Lessons from Dell’s N.C. Shutdown

October 7, 2009

Dell has just announced the


of its computer and peripheral factory in Winston-Salem, N.C. As I recounted in The Great American Jobs Scam (

Scam #12

), the plant was awarded state and local subsidies in 2004 that could have totaled about $300 million – more than twice the cost of the plant!

Now instead, more than 900 people will be dislocated and the subsidies will not create badly needed jobs in the state’s Triad region hard-hit by textile and furniture shutdowns.

The costly deal was rammed through in a textbook case of corporate-dominated process. After months of secret negotiations with the state commerce department during which the company essentially demanded zero taxes, state legislators were given one day to read and vote on the bill, up or down with no amendments.

Back in my previous life consulting against plant closings, I taught people that tax dodging is one more early warning sign, one more signal of corporate disinvestment. That is, if a factory owner is letting the equipment run down, removing hot new product lines, demanding wage concessions and chiseling on property taxes, it is saying loud and clear: “we do not see our future in your community.”

Looking at Dell (and recalling footloose companies like Sykes, Scam #4), I say the same principle applies to any newly arriving company that demands huge tax giveaways. If it refuses to pay its fair share of the growth-related costs it induces (for roads, schools, police, fire, sanitation, etc.) it is saying either: “We don’t care about the long-term quality of public services here,” and/or “Let everybody pay higher taxes to support the costs we create; that’s not our concern.”

Either way, the message is clear: the company does not want to invest in the fabric and the future of the community. And elected officials should see the early warning signs and run the other way.