published Friday, May 10th, 2013

Stimulus for Georgia carpet mill set to top $120 million

SOUTHEASTERN INCENTIVES

* Kia: $160,000 in incentives per worker -- $400 million in incentives for a $1.2 billion investment, 2,500 workers.

* Volkswagen: $285,000 in incentives per worker -- $570 million in incentives for a $1 billion investment, 2,000 workers.

* Baxter International: $140,000 in incentives per worker -- $210 million in incentives for a $1 billion investment, 1,500 workers.

* Caterpillar: $55,000 in incentives per worker -- $77 million in incentives for a $200 million investment, 1,400 workers.

* Engineered Floors: Total - About $120 million to $130 million in incentives, or more than $50,000 per worker

- Discretionary or elective incentives --$13.9 million, including sales tax exemptions on energy use and construction materials

- Statutory jobs tax credits, tax exemptions and training assistance -- $91.7 million, including $22 for machinery and $60 million for jobs created

- Local incentives -- $15 million to $25 million in local property tax abatements and infrastructure help

Source: News reports

Mice don't wander too close to mousetraps with no cheese. So, too, big businesses today often look for a juicy package of incentives before spending a fortune on a new factory.

But the state and local officials who craft the incentive packages say they have little choice -- that if they don't offer companies tax breaks, infrastructure improvements and worker training, then someone else will.

The latest big catch for Georgia is a doozy: A new set of carpet plants in Whitfield and Murray counties will hire 2,400 workers and invest $450 million over the next five years.

To seal the deal, state and local officials will together offer more than $120 million in tax breaks, exemptions and credits, a package that includes training assistance, grants and sales tax exemptions on energy use and construction materials.

"You can say that on the face value, yeah, you're discounting what you could have gotten, but the way I look at it is, you're not promised anything," said Brian Anderson, president and CEO of the Greater Dalton Chamber of Commerce. "They have the ability to get this type of assistance somewhere else, and then we wouldn't have a chance to get even the tax dollars we're getting today."

Spread out between Whitfield and Murray counties, the expansion is good news for a beleaguered work force that has been beset by job cuts in the last decade.

"For us and with our unemployment rate as high as it is, it's going to tremendously reduce our unemployment rate and get our community back to work," said Murray County Sole Commissioner Brittany Pittman. "We had to take that into account when we looked at making our offer.

This marks the first time that officials have shelled out sizable tax breaks to attract new investment from the carpet industry, which has traditionally been based in the Chattanooga area.

Pittman, who said Murray County's deal with Engineered Floors is "in the millions," is also negotiating a similar deal with Mattex, a carpet-backing company that will be one of Engineered Floors' suppliers.

"There's always competition for jobs, and not always with other counties, but also with other states," Pittman said. "In our community we've been hit very hard by the economic downtown, and we have to be seen as a competitive and business-friendly environment ... to be more attractive."

Previous incentives packages in the region have been criticized for handing out money to big corporations with no real guarantee that the promised jobs will ever materialize -- or remain in the area. But officials say this time, they've negotiated an agreement with real teeth.

Under the current agreement, officials will keep a close eye on how well Engineered Floors delivers on its promises, and will ask for a refund if conditions change.

"With the local incentives, each company receiving that assistance agrees to create a certain number of jobs and a certain amount of investment," said Elyse Cochran-Davis, executive director of the Dalton-Whitfield County Joint Development Authority. "If they're unable to fulfill that, then they're subject to repay those."

Contact staff writer Ellis Smith at esmith@timesfreepress.com or 423-757-6315.

about Ellis Smith...

Ellis Smith joined the Chattanooga Times Free Press in January 2010 as a business reporter. His beat includes the flooring industry, Chattem, Unum, Krystal, the automobile market, real estate and technology. Ellis is from Marietta, Ga., and has a bachelor’s degree in mass communication at the University of West Georgia. He previously worked at UTV-13 News, Carrollton, Ga., as a producer; at the The West Georgian, Carrollton, Ga., as editor; and at the Times-Georgian, Carrollton, ...

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