"Letter to the Commissioner," January 23, 2012 | Eastern North Carolina Now

   Publisher's note: Below is solid citizen, Warren Smith's ongoing, and well stated, "Letter to the Commissioner." We agree: At some point, Beaufort County needs to remedy its Economic Development mess, then North Carolina needs to tend to its mess as well.

Beaufort County Commissioners
121. W. Third Street
Washington, NC 27889

Dear Commissioners,

    On January 18, 2012, the One NC Fund announced a $180,000 grant for Spinrite Services LLC. There was further coverage of the grant in the Washington Daily News. Since local taxpayers will add $180,000 to the One NC grant, I am requesting confirmation of several details surrounding this grant.

    In December 2011, Spinrite Services LLC, a Canadian firm, "acquired certain assets, including the Washington facility, from Caron International." Washington Daily News coverage mentioned that the grants would be used to make "needed upgrades to the Washington plant."

    So it seems fair to ask if taxpayers are either:

    • Compensating Spinrite Services LLC for costs it did not anticipate when it did its due diligence prior to the acquisition, or

    • Compensating Caron International for maintenance and upgrades it did not perform while the assets were under its ownership.

    If the logistics or condition of the plant and equipment did not suit Spinrite's purposes, then why did they buy it? Once they decided to buy it, then why didn't they require Caron to complete the needed upgrades prior to finalizing the deal? This sale was a voluntary and profit driven agreement between well-informed private parties. The concerns over costs of upgrades should have simply been settled between Spinrite and Caron by an adjustment in the price of their transaction.

    The news articles imply that the work force was laid off, followed by an almost immediate re-hiring of a number of the employees. Meanwhile, the executive management team from Caron International has continued operating the facility now owned by Spinrite Services.

    Although the grant announcement omits discussion of baseline employment, conversations with commissioners lead me to believe that approximately 90 employees were laid off and that nearly 65 were rehired. Approximately 25 people have lost their jobs, but they will likely qualify for unemployment insurance benefits, which they have paid for while employed by Caron International.

    Operations will continue as they always have. The new owners are pleased with Washington and believe there will be very few changes:

    • Although requiring upgrades, the plant is well suited to the operation.

    • The previous management team will continue to run the operation for the time being.

    • The remaining employees are well trained and competent to continue the profitable manufacture of the traditional product lines on behalf of the owners.

    What has changed is that 25 employees have been dismissed and local taxpayers will need to raise $180,000 to be given to a firm that has reduced employment.

    If I am correct in this, then what local small businessman would not feel entitled to the same treatment?

    This transaction opens new and troubling ground by creating a perverse incentive for future grant requests. Now that grant applicants can qualify for assistance even while reducing employment levels, how will the county commissioners discriminate between future incentive-grant applications which actually create new, previously non-existent jobs and grants which are, hypothetically, merely strategies to ask taxpayers to pay for:

    • Down-sizing organizations,

    • Upgrading private property and

    • Retiring unwanted workers?

Regards,
Warren Smith
Beaufort County, NC