Secrecy Surrounds Incentives Deals in Fairfield County Project

August 26, 2013

Investigative Reports

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Element FlyerAt a Fairfield County Council meeting last month, citizens questioned why details about a major unnamed manufacturing project were being kept secret.

“Please let us have some transparency,” one citizen pleaded during the meeting, according to a story in The (Winnsboro) Herald-Independent.

“There are certain things that are confidential when dealing with a client,” Milton Pope, the county’s interim county administrator, told the audience. “It is a protocol every county goes through. If certain information were released, a county would lose business prospects.”

On Thursday, state and local officials revealed the identity of “Project Palmetto” – Element Electronics – announcing that the Minnesota-based company would open a flat-screen television manufacturing plant in Winnsboro in December, eventually creating 500 jobs in the small, rural county that has struggled with relatively high unemployment in recent years. Company officials said they were relocating production operations formerly done in China as part of an initiative, which began last year, to return television manufacturing to America.

But despite the hoopla surrounding the planned $7.5 million investment in Fairfield County – Gov. Nikki Haley joined in Thursday’s announcement with Element Electronics officials in a live webcast from a Wal-Mart-sponsored conference in Orlando to Winnsboro – state and local taxpayers were left in the dark about the total public costs of the project.

In its press release on the project, the S.C. Department of Commerce said had little to say about the offered incentives, noting only at the bottom of the release that the state Coordinating Council for Economic Development, made up of the heads of state agencies involved in economic development, had approved a $1.3 million rural infrastructure grant and job development credits, which are refunds – often substantial – of a portion of a company’s employee state income-tax withholdings. The Nerve has reported extensively about the Coordinating Council’s secret practices.

Commerce spokeswoman Amy Love did not respond Friday to written questions from The Nerve about whether other taxpayer-backed incentives have been offered to Element Electronics.

“The partnership between South Carolina and Element Electronics came together in just a few short months, demonstrating that American renewal in manufacturing is working to create jobs, drive investment and produce quality American-made products for our customers,” said Bill Simon, Wal-Mart U.S. president and CEO, as quoted in the Commerce press release.

Contacted Friday by The Nerve, Pope, a former longtime Richland County administrator, said Element Electronics is expected to receive taxpayer-backed training through the S.C. Technical College System’s readySC program. On the county side, he confirmed the company will be offered a fee-in-lieu-of-taxes (FILOT) agreement, which can greatly reduce a company’s property tax bill over the life of the agreement.

But Pope, who was with Haley and County Council Chairman David Ferguson at last week’s Orlando conference, declined to discuss specifics of the state or county incentives agreements, noting, “Some of those decisions have not been finalized yet.”

Pope said it was his understanding that Element Electronics would have up to five years to create the 500 jobs, adding that a vacant 315,000-square-foot building on U.S. 321 Bypass North where the company will be located is expected to have about 250 workers within a year. Fairfield County’s unemployment rate as of July was 8.9 percent, slightly higher than state rate of 8.1 percent, according to the S.C. Department of Employment and Workforce.

Kelly Steinhilper, spokeswoman for the Technical College System, did not respond to written questions Friday from The Nerve about worker training.

Fairfield County Councilman David Brown declined Friday when contacted by The Nerve to discuss specifics of the county incentives, including whether the county planned to buy the former Perry Ellis clothing distribution building, where Element Electronics will be located, possibly through a proposed county business development corporation.

“I think all of that will be answered at the press conference next week,” Brown said, though he didn’t know when or where exactly the press event will be held.

The Perry Ellis distribution center and another large Fairfield County employer, Plastech, which produced molded parts for the auto industry, closed in 2008, collectively putting about 400 employees out of work.

Brown said given the loss of local industry over the years, the Element Electronics project is “something that is really needed in Fairfield County.” He said the expected average wage will be at the “average or above average of what other companies here are paying.”

But given a reported average hourly wage of $12.50 and assuming a 40-hour work week, the average annual salary at the Element Electronics plant would be $26,000 – $1,000 less than the annual per-capita personal income in the county in 2011 and about $7,400 less than the state’s per-capita income for that year, according to figures from the U.S. Bureau of Economic Analysis.

Brown conceded that the expected average hourly wage at the Element Electronics plant would be less than the average pay at the former Mack Trucks assembly plant in Fairfield County, though he contended that the truck assembly operation was “unique in the whole state.”

Mack Trucks operated in Fairfield County from 1987 to 2002. At its peak in the 1990s, the company employed about 1,500 workers; when it closed, the number of workers had dropped to approximately 600.

The Nerve in 2010 reported that Mack Trucks was among a number of South Carolina companies that had closed after receiving taxpayer-backed incentives.The truck assembler had received at least $17 million in state and local tax breaks; land; and improvements to roads, sewers and rail lines, according to news articles at the time.

Asked Friday if he were concerned that Element Electronics could pull out of Fairfield County even with generous incentives, given the experience with Mack Trucks, Pope replied, “No, I think every community learns its lessons from the past.”

Reach Brundrett at (803) 254-4411 or rick@thenerve.org. Follow him on Twitter @thenerve_rick. Follow The Nerve on Facebook and Twitter @thenervesc.