Nissan/Tennessee: Working Both Sides of the Fence

Nissan stands to receive a great deal of money to move its California headquarters to Tennessee, including a great deal of cash to move employees from California to Tennessee. While this development is surely good news for Tennessee, it is most assuredly bad news for California.

This is not an easy article to write. It is easier to "stay out of it," so to speak. Yet some times, we need to speak to important issues that challenge us professionally and personally.

Here is a story pointing up the "possible" dangers of the same consulting firm working both sides of the fence on a particular issue--that is working for a geographic area in creating new advantages for economic development and helping a specific company take advantage of those new advantages. The case in point concerns the fact that Mark Sweeney of McCallum-Sweeney helped to create the new Tennessee law creating additional incentives for relocating companies, and then he represented a company (Nissan) as its site consultant in a project that resulted in Nissan locating in Tennessee and taking advantage of the new incentive program. I will add that from my standpoint, Mark is one of the better professionals working in both economic development and business site selection.

According to a recent Tennessee newspaper article, "Altogether, the moving-expenses law, written at the request of Mark Sweeney, Nissan's paid site-selection consultant, gives the company a $64 million bonus above what the state's standard incentives packages had been in the past."

See other versions of the story here, and here, and here.

As a consultant serving the economic development industry, I made a conscious choice several years ago to only work "one side of the fence." The potential for a conflict appeared quite strong to me. I chose to work only for geographic areas and not companies. Working for both was "uncomfortable" for me.

Admittedly, the details must be looked at here to ascertain whether any wrong doing occurred by McCallum-Sweeney, Nissan, or the State of Tennessee. By its nature, news is reported as it evolves over time. We must be careful about drawing premature conclusions about what is true. Please do not misunderstand my point. I am not opposed to consultants that in general do work for both geographic areas and companies. My concern is more specific in terms of a consultant working on a project or situation that could pit an area's interest against those of a company.

Situations like this can help fan the flames of debate surrounding economic development incentives. We already have a very volatile situation on our hands with Cumo versus DaimlerChrysler. How much more heat can we really stand in this area? We need to be more careful in the future; much more careful than we have been to date.

Personally, I do not favor the type of relocation incentive being offered by Tennessee. In my view, the company should be bearing these moving costs. But that is only my view. The only reason why the public sector is getting stuck with this cost is because we (the economic development community) have allowed this cost to become a matter for consideration in competing for deals.

We should stop and reflect upon what we are doing in the incentive arena before the golden goose is killed for good.