by Jon Sanders
Director of the Center for Food, Power, and Life, Research Editor, John Locke Foundation
If you knew you had an investment opportunity that would return about three and half times your original investment, would you take it? If this was a gamble, your odds of winning are 1:1! In this case, the jackpot is a net $12.4 million.
That’s the business decision that Advance Auto Parts executives were faced with, and they of course took the sure win. The only way they could turn this down would be if another state were even stupider than North Carolina offering $17.4 million in exchange for $5 million in investment over 12 years and somewhere north of 100 net new jobs.
Film production companies have to be annoyed at this deal, which offers this more favored crony a guaranteed return rate of almost 14 times sweeter than the rate guaranteed them (25 percent vs. 348 percent of investment).
When Advance Auto Parts was awarded a state incentives package worth more than $17.4 million last week, the McCrory administration touted the company’s plan to “create 600 new jobs” in Raleigh as part of its investment.
What wasn’t mentioned was that a good chunk of those 600 jobs could be workers who are already employed by General Parts International, which Advance Auto acquired for $2.04 billion earlier this year. Nor was it mentioned that some General Parts employees are expected to lose their jobs as a result of the corporate restructuring, or be given the option of relocating to Roanoke, Va.
General Parts, a homegrown company that operates 1,400 Carquest stores, employed about 500 people in Raleigh at the time it was bought. Last week those workers were notified which functions and departments were staying in Raleigh and which were moving to Roanoke, where Advance Auto has its headquarters.
“Some of those team members in that 500, some of their functions are moving to Roanoke,” said Shelly Whitaker, an Advance Auto spokeswoman. “Some of their functions will be part of that 600 as we hope to retain those team members. And then some we may not.” …
Advance Auto is eligible to receive $17.4 million over 12 years if it meets its hiring targets and invests more than $5 million.