Japan Trips, Other Taxpayer-Funded Freebies Offered to Bridgestone

January 12, 2012

Investigative Reports

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The NerveOver the next several years, as many as 200 new employees at the expanding Bridgestone plant site in Aiken County will be flown to Japan, where the international tire manufacturer is headquartered, according to a state incentives agreement obtained by The Nerve.

There, the new workers, including supervisors, maintenance technicians and operators, will receive taxpayer-funded training for up to 120 days, depending on their job type, documents show. Taxpayers also will cover their food and lodging at $225 per day for each employee.

Collectively, the state’s readySC job-training program, which is run by the S.C. Technical College System, projects it will spend nearly $8.6 million over a  period of at least seven years to recruit and train about 675 Bridgestone workers – nearly 80 percent of the announced 850 jobs at the Aiken County site.

That works out to be an average of about $12,750 in taxpayer-funded recruiting and training costs per eligible employee. When tens of millions of dollars in other taxpayer-backed freebies are added in, the per-employee public cost for all 850 workers will be far higher, The Nerve found in a review of state and local incentives agreements obtained under the S.C. Freedom of Information Act.

Conservatively, the offered incentives total at least $57 million over 10 years, The Nerve’s review found. That works out over the period to be nearly $67,500 per worker for the 850 announced jobs.

Bridgestone Americas Inc. is the Nashville-based U.S. subsidiary of Bridgestone Corp., headquartered in Tokyo. The parent company recorded net income of $1.2 billion in 2010, company records show.

Bridgestone Americas announced in September that it would build a 1.5-million-square-foot plant in the Sage Mill Industrial Park in Aiken County to manufacture large, off-road tires. It also announced it was expanding its existing passenger and light-truck tire manufacturing plant at the site by an additional 474,000 square feet; in July, it announced a 266,000-square-foot expansion of the plant.

The total announced investment for the project, dubbed “Project Hercules,” was pegged at $1.2 billion. Gov. Nikki Haley said in September that the project represented the largest initial capital investment by a company in state history. (In comparison, for example, the initial announced capital investment for the Boeing aircraft assembly plant in North Charleston was $750 million.)

Bridgestone said it plans to create more than 850 full-time jobs with the expansions and new plant. The state incentives agreement, however, reveals that not all of the employees are required to work directly for the company; instead, the jobs can include “all contract employees, whether direct or third-party to the Company or Sponsors,” and who are “full-time equivalents.”

The average annual salary or hourly wage of the workers was blacked out in cost-benefit analyses provided to The Nerve, as was other information, such as specifics on the value of the land, building and machinery for the project.

It’s also not known how much investment and how many jobs are required for Bridgestone to receive certain state incentives; or whether there are any “clawbacks,” or penalties, for not meeting required investment or job-creation targets.

In a written response last week to The Nerve, Karen Manning, chief attorney for the S.C. Department of Commerce, said the company is “subject to capital investment and job requirements,” though she added that written performance agreements requested by The Nerve have “not yet been fully executed.”

Manning could not say when she would provide those documents to The Nerve.

Other media reports said the 850 jobs would be created over a nine-year or 15-year period. Based on those figures, no more than 94 jobs on average would be created annually.

Meanwhile, millions of tax dollars will be spent up front for the project.

In a September press release announcing the project, Commerce officials said the agency would provide $15.5 million in a state grant to Bridgestone for “infrastructure and site preparation,” including about $6 million to improve public roads next to the plant.

The state incentives agreement shows that the grant was approved by the S.C. Coordinating Council for Economic Development (CCED), made up of the heads of 11 agencies involved with economic development; the Commerce secretary chairs the panel.

The $15.5 million grant and the projected $8.6 million in publicly funded training costs aren’t the only incentives offered to Bridgestone. A review by The Nerve of the state and Aiken County incentives agreements found that Bridgestone will receive much more taxpayer-backed support, including:

  • At least $12.8 million over 10 years in job development credits approved by the CCED; the credits are rebates of a portion of employee state income withholding taxes;
  • Approximately 545 acres of project site land purchased by the county. Clay Killian, the county administrator, toldThe Nerve in a written response that the $10.45 million purchase price will be covered with county-issued bonds that eventually would be “retired with fee payments from the company”;
  • At least $7 million over 10 years in state-authorized corporate income tax credits for job creation and enhanced tax credits for being located in a designated “multi-county industrial park”;
  • An estimated $3.9 million in costs incurred by the county for water and sewer line improvements within Sage Mill Industrial Park, which Killian said will be covered with state grants;
  • A $2.5 million grant from the state Ports Authority for off-site water and sewer improvements; and
  • $450,000 to $500,000 for a site construction road to be built by the county and paid for with “fee payments” by Bridgestone, according to Killian.

The offered incentives total at least $57 million, excluding the projected $3.9 million in county water and sewer line improvements that Killian said would be covered by state grants.

And the total figure doesn’t include another huge tax break offered to Bridgestone by the county:  a fee-in-lieu-of-taxes (FILOT) agreement that would run for 40 years and assess company property at the owner-occupied homeowner rate of 4 percent instead of the standard 10.5 percent assessment rate for industrial property.

On top of that, Bridgestone would receive large rebates of its FILOT payments through “special source revenue credits,” according to the county incentives agreement. The agreement didn’t specify the taxpayer cost of the financing arrangement.

Killian also couldn’t provide specifics, noting in a written response to The Nerve that the “actual amount coming to the county in any given year will depend upon how quickly the (capital) investments (by Bridgestone) are made, depreciated values and reinvestments by the company and other variables.”

From 1995 to 2008, South Carolina gave away a total of about $2 billion in incentives to companies statewide, according to a research paper published in April by the South Carolina Policy Council, the parent organization of The Nerve. 

But despite the huge amount of taxpayer-funded giveaways, the state as of last year had the 12th slowest-growing economy in the nation, the Policy Council’s research found.

Reach Brundrett at (803) 254-4411 or rick@thenerve.org.