LETTER TO THE EDITOR: Williamson, Inc. CEO Confident in County’s Economic Future

by Matt Largen, President & CEO of Williamson Inc

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Matt Largen

The profession of economic development has been thrust into the spotlight lately with the news Carrier will continue to operate a plant in Indiana, keeping roughly half of the jobs in America that were planned to be off-shored to Mexico.

Last week, Carrier reached an agreement with President-elect Trump and Vice President-elect Mike Pence to keep nearly 1,000 jobs in Indiana. In March, the company said it was moving those jobs, and about 2,000 others, to Mexico. The company will receive $7 million in state tax breaks over 10 years as part of the deal.

There are two stories here that matter to Williamson County: the judicious use of local tax incentives to close deals and the long-term effect of automation on our economy.

Economic incentives are nearly as old as our Republic. According to Thomas P. Miller and Associates, an Indiana-based economic consulting firm, state governments have offered economic incentives since 1791. Economic incentives certainly garner headlines, but are rarely fully explained or understood. Every community has a different approach to offering incentives, and nearly every community participates in one way or another.

One of the largest misconceptions is that a community presents a company with a giant Publishers Clearinghouse-type check at a press conference announcing 1,000 jobs. In reality, communities across the country are moving towards a performance-based approach, like Williamson County, where a company creates a certain number of jobs and, in return, they receive a refund on property taxes or some other local tax. A performance-based tax incentive is a much better approach and creates a mutually beneficial relationship between the public and private sector.

Williamson County has participated in 11 tax incentive deals in the last 22 years. In the last two decades, those companies that received local tax incentives have generated over 7,300 jobs, which combined is larger than the population of 75 percent of all cities in Tennessee. Nissan, Tractor Supply Company, Mars Petcare and Jackson National Life Insurance Company are just a few examples of the recipients of those tax deals. Each one of those companies have become economic and philanthropic cornerstones of Williamson County.

While most counties in Tennessee abate, or forgive, 100 percent of property tax dollars, Williamson County has an ironclad rule never to abate money that is earmarked for Williamson County Schools, which is roughly 60 cents of every property tax dollar (excluding debt service). The Williamson County Commission makes the final determination on approving or rejecting tax incentive deals after thoroughly vetting the project through a series of public hearings and committee meetings.

In some cases, tax incentives are necessary to win a project and bring good jobs to Williamson County. On more than one occasion I have seen incentives tip the scales in favor of one community over another. While no amount of incentives can make a bad deal good, they are an economic reality and very much a part of the decision making process for companies, especially during the final stages of negotiations.

In addition to offering economic incentives thoughtfully and carefully on a case-by-case basis, Williamson Inc.’s approach to attracting and growing jobs is to focus on the fundamentals, which include great schools; low crime; a variety of housing options; amenities like access to healthcare, parks and locally-owned restaurants; airport access; and tourism assets like music and historic preservation. Companies are attracted to an area for the same reason people are attracted to an area. In today’s economy, companies follow talent.

While economic incentives play a key role in economic development deals, automation is increasingly becoming a factor in how companies decide to invest in capital and where economic developers decide to invest in job training programs. Automation continues to drive capital investment numbers up and jobs numbers down in manufacturing plants. Greg Hayes, the CEO of United Technologies (Carrier’s parent company) said the $16 million investment in the Carrier factory in Indianapolis will automate the plant to drive down costs and ultimately means there will be fewer jobs. Also, consider this one example from an article in the New Statesman two years ago:

“Kodak was founded in 1880, and at its peak employed nearly 145,300 people, with many more indirectly employed via suppliers and retailers. Instagram was founded in 2010 by a team of 15 people. In 2012 it was sold to Facebook for over $1 billion. Facebook, worth far more than Kodak ever was, employs fewer than 5,000 people.”

Manufacturing will have a key role in the future of America’s economy, and the role is evolving with the next generation of workers in state of the art production facilities. We have partnered with Columbia State Community College and Fairview High to help launch a mechatronics program to meet the demand of the 21st century manufacturing workplace. The program allows high school kids to graduate with both a high school diploma and a technical certificate. The program focuses on teaching students advanced manufacturing skills that will allow them to run the machines that run the manufacturing plants of the future. While the program is up and running and has been met with overwhelming demand by Fairview High students, we are still working on a solution to mitigate the costs for those students.

When I am asked to talk to kids, parents and educators about the Williamson County economy, I focus on the importance of learning skills like leadership, critical-thinking, problem-solving, communication, and teamwork. Those skills could easily translate to project-based employment if that becomes our economic model. Although we do not know what kind of jobs the future holds, we can be feel somewhat confident these new skills will be vital in the future. The ability to problem-solve, in particular, will continue to usher in new waves of innovation. I tell my two girls to think about solving a problem, not necessarily following your passion, when you start thinking about a career.

In his individual and collective conversations with companies across industries and across the country, I hope President-elect Trump will continue to appeal to both the economic patriotism and the sense of community of company executives. I also hope that he will help create a stronger sense of economic certainty through tax and regulatory policy, something we have been told by a number of large employers has been missing for the last several years.

One of our employers reminded me this week their product cycle is eight years out and predictability and stability is critical for their business. Companies are risk-adverse, and one of strongest selling points of Williamson County is the stable and predictable economic environment that has led to our Aaa bond rating. Williamson County, Middle Tennessee, and the state of Tennessee have created an umbrella of certainty in a very uncertain world.

Business plays a critical role in keeping a community healthy. A vibrant business community leads to a vibrant community. Innovation and automation will continue to impact local economies across the country in the manufacturing and eventually the service sector to an even greater degree. Tax incentives will continue to play a key role in attracting and growing companies in Williamson County and beyond. We will continue to partner with schools and higher education to prepare our students for the jobs of the future.

I am very confident about the future of the Williamson County economy and trust there will be a broad engagement and partnership with the private sector to find ways to continue to grow and keep jobs in America.