As the saying goes, you catch more flies with honey than you do with vinegar. The same can be said of attracting and keeping companies in specific cities and states: the sweeter the pot, the more likely municipalities will get the prize.
In the high-stakes game of corporate relocation and retention, cities, counties and states often provide hefty tax breaks and other financial and intangible incentives to entice companies to move to or stay in their locations.
As the Flooring Belt of Georgia and Tennessee continues to experience a revival and renaissance, civic leaders are eagerly and aggressively wooing flooring companies with a variety of bonuses and boosts.
“We’re very excited about the flooring industry and what’s going on with the resurgence,” said Tom Croteau, deputy commissioner of global commerce for the Georgia Department of Economic Development, the state’s sales and marketing arm and the lead agency for attracting new business investment and encouraging the expansion of existing industry and small businesses. “They’ve done a great job of coming out of the last recession and reinventing themselves. We at the state of Georgia have been thrilled to embrace and support the companies.”
According to the state’s research, the flooring industry lost more than 10,000 jobs in Georgia over the 10-year period from 2004-2014. However,
the rapidly improving economy has bolstered the flooring business. Georgia is well-positioned to capitalize on its legacy as the flooring capital of the industry as well as its overall position as a strong area for business, he said, noting the state’s recent ranking by one publication as the top state for businesses due to its strength in logistics, global access, quality of life and workforce.
Of course, one of the biggest draws for attracting and retaining companies is tax incentives. “Incentives are very important,” he said. “And they’ve become more important over the last five to seven years in companies’ business models. We try to help those companies get to where they’re trying to grow to [with jobs and investments]. The incentives are basic but they’re not easy. It’s not always a sexy sizzle dollar sign you see but it’s one of the most important things we do.”
In basic terms, Georgia offers a 6 percent corporate income tax rate with a single-factor apportionment formula which means companies pay taxes on only a portion of the taxable income. The state offers other job tax credits and tax exemptions as well.
The state pointed to Engineered Floors as an example of what tax incentives can do to fuel growth. When Shaw looked to expand facilities, it could have looked beyond Georgia to neighboring states. But with Georgia’s Mega Project Tax Credit, the company decided to
develop the facility in Georgia with a $450 million investment and a target of adding 2,400 jobs.
Shaw Industries Group Inc. is building a 67,000-square-foot Create Centre in Cartersville, Ga., set to open late this year that will house the commercial division’s marketing, design and innovation associates.
More than money
Croteau noted that besides tax programs, one of the most critical benefits the state offers is the Georgia Quick Start education program, the oldest program of its kind in the U.S. “It’s the secret sauce for a great deal of Georgia’s development.” This free education program is customizable to several industries to train employees to companies’ needs. It’s offered through Georgia’s large network of technical colleges and has so far trained more than 1,000,000 employees in 6,500 projects.
“We have technical colleges all around the state, so whatever campus is closes to that partner company can participate,” he explained. The program is developed in conjunction with the companies so the courses can train prospective employees in the skills those companies need and can help place those employees after training. “The training element is critical [to attracting companies]. When a company decides to spend millions to upgrade or relocate, they need to know they will have people trained to work there.”
Beyond incentives from the state, cities and counties work to provide tangible and intangible offerings. Chambers of commerce and local development agencies are usually on the front line of working with companies to provide both financial incentives as well as “quality of life” offerings.
“People have choices and we have to continue to be competitive,” said Carl Campbell, executive director for the Dalton-Whitfield Joint Development Authority. “The growth in the flooring industry doesn’t have to happen here so it’s absolutely important we have good offerings.”
Rob Bradham, president and chief executive officer of the Greater Dalton Chamber of Commerce said incentives play a vital role in attraction and retention – even in flooring. “A lot of people in Dalton feel like since carpet was born here we don’t have to provide incentives. But the fact is, these manufacturers have lots of options and we want Dalton to be on top of their lists. Other communities are offering them and we have to do the same.”
However, the incentives have paid off since the floor covering business has bounced back.
“The flooring industry is much healthier than it was seven and eight years ago and it’s tied into the economy,” he said. “And as they have hired more employees we have seen benefits in every sector of the [Dalton] economy.
And he anticipates seeing a ripple effect as Dalton grows. “Dalton wouldn’t be what it is without the floor covering industry. But we know diversity in our manufacturing base is very important if we want to be economically viable. The last recession is proof of that. To mitigate our risk, we must focus on industries outside of flooring.”
Melinda Lemmon, executive director for the Cartersville-Bartow County Department of Economic Development, said, “Our community can and does extended assistance to companies that are a good fit here, that create quality jobs and invest.”. She said that while it’s always great to bring in new companies, helping existing companies grow is even more satisfying. “Bartow certainly has even more respect for existing companies that want to continue their growth in our community. Floor covering companies are among our largest employers and tend to be employers of choice.”
The Dalton Chamber of Commerce works to provide companies and businesses with amenities and incentives to benefit the entire town.
Tennessee Too
Of course, Georgia isn’t the only state wooing flooring companies. Nearby Tennessee also is actively courting companies and has scored several high-profile wins. Johnson City, Tenn. coaxed Mullican to invest $15 million to significantly expand its operations there. The deal also added 200 jobs to the area.
“We in the chamber world want to land those industries that make sense for the economy,” said Gary Mabrey, president and chief executive officer of the Johnson City Chamber of Commerce. “We feel we are an attractive site for new and expanding business and the Mullican investment certainly helps recruit other companies,” as does a diversified economy with a large health care industry, other companies and a major university in the area. Each investment fuels other businesses, he said. “It’s chicken, eggs and an omelet,” as to what comes first — it doesn’t matter as long as they all drive growth.”
Johnson City’s Chamber of Commerce focuses on multiple industries for growth.