Chasing big fish

by Tom Campbell, Producer and moderator of NC SPIN, October 12, 2017.

Most cities of any size are salivating at the opportunity to land the big Amazon fish, including several in North Carolina angling to win the trophy. Jeff Bezos’ Seattle based company is shopping to locate a second headquarters site and the bait they are dangling is 50,000 new jobs and $5 billion in investments.

Amazon’s list of desirables is extensive. They want to locate in a metropolitan area of more than 1 million, have nearby universities, on-site access to mass transit, a 45 minute or less commute to an international airport, major highway artery access, a diverse population and recreational opportunities. An all-out bidding competition, among cities offering Amazon economic incentives, has erupted.

North Carolina hasn’t done well in these big-game tournaments. Until 1993, our state didn’t offer incentives other than roads, utility improvements and job training. Mercedes Benz changed all that. North Carolina made the short list to lure the carmaker, but lost out to Alabama’s $300 million plus incentive package, an unheard of amount at that time. Earlier this year we were thought we were in the running for Foxconn’s $10 billion investment with thousands of jobs. Our state offered incentives of more than $570 million, but lost out to Wisconsin’s $3 billion incentives package.

These ever escalating, high stakes incentives pageants are little more than a Robin Hood in reverse scenario. Bezos, Amazon’s principle owner, is reportedly worth more than $84 billion. North Carolina’s leaders claim we don’t have the wherewithal to build roads, fund schools and provide for those in need, yet we are willing to shell out a billion or more to give to those already wealthy. It is insane and the payback to taxpayers is problematic.

Most all these big prospects will choose larger cities, further exacerbating our urban-rural problems as more move to the cities to take jobs. But rural areas won’t be alone in suffering, as increased demands on the cities where the plants locate require higher taxes to improve congested roads, construct new schools, expand water and sewer utilities and other public amenities. Taxpayers pay on both ends.

Too many times the companies we’ve offered these incentive packages fail live up to their promises, sometimes later pulling up and leaving, or laying off employees. Our state is littered with water and sewer systems built to accommodate now vacant textile operations, systems now unable to generate sufficient revenues to properly keep them maintained.

Yes, we want more and better paying jobs for our people. Yes, we want to attract businesses with newer technologies and modern operations and yes, we want to make this a more desirable state in which to live. But we are neglecting those businesses that started and stayed here. Just think of the benefits we could enjoy if our leaders spent as much time and money helping small to medium-sized companies as we do chasing after these big fish. These companies create 7 out of 10 new jobs.

This logic won’t change the mindset of economic developers or politicians. It’s sexy to announce and cut the ribbon on a big catch and get media headlines. But we’ve demonstrated the odds of landing the big ones are about as good as winning the sweepstakes. A safer bet is to help the small fish grow larger and that is no fish tale.