Economic Development - Expansions and Relocations

[turbocraig]

True.   Lease prices haven't been revealed, but it's expected that the subscription will be $100-150/mo, with the caveat that they'll replace the battery pack when it degrades to 70% capacity.  You may never own the car long enough to need to replace it, but it is a unique angle if you plan on keeping a car long-term (and the current average car owner is hanging onto their car for more than 7 years and that trend has been on the rise steadily).  We'll see how they do, but I wouldn't bet against them just yet.  They may be the next Hyundai or they could be the next Daihatsu.

[atlrvr]

So, my question above is actually a question on if this is a good investment for NC taxpayers.  Hyundai imported cars here for 19 years before opening a factory, presumably because it took that long to prove demand.  They were also a lower price point car to gain market share.  Personally, I'd like to see their business model proved here first before we write incentive checks.   I'm sure some will argue the structure helps protect tax payers, but thinking about this how a private investor would, the Toyota deal is a much better risk/return than this deal unless incentives turn out to be much lower than I expect.

[turbocraig]

40 minutes ago, atlrvr said:

So, my question above is actually a question on if this is a good investment for NC taxpayers.  Hyundai imported cars here for 19 years before opening a factory, presumably because it took that long to prove demand.  They were also a lower price point car to gain market share.  Personally, I'd like to see their business model proved here first before we write incentive checks.   I'm sure some will argue the structure helps protect tax payers, but thinking about this how a private investor would, the Toyota deal is a much better risk/return than this deal unless incentives turn out to be much lower than I expect.

We lost Rivian (also an upstart) to Georgia and I don't know how much NC offered Rivian nor how much they're shelling out for VinFast, but Rivian committed to 7,500 jobs whereas VinFast is talking as many as 13,000.   And yes, those could be pie-in-the-sky numbers, but they're out there in print.  To your point, nothing is proven till it's proven, but the coming EV revolution is reminiscent of the early days of the ICE car industry a century ago.  It'll be interesting to see where and if EV manufacturers cluster, both legacy and the many upstarts (current and yet to come).  In the past ~decade we've witnessed the birth of brands like Tesla, Lucid, Fisker, Rivian, now VinFast and FaradayFuture (if they can ever get their sh!t together) and likely many more to come.   Not all will survive, just like DuPont, Essex, Hudson, Cord, etc. back in the early days, but if we can plant the seeds that tell the world NC is fertile ground for the EV industry, and Toyota battery is certainly part of that, then maybe it's worth priming that pump.  You can't win if you don't play.

Edited March 26, 2022 by turbocraig

[DMann]

Go here, https://www.greencarreports.com/news/1135178_vinfast-vf-8-vf-9-electric-suvs-2022-will-we-really-see

[KJHburg]

10 hours ago, atlrvr said:

So, my question above is actually a question on if this is a good investment for NC taxpayers.  Hyundai imported cars here for 19 years before opening a factory, presumably because it took that long to prove demand.  They were also a lower price point car to gain market share.  Personally, I'd like to see their business model proved here first before we write incentive checks.   I'm sure some will argue the structure helps protect tax payers, but thinking about this how a private investor would, the Toyota deal is a much better risk/return than this deal unless incentives turn out to be much lower than I expect.

NC does not write incentive checks.  This is one of the main things emphasized at my Econ Development 101 class.   Here is what happens in NC:   Company promises to spend this much money in investment in a certain time period and create x number of jobs.  They have to PAY their payroll and property taxes then the state and or local county/city will rebate a percentage back to them ONLY after they have been audited and verified on job numbers (which obviously the state will know).   Plenty of companies don't meet their numbers or share their numbers and thus get no rebates.  

Here is a story that just came out about Microsoft and their planned expansion in both Charlotte and in Morrisville near RTP.   From the Triangle Biz Journal and notice Microsoft DID achieve their job numbers and investment it seems.  They just did not want to prove it to the state.   Does Microsoft need any incentives?  Of course not they are a highly profitable company.  At the time of the announcements Microsoft had 1500 employees in NC 1000 in Charlotte and about 500 in Morrisville.   Now the company has 2500 jobs or 1000 more in the state. 

Tech giant Microsoft is opting out of the state’s Job Development Investment Grant program, citing its unwillingness to share employee data with North Carolina officials.

