Jabil May Be Calling St. Pete's Bluff

ST. PETERSBURG, Jun 28, 2008 (Tampa Tribune - McClatchy-Tribune Information Services via COMTEX) -- JBL | Quote | Chart | News | PowerRating -- ST. PETERSBURG -- This week, news broke that Pinellas County could lose one of its corporate heavyweights, St. Petersburg-based Jabil Circuit.

That would mean the loss of some or all of its 1,900 local employees and nearly $1.6 million in annual property taxes, according to Pinellas County tax records.

But is the company for real about potentially moving or bluffing in order to win financial incentives from local governments?

Like professional sports teams that threaten to leave, some corporations have engaged in gamesmanship to win tax breaks, money for road improvements and other incentives, said Rachel Weber, an associate professor and expert on economic development from the University of Illinois at Chicago.

Essentially, companies line up competing offers from other cities and counties eager to lure them to town and they ask their own communities to match the offers. They often use accounting firms and relocation consultants to solicit the offers.

"Unfortunately, it's very difficult to determine" whether companies are serious about their plans to move, Weber said.

Jabil Circuit is a leader in contract manufacturing, meaning it makes cell phones and electronic gadgets for some of the world's leading consumer brands. Although it has been in Pinellas County for 26 years, the company this week confirmed that it is considering moving to a new headquarters and manufacturing facility. Public support will play a role in where Jabil locates, company spokeswoman Beth Walters told The Tampa Tribune on Tuesday.

Coincidentally, the St. Petersburg City Council last week approved an incentive package for an unidentified company known only as Project Extreme. City and county economic development officials won't say whether Project Extreme and Jabil Circuit are one and the same. However, government documents show that Project Extreme is a major employer based in St. Petersburg with 1,900 employees in manufacturing and research and development. That appears to match Jabil Circuit.

Incentives Would Aid Expansion

The incentives include: $4.7 million if Project Extreme locates in an abandoned, underutilized or contaminated area called a "brownfield," $13 million for road construction and $15 million in other incentives. The money would come from St. Petersburg, the county and the state.

With the incentive package, Project Extreme would not only stay in the area, but the incentives would help it expand here. It could add an additional 858 jobs with average pay of $42,685 and construct a $49 million building, city documents show.

Walters, the Jabil Circuit official, did not return calls Thursday or Friday.

If Jabil Circuit is the company in question, it appears to have the upper hand in requesting financial help from the city, county and state -- whether or not it is serious about leaving.

Mike Meidel, Pinellas County's economic development director, wouldn't speak about Jabil specifically because the project is confidential. Generally, he said, that in order to qualify for state financial incentives, an existing company must certify that it would consider leaving without those incentives. The Project Extreme company was able to show the state that it has received competing offers from other communities seeking to lure it to town, Meidel said.

Ron Weaver, a Tampa development lawyer, said corporations that are flexible and can move their operations to another town easily have leverage when demanding incentives.

Relocation May Not Be Difficult

Moving may not be a problem for Jabil Circuit. The 1,900 people it employs in the area are a fraction of the roughly 75,000 people it employs worldwide.

Amit Daryanani, an analyst who follows Jabil Circuit for RBC Capital Markets, said much of Jabil Circuit's work today takes place in Asia and it matters little where the corporate headquarters is. The company's biggest competitor is a Singapore-based manufacturer, Flextronics International, Daryanani said.

Historically, much of state and local government economic incentive money went toward luring new companies to town, but in recent years, even companies with longstanding ties to a community have begun making demands.

"Existing businesses have kind of gotten in on the game to try to level the playing field," Weber said.

Dave Goodwin, St. Petersburg's economic development head, wouldn't say whether Jabil Circuit is the Project Extreme company. However, he said Jabil is a "primary" employer that not only employs people directly, but also creates jobs for the vendors that serve Jabil.

"Those are some of the most important types of companies that you can have," Goodwin said.

Reporter Michael Sasso can be reached at msasso@tampatrib.com or (813) 259-7865.

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