RALEIGH, NC (WNCN) — In the largest economic development announcement in North Carolina history, Vietnamese electric vehicle maker VinFast could receive up to $1.2 billion in bonuses to build their factory in Chatham County.
The company says it will invest just over $4 billion and create 7,500 jobs that pay an average minimum wage of around $51,000.
North Carolina Department of Commerce documents show VinFast considered 29 sites in 12 states before selecting North Carolina and the Triangle Innovation Point megasite near US 1 in Chatham County.
The state is offering up to $854 million, including infrastructure improvements and tax relief, while Chatham County has pledged up to $400 million.
“Most of it is for necessary water and sewer road improvements and site preparation,” Gov. Roy Cooper (D) said after the announcement. “It ensures that we can get to the table to be able to attract a company like this.”
The governor worked with Republican and Democratic leaders in the General Assembly as North Carolina tried to lure VinFast into the state.
The company’s global CEO, Le Thi Thu Thuy, said the announcement followed “three weeks” of negotiations.
State documents show that to be eligible for the full tax relief over the next 32 years, VinFast must meet a minimum of 80% of the jobs it has pledged to create and a minimum of 90% wages he has promised to pay.
Mike Walden, an economist at North Carolina State University, developed the formula the state uses to calculate these incentives more than 20 years ago.
“The incentives are really a reduction in the tax burden where they look at the cost of that versus the benefits of bringing in more money, more jobs, more payroll,” he said. “Bringing in more activity, which of course will generate more activity for the state. So the state is very deliberate about reviewing these incentive programs and making sure they are profitable for the state in the long run.
Jon Sanders, an economist at the conservative John Locke Foundation, noted the growing size of these incentive programs as states compete to attract big projects.
Last April, the state approved a nearly $1 billion package for Apple to build its new campus in Wake County.
“They just seem to get bigger. But, these things go on for decades and decades and we’re just going to pile them on top of each other, where will we be in four decades? ” He asked.
He said while states across the country use incentives as part of their strategy, companies tend to prioritize other factors.
“Our education, our low taxes and regulations, our access to major highways, those are the main drivers,” Sanders said. “For the politicians, they want to give the impression that without these incentives these things would never have come here. But, most likely and in most cases, these projects will be built in North Carolina as they will be built in North Carolina, because it makes good business sense.
Commerce spokesman David Rhoades told CBS17 that companies are required to submit a performance report on whether they have met their commitments on jobs created and money invested are subject to performance reviews by its department and the Ministry of Revenue.
“Sometimes there are cases where a company comes back to us and reports that they have not met their objectives, or that they may have been unable or unwilling to submit the required compliance information to us. In these cases, the company will most often ask us to end their subsidy. Recent examples are a 2019 grant to Microsoft (from which no state payment was ever made) and a 2018 grant to Sonic Automotive (which also never received a state payment from JDIG). Both companies are in business and have created jobs in North Carolina,” Rhoades wrote in an email.