UPDATE: NOLA.com had said the incentive package for the DXC relocation was $120 million. The Baton Rouge Business Report puts the number at $44 million.
In order to attract Virginia-based DXC Technology to New Orleans, where it will open a Digital Transformation Center in the heart of the Central Business District, the state put together an incentive package worth more than $44 million in grants, workforce training and investments in higher education computer science and engineering programs.
In return, the publicly traded tech giant—which has revenues of some $25 billion and more than 6,000 private and public sector clients in 70 countries—has promised to create some 2,000 permanent jobs over the next seven years with an annual payroll exceeding $133 million by 2025.
“DXC’s selection of New Orleans represents the rarest and most promising economic development win that Louisiana or any state could hope for,” Gov. John Bel Edwards said at a 2 p.m. announcement outside the Mercedes-Benz Superdome, near where the new DXC facility will be located. “With this project, Louisiana gains a next-generation leader in global technology services, our college graduates will find unprecedented job opportunities at home, and New Orleans will welcome a landmark project to elevate its economy.”
While New Orleans is the big winner in the deal, the benefits will ripple throughout the state. According to a recent economic impact study by LSU, the company will generate $64.3 million in new state taxes, $868.4 million in new Louisiana earnings and have a total economic output of $3.2 billion from 2018 through 2025.
A significant part of the state’s deal with the DXC includes a $25 million investment in higher ed to increase the number of degrees awarded in computer science and other STEM-related fields on four campuses—LSU in Baton Rouge, the University of New Orleans, Southeastern Louisiana University in Hammond and Delgado Community College in New Orleans. The institutions will receive grant money directly over the next five years to be used for faculty, curriculum and other instructional resources.
In addition to the $25 million investment in higher ed, the state’s incentive package includes $18.7 million in performance-based grants payable to the the company over five years, including a $15 million flexible performance-based grant, a $2.2 million parking assistance grant, and a $1.5 million demolition grant. DXC will also receive workforce training assistance from the state’s LED FastStart program.
So it’s about $19 million in more or less direct incentives to DXC and $25 million in essentially workforce training at four colleges close to the New Orleans headquarters. Which seems like not all that bad a deal – unless, of course, you’re already running a company in the tech field somewhere in South Louisiana, in which case your labor costs just went up fairly quickly thanks to your own tax dollars being spent against you.
But it’s an economic development win, so Edwards is obviously going to be taking credit for it.
ORIGINAL: That’s using the Democrats’ rhetoric attacking economic development incentives to describe the announcement coming this afternoon of “one of the most significant economic development” projects in the state’s history, which Edwards had trumpeted earlier today.
The recipient of that largesse is DXC Technology, which will be bringing a reported 2,000 jobs to New Orleans.
DXC Technology, a global tech company that consults with the private sector and governments, will bring 2,000 jobs to downtown New Orleans as part of a company expansion, a source familiar with the project said Monday (Nov. 13).
The Tysons Corner, Virginia-based company will open a new center downtown — leasing as much 300,000 square feet of office space and hiring the 2,000 workers over the next seven years, through 2024.
DXC is a new company created in April 2017 by a merger of two longstanding companies in the U.S. tech sector: HP Enterprises, once part of Hewlett Packard, and Computer Sciences Corp., known as CSC.
The company’s offerings for IT services include business processes like billing systems, moving companies into the cloud, security services and government contracting.
Local leaders are billing the news as the single biggest economic development announcement in the city’s history. Gov. John Bel Edwards is holding a news conference 2 p.m. Monday (Nov. 13) at the Mercedes-Benz Superdome to formally announce the project.
The details aren’t out yet, but supposedly Edwards is putting the state on the hook for some $120 million in incentives and workforce development spending – meaning the taxpayers will be paying $60,000 to incentivize the creation of each job this economic development project will produce.
$60,000 might well be more than these 2,000 workers will make on average. It seems an inordinate expense.
Particularly given that it’s Edwards who’s throwing this money around. After all, didn’t this man run around the state screaming about corporate welfare and how Bobby Jindal was robbing schoolteachers and local medical clinics to throw money at IBM and other corporate giants? We seem to remember that, and we also seem to remember his constant rhetoric about how tax breaks and credits have robbed Louisiana of hundreds of millions of dollars in corporate income tax.
Apparently it’s OK to give tax credits to people from out of state but not to people already here.
Look, it’s good that there is job creation going on in New Orleans. Lord knows it’s needed somewhere in Louisiana, because after all this was the worst-performing state economy in America last year.
But $60,000 per job? How on earth are Louisiana’s taxpayers supposed to be able to afford that? And how does Edwards defend that amount of largesse when Louisiana supposedly has a billion-dollar fiscal cliff coming next year?