An earlier post I briefly noted why we use incentives as part of the economic development toolbox and provided an example of an MOU.
This one is is about an incentive package and the churn. The link is from MSN and the story is about the Foxconn project.
I will not spell out the project parameters, the article does that. However, I will comment on the slant of the story. As an economic developer, I get concerned when I read comments from a business that says we will still create XX jobs, but at a slower pace. If, as the lead on the project, I am aware before any public announcement and I can brief superiors, I have a higher level of comfort. This does not apply to this story.
However, in economic development we sometimes get tarnished when a questionable deal generates so much press. That makes the job of negotiating incentives, ensuring buy in, and moving at a fast pace much more challenging. It also reinforces good practices and transparency.
Link to story:
https://www.msn.com/en-us/news/finance-companies/foxconn-reconsidering-plans-to-make-lcd-panels-at-wisconsin-plant/ar-BBSWEzu
Monday, June 10, 2019
Sunday, June 9, 2019
Economic Development and Incentives I
Incentives are part of an economic developer's tool box. They are not necessarily bad or good. They are used to cause an action. In economic development we use incentives to help a company justify a decision. Examples are building on a greenfield site or expanding an existing operation/facility.
The goal is to create jobs and capital investment for a reasonable and well thought out incentive. Incentives can be other inducements aside from money. However, that is for another post.
Incentives can be applied wisely or poorly. Any good incentive offer undergoes the following: a rigorous ROI, an MOU issued in the public domain (with clawbacks), and help close a deal (as opposed to actually financing the project). Consider incentives icing on a cake and not the actual layer.
The MOU clearly and concisely spells out the incentive and the responsibility of all parties. Key components are job and investment thresholds, how an incentive is paid out, and clawback provisions. An example of a local resolution and agreement is on the following link.
https://lfportal.pwcgov.org/weblink/DocView.aspx?id=11549&page=541&searchid=100796a0-f029-4740-a5dc-fcae2569c445
The goal is to create jobs and capital investment for a reasonable and well thought out incentive. Incentives can be other inducements aside from money. However, that is for another post.
Incentives can be applied wisely or poorly. Any good incentive offer undergoes the following: a rigorous ROI, an MOU issued in the public domain (with clawbacks), and help close a deal (as opposed to actually financing the project). Consider incentives icing on a cake and not the actual layer.
The MOU clearly and concisely spells out the incentive and the responsibility of all parties. Key components are job and investment thresholds, how an incentive is paid out, and clawback provisions. An example of a local resolution and agreement is on the following link.
https://lfportal.pwcgov.org/weblink/DocView.aspx?id=11549&page=541&searchid=100796a0-f029-4740-a5dc-fcae2569c445
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