“Unfortunately the amount of employee data requested to validate job creation metrics is more than Microsoft is willing to share,” Michael Shelton, director of real estate for Microsoft, wrote in a letter to Commerce Secretary Machelle Sanders March 16.  The letter was made available to the Triangle Business Journal at the behest of a public records request.  Microsoft has more than 2,500 full-time employees in the state and has invested $73 million across operations in Morrisville and Raleigh. Shelton wrote that the company would “continue our commitment to capital investment and job creation in North Carolina for years to come.”

It is not a total surprise, as the company shied away from answering questions about its participation in the JDIG program last month. In December of 2019, the firm announced plans for a major expansion in Morrisville, one it told the state would create 500 high-paying – averaging $125,000 a year -— jobs by the end of 2027. Had it met its milestones in terms of job creation, it could have been in line for $1.9 million from the state and county in the form of incentives.

The 500 jobs were on top of the 550 employees it already had in the region.  The same year, Microsoft announced plans to expand in Charlotte, too, adding 430 jobs in exchange for up to $7.9 million in state incentives. The company already had 1,000 employees in the Charlotte area.   In North Carolina, companies must prove they met certain job creation milestones before they can obtain incentives. The North Carolina Department of Commerce has confirmed no incentives dollars have been paid to Microsoft.

https://www.bizjournals.com/triangle/news/2022/03/25/microsoft-opts-out-of-incentives-for-morrisville.html

So basically no company gets money up front if this Vietnamese company does not meet its investment or job goals it will get nothing.   NC's program on incentives in one of the best in the country for the tax payer.  

 

 

[RANYC]

20 minutes ago, KJHburg said:

NC does not write incentive checks.  This is one of the main things emphasized at my Econ Development 101 class.   Here is what happens in NC:   Company promises to spend this much money in investment in a certain time period and create x number of jobs.  They have to PAY their payroll and property taxes then the state and or local county/city will rebate a percentage back to them ONLY after they have been audited and verified on job numbers (which obviously the state will know).   Plenty of companies don't meet their numbers or share their numbers and thus get no rebates.  

Here is a story that just came out about Microsoft and their planned expansion in both Charlotte and in Morrisville near RTP.   From the Triangle Biz Journal and notice Microsoft DID achieve their job numbers and investment it seems.  They just did not want to prove it to the state.   Does Microsoft need any incentives?  Of course not they are a highly profitable company.  At the time of the announcements Microsoft had 1500 employees in NC 1000 in Charlotte and about 500 in Morrisville.   Now the company has 2500 jobs or 1000 more in the state. 

Tech giant Microsoft is opting out of the state’s Job Development Investment Grant program, citing its unwillingness to share employee data with North Carolina officials.

“Unfortunately the amount of employee data requested to validate job creation metrics is more than Microsoft is willing to share,” Michael Shelton, director of real estate for Microsoft, wrote in a letter to Commerce Secretary Machelle Sanders March 16.  The letter was made available to the Triangle Business Journal at the behest of a public records request.  Microsoft has more than 2,500 full-time employees in the state and has invested $73 million across operations in Morrisville and Raleigh. Shelton wrote that the company would “continue our commitment to capital investment and job creation in North Carolina for years to come.”

It is not a total surprise, as the company shied away from answering questions about its participation in the JDIG program last month. In December of 2019, the firm announced plans for a major expansion in Morrisville, one it told the state would create 500 high-paying – averaging $125,000 a year -— jobs by the end of 2027. Had it met its milestones in terms of job creation, it could have been in line for $1.9 million from the state and county in the form of incentives.

The 500 jobs were on top of the 550 employees it already had in the region.  The same year, Microsoft announced plans to expand in Charlotte, too, adding 430 jobs in exchange for up to $7.9 million in state incentives. The company already had 1,000 employees in the Charlotte area.   In North Carolina, companies must prove they met certain job creation milestones before they can obtain incentives. The North Carolina Department of Commerce has confirmed no incentives dollars have been paid to Microsoft.

https://www.bizjournals.com/triangle/news/2022/03/25/microsoft-opts-out-of-incentives-for-morrisville.html

So basically no company gets money up front if this Vietnamese company does not meet its investment or job goals it will get nothing.   NC's program on incentives in one of the best in the country for the tax payer.  

 

 

I wouldn't want it any other way.

