Incentives downplayed by head of job recruitment efforts
RALEIGH — The new head of the North Carolina organization expected to run the state's privatized job recruitment efforts said Tuesday that he knows as a former CEO that tax breaks and other corporate incentives have only a marginal impact in attracting businesses.
State Commerce Secretary Sharon Decker introduced Richard Lindenmuth as the interim head of the Economic Development Partnership of North Carolina, the nonprofit organization shaping up to take over recruiting companies, films, tourists and sporting events to the state.
Lindenmuth, 69, leaves a position as partner in a management consulting firm, where he's paid to step into companies as an interim chief executive officer. He has more than 30 years of management experience in domestic and international businesses, including serving as CEO for more than 10 companies, the state agency said.
Lindenmuth declined to describe how much he earned last year other than it was more than the $120,000 annual salary he will collect under a personal services contract he signed with the Commerce Department. The state agency's top lawyer will decide whether Lindenmuth is living up to the contract.
Gov. Pat McCrory said Lindenmuth's experience fits his administration's goals for targeting manufacturing and foreign companies.
"He's going to help develop the plans for recruitment in the future, and he'll have the credibility to meet with potential customers (while) clearly understanding what their needs are and how North Carolina can best meet those needs," McCrory said.
Lindenmuth said that after advising and working as a corporate chief executive officer, he's observed that tax breaks dangled to attract companies have less impact on increasing employment than broader factors like good schools, low living costs and a cooperative business environment. The cost of tax breaks, free land and other incentives has accelerated over the past two decades as North Carolina offers more and bigger packages to try attracting jobs.
"Incentives truly do not make the difference," Lindenmuth said. "Incentives are important only in the sense of trying to get very specific help to a particular company. I look at incentives just like I would inside an organization. If you pay a bonus to one individual, it does not provide an incentive to the organization."
An exception might be using big incentive packages to lure major manufacturers like South Carolina did in attracting auto-maker BMW and jet-builder Boeing to open factories that state, Lindenmuth said. For such big employers, tax breaks and other incentives are expected, he said.
Critics contend adoption of similar public-private partnerships in other states created a growing appearance of insider dealing and conflicts of interest. North Carolina's planning for the privatized marketing effort has considered missteps by similar organizations in other states, Decker said last month.
Lindenmuth starts knowing his position may not last. While state lawmakers authorized the McCrory administration to plan its shift to privatized business recruiting, legislation detailing how the nonprofit should operate never passed. Decker said she is following the stalled bill's outline in pushing forward with changes. The legislation is expected to get a new look after the General Assembly starts its annual session in May.
The uncertainty put off some candidates for the CEO job, Decker said, while Lindenmuth was experienced in pushing change and coping with unexpected surprises as he worked with companies that were starting up, shutting down or transforming into new directions.
"He's used to grey space, used to a lot of uncertainty," Decker said. "What brought me back to Dick again was his absolute comfort with change management, because that's what this leadership role is."