Diebold said Tuesday it had considered moving its headquarters and most of its local offices out of Ohio, but it would instead consolidate five of its seven area locations at a yet-to-be disclosed site in the Akron-Canton area.
Gov. John Kasich appeared at Diebold’s headquarters here Tuesday afternoon to announce that the company had accepted his administration’s offer of a $56 million package of tax credits, loans and grants to induce the company to stay.
“For the folks that are located in Akron, Canton (and) Green, this is a big save,” said Kasich.
Diebold President and CEO Thomas W. Swidarski said, “If it wasn’t for the governor’s aggressive stand and stepping up through this legislation, Ohio would not have been competitive enough for Diebold to remain here.”
Diebold spokesman Mike Jacobsen said the company, a manufacturer of ATMs and bank security systems, has about 16,000 employees worldwide and about 1,900 in Green, Canton and Jackson Township. It wants to consolidate about 1,500 employees now in five facilities at a new campus because its buildings are aging and employees could better collaborate and host clients at one location.
The company expects to spend $105 million on constructing the campus and other consolidation costs, and hopes to break ground in a year. The company says no one would be laid off as a result of the consolidation.
Swidarski said the company is considering three to five sites for its campus, but is not disclosing which ones, to avoid giving sellers leverage in negotiations.
Canton Mayor William J. Healy II and Green Mayor Dick Norton, in attendance for the Diebold announcement, indicated that at least one prospective site is in Canton or could be annexed into Canton and at least one other site is in Green.
Depending on which site is chosen for the campus, both Canton and Green could lose substantial income tax revenue. Norton says Green gets about $2 million in income tax revenue from three Diebold offices in the city that would be moved to the campus. But Healy said the area already has “won” by keeping Diebold here because the economic effects of its departure would have been devastating to Canton, which has several residents who are Diebold employees.
Healy said Canton’s Community Improvement Corporation has been in private discussions during the last nine months with Diebold in trying to hammer out a proposal involving a possible site in Canton. Healy said he could not divulge details.
Jacobsen said the state’s package includes $30 million in tax credits, $20 million in loans from state loan funds and $6 million in economic development grants. The company expects about $44 million in tax breaks from local governments. In return, Diebold has to retain at least 1,500 jobs in Ohio for 18 years and would have to repay the incentives if it does not.
Page 2 of 3 - Diebold has about 2,000 Ohio employees, but Kasich said the company wanted a margin for error in case of another economic downturn.
Jacobsen said Virginia and North Carolina, which already have Diebold manufacturing facilities, had offered aggressive tax breaks and other incentives to the company in hopes of luring expanded operations to their states. Jacobsen declined to give details about those “compelling offers” but said “it was our strong preference not to leave.”
Jacobsen said Diebold officials told the administration of then-governor Ted Strickland that the company was considering moving, but the company and the state could not agree on a package of incentives.
Kasich said a week after he was elected in November, he called Swidarski and said, “we’re going to do everything we can to keep you.”
The governor even offered to address Diebold’s board and make his pitch in person.
“Whatever you want me to do,” he said.
The governor said he wanted to avoid a repeat of the situation where Diebold competitor NCR moved its headquarters from Dayton to Georgia in 2009 due in part to tax incentives offered by that state.
“We lost NCR because we weren’t even in the ball game. People were asleep at the wheel. We could not allow that to happen again,” Kasich said.
But Kasich’s director of job creation, Mark Kvamme, ran into snags, which Kasich declined to describe, while trying to negotiate a tax incentive package with Diebold. Then the General Assembly passed House Bill 58 last month authorizing refundable job retention tax credits, which were designed to keep American Greetings from leaving the state.
Under the law, Diebold also qualified for the credits because it was promising to retain at least 1,000 jobs, it was being wooed with credible offers from other states and it was willing to invest at least $25 million on its new campus. The refundable credits allow the companies to potentially eliminate their income and corporate tax liability and then claim refunds up to a total statewide cap of $8 million.
“If you don’t have an incentive package that works, if somebody else is outbidding you, you’re going to lose,” said Kasich, who added that North Carolina could offer the enticement of its Research Triangle, which includes top technology companies and universities. “When their main competitor has moved from this area or moved from the state of Ohio to Georgia, Diebold can’t afford to have a higher cost structure.”
The Ohio Legislative Service Commission says the tax credits are likely to lead to decreased tax revenue, meaning less money for the state’s local government and library funds.
Kasich said what the state gave up in tax breaks, it and local governments more than get back in tax revenue from the economic activity that Diebold generates — at least $6 million the first year of the deal.
Page 3 of 3 - The governor said Diebold warranted consideration for tax breaks because it could have taken its precious high-technology jobs and an annual $90 million payroll out of the state.
“We’re not just going to give everything to everybody that says they’re going to leave,” said Kasich. “We have to make a determination on the basis of what are those companies that we think are critical to the future of our state.”
Kasich indicated that he would take any company’s departure from Ohio almost personally.
“You know (since) LeBron (James) went to Miami, I celebrate every night that (the) Miami (Heat) loses,” Kasich said to Swidarski. “And I must tell you, I celebrate every deal you get that NCR loses.”