Incentives for Dalton-area carpet plants could top $100M

The company that plans two two new factories in Georgia’s carpet country could get state incentives worth as much as $105.6 million over several years, information released Wednesday by state economic development officials shows.

Calhoun-based Engineered Floors expects to hire 2,400 workers at new plants in Whitfield and Murray counties. It is one of the state’s biggest job announcements in years and a boost for northwest Georgia’s flooring industry, which was savaged by the recession and housing bust.

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The incentive figure could rise, as separate inducements from local authorities have not been finalized.

If the maximum value of the state package alone is realized, it could amount to $44,000 per job.

Department of Economic Development spokeswoman Alison Tyrer described elements of the pact to The Atlanta Journal-Constitution, though a full draft of the state incentives package was not released.

Discretionary or elective incentives provided by economic development officials total $13.9 million. These include a grant of $6 million from the OneGeorgia Authority, $3.4 million in energy tax exemptions and an estimated exemption from sales tax of $4.5 million for construction materials.

Engineered Floors also is eligible for $91.7 million in “statutory” jobs tax credits, tax exemptions and training assistance — up from the nearly $70 million state officials estimated last week at the time of the company’s announcement. Such incentives pegged to job creation are built into the state’s tax code.

The “statutory” benefits include $22 million in sales tax exemptions for machinery, and about $60 million in credits that depend on jobs actually being created and other factors such as salaries and a county’s unemployment rate.

Georgia has had a run of success landing headline-grabbing projects, but they have come at a cost.

Biosciences giant Baxter International has been promised local and state incentives that could one-day top $210 million, or $140,000 per promised job.

State and local officials wooed construction equipment maker Caterpillar to Athens with an incentive deal worth more than $75 million in tax credits, infrastructure improvements, grants and property tax abatement. That could be worth more than $53,500 per promised job.

Both companies are in industries coveted by the state for their potential to attract spin-off jobs from suppliers, or in the case of Baxter, cultivate a stronger bioscience industry.

Flooring has long been a bulwark of northwest Georgia’s economy, with giants such as Shaw Industries and Mohawk Industries based there. Engineered Floors declined to disclose wages at the new plants, but said they would be “consistent” with those paid at its other Georgia factories.

The Dalton metro area has lost more than 13,000 jobs from its July 2006 peak, and the unemployment rate is about two points higher than the state average, according to federal and state labor data.

Economic development officials in Whitfield and Murray counties, where the plants will be built, said negotiations with the company involving local incentives are ongoing.

Brian Anderson, head of the Dalton-Whitfield Chamber of Commerce, said local incentives are likely to include property tax abatement, infrastructure upgrades and road work.

“If you’re going to play the incentive games – and most say you have to in this competitive environment – our approach is similar to many other states,” Anderson said.

“If you’re going to incentivize a company coming from halfway around the world, you certainly better offer incentives to a homegrown industry that’s been here for decades,” he said.

The disclosure of the incentive package follows an AJC investigation into two incentive grant programs run by the state. The newspaper found nearly half the companies that benefited from certain state grants didn’t deliver the full number of jobs promised by the deadlines. The state also seldom recoups funds.

The newspaper’s investigation also showed the state sometimes missed or overlooked red flags in its vetting process.

Deal said this week that the state wouldn’t hesitate to try to recoup any incentives from a company that failed to create promised jobs. He noted that his administration requires a company to deliver 80 percent of the jobs and private investments it pledges to satisfy their legal obligations. It was previously 70 percent.

“If a company did not produce what they had promised and they got the benefits of that promise, we’d want to pursue them,” he said. “If it is possible to recover, we’d want to do that.”

UGA economist Jeffrey Humphreys said the two plants have the potential to spawn 2,300 additional jobs, partly through suppliers and services and partly through spending on food, entertainment and other goods. He said the timing seems opportune for both Engineered Floors and the state.

“We’re in the very beginning of the next up cycle for carpet and flooring since we’re in the beginning of the next up cycle for housing,” he said, adding that as a result “jobs that are being promised are more likely to materialize.”

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