Some companies find the grass is greener in S.C.

Leicestershire, England-based Winbro Group Technologies chose to invest $10 million in this building in York County, S.C., after considering the Charlotte metropolitan area. Photo courtesy of Winbro Group Technologies

Robb Hudson was frustrated with Mecklenburg County.

The North American vice president for Leicestershire, England-based Winbro Group Technologies had hoped the county would take more of an interest in the company when it began shopping this year for a location for its North American headquarters.

Winbro considered the Charlotte metropolitan area, including York and Lancaster counties in South Carolina. Virginia, New England and Mexico were also in the running.

In the end, York County, just 20 miles south of Charlotte, landed the company — complete with plans for a $10 million investment initially and another $40 million or more in the years to come — in the Waterford Business Park in Rock Hill.

“Mecklenburg County was a little slow to react,” Hudson said. “The state (North Carolina) picked up the slack I would say as soon as they got word of it. They were pretty proactive after that, but Mecklenburg County was a bit slow.”

Compared with Mecklenburg County, “South Carolina and York County in particular was very aggressive,” he said. “Not from a financial standpoint but in making sure we had all the information we needed. And they offered a lot more possibilities as far as locations went.”

Winbro, a manufacturer of advanced machining technology for aero-engines and industrial gas turbine for the aero-engine and industrial-power markets, announced Oct. 19 its plans to locate in the Palmetto State. Within the first five years, the $10 million initial investment is expected to generate 25 new jobs. The company plans another $40 million in investments during the next five years and another 125 new jobs.

York County, which Hudson describes as having a “leaving-no-stone-unturned attitude,” has already begun helping Winbro with its expansion plans.

Hudson, who will be the senior company official at the new location, said another reason the company chose Rock Hill was a partnership with York Technical College that will provide the company with trained employees.

Although Winbro met with, and was impressed by, Central Piedmont Community College in Charlotte, YTC had a better program for the company’s needs, Hudson said.

Hudson said he thought Mecklenburg County was not as interested in pursuing Winbro because of the company’s initially slow growth pattern.

“For companies our size, I think there’s a bit more that we can receive from South Carolina than North Carolina, but I don’t think at end of day that really makes that much of a difference,” he said.

It wasn’t just Mecklenburg County that didn’t perform as well as South Carolina, Hudson says.

South Carolina Gov. Mark Sanford and Virginia Gov. Bob McDonald worked directly with Winbro, but North Carolina Gov. Bev Purdue did not have the same level of interaction, Hudson said. Instead, North Carolina Commerce Secretary Keith Crisco worked with the company, Hudson said.

“I think that played more of a psychological role in our decision, knowing that we could pick up the phone and call the governor,” Hudson said. “While we are happy with our decision, it was a difficult decision. I think really being able to find the right building and the unique partnership we are able to develop with York Tech were really probably the bigger keys to our decision than any type of incentive package.”

That’s not typical of the North Carolina governor, said Chris Mackey, spokeswoman for Purdue’s office.

When Purdue took office, she pledged to take any meeting or any phone call that would help bring jobs to North Carolina, Mackey said.

“I think it’s unfortunate that she didn’t get the opportunity to speak with them, because she is a great salesperson,” Mackey said, adding that she wasn’t aware of specifics in Winbro’s case.

Mackey added that Purdue works closely with Crisco and the state’s commerce department and has been known to give her cell phone number to businesses considering locating in the state.

Officials aware

That South Carolina is attractive to businesses is not lost on some Mecklenburg County officials.

The subject came up last month during a meeting of a board that governs bond issuances in Mecklenburg County.

Mecklenburg County attorney Marvin Bethune, who sits on the Industrial Facilities and Pollution Control Financing Authority, said that whenever a business is considering locating in Charlotte, they are also being wooed by South Carolina and, in particular, York County.

Bethune made the comment after hearing from Charlotte-based RedF Marketing during the Oct. 13 bond commission meeting. RedF CEO Sara Garcés Roselli told the board her company has also received attractive incentive offers from South Carolina.

Roselli declined to comment on the incentives offered by South Carolina because RedF is still negotiating with both states.

Mecklenburg County Commissioner Harold Cogdell, who also chairs the county’s economic development committee, said he was not aware of Winbro’s frustration with Mecklenburg County.

But he said the competition for businesses between the states is a trend he has noticed for at least the past two years.

“Frankly, I don’t know if it’s the businesses reaching out to local and state governments, or local and state governments reaching out to businesses,” he said. “But, certainly, there is communication that occurs and many instances an economic incentive package offered by state and local officials.”

Cogdell said he wished people realized that although Mecklenburg County’s leaders have invested in its infrastructure, there are other communities that have done the same and also have a highly skilled work force.

“But they’re also writing a check and sending a very clear and unambiguous message that we would like you as corporate partner in our community,” he said.

He said he thinks the county has been successful at attracting businesses to the Charlotte area.

One of the county’s bigger accomplishments was the December 2009 announcement that Stockholm, Sweden-based Electrolux decided to locate its new North American headquarters in Charlotte. The company expects to create a minimum of 738 jobs in the next five years.

Siemens Energy, with international headquarters in Berlin, Munich and Erlangen, Germany, has made three announcements since May 2009 that center on Charlotte.

