North Carolina Raised Sturm, Ruger Incentives Three Times
BY EMERY P. DALESIO, AP Business Writer
RALEIGH, N.C. (AP) _ Gun manufacturer Sturm, Ruger & Co. made clear early and publically that North Carolina was its preferred location for a new factory and the hundreds of jobs it would bring. But the company kept alive enough doubt that state officials raised their offer of tax breaks and other sweeteners three times.
The state and company ended a nearly five-month courtship in mid-August by agreeing on a package of incentives that could be worth $13.7 million if Ruger meets investment and hiring goals. Including additional incentives from the town of Mayodan and Rockingham County, the total package could be worth $15.5 million.
In return, the company plans to hire more than 470 workers in a county where the unemployment rate topped 9 percent in August. The company expects to invest $27 million and pay annual salaries averaging more than $45,000 plus benefits, compared to the Rockingham County average of $33,000.
As early as March, a consultant working for Ruger had picked a former textile building in Mayodan as a likely site, nosed around the community, looked into the availability of machinists and other workers, and asked about labor unions, according to state Commerce Department records provided to The Associated Press following a documents request.
Yet Ruger dangled the possibility it still could go elsewhere.
The same day in July that Ruger announced to investors it was targeting Mayodan and already had a building picked out for its first major expansion in more than 25 years, the executive leading the company’s search, Steve Maynard, told North Carolina officials it wasn’t yet a done deal. It was all “subject to finalizing the state and local incentive agreements,” Maynard wrote state Commerce Secretary Sharon Decker. Ruger would wait to buy the building until “after these agreements are finalized to our satisfaction.”
That doubt was essential to maintaining the dance for dollars: State law requires that a Job Development Investment Grant _ the heart of the state’s offer _ can’t be given if it isn’t necessary to bring the jobs to North Carolina.
Ruger presented an uncommon opportunity for bringing hundreds of high-wage manufacturing jobs to a rural community. Its business had multiplied in recent years thanks to gun owners fearing the Obama Administration would push new gun restrictions through Congress. It was introducing new products every three months and had outstripped the capacity of existing plants in Arizona and New Hampshire to keep up.
Then, in December, 26 small children and educators were shot to death at their school in Newtown, Conn. Connecticut adopted a package of gun control measures that are considered among the strictest in the nation. Southport, Conn.-based Ruger was already looking for a plant site, settling on the South.
Company executives wanted to open their factory in a state that embraced gun manufacturing jobs, and money was a standard by which to measure competing states.
“The amount of the offer, while not bad, doesn’t seem to convey much excitement about the project,” Graham Pervier, a local business recruiter involved in negotiations, wrote to state Senate leader Phil Berger in mid-June. “More like we are trying to get by with as little as possible. The company execs are less concerned about the actual amount, but they really would like to see more enthusiasm. They are very sensitive about being a gun manufacturer and could misconstrue the message.”
The company still might build instead in Columbia, S.C., or Taylor, Texas, without the state investment grant, state officials said. “SC is offering incentives estimated in value of $20 million. TX does not have corporate income taxes and are offering incentives estimated in value of $7 million,” a note to the grant approval committee said.
“If this gets down to a bidding war Texas will win,” Stewart Dickinson, a top Commerce Department official responsible for negotiating incentive packages, wrote in June.
Emphasizing North Carolina’s allure, a state business recruiter wrote Ruger’s consultant that the state had “the 3rd lowest `effective tax rate’ in the nation based on multiple studies.” Gov. Pat McCrory and Republican legislative leaders were simultaneously arguing a tax cut was necessary to spur business. The cut in personal and corporate income taxes are projected by the General Assembly to be worth $524 million over the next two years.
In mid-July, McCrory scheduled a call with Ruger CEO Michael Fifer, who had been a dinner guest at the executive mansion in May, “to reinforce North Carolina’s excitement and enthusiasm for the project.”
Hours after the phone call, McCrory’s top jobs adviser Tony Almeida celebrated.
“Rockingham County site is preferred site! Gov talked to CEO today and all he wanted to talk about was nailing down a date for announcement and a golf game with Gov afterwards!” Almeida wrote.
But by the time the agreement was signed nearly a month later, the state had agreed to forgo another $1.4 million in future tax revenues that the Ruger factory would generate over 12 years. The state investment grant is paid out over time as jobs are created.
Commerce Secretary Decker said the Ruger deal and others impressed upon her the tricky negotiations going on every day between big companies and the states competing with each other to attract jobs.
“I had no idea,” she said. “You would be blown away if you saw what I’m looking at _ what our sister states around us, near us, adjoining us, are putting on the table financially.”
Associated Press Writer Emery Dalesio can be reached at http://twitter.com/emerydalesio
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