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Just three months ago, N.C. Commerce Secretary Keith Crisco conceded the state's high-stakes recruitment of Dell in 2004 had not "yet" proven to be a success. "We need three to four years to judge it in total," he told a gathering of commercial real-estate executives in Raleigh July 23, the Triangle Business Journal reported.

No, we don't. Dell announced Wednesday it will close its desktop computer assembly plant in Winston-Salem by January. The decision displaces 900 remaining employees and disconnects an economic development project that state and Triad leaders banked on heavily to help lead an economic transformation.

Dell's terse public statement cited a strategy of "global simplification," its response to a deep recession and shifting competitive landscape that has weakened the company's position in the marketplace.

Warning signs

There were warning signs. The Wall Street Journal reported more than a year ago that Dell was trying to sell "most and possibly all" of its manufacturing facilities. The company didn't confirm that plan, but in January it did unload a desktop computer assembly plant in Lebanon, Tenn., as demand for that product declined. It also reduced employment levels at a Nashville facility, "migrated" its major European operation from Ireland to Poland for cheaper labor and, ominously, began paring its Winston-Salem work force.

Dell refused to give numbers about its local layoffs until the Winston-Salem City Council summoned executives to a public meeting to answer questions.

Dell's penchant for secrecy was disturbing from the time it began negotiating with state officials, who fashioned a $242 million incentives deal in an effort to win what they thought was a closely contested bidding war against Virginia. It turned out Virginia's offer was much less and based on more modest projections of Dell's potential economic impact.

Triad governments also contended to land the Dell facility. Winston-Salem and Forsyth County prevailed with offers worth a combined $37 million.

Fortunately, state and local incentives were linked to performance. Dell didn't deliver and won't collect most of the tax breaks promised. It also owes repayment for up-front benefits and annual incentive payments. Winston-Salem Mayor Allen Joines said the city will get back "every penny" due.

That stands to be proven. Taxpayers should demand that state and local governments give a full accounting of what's been paid and repaid.

Incentives folly?

The episode "provides a stark and painful example of the folly of the incentives game engaged in by our state and local governments," said Bob Orr of the N.C. Institute for Constitutional Law, which unsuccessfully challenged the legality of the state's pact with Dell. But Gov. Bev Perdue reacted to Wednesday's bad news by vowing to "aggressively pursue new business and job opportunities." Her commitment is welcome, but it must be tempered with caution. North Carolina was overly aggressive in pursuing Dell only five years ago to the point of offering much more than was prudent or necessary.

Critics like Orr say the Dell saga argues against making any deals with multinational corporations that come and go as their own interests dictate.

Unfortunately, that's not so easy in an environment where incentives are always part of the discussion in economic development projects.

Find a better way

A more rational approach would encourage job creation but eliminate competition among states and local governments -- something like providing federal tax credits based on employment. Small businesses as well as large companies would qualify. There would be no secret negotiations or wildly excessive incentives based on hopes and promises.

The Dell disappointment is so deep because expectations were so high. The anticipated 1,500 Dell jobs were just the beginning. The new facility was going to draw suppliers and other businesses, resulting in thousands of new jobs. The Dell name would bring worldwide attention to the Triad for its healthy business environment and promote economic diversification and modernization as the old industrial mainstays of tobacco, textiles and furniture declined.

Dell did employ close to 1,200 people earning average salaries of better than $36,000, plus as many as 300 contract workers before layoffs began. Its business decisions are not unusual in a harsh economic climate. But, with no roots in North Carolina, Dell wasn't bound by loyalty to the communities that embraced it with open arms, and wallets, just five years ago.

It's time, much sooner than expected, to judge the Dell experience "in total." And to learn from it.