Chiquita relocating headquarters to Charlotte

More than $22 million in incentives, busier airport snag banana king

By Ely Portillo
elyportillo@charlotteobserver.com

Posted: Wednesday, Nov. 30, 2011

More Information

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North Carolina and local governments often use incentives to lure companies to relocate or expand. Here's a summary of some other recent Charlotte-area deals involving state and local money.

Earlier this month, Siemens was awarded $21.7 million for an expansion in Charlotte expected to bring an additional 400 jobs.

In October, CTL Packaging received $3.7 million in incentives for building a manufacturing facility and bringing 131 jobs to Gastonia.

In June 2010, financial services firm Citco received incentives worth about $4.1 million for opening a Charlotte office with 258 jobs.

In April 2010, Electrolux was promised $8.1 million worth of incentives for expanding its Charlotte facilities and adding 200 jobs.

In January 2010, Husqvarna received a grant worth up to $2.5 million for moving its North American headquarters to Charlotte, bringing 160 jobs.
Chiquita is the successor company to the old United Fruit corporation, a firm whose influence over Latin American countries helped coin the term "banana republic." In 2002, the company went through Chapter 11 bankruptcy. Since emerging it has acquired a salad distribution company to diversity its business.

Though Chiquita sells salads, juices and other produce, bananas still account for the lion's share of the company's revenues: $1.5 billion out of $2.4 billion in sales through the company's first three quarters this year.

Earlier this month, Chiquita posted a $29 million loss for the third quarter as expenses rose and revenue fell slightly. But the volume of bananas sold rose 4.9 percent so far this year in North America, even as Chiquita raised prices 7.4 percent. Sales volumes are down slightly in Europe and have fallen a sharp 26 percent in the Mediterranean and Middle East.

Despite its iconic brand status, the company isn't a stranger to controversy. The company agreed in 2007 to pay a $25 million fine to the U.S. Justice Department, for paying paramilitary groups in Colombia $1.7 million between 1997 and 2004.

Payments to the groups were similar to extortion, Chiquita has said, and company officials paid to protect workers in the banana fields. But the groups in question committed atrocities against Colombians, and the U.S. government labeled at least one group a terrorist organization.

The company employs about 21,000 people across more than 70 countries, most of them in Central America, where its bananas are grown. It's sales are divided fairly evenly between North America and Europe.

Chiquita Brands International, an iconic company almost synonymous with bananas, said Tuesday that it will move its global headquarters to Charlotte next year, bringing some 400 jobs.

The company was lured by more than $22 million in state and local government incentives and the promise of easier international travel from Charlotte/Douglas International Airport, which has grown as the airport near Chiquita's current headquarters in Cincinnati has shrunk.

Chiquita, which had $3.2 billion in sales last year, is negotiating to lease five or six floors in the NASCAR Plaza office tower adjoining the racing league's Hall of Fame.

"This is a diversification, really an unprecedented diversification, in jobs, investment and development in our economic center," Charlotte Center City Partners President Michael Smith said.

Chiquita Chairman and CEO Fernando Aguirre, N.C. Gov. Bev Perdue and other state and local politicians announced the relocation Tuesday at the Charlotte Chamber. The news was greeted with a standing ovation from local business leaders and government officials.

"We are very confident that Charlotte is the optimal place for our business," said Aguirre. He said Cincinnati treated the company "extremely well" for more than 20 years. "But times change, and we needed to make the decisions that will help our business in the longterm. ... We've got to move on," he said.

The company is set to bring about 417 jobs to the city, including accountants, human resources staff, IT workers and finance specialists. About 300 of those will be jobs from the company's Cincinnati headquarters.

Many of the other 100-plus jobs will be coming from Salinas, Calif., the headquarters of the former Fresh Express, bought by Chiquita in 2005. Some jobs will remain in Cincinnati, including people who deal with the Kroger supermarket chain.

Although the majority of employees will be offered the opportunity to relocate, Aguirre said he expects the company will end up hiring about 200 in Charlotte. The jobs will pay an average salary of over $106,000, state officials said, and Aguirre expects the move to be completed by late 2012.

