Business

Chiquita’s early exit raises incentives questions

Chiquita Brands International is closing its Charlotte headquarters barely more than three years after deciding to move here, the company said Wednesday, Jan. 14, 2015. Chiquita employs about 320 office workers uptown.
Chiquita Brands International is closing its Charlotte headquarters barely more than three years after deciding to move here, the company said Wednesday, Jan. 14, 2015. Chiquita employs about 320 office workers uptown. dhinshaw@charlotteobserver.com

Chiquita Brands International, which announced plans Wednesday to move its headquarters and 320 jobs from Charlotte, has promised to pay back millions of dollars worth of incentives money used to lure the company, state and local officials said.

But some local officials said the banana company’s departure raises questions about the use of such grants to bring companies to Charlotte.

Incentives, which state and local governments give to entice companies to relocate or expand, are expected to be a major issue in the state legislature this year. Gov. Pat McCrory has said he needs more incentives money immediately to persuade companies to move to North Carolina.

But the Chiquita episode shows that luring a company doesn’t mean it will stick around.

“You can’t expect loyalty from any company if you’re paying them to move,” said Mecklenburg County commissioner Bill James, a longtime critic of incentives. “Government was basically prostituting themselves to get them here. ... Nobody falls in love with a prostitute.”

A major factor in Chiquita’s decision to move was $22 million worth of state and local tax incentives, to be paid out over a decade. As a condition of the payments, Chiquita agreed to keep its headquarters in Charlotte for 10 years and bring more than 400 jobs.

State and local officials said Wednesday that Chiquita has pledged to pay back all the incentives it has received so far. Charlotte and Mecklenburg County said they will be repaid about $500,000 each.

N.C. Commerce Secretary John Skvarla said he has talked with Chiquita leaders and they have pledged to return $1.5 million worth of economic incentive grants. The state offered about $543,000 as a Job Development Investment Grant and $1 million from the One North Carolina grant program. The state Commerce Department said that represents all the state money Chiquita received so far.

The Chiquita deal has been criticized because the company requested money upfront to help offset its move to Charlotte. To fulfill the request, the city made an unusual move: It offered Chiquita additional incentives outside of the usual property tax refunds it provides companies.

The city said Wednesday that the city and the county had so far paid Chiquita $1 million – which the company agreed to repay. Chiquita never applied for other incentives, city officials said.

Charlotte Chamber CEO Bob Morgan defended the use of incentives to persuade Chiquita to relocate. He said the refunds showed the program’s built-in safeguards work.

“The incentives tend to be very good business deals, very modest frankly compared to others,” said Morgan. “They’re a win-win for the public sector as well as the company. There’s risk in any business deal. You mitigate against those risks with clawbacks.”

County commissioner Matthew Ridenhour said Chiquita’s pullout provides a case study for why the board needs to review its incentive grant program.

“I think it shows the reality of these grants,” he said. “We can be excited when businesses choose to locate in Charlotte, but just as easily as they come, they can also go somewhere else.”

Ridenhour said the board’s economic development committee, which he chairs, had already begun to review the incentive grants program. “Now we’ll need to discuss how the Chiquita case will change our program, if at all.”

Commissioner Jim Puckett agreed.

“It’s like my dad always told me, if the girl dates you for your money, etc., remember there is always someone with more of whatever she is looking for.”

A high-profile courtship

Chiquita announced its plans to move from Cincinnati to Charlotte barely more than three years ago, after a high-profile lobbying effort featuring a Twitter campaign and custom-made Chiquita bowties. Chiquita moved into the NASCAR Plaza office tower, putting its iconic blue and yellow logo atop the building.

But Chiquita was already having financial difficulties. The Observer reported last summer that the company had actually begun talks about being acquired before moving to Charlotte.

Two Brazilian companies bought Chiquita earlier this month for $681 million and took the company private.

In a message Wednesday to employees, Chiquita’s interim CEO said they’ll learn more over the next 90 days about their jobs, which could be relocated or eliminated.

“Thank you for your support as we shape a bright future for this great company,” interim CEO Brian Kocher wrote to employees.

About half of Chiquita’s employees relocated from Cincinnati. One employee, who asked for anonymity because she was not authorized to speak publicly, said many were worried Wednesday.

“This morning everybody’s just anxious and wondering what exactly will happen,” said the woman, who moved from Cincinnati. “We don’t have any information.”

Aguirre is ‘disappointed’

Former Chiquita CEO Fernando Aguirre spearheaded the move to Charlotte. He was later replaced with a turnaround specialist to try and fix the company. Aguirre told the Observer on Wednesday that he was sad to see the company leave Charlotte.

“I was disappointed to learn that, but I wasn’t very surprised,” said Aguirre. He noted that uncertainty has swirled around the company for months – the Brazilian buyout followed a bruising takeover fight with an Irish produce company. But that unsettled period gave many employees time to consider alternatives, Aguirre said.

“On the good side of things, they have had a lot of time to think about it and plan for the future,” said Aguirre.

Chiquita’s most visible local event has been the annual Chiquita Classic golf tournament. The company gave Charlotte’s United Way a donation to kick off the group’s fundraising drive at the beginning of each campaign. In September, Chiquita donated $150,000.

United Way spokesman Bill Norton praised Chiquita for its past support and said the group will find another sponsor. But he said the immediate focus should be on helping Chiquita’s displaced employees.

“We’re going to have to come up with a new way to kick off our campaign next year,” he said. “Today is more of a day to mourn Chiquita.”

Staff writers Andrew Dunn and Steve Harrison contributed.

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