North Carolina politicians came close to making a potentially fatal error with the manufacturers in the state, but wised up at the last minute.
Gov. Mike Easley vetoed legislation that would provide $40 million in incentives to Goodyear for a tire plant modernization. He and his supporters argued that the bill would set a poor precedent. The legislation was created specifically for Goodyear and its Fayetteville, N.C., tire plant, and no other company in the state met the requirements of the bill.
That wasn't particularly unusual. However, the bill required the company to employ 2,000-and Goodyear today has 2,750 people staffing its tire factory.
The governor maintained the legislation was a license-paid for by state taxpayers-for Goodyear to eliminate 750 jobs, if it feels so inclined.
That stance ignored the fact that where products are made is of no consequence to tire makers. If it's more cost-effective to manufacture in North Carolina, great, Goodyear is there. If not, Goodyear will just build tires elsewhere.
Goodyear is a global company first and foremost. It has no particular loyalty to North Carolina, and plenty of other states and countries would welcome the opportunity to host a Goodyear plant.
What really put the state government in a pickle was that other manufacturers-particularly Bridgestone/Firestone and Michelin, which operate plants in the state-wouldn't be eligible for the financial assistance. As Goodyear competitors, they, too, want consideration. If they didn't get it, they could develop a roving eye.
The governor and state legislature chewed on the problem for awhile, and came up with a compromise that could cost the state $60 million over 10 years. The new law calls for benchmarks in employment and investment that means BFS could get nearly as much in incentives as Goodyear. How Michelin, which operates a much smaller tire plant in the state, fares with the bill is uncertain.
North Carolina is one of those Southern states that created the financial incentive situation decades ago when it lured tire production away from the Midwest and East Coast. Now it has to abide by the precedent it set.