Joines: Dell and Herbalife in talks for sale of manufacturing plant
Nov 12, 2012 (Menafn - Winston-Salem Journal - McClatchy-Tribune Information Services via COMTEX) --Dell Inc. is trying "aggressively" to sell its vacant manufacturing plant in southeastern Winston-Salem to Herbalife Ltd., possibly for about 30 million, Mayor Allen Joines said Monday.
Although Dell spent about 110 million to build the plant, the company may be open to selling it at a significant discount because of the utilities costs and property taxes related to the building.
Each year, Dell pays about 900,000 in property taxes alone for a building it does not use. Selling the plant, which has 750,000 square feet and has been closed since 2010, would eliminate the property-tax expense and give Dell a one-time financial boost.
"There are not that many companies out there that can afford to buy a 750,000-square-foot building," Joines said.
Efforts to contact Herbalife and Dell were unsuccessful.
Herbalife, a nutrition supplement company based in Los Angeles, posted more than 3.5 billion in total revenue last year, and is considering bringing over three years 493 jobs averaging more than 40,000 annually. And the company stands to receive economic incentives worth 10.5 million from the state of North Carolina, 2.25 million from the city and 1.19 million from Forsyth County.
Critics of such incentive deals say that it amounts to corporate welfare.
They point out that a company that makes such revenue does not need to receive a refund in the property taxes it pays, that a project worth doing should not require public money and that it leads to unfair taxation because smaller businesses do not get to enjoy such incentive deals.
On the other hand, city officials say, money for the tax-based incentives is generated by the project itself - and that the project would pay for itself within seven years. After that period, the city would reap all the benefit of the new property taxes as well as the jobs the project brings.
Winston-Salem is competing with Gwinnett County, Ga., for the Herbalife project. The details of Gwinnett's project are unknown, but no manufacturing plant is located there.
Several members of the Winston-Salem City Council, attending a finance committee meeting Monday, spoke favorably about the possibility of bringing jobs to the city and seemed prepared to support the incentive deal when it goes to the council's next scheduled public meeting, which is next Monday.
"There's probably not a week that goes by that I don't have a conversation with somebody that is looking for some type of employment, looking for a job, and I think that it is imperative of (the) council ... to look at ways to bring jobs into this city," Council Member Derwin Montgomery said.
Bob Leake, the president of the economic development group Winston-Salem Business Inc., told the finance committee that the project would mean all sorts of jobs, from entry-level manufacturing to finance and office management.
"Suffice it to say that there should be jobs available for a very wide range of individuals in this market," Leake said.
In considering a manufacturing hub on the East Coast, Herbalife set aside a budget of about 130 million, according to its latest earnings report. The company would spend about 53.6 million on capital improvements and 46.6 million on machinery and equipment.
The remaining 30 million would likely go toward the purchase of the plant, Joines said.
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