ASHEVILLE – In today’s competitive marketplace, the cost of doing business often means the cost of obtaining the business.
To lure GE Aviation’s industry-transforming jet-engine component operation to Asheville and three other North Carolina locations, state and local officials offered the company a package worth in excess of $11.2 million in cash incentives.
And that doesn’t include the roughly $18-$20 million, 172,000-square-foot facility that Buncombe County built for GE Aviation at 401 Sweeten Creek Industrial Park Road.
David Gantt, Buncombe County Commission chair, emphasized that the Evendale, Ohio-based company would reimburse taxpayers for that outlay through annual lease payments.
He and other public officials, such as Kim Genardo, North Carolina Department of Commerce spokeswoman, also underscored GE Aviation doesn’t get paid unless company executives hold up their end of the bargain by delivering annual minimums in jobs created and money invested in the project.
But some Asheville leaders and residents question whether the system of incentives itself is the most productive way to grow the regional economy.
“We argue for tax incentives to be used where there is a clear public purpose in the presence of market failure,” said Franzi Charen, director of the Asheville Grown Business Alliance. That grassroots organization supports local, independently-owned businesses, according to its website.
The Asheville factory is the only one in the world that manufactures jet-engine shrouds using a revolutionary lightweight technology employing a ceramic matrix composite invented by GE Aviation researchers.
Facilities also exist in Durham, West Jefferson and Wilmington.
Initially, the West Jefferson factory will handle the first cuts of the materials, said Michael Meguiar, the Asheville plant manager. Asheville and Wilmington workers will finish the products. And the Durham facility will piece the components together.
GE Aviation employs more than 1,300 people in North Carolina.
The shroud is a stationary part in the hot section of the engine that directs cooling air.
Company customers will save $1 million per engine, billions of dollars in total, Meguiar said.
Experts expect the innovative technology to replace current engine
components in coming generations of jets.
That potential isn’t enough to sway Charen.
“By pitting communities against each other, large corporations and their stockholders are the real winners,” she said. “It takes courage and commitment for our leaders to opt out of this interstate game of poaching jobs from one another.”
Seven states and cities vied for the plant in Asheville’s industrial park.
Still, Gantt sees the incentive landscape a bit differently.
“They are not gifts we give and say thank you for coming here,” he said.
To reap their rewards, company executives must invest a minimum of $175.6 million and create 218 jobs across the state by Dec. 31, 2017, according to the agreement the parties signed last July.
But GE Aviation spokeswoman Kelly Walsh said the company plans to invest $195 million and create 242 jobs by that time.
Gantt ticked off the benefits of the deal to area taxpayers: the county owns the building GE Aviation leases and the land on which it sits; public officials forecast a “positive cash flow on the whole thing in three years;” and, 52 new high-wage jobs before 2018.
The average wage of those jobs statewide must be at least $43,000 a year, according to the agreement signed by company executives and North Carolina officials.
Executives representing two other companies whose products would support the Asheville GE Aviation operation have spoken to Gantt about their interest in establishing outfits here.
Gantt said those executives asked that their identities be kept confidential due to the early stages of their consideration.
Tim Tucker, the GE Aviation West Jefferson plant manager, said supply-chain companies could provide services including corrosion coating and plasma spraying.
The company plans to install $126 million worth of equipment in the Asheville plant and will pay an annual lease starting at $580,000. For the first seven years, Buncombe County and Asheville will pay $492,000 a year and receive $1.2 million in new property taxes.
The new jobs would generate an additional $600,000 in state and local taxes.
Durham and New Hanover county officials voted to supply GE Aviation with $400,000 and $800,000 in cash incentives, respectively.
North Carolina’s commerce department has pledged $3.57 million in grants. The One North Carolina Fund is offering a $1.25 million grant to GE Aviation.
The state’s community college system has awarded $1.2 million grant for an employee technical-training center at Asheville-Buncombe Technical Community College.
And the state commerce department’s rural division is finalizing another grant for the company, Genardo said.
The breadth and scope of the incentives disappoints Gary Garner, 71, a retired businessman of Arden who ran the Garner Stereo Center in downtown Asheville for 30 years. That store now is based in Fletcher, run by his sons, he said.
“I’ve always felt that small businesses have been slighted by that type of thing,” Garner said. “There at least should be some discussion about helping out the small guy locally. Sometimes I feel like the big corporations are putting a gun to the head of government officials and threatening to pay them incentives and they’ll locate there — or they’ll go somewhere else.”