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Economic uncertainly prompts cancellation of incentive grants totaling $20M

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(The Center Square) – Economic uncertainty was cited by two companies in the aftermath of incentive deals with North Carolina being canceled.

BioAgilytix Labs in Durham and Cognizant Technology Solutions in Charlotte had previously been awarded job-creation incentives of $18 million and $2 million, respectively. The Economic Investment Committee, within the state Department of Commerce, said those would not be fulfilled.

In February, announcements of unsuccessful deals ending included Clorox Services Company, Syneos Health, and Service Offsite Solutions. In January, it was Bandwidth.

“Cognizant has experienced a hiring slowdown due to economic uncertainty and decreased demand,” the company wrote in a letter to the committee requesting cancellation.

BioAgilytix Labs also cited changes in the economic climate in its request for cancellation. It employs 523 people in Research Triangle Park.

“From October 2020 until present, BioAgilytix has invested more than $20M in our facilities for the purpose of growth and expansion,” BioAgilytix wrote. “Such investment has increased our capacity to over 150,000 square feet between our three facilities. However, because of downturns in biotech funding in the last two years, we have re-focused our strategy for 2024 and beyond, with our primary goal to generate as much return on investment as possible based on our current infrastructure and employee base.”

Most job creation grant cancellations are at the request of the companies, David Rhoades, communications director for the North Carolina Department of Commerce, told The Center Square. The grants are performance based, he said.

“No funds are paid out on those grants until the company has in fact met the job creation target and a capital investment target,” he said.

The job creation grants are usually for a period of 12 years, Rhoades added.

“They are thoroughly vetted every year both by our department and the Department of Revenue to make sure those jobs have indeed been created,” he said. “A 12-year-grant is paid out in increments over those 12 years.”

Recently, the Commerce Department has noticed that office-oriented projects have been withdrawing from the program.

In its letter to the state, Cognizant cited changes in workplace patterns.

“Like many companies, Cognizant is re-evaluating its real estate needs in response to post-pandemic

work trends and the state of the current economy,” the company said. “Our associates are working in-person, hybrid in-office schedules, or remote, depending on the kind of work they do and client requirements.”

At the same meeting, the committee approved $1.9 million in state incentives for a defense contractor, DuoTech Services LLC, which wants to expand its manufacturing facility in Macon County to produce electronic components for military aircraft. The project will create 95 jobs over five years, the company said.

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