September 30, 2016

Grains of Salt (v15): Incentives

The last Grains of Salt post I did, v14, was about the top 50 fastest growing companies in Upstate NY. The list of our region's companies was culled from the Inc. magazine's list of the 5,000 fastest growers.

In that post, I lamented that, with one distant exception, there were no Syracuse-area companies listed - not in the top 50, and not in the top 5,000. In fact, for several years running, there haven't been any Syracuse companies on the list.

That post is behind me -- it's from 25 days ago, for heaven's sake, which is a lifetime in today's 24/7 news cycle. Tonight, I do have a story about a successful local company, but as with that earlier post, this one too has a less than ideal ending.

Last July, Skaneateles Falls-based Welch Allyn was sold to Chicago's Hill-Rom for a couple billion dollars, ending 100 years of family ownership of the medical equipment company, and putting quite a bit of fear into the local community. Shortly after the sale - Joe Biden literally only days after - 50 people were laid off, which added to the angst people were feeling.

Earlier this week, though, we learned that our Sonofa Gov was coming to town to make an announcement at the company, and we all knew what that meant: money was coming along with him.

Hill-Rom will be adding 100 jobs at Welch Allyn, in manufacturing, marketing, and R&D, over the next couple of years. And in return (this is where the Gov comes in) the company will be eligible for some $13.5 million in incentives from New York State. For example, there's potentially $6M in tax credits over ten years via the Excelsior Jobs Program, and a $6M grant under the state's Upstate Revitalization Initiative, contingent upon the creation of the 100 jobs. The company also noted they'd be seeking property tax and sales tax relief, plus job training dollars, from the local government - for another $1.5M or so.

I'm all for job growth our area - we can use all the help we need -- so I shouldn't be cynical about the announcement, I guess. I would be less cynical, though,  if it weren't for a couple of statements from Welch Allyn president Alton Shader.  Here's the first one:
I hope that people understand that we want to invest here in Skaneateles Falls. We want to invest in Welch Allyn. The incentives are there to ensure that we live up to our commitment.
Huh. We want to invest, we really do - we're committed to doing so, we really are. As long as someone's going to pay us to do it.

But wait - there's more. Again, according to Shader
The team here at Welch Allyn has done a great job and we are experiencing quite a bit of growth within our business.
In fact, business has been going so well under Hill-Rom that this will be the best year in the company's 101-year history, we're told.

That's right: business has never been better, the team is doing a great job, and we are committed to investing in the neighborhood - as long as you reward us for doing so through tax credits, grants, and so on.

I really don't like blackmailers, which is what these businesses are, the ones that hold communities like Skaneateles Falls hostage, or who threaten to pull up stakes and go somewhere else if they don't get what they want from the taxpayers. And I really don't like that politicians, whether it's at the local, county or state level, feel that they have to succumb to the demands of profitable companies, companies that are having their best year ever, and hand over grants and credits and incentives.

While I know that, in the overall scheme of things, the package of ransom being paid to Hill-Rom to keep Welch Allyn going isn't much, especially when spread out over 10 years, the mere fact that they asked for a package is insulting. After all, you're the guys having the best year ever; the same can't be said for most of the taxpayers in New York.

What's more, it seems the Excelsior Jobs Program has some issues, including an inability to ensure that we're getting what we pay for. Companies are not being held to their commitments - in some cases, that commitment is for as few as five net jobs - and are not meeting their job creation goals, or they have their goals lowered, and so on, according to State Comptroller Tom DiNapoli.

Let's hope we don't see those same issues with the package we're handing over to Welch Allyn and Hill-Rom.