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County OKs LabCorp incentives

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Comments (12)

Friday, November 20, 2009

(Updated 4:04 pm)

By Gerald Witt
Staff Writer

GREENSBORO — Guilford County approved an incentive plan worth $248,791 in exchange for 373 jobs that Laboratory Corp. of America might move to a building in Greensboro.

The amount the Board of Commissioners approved Thursday is less than the requested figure from the Burlington-based company, which hopes to consolidate its billing operations from 24 locations across the country to a site either here or in Danville, Va.

Brad Morton, vice president of corporate billing for LabCorp, would not say what the timetable is for the company’s decision.

Dan Lynch, president of the Greensboro Economic Development Alliance, said Gov. Bev Perdue also has announced a $275,000 grant to LabCorp if the company moves the billing center here.

LabCorp hopes to open the center by the second quarter of 2010, Morton told commissioners, and is negotiating a 15 year lease for a building.

With the county’s incentive package, along with a $373,000 offer from Greensboro, LabCorp would receive $896,791 in government funds if it locates 373 jobs in Greensboro and invests $3 million in furniture and equipment.

The Board of Commissioners voted for a smaller amount than the $373,000 LabCorp initially sought, citing the company’s lower-than-required wages.

“When I look at the numbers, 317 jobs, or 85 percent, are projected to make $11.50 an hour,” said Commissioner Kay Cashion, who proposed the smaller amount.

Typically, the county offers $1,000 per new job for an average wage of $40,000 a year. A salary in that range would pay more than $19 per hour.

The incentive offer passed with a 7-4 vote. Commissioners Paul Gibson, Kirk Perkins, Steve Arnold and Billy Yow voted against the offer.

“I find it rather sad that a company of your size, strength and stature would come in and ask for less than a million in incentives,” Arnold said.

Through the third quarter of 2009, the company’s earnings per share rose, compared to the same period in 2008, from $3.06 per share to $3.67, according to an October earnings release from LabCorp.

Commissioner Kirk Perkins said he voted against the package because he believed the company would move the operation anyway.

Commissioner Mike Winstead, with other commissioners who approved the incentives, said the nation’s difficult economic times have highlighted incentive requests — and the jobs that go with them.

Lynch said this is the first incentive request that has gone before commissioners this year from his office.

“Eighteen months ago, we would not be in front of you with this project,” he told the board.

Contact Gerald Witt at 373-7008 or gerald.witt@news-record.com

Accompanying Photos

File photo (News & Record)

Commissioners Insider

Let the building begin
The commissioners approved more than $30 million to kick off nine county construction projects, including moves that will make the register of deeds offices more accessible in Greensboro and High Point.
Need a ride?
The commissioners voted to examine and create a stronger contract with the county’s transportation provider, MV Transportation. The contract is worth $13.2 million.
Expect that conversation to happen in coming weeks and months for a service that commissioners hope will provide more reliability and service.
“I know this isn’t going to be smooth, but we can do better,” Commissioner Paul Gibson said.

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AirDoc

November 20, 2009 - 10:37 am EST

Sorry LabCorp - your earnings might be down but you are a stable company. You should be ashamed for asking for taxpayers money. Did you do this simply because you figured the Board of Commissioners were dumb enough to give it to you?

Donnell DJ Hardy

November 20, 2009 - 1:56 pm EST

We have an incentives program and it isn't a requirement that the company be struggling in order to apply for this program. The requirements are for a threshold of verifiable new investment and providing jobs that have a compensation package above the average level. When I first heard about this I felt similar but incentives aren't meant to be a welfare program for companies in trouble. I welcome a solid company with excellent growth prospects using this money to mitigate current risks so that they can provide that growth now.

Basically, they want to make more money with minimal private risk and we need the jobs. This is what incentives are all about. The increased employment now will pay for itself with increased sales tax revenue (state & local) and this will put more disposable income in the local economy which should spur some spillover job creation and business expansion. The residual revenue for property taxes of the currently unused site will also contribute in making this a long-term gain for this area. I'd much rather reward a solid local company that has local ownership and has contributed it's share in the local economy than some complete outsider interest.

My only hope is that the company decides to locate on the East Side of the city where the jobs are sorely needed and where the economic activity would be appreciated (just my personal hope).

AirDoc

November 20, 2009 - 2:21 pm EST

Thanks Donnell - but LabCorp's compensation package ISN'T above average. I simply don't believe taxpayers should be paying established companies to expand here.

Donnell DJ Hardy

November 20, 2009 - 2:44 pm EST

AirDoc,

I understand and respect your hesitation. My gut reaction was the same. I also suspected that the compensation package was below average when I heard the request. I know the city/county revise their averages on a yearly basis so it may be in line with that new average.

