Friday, August 28, 2015

When a 'thank you' seems a bit much

The Rendell administration provided state assistance to two companies in Philadelphia: Cintas Corp. gets $75,000 to build laundry; Digitas Health gets $617,000 to move to bigger offices.

When a 'thank you' seems a bit much

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The Governor’s Action Team has been in high gear of late, charging around Pennsylvania and awarding money for economic development projects.

Gov. Rendell was in Center City Thursday to announce two projects in Philadelphia. One sounds like economic development to me, while the other feels more like what activists deride as corporate welfare.

Cintas Corp., the big uniform supplier, will build a 58,000-square-foot building to process laundry at 4700 Jefferson St. in West Parkside. The state will provide a $75,000 “opportunity grant” for the project which will cost Cintas $14.8 million. For its part, Cintas says the new plant will enable it to retain 1,564 existing positions.

A new laundry facility probably will be more efficient and it’s planned for an area of the city that definitely could use the jobs. Sounds like a good deal.

But the state also is providing a $200,000 opportunity grant and $417,000 in job creation tax credits to help Digitas Health move into 61,000 square feet of offices in Center City.

Digitas Health , which used to be known as Medical Broadcasting Corp., bills itself as “the largest advertising agency in Philadelphia.” The agency employs 240 people.

David Kramer, its CEO, told Inquirer staff writer Stacey Burling that the agency had outgrown its Rittenhouse Square offices and “we were looking at all options,” including the suburbs.

Medical Broadcasting had been there before. It was in Conshohocken before moving into the city in 1996. That was about 200 employees ago.

Digitas Health, a unit of Paris-based Publicis Groupe S.A., says it intends to create 139 “highly-compensated positions within three years.”

For Rendell, the math works: Taxes from the new jobs would repay the state’s assistance within a decade. A growth company like Digitas Health would have been “desired by virtually anybody,” he said. “Job one is to make sure that the companies we do have stay with us and expand.”

And that’s what Digitas is doing. It signed a 10-year lease at the Wanamaker Building near City Hall under its $4 million project.

But I can’t help wondering if the Digitas Health assistance is simply subsidizing one company’s move from one tony address to another.

After all, both Cintas and Digitas Health have access to ample capital. Cintas is a New York Stock Exchange-listed company based in Cincinnati with $3.7 billion in 2007 sales. Digitas Health’s parent, Publicis Groupe, reported revenue of 4.7 billion euros for 2007.

For perspective, let’s remember that the Governor’s Action Team provided a total of $400,000 in financial incentives for the expansion of the AgustaWestland helicopter assembly factory in Northeast Philadelphia about a week ago. That is a $32 million project to create 200 manufacturing jobs and retain 185 others.

And Digitas Health isn’t the first marketing firm to receive state assistance. Rendell’s team provided a total of $150,000 to the Star Group following the move of its headquarters from Cherry Hill into Center City in 2006.

Rendell said the grants are a way of saying “thanks for your confidence in us and thanks for your confidence in the city as well.”

Kramer said the city attracts “a lot of young people with great educations who are interested in these new media.” Why then do we need to subsidize growth that appears to be happening naturally?

To me, the grants seem more like a “thank you for not leaving."

Quotable

“We haven’t done a very good job of providing an on-time product in Philadelphia, but our trend line is good.”

- Suzanne Boda, US Airways’ new senior vice president, based at Philadelphia International Airport.

Inquirer Columnist
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Mike Armstrong Inquirer Columnist
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