Some Criticize Delaware’s $14M Incentive to Keep I
Wilmington, DE, October 4--Judy McKinney-Cherry began wooing Invista from the moment DuPont announced the sale of the textiles and interiors business to the Wichita, Kan.-based Koch Industries, according to The News Journal.
But Invista gave her the cold shoulder, said McKinney-Cherry, director of Delaware's Economic Development Office.
"It was very clear Invista wanted a new identity and had to establish a new direction, separate from DuPont. So I had a sense they wanted to be far away."
So McKinney-Cherry began a campaign that reached a milestone Monday, when a key advisory panel approved a $14 million package to keep the headquarters and its 350 jobs in the state.
Critics have questioned the size of the payout and the lack of protections for Invista's Seaford plant. But experts in corporate site selection say such payouts are not unusual given the fierce competition today for corporate headquarters.
"Sometimes it's just corporate welfare, but sometimes you have to play ball," said Margaret Talley-Seijn, an editor with Plants, Sites & Parks, a site-selection magazine for corporate executives. "If you don't have [payouts] in your arsenal then Pennsylvania and New Jersey sure do, and they're not afraid to use it."
The Invista deal includes an $8.75 million cash payout if the company retains the 350 jobs for at least six years. Invista said the jobs will carry an average salary of $90,000 a year.
The package also includes employee training, relocation assistance if Invista moves more operations to Delaware and matching grants for federal research money Invista may receive.
The cash payout comes to $25,000 per job. Talley-Seijn said that figure is not unusual for a corporate headquarters move.
She said that, in December, Chicago agreed to pay up to $41 million to attract Boeing's headquarters from Seattle. At most that move will create 500 jobs, or $82,000 per job.
"Headquarters have a way of bringing in other businesses. It's a jewel in your crown. It's good PR. Having headquarters in a place means executives and their families are living there, mingling with the community. It's good for the community," she said.
In April, New Jersey officials offered $100 million to Cigna Corp. to lure its headquarters from Center City Philadelphia to Camden. Cigna declined the offer.
McKinney-Cherry said the benefit of keeping a headquarters goes beyond the taxes paid and household spending of the employees.
"It's not just the headquarters. It's the contractors, the suppliers, the small and medium businesses that rely on that big business for their livelihood."
Research and development facilities like the one that will accompany Invista's headquarters tend to spin off new businesses, as DuPont has done over the years, she said.
In 2002, McKinney-Cherry's strategic fund offered $2.6 million to attract a biotechnology research center from Germany.
Fraunhofer USA promises to create 40 jobs by next year. At $65,000 per job, that's the state's biggest per-job payout ever from the strategic fund, officials said.
The center's director, Barry Marrs, is known as a serial entrepreneur because of his skill in spinning off businesses from inventions coming from his lab, said Bob Dayton, life sciences director for the Economic Development Office.
State officials have said Invista looked at five states and four countries in its site search. The company has portrayed the search as a necessity, not a bid for cash.
"It was part of the terms of the [sale] agreement that we had to move off DuPont's campus," said spokeswoman Kristin Altimari. "We had to move somewhere. It was part of our due diligence to look elsewhere."
Invista added in a statement that leaving the campus would "allow for establishment of our own corporate culture."
