MetLife’s RI Moves Part of Controversial Multi-State Plan
Monday, April 01, 2013
While Rhode Island has been reeling from the recent announcement that MetLife will be cutting jobs in the state due to moving headquarters and consolidating operations in North Carolina, a deeper look has revealed that the insurance giant has been orchestrating a much wider-reaching re-organization -- and not without controversy.
MetLife, Rhode Island's 13th largest employer -- and 6th largest for-profit employer in 2011 -- will be seeing a reduction of jobs at its Warwick base when MetLife begins moving its headquarters to North Carolina next month.
With MetLife employment numbers in Rhode Island listed at over 2600 in 2011, Warwick Mayor Scott Avedisian told GoLocalProv last week that his office is "working very diligently with MetLife to ensure the viability of the 1,400 jobs that will remain on the Warwick campus."
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTRhode Island will not be the only state impacted by MetLife's decision to consolidate operations in North Carolina, when Charlotte becomes the U.S. headquarters for MetLIfe's retail business, and Cary, a suburb of Raleigh, will serve as its global technology and operations hub.
The insurer has indicated it will be shifting jobs from Massachusetts, Connecticut, Pennsylvania, New Jersey, and California to approximately 2600 positions split between the two North Carolina locations.
In a statement released by MetLife on March 7, Executive Vice President Eric Steigerwalt said, "North Carolina has much to offer our employees and the company. The strong sense of community in Cary and Charlotte, as well as the region's robust infrastructure and sustainable talent pool were all compelling reasons for coming here."
On the same day Met Life made the announcement, the Office of North Carolina Governor Pat McCrory issued a press release as well regarding the impending arrival of the insurance giant to the Tar Heel State. Claiming the project was made possible in part by an award from the state Job Development Investment Grant (JDIG) program, it went on to state that the award could yield aggregate benefits to MetLife of up to $87.2 million over 12 years.
Tar Heel Pull Too Hard to Resist?
The joint announcements made by MetLife and the Office of North Carolina Governor Pat McCrory on March 7 indicated what appeared to be a mutually beneficial deal between the company and the state.
McCrory's office said that in addition to the 2,600 jobs MetLife would be adding to the region, the insurer is expected to invest over $125 million into its new Mecklenburg and Wake County campuses.
According to the release, the project was made possible in part by the JDIG program as well as a One Carolina Fund Award, which is based on proof of job creation and other performance requirements. JDIGs are awarded only to new and expanding businesses whose benefits exceed the costs to the state and would not be undertaken in North Carolina without the grant.
Under the terms of the company’s JDIG award, MetLife is eligible to receive up to twelve annual grants equal to 75 percent of the state personal income tax withholdings from the eligible new jobs created since the date of the initial award. Receipt of each annual grant is based on state-certified proof that the company has fulfilled incremental job creation and capital investment requirements. Over twelve years, the JDIG award could yield aggregate benefits to MetLife of up to $87.2 million.
The release goes on to state that as much as $29 million in additional funds from MetLife’s JDIG award could be added to the state’s Utility Fund for infrastructure improvements in economically distressed counties. In addition, the project was made possible "in part by a performance-based grant from the One North Carolina Fund of up to $2 million. The grant is contingent upon proof of job creation and receipt of a local funding match."
Courting Controversy
In MetLife and McCrory's releases on March 7, both parties thanked a number of groups in the state for making it possible, including the N.C. Department of Commerce, N.C. Community Colleges, Mecklenburg County, City of Charlotte, Charlotte Chamber, Charlotte Regional Partnership, UNC Charlotte, Wake County, Town of Cary, Cary Chamber, Greater Raleigh Chamber of Commerce, N.C. State University, Research Triangle Regional Partnership and Duke Energy were all named.
However, in an article that appeared in the Charlotte Observer on March 12, several Mecklenburg County officials went on record expressing concern as to how the County was moving forward to award $1.9 million in tax-break incentives to MetLife for their planned Charlotte hub.
Mecklenburg County Board of Commissioners Chairwoman Pat Cotham told the Observer that in a closed-door board session on March 5, commissioners "only had about 15 minutes to decide whether to give the incentives to MetLife during a meeting in which [members] say a Charlotte Chamber [of Commerce] representative unveiled the company's plans to them for the first time."
In an e-mail to the Observer, a Chamber representative said the Chamber signed a non-disclosure agreement with MetLife, preventing it from telling Commissioners about the company's plans until just before the incentives vote.
While the Commissioners gave preliminary approval to the plan during the meeting, Cotham has said she wants the economic development committee, which was revived this year, to review requests for incentives from companies and make a recommendation to the full board. Cotham told the Observer that Commissioners should be involved in discussions about companies seeking public dollars "on the front end".
According to the article, Ken Atkins, who runs Wake County Economic Development, part of the Greater Raleigh Chamber of Commerce, said he told Wake County commissioners in December that MetLife was thinking about bringing jobs to Wake and Mecklenburg counties.
The members of the state’s Economic Investment Committee, which voted on the JDIG package, knew that MetLife was looking at coming to North Carolina in late February when they voted in a closed session, said Josh Ellis, spokesman for the state’s commerce department.
However, another Mecklenburg County commissioner, Vilma Leake, voiced similar concerns. “Wake County knew the company and all of the information,” said Leake. “Why was it such a secret for us in Mecklenburg County?”
North Carolina Governor's Ties to Lobbying Firm Questioned
Another point of scrutiny in the deal is that Governor McCrory was previously employed by the firm of Moore & Van Allen, who helped broker the arrangement between MetLife and the State of North Carolina.
According WRAL.com in North Carolina, it's not clear when MetLife hired Moore & Van Allen, but the company began discussing a move to North Carolina roughly nine months ago, while McCrory was still employed at the firm.
The Governor told WRAL that his commerce secretary led that recruitment effort, and that his first involvement came with a phone call to MetLife's chief executive after an agreement had been reached.
"There's no doubt that (incentives) was a factor in their decision-making. To what degree, I don't know," he said.
McCrory said the state Department of Commerce is reviewing how incentives are used to recruit new and expanding businesses as part of an overall examination of North Carolina's economic development strategy.
The Wake County Board of Commissioners will be voting on the local tax incentive package for MetLife Monday, April 1, and the Mecklenburg County Board of Commissioners is slated to vote on their package on Tuesday, April 2.
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