Most recently, Siemens announced it will create 15 to 25 jobs annually by moving its nuclear instrumentation and control group from Alpharetta, Ga., to University Research Park in November. In May 2009, it announced an expansion at its Charlotte manufacturing facility that would create 226 new engineering and manufacturing jobs and invest $50 million in new equipment. In March, the company announced it would create 825 jobs and invest $170 million in construction and equipment by relocating its gas turbine manufacturing operations from Ontario, Canada, to Charlotte.

“But we also have more work to do,” Cogdell said. “It never ends. Just as we are actively recruiting businesses from other locations, other cities, states and countries are actively recruiting our businesses.”

Recruitment tools

Cogdell said the primary recruitment tool that Mecklenburg County government has to offer is funding through the business investment grant program.

That program offers a tax rebate of a percentage of property taxes paid by the businesses over a specific period of time if the business agrees to make an upfront capital investment and hire a minimum number of employees.

The amount of tax rebate offered by the county is based on variables in a business’ plan, such as the size of the capital investment, the number of employees and where the business would be located and whether it is an area that city and county officials are targeting for development.

The city and county is reviewing the business investment grant program, he said.

“I cannot speak for the (Mecklenburg County) Board (of Commissioners), but my personal vision is to see a more tiered approach to minimal capital investment,” Cogdell said, referring to businesses who have smaller-scale investment plans. “Right now, our current program requires a minimum of $3 million in some areas, and in other areas a minimum of $30 million. I believe we need to look at the county as a whole and create a tiered system.”

The new system could allow a smaller capital investment in areas where county officials would like to see more economic development, such as North Tryon Street or Freedom Drive, he said. It could also allow county officials to offer incentives to certain types of businesses, such as those in the energy or health care industries.

State officials can also step in with incentive packages.

Dale Carroll, deputy secretary of the North Carolina Department of Commerce, said the One North Carolina Grant matches the county-level incentives for up to three years, based on the performance of the company, meaning whether it was able to hire the employees and make the capital investment it promised when the incentive was offered.

A job development investment grant also can be offered by the state to companies promising larger investments. If those companies provide the investment, then a percentage of state payroll taxes are returned to the employer.

Grants offered through the state’s Golden Leaf Foundation, created with money related to tobacco settlement cases, and rural economic development grants are also available for businesses that meet location and number of employees qualifications.

‘I don’t put up billboards’

York County’s economic development director, Mark Farris, said although he doesn’t market to Charlotte companies, when his phone rings and a company is interested in located in South Carolina, he goes to work.

“I don’t put up billboards on Westinghouse or Arrowood, but I don’t dissuade a company just because they are presently located in Charlotte, either,” he said.

Farris cited a study that shows that less than 1 percent of companies in Mecklenburg County leave the county. York County also exports 40,000 employees to Mecklenburg County but imports about 5,000 Mecklenburg County employees to work in York County, he said.

Farris said the role of South Carolina in economic development is to reward job creation, while the county rewards capital investment.

In South Carolina, there is a jobs tax credit that earns a company up to $3,500 per job, and a job development credit that allows companies to retain 3 to 5 percent of their annual payroll to use for land, buildings or upgrades to capital investment.

South Carolina counties can also negotiate property tax and offer fee-in-lieu packages, which reduce the rate at which property is assessed, sometimes from 10.5 percent of fair-market value for industrial facilities to as low as 6 percent or even 4 percent for unusually large developments.

Farris said incentives are headline-grabbing and sexy, but it takes more than that to win a company.

Studies have shown that incentives rank well below transportation, labor availability and training and quality of life, he said. But when a company has decided it wants to locate in the Charlotte region, incentives may become more important in getting a company to locate in a specific area, like York County.

“We compete tooth and nail and we make no apologies for it,” Farris said. “It’s getting increasingly competitive based on current economic conditions. We offer an opportunity for a company to lower its cost of operation. Having said that, I don’t win every company and every company doesn’t find that we are the best location for them for whatever reason. I have a company that located in York County because the owner of company wanted to get away from his mother-in-law. Reasons a company makes decisions are the same as the way we buy a house. But, at the end of the day, I have heard companies say that their total liability and cost of operations are less in York County.”

Tire company rolls away

Winbro is not the only company Mecklenburg County has lost to South Carolina.

Continental Tire North America moved its headquarters from Charlotte to Indian Land in Lancaster County in April 2009 because it was trying to downsize its location.

Lancaster County offered Continental a property tax rate freeze at 6 percent and up to $200,000 in tax rebates, while the state offered job development credits for new jobs created.

Continental Chief Financial Officer Tim Rogers said the incentives offered by other states, including South Carolina, made it hard not to choose to move.

“My memory is that North Carolina did not have a retention program, so the incentives they could offer were limited,” Rogers said. “South Carolina had a fairly sophisticated program to incent businesses to move there. That was true of Georgia, Illinois and Michigan.”

Continental moved from Akron, Ohio, to Charlotte in 1995. Rogers said Continental has a good relationship with North Carolina and the company would have stayed in Charlotte, but the incentives offered by other locations were too enticing.

“The state of South Carolina and the local economic development team was very helpful in helping us understand what incentives were and what our options were with respect to where we could move,” he said. “South Carolina does a really fantastic job in that regard.”

Rogers said North Carolina is aggressive in attracting businesses.

“But more could be done on the retention side.”

Tara Ramsey can be reached at [email protected].