IBJOpinion

EDITORIAL: Rolls-Royce abatements worth the cost

IBJ Staff
April 9, 2011
Back to TopCommentsE-mailPrintBookmark and Share
IBJ Editorial

The city of Indianapolis’ plan to award Rolls-Royce Corp. $22 million in tax abatements—even though it is not committing to add a single worker—has rekindled the age-old debate over corporate welfare.

To be sure, that’s a debate worth having. We wish communities and states didn’t dole out incentives like candy—a practice so prevalent that company executives and boards almost feel derelict in their duty if they don’t chase the maximum handout.

But despite Rolls’ lack of job commitments, we don’t see the London-based aircraft engine-maker as a poster child for incentives gone awry. We think city officials have made a compelling case for stepping up big to secure the future of one of Indianapolis’ largest employers.

Here are the nuts and bolts of the deal, as reported by IBJ last week: Rolls this year plans to move 2,500 office workers from two World War II-era plants on the west side into the downtown Faris Campus formerly used by Eli Lilly and Co.

The worker exodus will pave the way for Rolls to move forward with $190 million in upgrades at the plants—improvements that are mandated under the company’s contracts with its customers.

Without the investment—and the move to make it happen—city officials say Indianapolis could have lost some or all of the company’s local employees.

We can’t know for sure that was a real risk. But if the city had bet it wasn’t and been wrong, the consequences would have been devastating. Rolls has more than 4,000 employees spread across about a dozen locations in the Indianapolis area—a concentration of good-paying jobs that would be almost impossible to replace if the company pulled out.

The city offered Rolls a 10-year, $1.2 million abatement to occupy the Faris Campus on South Meridian Street. As part of the move, Rolls will spend $20 million to retrofit the space. In return for investing $190 million into its west-side plants, Rolls will receive a 10-year, $21 million abatement.

We think the space shuffle is a net gain since it bolsters employment in the Mile Square—an area critical to the health of the entire region. But just as important, Rolls’ total investment of $210 million greatly enhances the likelihood that the company will continue to be a mainstay of the city’s economy for years to come.

Of course, if Rolls had moved forward on the downtown relocation and plant upgrades without a financial boost from the city, that would have been a far more desirable outcome.

And at first glance, $22 million in abatements over 10 years looks like a big sum. But it’s just half of the $44 million in additional tax revenue the improvements were projected to have generated had there been no tax break. And it’s a pittance compared with what the city would have to dangle to get an employer of that quality and scale to move here from another state.•

__________

To comment on this editorial, write to ibjedit@ibj.com.

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. I am also a "vet" of several Cirque shows and this one left me flat. It didn't have the amount of acrobatic stunts as the others that I have seen. I am still glad that I went to it and look forward to the next one but I put Varekai as my least favorite.

  2. Looking at the two companies - in spite of their relative size to one another -- Ricker's image is (by all accounts) pretty solid and reputable. Their locations are clean, employees are friendly and the products they offer are reasonably priced. By contrast, BP locations are all over the place and their reputation is poor, especially when you consider this is the same "company" whose disastrous oil spill and their response was nothing short of irresponsible should tell you a lot. The fact you also have people who are experienced in franchising saying their system/strategy is flawed is a good indication that another "spill" has occurred and it's the AM-PM/Ricker's customers/company that are having to deal with it.

  3. Daniel Lilly - Glad to hear about your points and miles. Enjoy Wisconsin and Illinois. You don't care one whit about financial discipline, which is why you will blast the "GOP". Classic liberalism.

  4. Isn't the real reason the terrain? The planners under-estimated the undulating terrain, sink holes, karst features, etc. This portion of the route was flawed from the beginning.

  5. You thought no Indy was bad, how's no fans working out for you? THe IRl No direct competition and still no fans. Hey George Family, spend another billion dollars, that will fix it.

ADVERTISEMENT