[rancenc]

As a follow up to @KJHburgs article above concerning incentives and a company's legal obligation to fulfill their contractual obligations to receive these incentives.  Here is a article from over 10 years ago concerning Dell's repayment to both NC and Winston-Salem/Forsyth on the incentives given because they did not meet the criteria to receive them.  They actually closed the facility not to long after they opened it.

https://www.wral.com/news/state/story/6292306/

Edited March 26, 2022 by rancenc

[nicholas]

On 3/25/2022 at 7:27 PM, atlrvr said:

I'm not sure how to asks this tactfully, so I'll just ask:. Who is interested in buying a $46k Vietnamese electric car?

I was kind of alluding to something similar in another thread.  It seems like everyone is just looking through rose-colored glasses with all these recent electric automaker announcements.  I mean when a bunch of companies are bringing brand new products (in this case electric cars) to market, who is going to win? The legacy companies with little experience in electric cars but strong name recognition and existing production/support/distribution facilities, or the new companies with little experience in electric cars and nothing else? I hope Vinfast succeeds because that would be another massive win for NC and would set the state up for the coming decades, however I will remain skeptical until I start seeing their cars on the road.  I have yet to see a single car on the road from an electric startup other than Tesla, and believe me I keep my eyes peeled.  Everyone keeps saying "but it's an electric revolution!" and devours every electric automaker startup press release as pure gospel, and you do you but I'm still waiting to see a $35k Model 3, new Roadster, Cybertruck, any Rivian, any Lucid, any Faraway, etc.....

[KJHburg]

Stayed tuned tomorrow at 2 pm as a major announcement for Vinfast is announced in Chatham County.  From what I understand it will include a battery plant that will supply their European operations too. 

[TGIBridays]

10 hours ago, nicholas said:

I have yet to see a single car on the road from an electric startup other than Tesla, and believe me I keep my eyes peeled.  Everyone keeps saying "but it's an electric revolution!" and devours every electric automaker startup press release as pure gospel, and you do you but I'm still waiting to see a $35k Model 3, new Roadster, Cybertruck, any Rivian, any Lucid, any Faraway, etc.....

I saw a Rivian driving around Stallings a week or so ago. But to your larger point, I think it will take a while for any of the startups to really filter out to Charlotte. You might see one or two randomly, but the streets aren't going to be flooded with $70+ luxury EV's, just like they aren't flooded with $70+ luxury ICE sedans (the exception might be F-150's, because men lose their minds when a luxury vehicle has a tiny bed attached to the back).  You'll never see a $35k new Model 3 now; it's just too expensive to build at this point. That claim is just one of many Tesla claims that they have failed to deliver on. Not that they haven't been successful regardless.  

[CarolinaDaydreamin]

5 hours ago, TGIBridays said:

I saw a Rivian driving around Stallings a week or so ago. But to your larger point, I think it will take a while for any of the startups to really filter out to Charlotte. You might see one or two randomly, but the streets aren't going to be flooded with $70+ luxury EV's, just like they aren't flooded with $70+ luxury ICE sedans (the exception might be F-150's, because men lose their minds when a luxury vehicle has a tiny bed attached to the back).  You'll never see a $35k new Model 3 now; it's just too expensive to build at this point. That claim is just one of many Tesla claims that they have failed to deliver on. Not that they haven't been successful regardless.  

Tesla had a 37k variety 2 years ago that had a pretty solid tax break in GA, and after a year of free supercharging was at or below $35,000 after all said or done. The claim that Tesla has failed to deliver is inaccurate. EV's face a political backlash for no reason whatsoever, there aren't ANY luxury vehicles at that price-point anymore. Considering the increase of fuel cost, they have become MORE cost effective than anything else it competes with.

[TGIBridays]

5 minutes ago, CarolinaDaydreamin said:

Tesla had a 37k variety 2 years ago that had a pretty solid tax break in GA, and after a year of free supercharging was at or below $35,000 after all said or done. The claim that Tesla has failed to deliver is inaccurate. EV's face a political backlash for no reason whatsoever, there aren't ANY luxury vehicles at that price-point anymore. Considering the increase of fuel cost, they have become MORE cost effective than anything else it competes with.

You'll, as in, you will.  Tesla will never sell a Model 3 for $35k these days. They briefly did in the past under certain situations with tax breaks, but not widespread and not without the tax breaks.  They might come out with a smaller car with fewer features or something that gets down to that $35k number, but it wouldn't be a model 3.

