RMFD’s Fleece Job
RF Micro Devices began in Greensboro in 1991, formed by three entrepreneurs on the eve of the digital revolution.
The company designs and manufactures components for wireless devices ‘— phones, global positioning systems, anything Bluetooth’… that kind of stuff. In terms of product RFMD, as it’s now known, is a global player. Their main buyers are Samsung, Nokia and Motorola and their research and development is staying abreast of the technology.
The company went public in 1997 and quickly raised $36 million, though the price of the stock hovered at just under $5 for a couple of years. By early 2000 RFMD’s stock spiked at over $90 a share and, after a split later that year, it has been in steady decline ever since. Last week a share of RFMD could be had for just over $7.
This means that RFMD is an excellent candidate for corporate welfare, and last Tuesday Gov. Mike Easley visited the Greensboro offices to award them their handout amid much fanfare and hoopla.
The company, which promises to deliver 300 or so jobs that should pay an average annual salary of $52,293, will over the next 11 years gather a possible $6.5 million in incentives paid by the state, Guilford County and the city of Greensboro.
To get a clearer picture we pulled out our calculator.
If 300 local people make $52,293 a year, that will pump more than $15.5 million into our economy annually. If they maintain the positions for 11 years they’ll be eligible for $4.9 million in incentives and their total outlay in salaries over those years will approach $200 million.
Greensboro’s share of the incentives is $590,000; Guilford County’s is $830,000. Between the two we are paying just under five grand for each of the 300 promised jobs.
At first blush it looks like a good deal for Greensboro ‘— the amount is a fraction of the subsidies we provide the Greensboro Coliseum on an annual basis and it seems as if we’ll get a return on the investment inside the first year. And as long as the state is slinging out incentive packages to multi-million dollar companies, we might as well throw a bone to a homegrown company.
We do not like corporate incentives. We see them at best as unearned rewards doled out to businesses that should be able to turn profits on their own. At their worst, corporate incentives seem like a form of extortion, a spoil of the bargaining table won through thinly veiled threats of relocation or shutdown.
And once we started paying them, or even offering to pay them, we were marked for suckers.
So when RFMD, with their stock stalled below $10 a share, was looking for a shot in the arm, they first went rooting in their own backyard, in a state that has already shown itself to be a willing player in the incentives hustle.
They got what they wanted. The jobs will likely benefit the area and the company will surely grow. And yet we still feel that the role of the government is not to help fund growth for a selective group of companies that operate for profit.