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South Carolina trumps North Carolina in bagging Volvo

South Carolina Commerce Secretary Bobby Hitt, at podium, talks about Volvo Car Corp.'s announcement it will build its first plant in North America in Berkeley County as Gov. Nikki Haley, second right, listens on Monday, May 11 2015, in Columbia, S.C. South Carolina beat out four other states for the $500 million plant that will employ 4,500 workers.
South Carolina Commerce Secretary Bobby Hitt, at podium, talks about Volvo Car Corp.'s announcement it will build its first plant in North America in Berkeley County as Gov. Nikki Haley, second right, listens on Monday, May 11 2015, in Columbia, S.C. South Carolina beat out four other states for the $500 million plant that will employ 4,500 workers. AP

When it comes to jobs, Gov. Pat McCrory has always been bullish on North Carolina’s chances against its southern neighbor.

“I told Nikki Haley, ‘We’re taking you down,’” he told a business conference in 2013. “She said, ‘Let the best woman win.’ I said, ‘Whatever it takes.’”

But it’s Haley, the governor of South Carolina, who has bagged the biggest trophies.

She claimed her latest economic development prize Monday when Swedish carmaker Volvo announced plans for a $500 million manufacturing plant near Charleston.

It was the state’s latest manufacturing coup.

In March Mercedes-Benz announced plans to invest $500 million in a new plant in North Charleston. That’s where Boeing began making 787 Dreamliners in 2011. And BMW, which started running cars off its Greer assembly plant in 1994, now employs 8,000. The state also has become the nation’s top tire manufacturer.

South Carolina landed Volvo with more than $200 million in state and local incentives. That includes about $120 million in state-issued economic-development bonds, $30 million in grants and $54 million in other incentives.

In the race for Volvo, South Carolina beat out a handful of states, including North Carolina, where McCrory has been fighting for new incentives since his “State of the State” speech in February.

“We need these tools passed in a matter of weeks, not months,” the governor told lawmakers.

Three months later, the General Assembly has yet to pass the governor’s incentive-laden N.C. Competes program. A bill passed the House but not the Senate.

“It hurts us not to have a strategy passed by the legislature,” McCrory said Monday. “I think members of the legislature are realizing that we have to have a strategy in place … so that my team can move forward and make proposals to viable clients.”

Neither Senate President Pro Tem Phil Berger nor House Speaker Tim Moore could be reached. Like McCrory, both are Republicans.

This wasn’t the first time North Carolina has been in the running for an automaker. Mercedes-Benz reportedly considered the Charlotte area for its American headquarters before settling on Georgia. Former Commerce Secretary Sharon Decker traveled to Japan last fall with an eye toward luring the auto industry and other jobs.

State officials had even identified tracts in Eastern North Carolina near Rocky Mount as potential sites for manufacturing companies.

Incentive stalemate

N.C. Commerce Secretary John Skvarla said Monday that North Carolina fell short in its bid for Volvo in part because the legislature hasn’t approved more jobs incentive funding.

Skvarla said his department couldn’t make a competitive offer because its main incentives fund, known as Job Development Investment Grants, or JDIG, is out of money. Both the House and Senate have economic development bills that raise the incentives cap, but neither proposal has made it to McCrory’s desk.

“I’m not sure we were ever in the game with Volvo because of that,” Skvarla said. “Right now, we’re not able to be competitive. We need certainty – we need the cap lifted, and we need longevity in the program.”

Republican Sen. Bob Rucho of Matthews said the Senate has already addressed the short-term incentive need by passing a bill that added $5 million to the JDIG fund.

His committee is considering adding more performance requirements to JDIG. He said he has “no timeline” for introducing a bill.

“We should do a real good soul searching and see if Commerce is doing the most efficient and effective job,” he said.

But some lawmakers say that’s not enough. “It’s like being in a baseball game, and we’re using a wiffle ball bat,” said GOP Rep. Charles Jeter of Huntersville, a co-sponsor of the economic development bill. “Hard to hit a 90 mph fastball with a wiffle ball bat.”

Republicans, who control the legislature, are divided on the issue. Critics say the state should rely on tax and other policies that promote an environment friendly to business. Supporters of incentives say that’s not enough.

“It’s frustrating because we’re just killing ourselves for ideological reasons and not for good ones,” Jeter said. “We’re arguing theory and policy when South Carolina is doing what’s necessary to make sure their people have jobs. To say it’s frustrating is an understatement.”

North Carolina still ‘very competitive’

Chris Chung, CEO of North Carolina’s Economic Development Partnership, a public-private venture designed to lure jobs, said North Carolinians shouldn’t be disheartened by Volvo’s decision.

“One state winning means a lot of other states did not win today,” Chung said. “It’s not as if Volvo bypassed North Carolina exclusively. They bypassed a lot of other good states that were in the running.”

Chung wouldn’t say whether the nonprofit partnership is in talks with other automakers, citing the group’s policy. But he said North Carolina is still competitive with South Carolina in terms of the state’s workforce, tax rates and energy costs.

“I still think we have a very competitive value proposition,” Chung said.

McCrory said Monday all the news isn’t bleak. North Carolina’s 5.4 percent unemployment rate in March was lower than South Carolina’s 6.7 percent.

“That’s the good news,” McCrory said. “The challenging news is we need an economic development strategy for the future. And the legislature hasn’t gone along with that.”

Democratic Sen. Jeff Jackson of Charlotte said economic development “is not a big mystery.”

“It’s just a question of whether we’re willing to make the commitment,” he said. “And now we have to fight a trend. South Carolina has picked up two of these plants, and now they have an international reputation that we’re going to have to contend with.”

Staff writer Ely Portillo contributed.

Morrill: 704-358-5059

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