I'm not saying Tesla doesn't deliver great vehicles or that they haven't pushed the needle in regards to EV's.  That's obvious. But they also are notorious for announcing aspirational goals and not quite meeting them. 

[DMann]

If you look at who is challenged with the onset of EV's look at Oil Companies, Gas Stations, Auto Repair Shops, Muffler Shops, Car Dealerships, Long Haul Gas Trucks, UAW, Insurance Companies, both Print and Media Advertising.  All stand to lose a lot with EV's.  New industries and opportunities will certainly come up, but to quote Randy Marsh from SouthPark, "They Took Our Jobs!"

[deleted account]

https://www.newsobserver.com/news/business/article259858125.html

[CarolinaDaydreamin]

9 minutes ago, TGIBridays said:

I'm not saying Tesla doesn't deliver great vehicles or that they haven't pushed the needle in regards to EV's.  That's obvious. But they also are notorious for announcing aspirational goals and not quite meeting them. 

Their aspirations have wildly exceeded the expectations of any car company in the past 40 years. They are by FAR the largest market cap of any car company in the world! I don't think its fair to claim they "notoriously" under-prerform their announcements. 

[TGIBridays]

3 minutes ago, CarolinaDaydreamin said:

Their aspirations have wildly exceeded the expectations of any car company in the past 40 years. They are by FAR the largest market cap of any car company in the world! I don't think its fair to claim they "notoriously" under-perform their announcements. 

I didn't say they under perform. They just don't always quite meet their goals.  That's fine.  It's worked out well for them, but it can be frustrating when you have to take every announcement with a grain of salt and wait to see if it'll be delivered exactly how they stated. There's no real reason for them to not make big goals for themselves at this point, since as you say they're doing well. Here's an article that addresses a few of these instances, but there are other smaller things they've walked back on as well. 5 times Tesla couldn't keep a promise about its electric vehicles  Again, I'm not taking a swipe at Tesla or EV's in general. It's just a frustrating aspect of following Tesla. That's partially due to them not having a traditional PR/media division (basically they just use their events, website, and Elon's twitter). Traditional automakers have a legion of PR people to clarify statements or issue corrections to projections/promises.

[KJHburg]

and remember NO incentives are paid until the company meets it goals on investment and jobs.

Biggest announcement in NC history up in Chatham County and this will ripple through the whole state including this region with suppliers.

VinFast Selects Chatham County, Triangle Innovation Point for New Facility - Chatham County Economic Development Corporation (chathamedc.org)

remember these NC startups from other companies that are thriving like the HondaJet up in Greensboro.   Boom Supersonic coming to Piedmont Triad airport is another but there is risk with any project.  

Edited March 29, 2022 by KJHburg

[Windsurfer]

2 hours ago, DMann said:

If you look at who is challenged with the onset of EV's look at Oil Companies, Gas Stations, Auto Repair Shops, Muffler Shops, Car Dealerships, Long Haul Gas Trucks, UAW, Insurance Companies, both Print and Media Advertising.  All stand to lose a lot with EV's.  New industries and opportunities will certainly come up, but to quote Randy Marsh from SouthPark, "They Took Our Jobs!"

All true ( my family was in the auto parts business for over 100 years here in CLT).  There are some other dynamics that hurt us, like cars that just don't breakdown anymore, and dealership warranty programs among the biggest, but the 'Amazon Effect' really killed me.  One area left out in your list is that of our road budget since we derive so much tax revenue from fuel.

[JRCLT]

Adapt or become obsolete. Unfortunately there is a point where an industry’s worth is superseded by the need for improvement otherwise we all crash. Although it’s not a zero sum game. With proper future planning and contingency planning a business can survive these changes and adapt if it is on top of its management and future proofing.

[CarolinaDaydreamin]

3 hours ago, DMann said:

If you look at who is challenged with the onset of EV's look at Oil Companies, Gas Stations, Auto Repair Shops, Muffler Shops, Car Dealerships, Long Haul Gas Trucks, UAW, Insurance Companies, both Print and Media Advertising.  All stand to lose a lot with EV's.  New industries and opportunities will certainly come up, but to quote Randy Marsh from SouthPark, "They Took Our Jobs!"

Maybe those things that are going to be replaced were dirty, auto promoting inefficient industries, propped up by extremely high barriers to entry and government policies which promoted their longevity. We will better urban places with less dependency on these industries. 