Incentives (at least as articulated in our city/county program) are meant to attract new investment...not necessarily just new companies. I suspect I'm not going to persuade you because your stance is one of principle. I generally would line up with you...but there are times when philosophy must be modified (not saying thrown out the window entirely) in the name of progress. I, initially, saw this as setting a bad precedent...but I think this is a unique request that presently meets our current needs and has many positive aspects that differ from other incentive requests that I have opposed in principle.

Appreciate the debate regardless. Cheers!

maxinedog

November 20, 2009 - 11:28 am EST

I am sure that "stable" people like AirDoc return their tax refunds every year. All the rest of us should be ashamed for asking for the "taxpayer's money." We can try to to differientiate tax deductions for individuals (meant to encourage productive behavior) and corporate incentives, but the argument fails. Perhaps AirDoc would prefer that the county put that money to a more "productive" use that does not increase employment and tax revenue in excess of the payout.

eyesnot

November 20, 2009 - 12:33 pm EST

By comparing the miniscule request from Labcorp, knowing the company, who has supported Burlington and the Triad for over 40 years, to companies like Fed Ex and Dell, the government should be the ones embarrassed. Does anyone have any idea just what return $1000 per person returns to the local government? Let me tell you. $2000 per YEAR in taxes, just on income tax. Let me add some more figures so there aren't any more foolish things said about someone actually trying to employ people here in the 4th worst unemployment area in the US. Each individual will contribute an additional $6000 per year to the local economy in just food and gas. As a bonus, the wages and those behind the wages make for quality humanity and are far less likely to live off the government like Walmart or Dell employees. Shame on the first comment. I almost clicked on the "report abuse" link.

tledford

November 20, 2009 - 1:07 pm EST

"$2000 per YEAR in taxes, just on income tax."

Eh? Neither Guilford County nor the City of Greensboro has an income tax. If you're talking about a portion of State and/or Federal income taxes that somehow "comes back" to Greensboro/Guilford county, then you may be correct, although I'd like to see links to your sources of data.

Beachwalk

November 20, 2009 - 1:13 pm EST

I agree with tledford. I'd like to see links to back up the numbers. I have a feeling eyesnot is pulling numbers out of the air.

maxinedog

November 20, 2009 - 1:57 pm EST

The easy numbers are 425 jobs multiplied by an average wage of $27,000 = $11,475,000 in annual salaries, The city and county incentives amount of 5% that annual amount. Even the harshest critic has to conceed that 5% of the annuall salary will filter back as a benefit (sales taxes and increased property tax revenue alone). You could then multiply this by the 15 years they have committed to on the building lease, but that is not even needed.

Donnell DJ Hardy

November 20, 2009 - 3:12 pm EST

To extrapolate from maxinedog's numbers. Figuring that take-home pay for these folks will be roughly 75% of salary (conservative considering the tax bracket these jobs will likely fall into) equates to 8.6 million. Figuring that at least 50% of this will be disposable income (resulting in sales tax) takes us to 4.3 million. Multiplying that by 7% brings the figure down to ~301,000/annually in revenue contribution. Of course, this is staggered because all 425 jobs won't be here on day one. However, the incentives will be spent in the local economy also which will have some multiplier effect in the local economy. In addition, since the ownership of this company is local that effect should be substantially higher than it would if these were outsiders.

I think this pays for itself over time and it gives this company what it needs to mitigate the risks they see in expanding during a recession with no horizon. There are other benefits from this deal as well of which the impact can't really be estimated intelligently, but I think this is a benefit to the local economy and well worth the money.

eyesnot

November 20, 2009 - 2:29 pm EST

Thank you Maxine. Ok, I was a little off. It comes up to $1500 profit for the state through income tax per person on the first year, $2500 per person there after. Not accounting for residuals. I assumed elementary economics was a given here, but I realize now many readers prefer to point fingers instead of discuss relative concepts.
No, I am not pulling numbers out of the air. I am generalizing to simplify an argument. Perhaps what I should say is, where are your links proving otherwise?
Yet there is another level to consider. How much will the government pay if those who would otherwise be employed are unemployed because Labcorp (or any company) chooses a different city to bring income into?

maxinedog

November 23, 2009 - 9:51 am EST

The incentive money will not be paid out in advance, but rather after the jobs have been created. Another point to consider for those of us who have a knee jerk reation to government and spending/deficits, is that all government spending is not necessarily bad. In an economy like this, we have gone from the private sector spending more than it earns, to a situation where the private sector is spending less than they earn (saving). This is great in the long term, but bad for the short term. The reduction in spending must be made up somewhere to keep the economy going. Net Exports/imports are not going to increase enough to make up the difference, so the US Gov. must step in, however that Gov. spending will be more effective if it is invested in items that increase productivity and private income. This is a great example of that, unlike the last stimulus package, which with hindsight I am sure everyone would like to have seen more focused on jobs and infrastructure, less earmark and entitlement.