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5/25/2010
11:41 AM
Bob Evans
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IBM Lands $31M In Subsidies For 600 Jobs

IBM is planning to hire 600 and possibly up to 800 employees at a proposed new services-delivery center in Columbia, Missouri, and in return will receive various financial incentives totaling about $50,000 per job. It's a great deal for IBM, but is it also a great deal for state and local taxpayers?

IBM is planning to hire 600 and possibly up to 800 employees at a proposed new services-delivery center in Columbia, Missouri, and in return will receive various financial incentives totaling about $50,000 per job. It's a great deal for IBM, but is it also a great deal for state and local taxpayers?In today's brutal jobs market, IBM has the luxury of seeking out communities in the U.S. as well as other countries that are willing to compete aggressively to have IBM locate a new facility in their area. Hewlett-Packard has deployed a similar strategy, as each company has opened or is planning to open three of these services centers in towns or small cities around the U.S.

As we've written before on this subject, IBM and HP have every right to push hard for the best possible terms in such negotiations, and to date there appears to be no shortage of communities eager to agree to tens of millions in concessions and incentives for the opportunity to have such high-profile companies bring several hundred new jobs to those areas.

For example, when we first wrote about the proposed IBM facility in Columbia last week ("IBM Is Hiring: 800 Jobs In Missouri"), we offered this perspective on comments from Columbia's mayor:

Reflecting the understandable enthusiasm similar to that generated by the opening of the other new U.S. centers, Columbia mayor Bob McDavid said, "IBM's local investment will bring 800 high-quality, knowledge-based jobs to our community." He also said "the enormous economic benefit" will "increase the quality of life for all Columbians for decades."

I hope Columbia and the surrounding region do indeed gain that "enormous economic benefit" of which McDavid speaks, and that the new IBM facility with its 600 and potentially 800 jobs over the next 2-1/2 years do indeed "increase the quality of life for all Columbians for decades." And I hope so for two reasons: first, for all of the potential economic impact generated by the new facility and jobs, plus the ripple effect those will have on related industries and businesses in the area; and second, because the city and state have put up $31 million in hard-earned taxpayer dollars to convince IBM to locate there.

A news article about the Columbia services center by the Associated Press spells out the details of the financial incentives IBM will receive:

The seven-member Columbia City Council voted unanimously to buy an abandoned office building for $3.05 million. Starting in November, IBM will rent the building for $1 a year over 10 years, with a five-year renewal option.

That's along with an additional $28 million in state tax incentives. And while officials continued to tout the promise of a needed economic boost to the sagging local economy, at least one council member - and several citizens who spoke at the public hearing - cautioned about offering too much, too soon to Columbia's newest corporate citizen.

RECOMMENDED READING:

IBM Is Hiring: 800 Jobs In Missouri

Global CIO: Indiana To IBM:Drop Dead

Global CIO: IBM Layoffs Mostly Outside U.S., Despite Media Indignation

Global CIO: IBM Iowa's Birthday: IBM Gets $52M, But What Does Iowa Get?

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