$16.1M income tax break

The incentives package includes an estimated $16.1 million grant from the state, equal to 75 percent of the company's state's income tax withholding over the next 11 years.

The company can also qualify for $1.3 million in state tax credits, and will receive $2.5 million from the state's One North Carolina Fund, given to encourage business expansion. Mecklenburg County and Charlotte will match the $2.5 million state grant with cash grants paid over the coming years. A further $560,000 could be available in research and development tax credits and funds for training.

The company's investments in its Charlotte facilities will total about $14 million, Aguirre said.

In addition to the headquarters, the company will also move its research and development to Mecklenburg County, and might open a second location to house those facilities.

At the NASCAR Plaza, which has struggled to lease office space and faced foreclosure proceedings last year, Chiquita branding will feature prominently on and in the building, Aguirre said.

Long, public campaign

Charlotte and Cincinnati have waged a long and unusually public contest for the company's headquarters. Charlotte had been trying to lure Chiquita for several months.

Supporters of both cities mounted campaigns on Twitter to entice Aguirre, who frequently posts messages on the social network.

In addition to the grassroots campaign, Aguirre met with elected officials, including Perdue, Charlotte Mayor Anthony Foxx and Mecklenburg Board of County Commissioners Chair Jennifer Roberts.

At the end of his first meeting with Perdue, Aguirre said she told him: "Fernando, I'm going to make this happen."

He also met with airport director Jerry Orr and attended a recent Panthers game. Aguirre didn't recall which team the Panthers played, but said they won.

Boca Raton, Fla., dropped out of the competition for Chiquita's headquarters after the company asked for at least $15 million in incentives, according to reports.

In the end, Ohio didn't match North Carolina's incentives offer, coming up with a final package of $6.5 million. An Ohio official said a larger incentives package would have been money poorly spent.

"The company has issues beyond what incentives can address," said Rob Nichols, a spokesman for Ohio Gov. John Kasich. "We're not going to be irresponsible and give away the store to try and keep a company that fundamentally doesn't want to be here or which has already made up its mind to leave."

A tale of two airports

Chiquita has been considering leaving Cincinnati for years, Aguirre said.

The city's local airport has lost flights as travel has shifted away from Midwestern hubs, and Delta has slashed capacity at the airport since its 2008 merger with Northwest Airlines.

According to media reports, daily flights plunged from about 600 in Cincinnati a few years ago to 190 now.

At the same time, Charlotte's airport has grown, adding more daily local and international routes as US Airways' presence in the city increased. Charlotte/Douglas International Airport is the carrier's busiest hub, with about 700 daily flights, 90 percent operated by US Airways.

The airport has direct flights to Frankfurt, which Chiquita has said would be critical, since about half of its business is in Europe.

There is also a direct flight to San Jose in Costa Rica, where Chiquita has a regional headquarters. All five of Chiquita's main ports are served by nonstop flights from Charlotte.

Chiquita's stock (symbol: CQB) closed down 22 cents Tuesday, about 3 percent, at $7.64 a share.

Observer reporters Steve Byers, Andrew Dunn, Steve Harrison, researcher Maria David, The Raleigh News & Observer and the Associated Press contributed

CHIQUITA AT A GLANCE

Employees: 21,000 worldwide, most in Central America where bananas grow.

Sales area: Primarily North America and Europe.

Products: Bananas, bagged salads, juice and other produce.

2010 revenue: $3.2 billion.

Recent financial performance: Chiquita posted a $29 million loss for the third quarter as expenses rose and revenue fell slightly. But the volume of bananas sold has risen 4.9 percent so far this year in North America, even as Chiquita raised prices 7.4 percent. Sales volumes are down slightly in Europe and have fallen 26 percent in the Mediterranean and Middle East.

The money's in bananas: Bananas account for the lion's share of the company's revenue: $1.5 billion of $2.4 billion in sales so far this year.

Major controversy: Agreed in 2007 to pay a $25 million fine to the U.S. Justice Department for paying paramilitary groups in Colombia $1.7 million between 1997 and 2004. Payments to the groups were similar to extortion, Chiquita has said, and company officials paid to protect workers. But the groups in question committed atrocities against Colombians, and the U.S. government labeled at least one group a terrorist organization. Ely Portillo