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2009-03-17
Spartanburg, SC. Wal-Mart Gets 20 Year Welfare Deal For Return Center

On February 12, 2009, Sprawl-Busters reported that Wal-Mart was shutting down its "Return Center" in Macon, Georgia, and the 400 jobs at the facility would not be returning to Macon. The battleship grey warehouse building in Macon has a huge yellow Mr. Smiley face on it, and the words: "Wal-Mart Return Center #9194. Our People Make the Difference." But the employees there didn't seem to make a difference to Wal-Mart. The media reports said the Macon plant will shut down in September. Workers will have nine months to find new jobs. These workers have been let go in the middle of a deepening recession. The Macon plant had operated for 14 years. Wal-Mart has six such return centers in the country. The Macon facility processed products from around the Southeast that may be defective, or recalled, or overstocked. Some of this merchandise is returned to the supplier, while others are donated to charity. Macon's loss was a gain for Spartanburg, South Carolina. According to the Spartanburg Herald-Journal, the new Wal-Mart Return Center is expected to bring up to 500 jobs to Spartanburg County. The new Return Center will be located at North Blackstock Road."The building there [in Macon] isn't able to operate at the level of capacity that we need," a Wal-Mart spokesman explained in February. He said the volume of Wal-Mart returns were just too much for the Macon building, so the company felt its best option was to leave its 400 employees behind, and vacate Bibb County, Georgia. "That, combined with the fact that our lease expires in October... We decided that this is the business decision that makes the most sense." The Spartanburg return center will not be run by Wal-Mart, but by a contractor. The building in Spartanburg that will house the relocated facility is owned by the Johnson Development Corporation, so its only a matter of time before Wal-Mart dumps the Spartanburg site too, when that lease runs out. The displaced Macon workers will be given a chance to apply for jobs at Wal-Mart of Sam's Club -- but they will have to apply for a job like anyone else. The company has suggested that it might set up a "career fair" for the workers losing their jobs. Wal-Mart said the Macon closure had nothing to do with the state of the economy, and all other options were considered before the decision to close the center was made. It was just a business decision based on a lease. This week, the Spartanburg Herald Journal reports that the Spartanburg County Council is working on a 20-year incentive package to subsidize Wal-Mart's product return center. The agreement is called a "fee-in-lieu-of tax" agreement (FILOT), and is based on Wal-Mart investing at least $13.5 million in Spartanburg County within the next five years. Under the FILOT agreements, a fixed tax rate, known as the "millage rate," is established in return for promised investment. The tax rate to the company is reduced below what the company would normally be required to pay. The agreement amounts to a twenty year tax break, and will give Wal-Mart a $44,000 savings on its property tax bill in its first year alone. To pass this plan, the County Council has to take three votes on the welfare plan, and hold a public hearing. This week was the first reading of the FILOT agreement. Under the plan, the county will grant a "special source revenue credit" to Wal-Mart of $100,000 per year for the first two years. The Journal reports that as many as 3,000 people submitted applications for the 500 or so jobs at the new facility. Wal-Mart has said the jobs will pay $10 to $11 per hour. That's basically the same average wage that Wal-Mart claims it pays its regular, full time hourly associates at its stores in South Carolina. "Right now, every job we can bring into Spartanburg County is an opportunity," County Councilman David Britt told the Journal. "There are counties in this state where this would be a BMW-type announcement." The newspaper now reports that the facility will be 342,000 s.f., which is about one-third larger than a Wal-Mart supercenter. Councilman Britt told the Journal that Wal-Mart's proposed move to Spartanburg put pressure on county officials to make sure the deal went through. This explains the unnecessary taxpayer's subsidy to the world's richest retailer. Spartanburg county has an unemployment rate of almost 11%.

What you can do: County officials for some reason must have felt that if they did not add some financial incentives to the plan, that Wal-Mart would not have come to Spartanburg. It is perhaps a sign of desperate times that local officials will try to sweeten a deal that is already going through with a candy store of tax breaks and related incentives. The fact is, this throwing cash at Wal-Mart probably had little or nothing to do with the ultimate decision to move to Spartanburg. Smaller retailers do not get offered these kinds of welfare deals, because they cannot offer the county the potential of 500 jobs. The fact is, Wal-Mart's presence in South Carolina and Georgia has largely offset existing jobs at other local, regional, and even national retailers. Neither Wal-Mart stores, nor their 'return centers,' represent any added value economically to their host communities. The return center jobs are not skilled jobs, and their pay is similar to what clerks would make in a discount store. Readers are urged to email the Chairman of the 7 member Spartanburg County Council, Jeffrey Horton, at: jhorton@spartanburgcounty.org with the following message: "Dear Chairman Horton, I hope the County Council will reconsider its support of the Wal-Mart 'inducement agreement' which creates a 'special source revenue credit' for the world's richest retailer. I can't imagine why the Council thinks its necessary to have county taxpayers subsidize the Wal-Mart corporation, which in 2008 had net profits of nearly $13 billion! Wal-Mart needs no 'inducement' to locate in Spartanburg. The deal is already in cement, and the county is throwing away tax dollars to a corporation that does not need welfare. Such subsidies are not routinely offered to smaller retailers, who have to compete with Wal-Mart, and this grandiose tax break is just another example of how local government creates incentives for large corporations to destroy jobs at its smaller competitors. Wal-Mart adds very little value economically to its host communities, as the people of Macon, Georgia found out the hard way. When Wal-Mart decides this facility no longer meets its needs, Spartanburg will get to stand in Macon's shoes. This whole deal could be done without the tax gift to Wal-Mart, and it is unseemly that county officials -- under pressure not to blow the deal -- would offer this kind of subsidy to Wal-Mart. I hope on second reading you will reject this plan, and remind Wal-Mart that under the Free Market, corporations do not need to approach communities with their hand out for welfare. Let Wal-Mart's project stand on its own financially. It is certainly capable of paying its full share of taxes. If you give them this tax break, what are you going to give the smaller merchants who are helping to pay for this welfare over the next 20 years?"










 
 
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