Chiquita Brands International Inc. decided to leave Cincinnati for many reasons, but the biggest one is undeniable: Money.
Lured by the promise of big savings, better air service to Europe and Latin America and a more diverse workforce, Chiquita announced Tuesday that it plans to leave Cincinnati, site of its home office of 24 years, for Charlotte, N.C.
North Carolina offered a package of grants and tax incentives potentially worth $22.7 million over 11 years, enticing the relocation of the world’s largest banana seller.
The counter offer from the state of Ohio and Cincinnati to keep the company downtown amounted to $6 million to $6.5 million, Chiquita chairman and CEO Fernando Aguirre told The Enquirer late Tuesday.
Aguirre said he was disappointed by Cincinnati’s effort to keep the company.
“With all due respect, the city did very, very, very little,” he said. “We had told them many times, even six years ago when we looked at moving for the first time, and they did very little or nothing. And this time around, they did very little or nothing.”
“Charlotte provided the most compelling economic opportunity for Chiquita by far,” he said during Tuesday’s announcement in Charlotte.
The move to North Carolina will save Chiquita $4 million a year, Aguirre said.
Charlotte aggressively pursued the company. North Carolina Gov. Bev Perdue got involved, as did Charlotte’s leading businessman, Hugh McColl Jr., the retired chairman and CEO of Bank of America.
“We had to compete and compete hard for this company,” Perdue said. “I took this one personally.”
Four states were pursuing the $3 billion-a-year produce giant, she said.
But in Ohio, state officials said the math didn’t add up, and matching North Carolina’s offer wasn’t worth the potential lost tax revenue.
“We’ve got to be a good steward of taxpayers’ dollars, and that means making sure that incentive packages give taxpayers the right return on their investment,” said Rob Nichols, a spokesman for Ohio Gov. John Kasich.
The Kasich administration wants to get a financial return on incentive deals as quickly as possible, preferably within one or two years, Nichols said. That means the new tax dollars to the state from business expansions and relocations would outweigh the tax money given up through incentives and grants.
Ohio’s offer to Chiquita would have netted a positive return in one year, he said.
Ohio officials believed Chiquita was already poised to move because of declining air service at Cincinnati/Northern Kentucky International Airport and other issues, including the lack of a bilingual workforce able to work easily with Chiquita’s substantial operations in Latin America.
“We’re not going to be irresponsible and give away the store to try and keep a company that fundamentally doesn’t want to be here or which has already made up its mind to leave,” Nichols said.
Cincinnati’s portion of the offer was less than $1 million, said one economic development source.
“Here, in Charlotte, the city got very involved,”Aguirre said. “A good part of the money came from the city and the county, each of which delivered significantly more than anything Cincinnati or Hamilton County said they might.”
Charlotte and Mecklenburg County, N.C., will contribute $2.5 million in cash grants, said Tim Crowley, a spokesman for the North Carolina Department of commerce.
The biggest piece of the North Carolina offer is a $16.1 million grant over 11 years. Chiquita must meet targets on jobs, investment and wages to receive the total amount, Crowley said.
Another $2.5 million grant was approved by the governor, and the company can qualify for up to $1 million in state tax credits.
Another $560,000 in research and development tax credits and training funds is available.
At a downtown news conference Tuesday, Cincinnati Mayor Mark Mallory initially joked about Chiquita’s pending departure. When asked for his reaction, Mallory’s initial response was: “Did I miss something? What happened?”
Then, more seriously, he said: “Obviously, we don’t want to see Chiquita go but we put our best effort forward, along with the county and the state of Ohio. We put together what I am certain was a pretty good deal for Chiquita. In the end, they decided to move to North Carolina. They have to be where they figure they can do their best business, and where they want to be headquartered and located. Right now, that’s not Cincinnati.”
Keeping a company in town can be more expensive than attracting a new company, said Doug Moormann, an economic development consultant. “It’s a calculation on the part of the government: how much are you willing to reduce your tax base to keep that company,” said Moormann, vice president for Development Strategies Group, a Cincinnati-based consulting firm. “In a new state, every single dollar the company brings is a new dollar.”
The state had been in discussions with Chiquita since 2005, Nichols said. The Kasich administration continued negotiations after taking office in January, with Kasich and his economic development chief, Mark Kvamme, in frequent touch with Chiquita, said Gary Lindgren, executive director of the Cincinnati Business Committee. They were helped by Sen. Rob Portman, he said.
During the announcement, Aguirre thanked the city of Cincinnati, the state, Kasich, Portman and Sen. Sherrod Brown.
“They have treated us extremely well,” he said before the audience of North Carolina business and government leaders. “But times change. The fact is we needed to make this decision to help our business, not just for the short term, but for the long term.”
“Charlotte is the optimal location for our business,” he said.
The move will bring a payroll with an average salary of $107,000 to North Carolina, but the average includes Aguirre’s compensation, which in 2010 was valued at $5.6 million.
Chiquita, a global business with 20,000 employees and operations in 70 countries, has its headquarters and 330 jobs at 250 E. Fifth St., in a high-rise now called the Chiquita Center.
It was moved here in 1987, after Cincinnati billionaire Carl H. Lindner Jr. took over the company. Lindner moved the headquarters to his hometown, where office space was much cheaper than in midtown Manhattan, then the site of Chiquita’s main office. But Lindner lost control of the company more than 10 years ago. In October, he passed away at the age of 92.
Aguirre said the company plans to complete the move by the end of 2012, but would be mostly moved out by next summer.
“It’s always disappointing to have a business leave the region, but these changes are a natural progression of business,” said Ellen van der Horst, CEO of the Cincinnati USA Regional Chamber. “We understand their need to make a decision to ensure their long-term success, and we wish them well.”
She said Cincinnati remains a good place to do business and cited several recent company moves.
One may be the Covington offices of Nielsen, which is in negotiations to move 600 employees into the Chiquita Center. The consumer analytics firm is negotiating a lease for 80,000 square feet, and wants its name on the building. In October, the city approved a variance to let Nielsen place its sign on the building.