(FROM THE WALL STREET JOURNAL 1/13/15)
By Cameron McWhirter
ATLANTA -- Georgia offered Daimler AG about $23 million in tax
credits and other incentives to move Mercedes-Benz USA's
headquarters to suburban Atlanta from New Jersey, according to the
state's formal offer.
The package of state job-tax credits, exemptions and development
funds is part of a larger set of enticements including lower
corporate-tax rates that Georgia officials say they used to
convince the luxury car maker to relocate from Montvale, N.J., its
home since 1972.
Georgia offered "cost savings and cost avoidances" of $23.3
million according to a Dec. 12 letter to Mercedes's site-selection
company from Christopher M. Carr, commissioner of the Georgia
Department of Economic Development.
The bulk of the Mercedes incentives -- more than $17.3 million
-- are in five-year tax credits given by the state in exchange for
each new job brought to Georgia, according to the state's offer,
reviewed by The Wall Street Journal. Under the package, the
company's state corporate tax bill will be reduced by as much as
$4,000, every year for up to five years for each new job, according
to the letter.
The state assumed the company would be creating at least 800
jobs in its offer for "Project Eagle," the code name that Daimler
gave to its headquarters search. The company has about 1,000
employees in its New Jersey headquarters and said last week it
plans to have about that many in Atlanta. The Atlanta office will
be comprised of transfers and new hires.
The state also provided $6 million in development funds, and a
partial tax exemption for construction materials to help build the
new headquarters. The company also will get a local tax abatement
for ten years, but the value of that incentive hasn't been
determined, since Daimler said it has not finalized the an exact
location for its new headquarters.
The company's decision to relocate its headquarters to suburban
Atlanta is "simply a home run for the state," Gov. Nathan Deal said
in an email last week to The Journal after the deal was made
public. Mr. Deal, who was inaugurated to his second term Monday,
has competed aggressively with other governors in the
post-recession period to attract new businesses to Georgia.
The incentives for Daimler aren't as large as packages offered
by Georgia to some other companies in recent years. In 2009, NCR
Corp., maker of ATMs and cash registers, shuttered its Dayton,
Ohio, headquarters and relocated about 2,100 headquarters and
manufacturing jobs to three locations in the Atlanta area,
receiving about $49 million in incentives, according to the
state.
But Mr. Carr said in an interview that the package that Georgia
offered was competitive and that the state used other factors as
well to persuade Daimler to move.
Steve Cannon, president of Mercedes-Benz USA, said incentives
played a small role in determining the finalist cities including
Atlanta, Dallas, Raleigh, N.C., and Charlotte, N.C.
Atlanta was the company's unanimous choice because it is
positioned between the company's expanding manufacturing plant in
Vance, Ala., and the Georgia Ports Authority port at Brunswick,
Ga., where the company imports most of its cars, Mr. Cannon
said.
Access to Hartsfield-Jackson Atlanta International Airport was
also a crucial factor, he said, because Mercedes-Benz USA will soon
assume oversight of operations for Canada and Mexico in addition to
the U.S., he said. Executives will be traveling regularly across
the continent and to Europe, and dealers will be coming in for
training often, he said.
Companies like Daimler will continue to relocate to the South in
coming years "as long as operating costs continue to be an
advantage," Mr. Cannon said. Asked if the South was becoming the
center of U.S. auto operations, he said, "It's already
happened."
New Jersey counteroffered in behind-the-scenes negotiations to
keep the headquarters, but to no avail. A spokesman for Gov. Chris
Christie declined to provide any details of what was offered.
Now the second-largest luxury car brand in the U.S. behind BMW
AG, Mercedes is part of a growing number of auto makers moving
operations and corporate headquarters to the South to take
advantage of low union membership in right-to-work states, low
corporate taxes and easy access to well-maintained highways, rail
lines, ports and airports.
Nissan Motor Co. moved its U.S. headquarters to Franklin, Tenn.,
from California in 2006. But not all have moved to the South:
Toyota Motor Co. said last year it would move its North American
headquarters from California to Plano, Texas, after Texas offered
an incentive package worth $40 million, or about $10,000 a job.
Experts said overall cost savings and Atlanta's strategic
location were key factors, not incentives.
"At the end of the day, it's more important for a headquarters
to be in a strategic location than to get the money," said John M.
Rhodes, senior principal of Moran, Stahl & Boyer LLC, a
national corporate relocation firm based near Sarasota, Fla., whose
firm was not involved in the deal.
Kenneth J. Meier, a political science professor at Texas A&M
University who has researched why businesses relocate, said,
"Corporations spend a lot of money figuring out these moves. When
you add in incentives, they're a rounding error for a company like
Mercedes."
---
Jeff Bennett contributed to this article.
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