Open Source: Most NC incentives fall short. Is that a feature or a bug?

This year, the North Carolina Job Development Investment Grants turned 20.

Known as JDIGs, these are the main incentive the state dangles to entice companies to move or expand here. Since 2003, North Carolina has awarded 406 projects. Some JDIG-backed initiatives are well known; Apple to build a future 3,000-worker campus in Research Triangle Park, for example. Others are smaller in scope.

After several years of growth, the program has actually been historically quiet so far in 2023.

And with two decades of JDIG data available, it is also clear that most of these projects never meet their initial hiring targets.

More than one in five projects have either been withdrawn or terminated before the state gives the businesses any incentive dollars. Another 91 projects have ended early after the state disbursed some money connected to job creation. 42 projects completed their goals and 181 are still active.

The incentive benefits are largely tethered to hiring; companies receive payroll tax rebates from the state as they meet certain hiring and investment thresholds.

So, is it an issue that most JDIG projects don’t match their promises?

The state says no.

“It’s working as designed,” said David Rhoades, spokesperson for the N.C. Department of Commerce, which administers the JDIG program. He noted the program has brought thousands of jobs to the state that would not be here otherwise.

I’ve heard state economic officials say it can be difficult to predict which projects will succeed or fail. Thus, casting a wider net can be a fruitful approach — even if the gulf between projected hiring and reality is poor optics.

The general “no harm, no foul” safety net of JDIGs seems valid. I would be curious, however, if there is a cost when a promised economic project falls short or turns into nothing (see Allstate in Charlotte which pledged 2,250 new jobs and delivered zero).

There are the dashed expectations of local residents. Sometimes local governments give upfront cash grants to these projects. And there is an opportunity cost when sites are reserved for projects that never materialize.

So, is the JDIG’s mixed success rate a feature or a bug?

Onto the rest of this week’s news.

Cooper has company in Japan

North Carolina has economic development offices around the world: in Mexico, Canada, Western Europe, the Middle East and Asia.

One of its oldest foreign offices is in Japan, a country that’s played a prominent role in North Carolina’s economy in recent decades — including through major employers like Bridgestone, Toyota and Fujifilms.

This week, Gov. Roy Cooper is in Tokyo to attend the annual Southeastern United States/Japan Economic Development Conference. His aim is to recruit more Japanese businesses to the Tar Heel State, but he’s got competition from neighboring states.

In April, Virginia Gov. Glenn Youngkin visited Japan during his first foreign trade trip. In 2019, Tennessee Gov. Bill Lee stopped by on his first international economic trip. Alabama’s commerce secretary is currently leading his state’s delegation in Tokyo.

But North Carolina does have a unique advantage — next year’s Southeastern United States/Japan Economic Development Conference will be hosted in Charlotte.

Short Stuff: New megasite, New data on Triangle VC funding

• $35.5 million from the state budget is going to the creation of a megasite in Burke County. House Speaker Tim Moore was on hand to celebrate the news. And here’s more on the ongoing statewide search to add more megasites — including an explanation of what a megasite is.

• Triangle startups have completed 127 venture capital deals so far in 2023, according to data released this week by PitchBook. This is a bit behind last year’s pace — when 195 local deals were completed overall, as VC activity has slowed nationwide.

• VinFast stock enters Friday trading at $8 a share. The automaker plans to begin selling stock to help fund its global expansion, including a big plant near Raleigh.

• Pendo CEO Todd Olson posted a message on LinkedIn about his Raleigh software company’s staff in Israel. “I pray for restored peace, so each and every individual can return to their normal lives as quickly as possible,” he wrote.

• Former Red Hat CEO Jim Whitehurst was named interim CEO of Unity, a game engine that rivals Cary’s Epic Games. Whitehurst led Red Hat from 2008 to 2020. This spring, I wrote about Raleigh’s Red Hat during the Whitehurst tenure.

• MetLife held its 5th annual Triangle Tech X Conference with panels at the company’s global tech campus in Cary. The focus of this year’s conference was on STEM equity in the era of artificial intelligence.

National Tech Happenings

• Many New York City residents are skirting the city’s new Airbnb regulations, Wired reports.

• TikTok and Montana were in federal court this week as the social media company is challenging the state’s ban on the platform.

• Employees of the music distribution platform Bandcamp are bracing for layoffs after their company was sold by Epic Games last month.

Thanks for reading!

Open Source

Do you enjoy Triangle tech news? Subscribe to Open Source, The News & Observer's weekly technology newsletter and look for it in your inbox every Friday morning. Sign up here.