Accountable USA - Pennsylvania

Kvaerner Philadelphia Shipyard (1997)

When the Pentagon closed the 195-year-old Philadelphia Naval Shipyard in 1996, the city thought that it had permanently lost a key element of its industrial infrastructure. But a year later the Norwegian engineering company Kvaerner ASA negotiated a deal with state and local officials under which it would reopen the facility and eventually hire about 1,000 shipbuilding workers. The plan called for subsidies from the city, state and federal governments and the Delaware River Port Authority of about $400 million, including some $200 million for reconstruction of the yard and the rest for workforce training. Kvaerner said it would invest $165 million over the first 12 years, but its costs were defrayed by a $30 million low-interest loan. Unions in the AFL-CIO’s Metal Trades Council agreed to work-rule concessions at the facility.

In 1999, before the new shipyard opened, the Kvaerner Group announced plans to sell its shipbuilding division but said it would move ahead with the Philadelphia project. To further assist the company, city and state officials allowed Kvaerner to shift $50 million of the money slated for training to construction costs and to redesign the shipyard in a way that cut those construction costs by $25 million. A 2000 audit by the state auditor’s office accused Kvaerner of using taxpayer funds for executive perks and living allowances. In 2001 the Kvaerner Group was taken over by Norwegian industrialist Kjell Inge Roekke. In 2003 the new shipyard completed its first vessel. In June 2010 the operation, which had been renamed Aker Philadelphia Shipyard, announced that it would lay off an unspecified number of workers because of a slump in new orders. Things improved in 2011after the shipyard received $42 million in new public assistance and then received several major orders. (Key sources)

Westinghouse Electric (2006)

In November 2006 the state legislature created a new subsidy program designed to persuade the nuclear engineering company Westinghouse Electric to stay in Pennsylvania as it underwent a major expansion. The legislation provided for the creation of up to four “Strategic Development Areas” in which state and local tax breaks found in Keystone Opportunity Zones would be made available for longer periods for companies that maintained at least 500 jobs and made capital investments of at least $45 million. Westinghouse, which had recently been acquired by Japan’s Toshiba, responded by choosing western Pennsylvania as the site for a $160 million headquarters and technical complex. But rather than automatically remaining in Monroeville, the company created a competition between that Pittsburgh suburb and another, Cranberry Township.

However, the administration of Gov. Ed Rendell moderated the process to avoid a ruinous race to the bottom. In March 2008 Westinghouse chose Cranberry, which offered a local-state subsidy package worth about $45 million over 15 years to capture the projected 3,000 jobs. The state offered several million more in other benefits. It later came to light that Westinghouse would not own the new complex but rather lease it from a real estate investment trust. The facility formally opened in October 2010 with projections that it would eventually house 5,000 employees. (Key sources)