North Carolina Governor May Veto Goodyear Support Proposal

(Akron/Tire Review – McClatchy Newspapers) Governor Mike Easley is considering vetoing legislation that gives up to $40 million in incentives to Goodyear Tire & Rubber Co. to modernise its Fayetteville, North Carolina plant and keep it running, according to the company’s lobbyist and lawmakers involved in the legislation.

The move would be a sharp reversal by the Easley administration, which has used incentives to lure technology giants Google and Dell. But critics in the General Assembly emphasise that those earlier handouts were used to lure new jobs, not keep existing companies happy.

Easley has to act by September 1 or the bill, which passed the House and Senate, becomes law. Fayetteville area legislators and Goodyear’s lobbyist John Bode met with administration officials about the bill Monday.

“He’s seriously entertaining a veto,” said Rep. Rick Glazier, a Fayetteville Democrat.

Dan Gerlach, Easley’s chief economic adviser, said Easley will make a decision next week. “The governor is committed to figure out ways to help companies like Goodyear in a fair and responsible manner,” Gerlach said.

The dispute over the legislation underscores the heightened scrutiny of state and local incentives across the country.

North Carolina is defending a lawsuit against the $242 million package it gave Dell in 2005 to open a Winston-Salem plant.

A similar suit was filed recently contesting the $260 million in incentives awarded to Google for plans to open a computer server farm in Lenoir.

New York state officials last month dispatched letters to about 3,000 companies warning they could lose their tax breaks for failing to create promised jobs.

Arizona’s governor signed a law last month that penalises certain localities for offering sales tax breaks to lure large retailers, saying the practice had gotten out of control.

The Goodyear legislation offers up to $4 million a year over 10 years for overhauling the 38-year-old plant. Senator Tony Rand, a Fayetteville Democrat and Senate majority leader, said the company is expected to apply only for $3.5 million a year.

The revamping would allow the plant to produce larger light truck and SUV tyres that have become a mainstay of the North American market, as well as newer, more durable tyres. The plant currently produces smaller, passenger car tyres.

In return, Goodyear commits to investing $200 million over the next five years and maintaining a full-time work force of at least 2,000.

The company, which recently settled a 12-week union strike, said in May it would retool its plant in Gadsden, Alabama, after receiving about $125 million in incentives there.

The Fayetteville plant employs about 2,750 workers, jobs that are irreplaceable if the plant would close, Bode said.

“These are blue-collar jobs, but they’re the best blue-collar jobs we’ve got,” he said. “$60,000 and health care and retirement – In Cumberland County that’s like dying and going to heaven.”