State gives away millions to companies that don’t hit job creation targets

September 20, 2018

Investigative Reports

Print Friendly, PDF & Email

Payoff

By RICK BRUNDRETT

Since 2015,14 companies that committed to locating or expanding in South Carolina collectively repaid nearly $7 million in state grants after failing to meet job creation or investment requirements, records show.

Four of the companies closed plants in counties that received the grants, and another project never materialized, a review by The Nerve found. Three of those businesses repaid all of the awarded grants, according to a list provided by the S.C. Department of Commerce to The Nerve under the state Freedom of Information Act.

Commerce declined to immediately provide The Nerve with details of the missed workforce and investment targets.

“Clawback” provisions in incentives agreements typically require companies to repay part or all of certain awarded benefits, based on a formula, if job creation or investment requirements aren’t met.

Between March 2009 and September 2014, the state awarded a total of $12.9 million in grants, which often are used for infrastructure improvements, to 11 counties and one town to help the 14 companies, according to the Commerce list. Of that amount, a collective $6.8 million, or about 53 percent, was repaid by the businesses between April 2015 and March 2018.

The Nerve in August reported the state had greatly reduced workforce and investment requirements under a $1.3 million grant benefiting Element TV, which announced it would close its Fairfield County television assembly plant starting next month. Commerce spokeswoman Adrienne Fairwell said then that repayment of the grant was a “moot point” because the money was used to buy and improve the plant building, which is owned by Fairfield County.

Element announced Tuesday that its plant would remain open after receiving notification that it was exempt from recently imposed tariffs by the Trump administration on imported Chinese television parts used by the company. The Minnesota-based company did not publicly say how many of its 134 full-time employees as of August would continue working with the exemption; it initially promised to create 500 jobs, records show.

Besides the amended Element agreement, the state Coordinating Council for Economic Development, made up of the heads or board chairpersons of 11 state agencies involved with economic development, including Commerce, approved the “reduction to performance requirements for one other grant award since Jan. 1, 2015,” Fairwell said in a Sept. 7 letter to The Nerve, though she didn’t provide specifics.

The Coordinating Council, administered by Commerce and chaired by Commerce Secretary Bobby Hitt, also has the authority to approve job development credits, which are rebates of a portion of employee wage withholdings, for companies. Fairwell said, though, state law bans repayment of the benefit, and the amount of the credit is confidential by law.

The Nerve has previously reported that the Coordinating Council has typically met behind closed doors in Commerce’s headquarters in a high-rise across from the State House to discuss incentives for companies, which often are not publicly identified.

Following is a list of the 14 companies that Commerce said repaid part or all of awarded state grants:

Company Award Repayment
Altera Polymers $100,000 $35,000
AVX Corp. $500,000 $250,000
Con-Pearl North America $150,000 $50,000
Dixie Poly-Drum Corp. $20,549.11 $20,549.11
Elkay Manufacturing $500,000 $500,000
FG Wilson LLC (Caterpillar) $700,000 $150,000
Fisher Tank Company $50,000 $15,000
Honeywell Safety Products $150,000 $50,000
Kongsberg Actuation Systems $150,000 $50,000
Michelin North America $7,600,000 $5,007,513
Nexans High Voltage USA $1,000,000 $100,000
TD Bank $1,000,000 $50,000
WNS Global Services $500,000 $50,000
Worthington Industries Engineered Cabs $500,000 $500,000

In 2007, Elkay announced it would open a cabinet plant in Barnwell, creating 300 jobs. But the project never materialized, and the company eventually repaid a $2 million grant, a company spokeswoman told The Nerve on Thursday.

Worthington Industries in 2015 – less than a year after announcing it was expanding its Florence facility – decided to close the plant, laying off about 310 workers.

Kongsberg announced last year it was closing its Easley automotive parts plant and moving operations to Mexico, eliminating nearly 100 jobs. Caterpillar in 2016 said it would close its Newberry County electric generator packaging plant, furloughing about 325 workers.

Last year, Samsung announced it would move its home appliance manufacturing operations to the former Caterpillar plant, a $380 million investment aimed at creating about 950 jobs over three years. Commerce in a press release then said the Coordinating Council approved job development credits for the project.

The Dixie Poly-Drum plant in Hampton County, which was supposed to bring 84 jobs with a renovation project announced in 2014 and later was acquired by US Roto Molding, closed several months ago, a US Roto spokeswoman told The Nerve.

Dixie Poly-Drum, Elkay and Worthington Industries repaid all of the awarded state grants for their respective projects, according to the Commerce list.

In an email Wednesday to The Nerve, Eric Bruner, spokesman for Greenville-based Michelin North America, declined to discuss the company’s $5 million repayment of the $7.6 million grant, noting the tire manufacturer “does not intend to discuss incentives or grant processes for competitive reasons.”

The Nerve in 2012 reported that Anderson County had been approved for a $7.6 million state grant for a new $500 million plant for Michelin, and that about 400 jobs were projected to be created. The county did not respond to a written request last week from The Nerve seeking comment on the grant repayment.

Fairwell on Monday told The Nerve that Commerce would not provide details of job creation and investment requirements for the 14 companies on its list, or release incentives agreements for companies with reduced workforce or investment targets since Jan. 1, 2015, unless The Nerve paid the agency $180 for an Aug. 26 open-records request, plus a $22.50 deposit for additional requested information.

The Nerve declined to pay that amount, citing a provision in the FOIA requiring that documents be “furnished at the lowest possible cost to the person requesting the records.” Commerce, which has a $234.2 million total budget this fiscal year, routinely has cited The Nerve an hourly labor rate of $45 for records requests.

 Brundrett is the news editor of The Nerve. Contact him at 803-254-4411 or rick@thenerve.org. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc.

Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

 

Comments are closed.