CREE's overseas tactic secures $2 million from Durham Commissioners | News
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Tuesday, September 14, 2010

CREE's overseas tactic secures $2 million from Durham Commissioners

Posted by on Tue, Sep 14, 2010 at 12:16 PM

While Durham county commissioners and the Durham Chamber of Commerce were genuflecting at the altar of CREE last night, there seemed to be little acknowledgment that the company was using an all-too-familiar strategy to secure a $2 million incentives package.

It was threatening to move jobs overseas. And given the exodus of manufacturing jobs from North Carolina, the Durham commissioners had to say Uncle.

The 23-year-old Durham-based company wants to create a production line for its new LED chip. Competing for the 244 jobs and $392 million in capital investment were Durham, China or Malaysia. The company stated that, “incentives from the local government are a key consideration in its final decision on locating the expansion …”

Translation: CREE was essentially threatening to move its new production line for its LED chip to the Far East if Durham did not come up with the money.

CREE has already received government money, including $1.8 million in federal stimulus funds for research and development. In addition, the company was awarded a $39 million advanced energy manufacturing tax credit from the feds to cover about a third of its new production.

“The regulatory environment and wages are better there [in the Far East],” said Keith Burns, who is on the Durham Chamber of Commerce board of directors. “It’s an economically responsible move for these companies. They have shareholders to report to.”

No translation needed there: The regulatory environment is better in China and Malaysia—better for the companies, but not for the workers. According to a January 2010 Economic Policy Institute report,epi.pdf “China extensively suppresses labor rights.” Malaysia’s labor and human rights violations are extensive, according to a 2010 report by Human Rights Watch.

The minimum wage for Chinese industrial workers is $140 month, according to a recent article in The Irish Times; in Malaysia, there is no minimum wage for most workers..

Commissioners unanimously approved the package for CREE, which manufactures energy-efficient lighting equipment, although they did require that $825,000 of the money be reserved to train new hires who must be Durham County residents. The company currently employs 1,850 full-time workers and 376 contractors.

North Carolina and Durham County are among the nation’s hardest-hit areas in terms of manufacturing job loss. The Economic Policy Institute ranks the state’s Fourth Congressional District as 15th in the nation for net jobs lost to overseas workers—11,700, or 3 percent of the area’s total employment.

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