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OPINION

Editorial: An end to incentives?

Tuesday, May 25, 2010
(Updated 3:00 am)

American Express probably hasn't put an end to corporate incentives in Guilford County, but it's made it harder for other companies to ask.

The financial services giant chose eastern Guilford County locations for a $600 million data center last week and never asked for millions of dollars in incentives that the Greensboro City Council and Guilford County Board of Commissioners were prepared to consider. Amex found other reasons to make its selection.

That's in keeping with the company's character. It's been a great corporate citizen since opening a call center near the airport in 1985, where it employs 2,000 workers. It operates on an ethic of giving to the community, not taking from it, and now it has enhanced that reputation many times over.

Even so, all companies are in business to make a profit. Incentive money was practically there for the taking, and Amex really couldn't be blamed for seeking the best deal it could get, here or somewhere else. It's practically unheard of for a firm offering a project of this magnitude not to ask for, and get, tax breaks and other inducements. It showed uncommon altruism by declining to press its advantage.

Now, thanks to the Amex decision, the future advantage may shift a little.

The next company asking for incentives can be held to the American Express standard. Why should it receive tax breaks when Amex, with its mega-investment and willingness to pay its full tax obligation, declined? Why can't the next company see the same benefits of locating in Guilford County that Amex saw?

The American Express decision should strengthen the resolve of local officials who worry this area can't attract new businesses without trowing money at them. Some were willing to make a lucrative offer to Amex, for good reason. There was a lot to be gained. But it turned out to be unnecessary to conduct business as usual with American Express, and now there's hope that a new business as usual is possible.

Amex isn't the first big company to locate in Guilford County without incentives. One, Lenovo, opened a computer distribution center without a deal in 2008. But it's the biggest. And it has shown how to establish goodwill at the start of a relationship.

Companies that drive a hard bargain, playing one competing state or region against another -- Dell comes to mind -- foster mixed feelings from the beginning. The jobs and investment are welcome, but it's often uncertain that they're worth the price. Resentment increases when the business doesn't produce everything promised.

Now, the feeling across the Triad and North Carolina will be that every company should come in like American Express -- finding a healthy business climate, good quality of life, willing work force, outstanding higher education and other benefits -- and asking for little other than the opportunity to thrive.

Why can't that become the expectation from now on?

Comments

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Unaffiliated

May 25, 2010 - 6:53 am EDT

Amen! Our elected officials also need to stop funding Community Based Organizations (CBO) . Re: Tax payers should have have the right to contribute to their CBO of choice; not have governments decide! Billy Yow speaks out of both sides of his mouth on CBO contributions. He shoved through $175,000.00 funding for the Pleasant Garden Community Center a couple of years ago, but (in the past) has not supported the budgets for the county with CBO contributions in it!

Panacea

May 25, 2010 - 8:29 am EDT

There is a huge difference between giving corporations "incentives", and supproting local community organizations, which are non-profit.

Andrew Brod

May 25, 2010 - 9:15 am EDT

I don't know anything about the details of this deal, but it seems a bit naive to attribute AmEx's decision to altruism. For-profit companies have a way of working toward higher profits, and that's not a bad thing. There's nothing wrong with profit per se. Often what seems like altruism is just a more round-about path toward profit.

For example, incentives often come with certain reporting requirements. Suppose AmEx didn't want to disclose some of the information necessary for it to receive incentive payments. If the value of keeping that information confidential outweighed the dollar value of the incentives, it would choose to forego the incentives. And altruism would have nothing to do with it.

Alternatively, one could imagine a company deciding that the PR value of not accepting incentives outweighs the bad press it'd get if it accepted them. Again, that'd be a calculation, not altruism. However, that appears not to apply here, because there was little or no controversy regarding AmEx incentives.

This is not to say we shouldn't applaud AmEx's decision or have hope for the future. But unless the N&R knows more about this than it's reported, it seems premature to call it altruism. And if it's not altruism, then there's no reason to expect the next company to ignore its profit needs.

Doug

May 25, 2010 - 1:08 pm EDT

We're counting on the power of positive reinforcement.

Andrew Brod

May 25, 2010 - 3:21 pm EDT

And I hope it works. But I wouldn't bet against the next company expecting incentives.

Unaffiliated

May 25, 2010 - 1:31 pm EDT

Panacea: Please accept my opinion as I will yours. Non-profits should be funded by individuals not governments. I am convinced that individuals would/should support the charity of choice. Elected officials should not be using our money to support non-profits. Check out the history of many non-profits that have received money (given by government boards) in the past . Project Homestead comes to mind. Also I always research CBOs who solicit funds. Exactly how much money actually reaches the intended charity & how much is used for non-essential line item can be deceptive. Accountability is lacking when you do not ask questions and receive answers.

Panacea

May 25, 2010 - 2:39 pm EDT

I agree that accountability is important whenever the government gives out money, whether to non-profits or to corporations, or when handing out contracts.

I disagree that the government should not fund non-profits. Those funds support a lot of useful programs, such as education and prevention programs to prevent the transmission of HIV. And since most CBO's are self funded, the amount of money that goes into them pales in comparison to corporate welfare.

manonthemove

May 25, 2010 - 4:49 pm EDT

Scroll down to the bottom of the page for the answer to contributions to non-profits. http://gcms0004.co.guilford.nc.us/departments/index.php Look at the total. How many people will benefit from the Shakespeare Festival? I agree to spend money for useful programs that help low income but not the frivolous programs that can't benefit all of us. We all have to cut out the luxuries and stick with the essentials.

Unaffiliated

May 25, 2010 - 8:44 pm EDT

Thanks. It's time to put an end to government "Handouts".

Dogwood

May 25, 2010 - 5:54 pm EDT

I wonder if American Express would like to be the sponsor for our new swim center. Every penny counts in advertising. I think the center will be a fine showplace attracting national swim and diving competitions plus young children will learn this fine art of swimming. Welcome American Express.

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