Dell To Close Plant, Screws NC Twice

So some history, a few years ago, NC bent over backwards in attracting Dell to come to NC. All kinds of tax breaks and incentives were given to them. So now, the recession hit, they are closing the plant, 900 workers are gone and NC is out literally millions of dollars that they gave Dell. I’ve never liked the idea of a states bidding for business with lucrative incentives like tax breaks. They never work in the states or public good’s favor. Frankly, I think it should be illegal for states to gamble away tax payers money like that. A company should locate a facility based on the merits of the state, the available talent pool, utility costs, land costs, etc. Not by how much money a state can stuff in their pocket. It’s been an ongoing trend here in NC and I just think it’s worth the cost in the long term.

Dell Inc. DELL will close a North Carolina plant, putting some 905 employees out of work, as the personal-computer maker continues its restructuring.The company is in the midst of cutting $4 billion in costs the next two years as Dell deals with slumping profits and still-weak demand, especially among its key corporate customers.

via UPDATE: Dell To Close N.C. Plant, Affecting 905 Workers –

3 thoughts on “Dell To Close Plant, Screws NC Twice

  1. Respectfully I am going to disagree.

    Just as important as the cost of land, utilities, talent pool and other costs of conducting business is the tax base a business must pay. Taxes are a cost of doing business and although people don’t realize these taxes are passed onto the ultimate consumer when they purchase a product. Think about that for a moment.

    All taxes a business pays ultimately get paid by the consumer. The Chairman of the board, CEO, CIO, Sr. VP, VP, Directors and workers of a company don’t take a pay cut if the local taxes of a plant go up? The company doesn’t reduce dividends to the share holders if the local/state/federal taxes go up. A company will look at the new taxes, calculate them into the cost of doing business and increase the cost of their products and services.

    The ONLY entities that pay ALL taxes are consumers – period.

    And to one other point you made. In this case NC is not out any money. Yes, they agreed to not collect any taxes for a period of time if Dell built a manufacturing facility in NC. If NC didn’t agree to that provision Dell may not have built the plant there in the first place. And another thing. I’m sure Dell spent several millions of dollars to built the plant, hire the workers, train the works, get supply and distribution contracts working and a whole lot of other activities to get the plant rolling.

    I’m sure Dell had a real business case in closing the plant. I’m sure that somewhere some bean-counter and executive figured out it was in Dell’s best interest to close the plant. That’s what capitalism does – it makes businesses stay competitive.

    And finally, I think local, state and federal governments should look at reducing taxes when feasible to be more competitive in bringing in new businesses. Contrary to popular belief, lowering taxes does stimulate growth.

  2. Think my original point went unnoticed. First, I agree with your point on business taxes. My point is that states shouldn’t be jumping all over themselves with tax incentives to businesses to come to their state. If all states did away with that, the playing field would be more level where a company would choose on the educational and logistical resources or challenges. Not by merely skewing their financial model which will most likely make no sense in five years when the tax benefits run out. The incentives makes a company think and build on the short term, not necessarily what is long term feasible.

  3. I agree with your line of thinking. However, the playing field will never be level because states and counties do whatever they can to get growth so they can have more tax basis.

    How many states or counties tell businesses – “we don’t want your growth opportunity”

    What we really need to do as a country is to put it all on the table – what are the real taxes and who is paying them.

    Health Care reform – I’m all for any reform and re-distribution of wealth as long as we are honest about who is paying for all this shit the government(s) want to do. Once and for all, let us all be honest and give thanks to those evil rich people who bear the majority of the burdens for the rest of the people of the US of A!

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