The Canton Repository has the must-read political story of the day. It did some digging and found that the extent in which the company was really in negotiations to move to other States (specifically Virginia and North Carolina) was far less further along than presented.
Let’s recap what we already knew before today’s story. Diebold was given an essentially free global world headquarters in Ohio that will cost an estimated $100 million that will be paid for entirely by State and local economic development dollars in exchange for a promise that the company will not reduce its workforce more than 20% over the next fifteen years.
The company’s CEO had already told then Governor Ted Strickland that it’s strong preference would be to stay in Ohio. Which led us to ask:
Again, how do we know that Diebold didn’t get an incentive package from either North Carolina or Virginia simply because that’s what is required under HB 58?
The discussions between Diebold and the other States were so preliminary, the other States didn’t even know it was Diebold!
At the time, Diebold’s corporate spokesman insisted that the company was close to potentially moving to another State until Kasich’s deal hit the table:
Jacobsen said Diebold held “serious discussions” with North Carolina and Virginia.
So, how serious were these discussions?
Well, first, the Canton Repository informs us that neither North Carolina or Virginia even knew that Diebold was looking to relocate there:
The North Carolina Department of Commerce didn’t even know it was 152-year-old Diebold that inquired last year about building a corporate headquarters in Durham County. Instead, Diebold had hired Duff & Phelps, a big-time business consulting firm in New York City, to act as a go-between.
That’s common corporate strategy in potential relocation plans, so word doesn’t leak. Duff & Phelps’ code name for the company with an interest in North Carolina was “Project Odyssey.”
Like North Carolina, Virginia officials didn’t know what company Duff & Phelps represented, though they figured it out in April.
After making a preliminary offer, North Carolina didn’t hear another word from Diebold’s representatives for nearly six months!
Second, it’s important to note that the company approached the States with an express purpose of obtaining packages from them. But then once the got the packages, they ceased all communications with them:
In a letter dated Oct. 19, 2010, North Carolina officials offered Diebold $35.7 million in incentives to relocate its headquarters from Ohio, the bulk of it in a job development grant. They also told Diebold they would be glad to assist the company in filling out paperwork to get the money.
That’s as far as discussions got, said Kim McCarl, a spokesman for the North Carolina Department of Commerce.
That’s 175 days between when North Carolina made its preliminary offer (in response to Diebold’s proxy request) and when the deal with the State was announced. That’s six months of no communication. No indication of acceptance of the State’s offer, no counter-offer, nothing. No indication for nearly six months of any discussions (serious or otherwise.) Diebold got their offers by proxy and then used them to get a deal with the State of Ohio. That’s all it did.
Neither State was prepared to offer nearly as much assistance as Ohio threw at Diebold.
Here’s how the Repo characterized the Commonwealth of Virginia’s offer:
Virginia’s deal would have paled beside Ohio’s offer, said Sandi McNinch, general counsel for that state’s Economic Development Partnership. When she learned of Ohio’s $56 million deal, her reaction was “Eeekkkk.”
McNinch wouldn’t divulge Virginia’s offer. However, a typical deal for a company such as Diebold would be $5.1 million in two grants, she said. They never got far enough to discuss tax credits or other offers, she said.
Again, note that just as was the case in North Carolina they “never got far enough to discuss tax credits or other offers.”
So we have two States that made offers to Diebold’s proxies, that were so preliminary that the States didn’t even know they were negotiating to get Diebold. Both make nothing more than a preliminary offer based on what little information they were given, and then they never hear from Diebold’s proxies again until six months later when they hear the announcement in Ohio and put two and two together. Diebold, which had told the previous Administration that it wasn’t seriously interested in moving in the first place uses the offers they invited to leverage a free corporate HQ from the State of Ohio for tens of millions more than either State would have ever given Diebold.
At the time of the Diebold $105 million corporate welfare boondoggle was announced, we said:
“Again, how do we know that Diebold didn’t get an incentive package from either North Carolina or Virginia simply because that’s what is required under HB 58?”
And the answer is we do know. That’s exactly what Diebold did. They went through the motions to get two States to make some kind of offer. They then used that to get a package deal from Ohio. They never contacted the other States after they made the offer for months because they were only interested in scaring the Kasich Administration with the “Ghost of NCR” into making an outrageous deal that would save the company over $100 million of dollars and do precisely whatever it intended to do all along.
And they can still fire 20% of its workforce and keep every dime.
John Kasich is a horrible negotiator.
But be happy to know that thanks to the secrecy and lack of transparency of JobsOhio, Ohioans will no longer get to find out just how bad of a dealmaker Kasich is with our tax dollars.