State Government

J-DIG Attracts Two New Industries to North Carolina

By Steve Tuttle

North Carolina’s new economic development incentives program has attracted its second and third new industries to the state, a sure sign that the Job Development Investment Grant (J-DIG) program is working.

General Dynamics Armament and Technical Products Inc. said recently that it will relocate its headquarters and a light manufacturing operation to the Charlotte area, a move that will create 405 jobs with a $30 million investment. That announcement came shortly after R.H. Donnelley Corp., the largest U.S. stand-alone publisher of yellow pages directories, said it would relocate its corporate headquarters to the Triangle, a move that will create 275 jobs over three years.

In May, German semiconductor maker Infineon Technologies North America Corp. became the first J-DIG recipient when it announced it would build an $8 million facility in Cary and create as many as 400 new jobs over five years.

All three companies said receiving J-DIG tax rebates was a key factor in their decision to move to North Carolina. Under the legislation adopted by the General Assembly last year, qualifying companies can receive up to 75 percent of the state income taxes paid by workers in new jobs they create. The program is targeted at industrial projects whose benefits exceed their costs to the state and which would not locate in North Carolina without the grant. No more than 15 such grants may be made in one year and the total rebate of state income taxes is capped at $10 million per year.

General Dynamics Armament and Technical Products Inc., which employs more than 2,500 people in eight locations, said it would begin moving its headquarters from Burlington, Vt., to Charlotte in September and have the operation running by the fall of 2004. The company will pay salaries averaging more than $70,000 a year. The company produces various weapons and armaments for the military, including Gatling guns, grenade machine guns and some rockets. Officials said the company’s J-DIG grant would be worth as much as $5.9 million in tax relief over 10 years if it creates all the jobs it promises.

R.H. Donnelley, which currently has a publishing operation in Morrisville that employs 240 as well as six sales offices throughout the state, will consolidate operations in Purchase, N.Y., and Overland Park, Kan., in a new headquarters in the Raleigh-Durham area. The company employs more than 1,400 people in 19 states. The company expects to move to North Carolina at the beginning of 2004 and be fully operational by April. It will initially employ 140 workers with estimated salaries for the positions averaging $63,000 and will add another 135 jobs by 2006. R.H. Donnelley, founded 116 years ago in Chicago, became an independent public company in 1998 when it spun off from Dun & Bradstreet Corp.

“To be able to announce the move of two first-rate companies like General Dynamics and R.H. Donnelly, in just one week, demonstrates North Carolina’s ability to compete in the global economy,” Gov. Mike Easley said.

“Attracting quality military industries is part of our economic development strategy. It is important that these corporations are able to interface with military personnel who will be using the systems that they build. This interaction is important in producing a quality product. North Carolina, the most military friendly state in the nation, is an ideal location,” the governor added.

“We received remarkable cooperation from North Carolina state and local officials. The central location on the eastern seaboard, access to a major airport, the affordable cost of living and competitive business incentives were major factors in the decision to move our company headquarters and light manufacturing to the Charlotte area,” said Linda Hudson, president of General Dynamics Armament and Technical Products.

“This is exciting news for Charlotte. General Dynamics is a great company and will bring excellent jobs,” said Carroll Gray, president of the Charlotte Chamber of Commerce.

Officials said over 10 years the General Dynamics project would generate a cumulative gross state product increase of about $617 million, produce a cumulative net state fiscal impact of $9.7 million and contribute about $2 million to the state’s Industrial Development Fund for infrastructure improvements in rural North Carolina required of grant recipients who locate in a Tier 5 urban county.

For each year in which General Dynamics meets the required performance targets, the state will provide a grant equal to 65 percent of the personal state withholding taxes derived from the creation of new jobs. If the company creates all of the jobs called for under the agreement and sustains them for 10 years, the agreement could yield maximum benefits to the company of as much as $5.9 million over the life of the grant.

“The economic incentive grant from North Carolina’s J-DIG program was pivotal to our decision to relocate to Raleigh-Durham.,” said R. H. Donnelly Chairman and CEO David C. Swanson.

Using a methodology developed by Dr. Michael Walden of N.C. State University, the N.C. Department of Commerce estimates the R.H. Donnelley project will generate a cumulative gross state product increase of about $325 million and a cumulative net state fiscal impact of $6.4 million over the life of the grant, as well as 515 jobs from all sources when the company reaches anticipated employment targets. If the company creates all of the jobs called for under the agreement and sustains them for 10 years, the agreement could yield maximum benefits to the company of as much as $4.3 million over the life of the grant.

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