When two Brazilian companies bought Chiquita Brands International earlier this month, we all knew our chances of losing the iconic produce grower’s headquarters had risen dramatically.
Still, it stung Wednesday when word arrived that Cutrale and Safra Group would be shutting down Chiquita’s Charlotte headquarters, removing 320 corporate jobs from uptown.
Local leaders put their best spin on the bad news. Charlotte Chamber CEO Bob Morgan insisted the story of Chiquita’s relocation to Charlotte was a good one, showing how the city appealed to a corporation with global reach and reputation.
But this is a blow to Charlotte. Chiquita decided in 2011 to move its headquarters from Cincinnati only after state and local leaders dangled $23 million in incentives.
Now, little more than three years later, the new owners are bailing out of Charlotte – apparently without even bothering to issue a public statement.
The good news is that the owners have pledged to repay the county and city the $1 million in incentives paid to the company. Michael Barnes, head of the City Council’s economic development committee, tells the editorial board that much of that $1 million was the local contribution to an unprecedented – and controversial – $5 million payment to help Chiquita with moving expenses.
“You can’t expect loyalty from any company if you’re paying them to move,” Mecklenburg commissioner Bill James said.
James has a point there. But he’s wrong to say we shouldn’t be playing the incentives game at all.
Incentive deals usually don’t center on up-front cash. Payments are spread over future years in the form of state tax breaks on the withholding taxes for new hires. Or it’s local property tax breaks. And as in Chiquita’s case, government leaders insert “clawback” provisions allowing them to retrieve taxpayer dollars if the deal goes sour.
Other cities, counties and states aren’t going to stop offering incentives. Rightly or wrongly, it’s a big part of the way job recruitment works these days. Here, as in most competitive endeavors, unilateral surrender is not a winning strategy.
Our city and county leaders deserve credit for crafting a Chiquita deal that protects local taxpayers. Still, they do need to learn some lessons from this. Chiquita, for instance, had been in quiet merger discussions with Irish produce company Fyffes even before negotiating with Charlotte to bring its headquarters here.
That suggests we need to analyze companies more thoroughly. And we need to make sure companies getting incentives are hiring local residents, not bringing in temporary foreign or out-of-state workers.
To their credit, City Council members and county commissioners know they’ve got work to do. Each body has panels working to fine-tune economic development policies and tools.
Our Chiquita experience has taught us we need more skill in cutting deals with global corporations. Let’s get up to speed before the next big one comes along.