September 19th / 21st, 2008
"Jobs Vanishing- So Should Perks"
In this, the lame duck year of the lame-brained George Bush, job losses
continue to be staggering. From January through end of August, 605,000 Americans
were thrown out of work. Collaterally, 1.2 million homes were foreclosed
in second quarter, and another 2.9 million people are behind in their
mortgage payments.
Closer to home, it was not a banner week for Forsyth County.
First, Dell announced that it might be closing its new plant, which could
put 1,150 people out of work. Then, a few days later, RJ Reynolds announced
that it was cutting 570 jobs.
The news was bad, but it was also a reminder of the differences between the
two corporations.
Reynolds helped to build Winston-Salem, and was the driving force in the city
’s economy for a century. Despite the controversy over the dangers of
smoking, and charges that the tobacco industry lied to Congress and to its
customers regarding deliberately high nicotine levels, Reynolds has remained a
stalwart supporter of all things community.
I am proud to be a graduate of RJ Reynolds High School, particularly because
of bragging rights to Reynolds auditorium, a true showplace of the South,
and a place where I spent countless hours involved in one kind of production or
another. It is possible that a high school could have been built without
Reynolds money, but it wouldn’t have been as impressive. And without
Reynolds, there would have never been an auditorium of such grandeur, or one that
served as a cultural mecca for the region.
Reynolds has also been active in supporting nearly every local charity
imaginable, including the United Way, for which Reynolds CEO Susan Ivey is a
former chairperson.
And so it came as no surprise to me that when market conditions forced
cutbacks, Reynolds showed lots of class and genuine concern for the affected
employees. Most took early retirement and will enjoy full benefits. Others were
displaced, but take with them financial compensation and a resume that will
make them desireable in the global marketplace.
Contrast that with the likes of Dell, Skybus, and Hanesbrands.
My criticism of the latter is well documented, but, suffice to say its
corporate conscience is nearly non-existent. CEO Richard Noll laid off some
14,000 people, cut out medical benefits for retirees, and transferred American
jobs overseas, where he pays slave wages to people making products that he will
ship back into the united states, and turn a huge profit which supports his
$8 million dollar salary.
Skybus and Dell, meanwhile, fall into a category of corporate behavior
almost as scurrilous. Skybus flimflammed state and local officials, and had
everyone scrambling to dole out various perks and incentives, only to watch the
airline fold and leave customers stranded with no explanation.
And then there’s Dell. If coercion and flimflamming was a high crime,
then Mike Easley and the Dell gang would already be behind bars. Dell persuaded
Easley and Forsyth officials into giving up over $300 million dollars worth
of incentives, or else they (Dell) would locate to Virginia. Later it was
revealed that the Old Dominion was only prepared to offer about one tenth of
what North Carolina put on the table. And Easley herded the questionable
package through the legislature before anyone had a chance to study the fine
print, which would allow Dell to lay off as much as half of their workforce and
still retain the incentives. It also allowed the computer maker to close its
doors and still retain half the perks so long as they didn’t boot down before
2010. Well, guess what? Dell signaled last week that it might have to
close its doors in “2010”. That wasn’t a coincidence.
Judge Robert Orr saw this coming. So did a few of us in the media. Orr
claimed that the deal was illegal, and he challenged it in court. I, on the
other hand, simply objected to perk packages for Dell and Skybus on purely
logical grounds.
If a new plant or a new venture is going to be so profitable, then taxpayers
shouldn’t have to subsidize the company in advance. The company should be
willing to put up their own money rather than take ours.
Those of us who railed against Dell and Skybus, were criticized for being
negative, and for not understanding that sweetheart deals create jobs.
Newsflash: Unethical companies who extort taxpayer perks and then vanish, don
’t add viable jobs to our economy. They add what amounts to temporary
jobs that vanish before our very eyes.
To their credit (and to my knowledge) Reynolds is not eliminating jobs here,
just so they can ship those jobs overseas and fatten the salaries of
executives. Reynolds is a victim of market conditions and, to be fair, of the
dangers of their own product, which led to a decrease in smoking. Still, the
company never asked the community for a hand out in order to construct the
Reynolds building. To the contrary, Reynolds was and still is committed to
community service, giving generously of their time, talents, and money.
Job losses and plant closings are never easy on a community, but if they
have to occur, we should be grateful that at least one company knows how to
achieve the transition with class and compassion.
The National Governors Association needs to step up with a moratorium on all
incentives, and make each member state stick to the agreement. In the
meantime, if incentives are still the norm, then cities and counties should
re-direct perks to existing industry with a proven track record, and who could use
the public monies to grow their already stable workforce.
Please, no more perks for companies teasing us with relocation. Let them
build here at their own expense, prove themselves as good corporate citizens,
and then, after 5 years, allow them to ask for a little public help that
might result in the creation of more jobs.
If we had taken the money and perks promised to Dell and Skybus alone, and
given it to Reynolds, I bet that Susan Ivey could have used those hundreds of
millions of dollars to develop a subsidiary business, or invest in a spin-off
or start-up (not unlike the boost of valuable patents that Reynolds gave to
Targacept).
Either scenario could have protected or transferred some of the jobs that
were recently eliminated.
Real, lasting job growth comes mainly from established companies (large and
small) whose leaders have ties and a commitment to the community.
It’s time to start rolling the dice with existing industry instead of
crapping out with carpet baggers.
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