[videtur quam contuor]

1 hour ago, JeanClt said:

Adapt or become obsolete. Unfortunately there is a point where an industry’s worth is superseded by the need for improvement otherwise we all crash. Although it’s not a zero sum game. With proper future planning and contingency planning a business can survive these changes and adapt if it is on top of its management and future proofing.

Biology teacher at my high school expressed natural selection clearly on the first day of class. "Students, in this world each organism must respond to pressure. In Biology we know from evolution that your options are to adapt, move or die. If you cannot deal with me and this class that means you have three choices." I forget her name but her message was received and the evolution section of high school Biology was reinforced with real experience. I am sorry to say I forget her name but a tip of the hat to her memory.

[atlrvr]

2 hours ago, CarolinaDaydreamin said:

Maybe those things that are going to be replaced were dirty, auto promoting inefficient industries, propped up by extremely high barriers to entry and government policies which promoted their longevity. We will better urban places with less dependency on these industries. 

I read this, and my memory of Guns, Germs, and Steel all came rushing back for me to blurt out here "urbanism originally, and continues to, exist to propagate industrialism. "

 

[nicholas]

14 hours ago, TGIBridays said:

I saw a Rivian driving around Stallings a week or so ago. But to your larger point, I think it will take a while for any of the startups to really filter out to Charlotte. You might see one or two randomly, but the streets aren't going to be flooded with $70+ luxury EV's, just like they aren't flooded with $70+ luxury ICE sedans (the exception might be F-150's, because men lose their minds when a luxury vehicle has a tiny bed attached to the back).  You'll never see a $35k new Model 3 now; it's just too expensive to build at this point. That claim is just one of many Tesla claims that they have failed to deliver on. Not that they haven't been successful regardless.  

Idk. There's a lot of new money in the Charlotte area that wants the latest and greatest stuff.  I've seen two Mercedes EQS450s in Huntersville which surprised me because I didn't know those were on sale yet.  Also a ton of Porsche Taycans (saw a Taycan Turbo S at work today) and have seen a Taycan Cross Turismo which is the wagon version.  Quite a few Polestars which is an electric sister brand of Volvo that nobody really knows about.  Audi E-Trons, Model S Plaids, etc. l see a lot of very new $200k+ Ferraris, Lambos, McLarens, Porsches, Rolls-Royces, etc on a weekly basis so the money is definitely here.

Tesla I think got into the market at just the right time, before there was as much governmental pressure to produce electric cars, and had the benefit (I guess you could call it a benefit) of being run by someone who had an almost Trump-level ability to win supporters despite his somewhat questionable personal life as well as erratic statements and Twitter posts.  Now that EVs are being not exactly mandated but strongly encouraged by governing agencies worldwide, all of the existing automakers are having to adapt, and the window of opportunity for newcomers is shrinking rapidly.  Basically all automakers are at the same general starting point in regard to building electric vehicles, but the Chevys and Mercedes and Toyotas of the world have so much more production experience to draw from than all of the startups.  I think electric cars will continue to grow in popularity, but I also think Tesla was kind of an anomaly due to a near-perfect mix of a unique market position coupled with a magnetic leader coupled with a relative lack of regulatory pressure.

[TGIBridays]

@nicholasI didn't mean to imply that all of these startups are going to make it.  A lot of them definitely won't. Rivian is different in that it already has a base of corporate customers (they're making amazon deliver vans) and they have backing from Ford.  I think the most likely scenario is that any startup that actually does well will quickly be swallowed up by the larger automakers.  You're right that Tesla got into it at the right time and that we most likely won't see that level of success from a startup again any time soon, but I don't think that means none of these startups will make it. 

As far as VinFast, like you said, we'll have to wait and see if they're successful.  They seem to be incredibly fast moving (having only been founded in 2017), but they seem to have a bunch of industry connections.  They're partnered with GM, basically rebadging some of GM's Asian cars for the Vietnamese markets, and they have been working with BMW for their luxury ICE vehicles. Hopefully for NC their push into the US EV market will be successful. 

[DMann]

16 hours ago, Windsurfer said:

All true ( my family was in the auto parts business for over 100 years here in CLT).  There are some other dynamics that hurt us, like cars that just don't breakdown anymore, and dealership warranty programs among the biggest, but the 'Amazon Effect' really killed me.  One area left out in your list is that of our road budget since we derive so much tax revenue from fuel.

EV's pay a separate EV tax at registration.  My wife's is $130 annually.