The Price of Spice in the Jobs Bazaar


March 05, 1995|By MIKE BURNS

If the cost of living seems to be climbing very slowly, at least according to government figures, the cost of working has certainly skyrocketed.

I mean the cost of persuading an employer to bring work to your community.

The treasure chest to lure McCormick & Co. spice company to Riverside Business Park contained more than $20 million in soft loans, outright grants and tax credits. The immediate return will be 150 jobs that will transfer from Baltimore County when the new distribution center is completed in Belcamp.

For Sunbeam Plastics, the price a month ago was more than $500,000 for 55 new jobs at the same Harford industrial park.

A few months earlier, food wholesaler Supervalu Inc. got a $500,000 grant for buying land in Perryman for a distribution center that will create some 200 new jobs.

Of course, there was also Starbucks Corp.'s bid for an East Coast distribution center in Harford County last year. The county, state and local landowners couldn't come up with $10 million or so in loans and grants for 500 jobs, and York, Pa., got the business.

In light of the new economics of the McCormick deal, the Starbucks package would have been a steal for Harford and Maryland.

Even the Sunbeam scheme looks like a relative bargain, with $470,000 in state money to buy nine acres for the plant, and then three years of county property tax credits.

Only weeks before the McCormick announcement, a number of people were grousing about how the county's land giveaway to the Indiana plastics manufacturer smacked of "corporate welfare"! Now, it's called smart bargaining, a savvy investment in Harford's future.

Because McCormick is the largest economic development deal done by the state in recent memory, the details deserve closer scrutiny.

First, the deal is worth at least $750,000 a year to the spice company in loan interest savings and Harford tax credits.

That includes a low-interest rate on $15 million in bonds, no interest on $4 million in bonds and $130,000 a year in Harford County tax credits.

It's not all public money. Some savings are from lower borrowing costs and tax credits on property improvements that would never have been made. But the $1 million state grant is from the public treasury; so is the forgiven interest on $4 million.

Second, the "gain" is 150 existing Maryland jobs; most workers will simply commute to the new Belcamp building instead of to Sparks.

Third, the jobs are on the lower wage tier. They are not in a major growth industry. Harford continues to court warehousing operations rather than targeting significant manufacturing or high-tech jobs.

Fourth, Harford got the $20 million facility because of its transportation location and 40 acres of relatively cheap land.

Fifth, Harford chipped in an estimated $130,000 a year in 80 percent property tax credits for three years, said to be the added cost of shipping product to Belcamp from Hunt Valley, instead of to Shrewsbury, Pa., one of the finalists. Fact is, Harford would have thrown in that sweetener in any case to seal the deal. Harford also agreed to fast-track permit approval so the facility can open by December.

No one's accusing McCormick of robbing Harford and Maryland with a fountain pen. McCormick simply made a hard business decision.

And the center's location in Harford bolsters local hopes that employment will increase by about 75 jobs within a few years; eventually, light manufacturing operations could be added to the Belcamp complex. That's the kind of development that is materializing at the Clorox and Frito-Lay distribution centers here.

If Harford is a clear winner, the state's gain is exceptionally modest for the price. Remember, it's nearly all state money and state commitment that landed the project.

Gov. Parris N. Glendening wanted the McCormick victory at any cost, to signal an end to Maryland's supposed anti-business reputation and to emphasize his difference of approach from the Schaefer team.

Harford certainly offers a good location for major warehouse operations and its land is still reasonably affordable. But this deal made clear that the state, with its much deeper pockets, will call the shots for future major economic developments. These decisions won't always favor Harford, when state money is the major lure, because of the demands of other counties.

Baltimore County proved competitive with Harford last year in winning the Time Warner Inc. merchandise warehouse (and more than 400 jobs) when state incentives were not a major factor. (Curiously, Baltimore County's White Marsh land was then priced much cheaper than Harford's Riverside land; the reverse was true in McCormick's search.)

McCormick was seriously considering the old Channel warehouse complex in Perryman last year, before Supervalu nailed down the site.

If McCormick had secured the Perryman property at that time, would Maryland have made such a generous offer to land the deal? It's doubtful. The Schaefer administration wouldn't have gone along at that price, just as it didn't for the Starbucks proposal.

In fact, there's been no change in state law, or the development fund, since then, only a change in state leadership. Plus the heightened recognition that Pennsylvania will be a formidable competitor for jobs in this region, even for long-established Maryland firms in our backyard.

Mike Burns is The Baltimore Sun's editorial writer in Harford County.

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