Triad Today - The Triad's only locally-produced public affairs program

October 16th / 18th, 2009

"DUPED AND DUMPED BY DELL"

Last week Dell computer announced that it was shutting down its Forsyth County plant in January, deleting over a thousand people from the Triad workforce. The local media treated the announcement as a major news story. But to those of us who smelled a rat six years ago, the plant closing wasn’t news, it was just the expected outcome of a flawed deal brokered by naïve politicians.

Local and state governments used to be the entities where prospective industry would come for information on workforce preparedness, available housing, environmental regulations, and permits. But somewhere along the way, governing bodies have become desperate, overly trusting bankers willing to give away the chicken farm just to get one perishable egg. Where Dell was concerned, the farm was $300 million dollars in state and local incentives, and the egg was a promise of high paying jobs. The deal would give Dell $200,000 in tax credits for every job created. But in a plant where the average salary was projected to be $28,000, that could have given Dell a net gain of over $170,000 per worker. There was also no promise of full health benefits, and none at all for family members. The agreement also allowed Dell to slash up to 40% of its workforce and not lose a penny of perks. And, the state agreed that so long as Dell didn’t close the plant before October,2010, it would only have to return up to half of the tax credits it had earned.

Governor Mike Easley and his Secretary of Commerce Jim Fain knew the deal was one-sided, but they let Dell strong arm them into believing that the plant would take its jobs to Virginia if North Carolina didn’t act immediately. According to a report by the Winston-Salem Journal, Dell’s Vice President for global manufacturing Kip Thompson told Fain, “Two thousand jobs – shouldn’t you be happy with no revenue?” Then he added more pressure by saying, “If a state like North Carolina can’t get after this, I’m worried for our country. There’s a certain amount of patriotism here”.

And so, during the first week in November of 2004, patriot Easley presented the Dell deal to State lawmakers as a time sensitive matter. The package passed quickly, but later, many legislators complained that they were given less than a day to read through, analyze and discuss the terms.

Easley and Fain should have told Dell that we needed more time, and lawmakers should have refused to rubber stamp the deal. They didn’t, and not long afterward, we discovered that Virginia had offered Dell a mere $30 million dollars in perks. North Carolina had been flim-flammed in the worst way by agreeing to pay ten times what we needed to in order to attract the plant.

Thompson’s strong-arm tactics, and the revelation coming out of Virginia should have told us what to expect from Dell. Despite an incentives package that was based on full disclosure, and driven by performance and workforce levels, Dell began laying off people, then refused to release job data to City officials. The height of arrogance occurred in March of 2009, when Dell spokesperson David Frink unashamedly announced, “We are no longer providing specific site employment totals”. Well, now they ARE providing specific numbers. By January there will be zero people making desktop computers in Forsyth, and the building in which they worked will be vacated.

Dell says the plant closing is due to the downward trend in demand for desk tops, and an increasing market for laptops. But any first year marketing student could have foreseen as far back as 2005 that laptops were the preferred product, at which time Dell could have reconfigured their plans to convert local production to the more viable product. Instead, Dell will make their laptop computers in Mexico, where they can pay slave wages and make huge profits. Translation: Dell could have remained in North Carolina and made a respectable profit.

Instead, local officials are left with trying to put a good face on a bad situation.

Winston-Salem Mayor Allen Joines announced that City taxpayers will recoup all of the incentive monies, which Dell must repay within thirty days after the plant closes. But the Mayor’s statement is flawed in two ways.

First, I don’t believe Dell will write a check for $15 million and hand it over to Joines by February. Nor do I think they will re-pay Forsyth County’ s $7.9 million investment on time. After all, Dell is the company who scammed us into helping them build their plant , then hid employment figures from us so we wouldn’t be suspicious when they shut it down.

Second, Joines’ assessment of full reimbursement is rather provincial because City residents are also state taxpayers, and the state is on the hook for a great deal of money - at least $8.5 million dollars by some estimates. For example, according to the North Carolina Capitol Monitor we will be stuck with the out of pocket costs for road improvements, and for round the clock police presence at Dell’s facility. We also funded a community college training program worth nearly $4 million dollars, and provided $10,000 per year tuition deductions for Dell employees who took classes at Wake Forest University. The state commerce department also estimates at least $3.3 million dollars worth of other incentives that we might not recover. And, as the Monitor points out, the one-sided agreement may ultimately result in Dell not having to pay any State corporate income tax for the next 30 years.

There are a few of us who could say to local and state governing bodies that we told you so. Former Judge Robert Orr, Rep. Dale Folwell, and myself are among that group. But none of us who fought against the Dell deal and accurately predicted the outcome are taking any pleasure in the loss of 1200 jobs, or of the economic impact those losses will have on Triad area vendors and suppliers. We are all losers, all of us except for Dell who will continue to profit from third world labor. As Judge Orr once warned, “Big corporations based out of state only have loyalty to their bottom line, not to the community”.

But this sad saga isn’t over so long as the same officials who approved the Dell deal still defend it, and boast that they would do it all over again. That isn’t naïve, that’s just stupid. First, our elected leaders must learn how to do better due diligence. If not, they will continue to put our tax dollars at risk as they have with Skybus, Dell, and the Dash ballpark. Next, Governor Perdue needs to make good on a promise she made while campaigning. During her 2008 appearance on my Triad Today television program, I asked if she would be willing to lobby the National Governor’s Association to enact a moratorium on industry incentives and corporate welfare. Perdue said she would. Of course, she also said she would return to Triad Today and debate Pat McCrory, and she said she would be the education Governor. She dodged the debate, and she raided our education lottery funds, so I guess I won’t hold my breath for incentives reform.

And so, it is up to us locally to safeguard our own coffers without impeding economic development. The two goals are not mutually exclusive. And, going forward, we should adopt the same mantra that George W. Bush so eloquently mangled: “Fool me once, shame on you. Fool ME, and you can’t get fooled again”.