Will Caltex HQ's move to Singapore really benefit the country?

The Straits Times (Singapore)  
October 22, 1998 
 SECTION: Pg. 1 

    EDB says Caltex's decision to transfer its corporate leadership to
Singapore marks an epoch in the annals of the country's headquarters' history 

 IN A move described as epochal in Singapore's drive to be Asia's business
hub, Texan oil major Caltex is to transfer its entire corporate leadership to
Singapore -the first multinational to base its global headquarters here. 

By March, Caltex will relocate most of its corporate staff and about 15
executives, including chairman David Law-Smith, with only limited corporate
functions continuing at its current base in Dallas, the company announced
yesterday. 

Its business units for trading, marketing, lubricants and new business
development will also be based here. 

Elated Economic Development Board officials said Caltex's decision was "most
significant and marks an epoch in the annals of Singapore's headquarters
history". 

An EDB statement went on to note that the Caltex HQ would be the first of its
kind in Singapore with its worldwide corporate management residing here as
well as holding board meetings in the Republic. 

"Caltex's decision affirms Singapore as an excellent headquarters location.
EDB warmly welcomes Caltex to make Singapore its home," EDB chairman Philip
Yeo said from Europe, where he is on an investment promotion tour. 



TIME Cover: States At War --PAGE 1-- November 9, 1998
SPECIAL REPORT/CORPORATE WELFARE/FIRST IN A SERIES
NOVEMBER 9, 1998 VOL. 152 NO. 19

The Scramble For Jobs
Playing The Zero-Sum Game
By DONALD L. BARLETT; JAMES B. STEELE

 If you have any doubt that the war among the states to offer tax breaks and
other economic incentives is a zero-sum game that creates no jobs, consider
the case of the Bagcraft Corp., based in Chicago. In 1993, Bagcraft, whose
claim to fame is the doggie bag, let out word that the paper bag-making
factory it had operated in Joplin, Mo., for more than 20 years would be
replaced.

Six towns in Missouri, Kansas and Colorado jumped at the bait, offering the
company free land, infrastructure improvements and real estate-tax abatements.
Meanwhile, Joplin tried hard to keep Bagcraft in town, assembling what a city
official described as the most aggressive incentives package in this small
(pop. 45,000) city's history--tax abatements for as long as 12 years, plus a
town-funded day-care center for Bagcraft employees. "When you offer a private
company incentives worth $5 million, coming from the taxpayers, I don't know
how much more you can do," said Joplin city manager Leonard Martin.

Neighboring Baxter Springs, Kans., came up with more--a lot more. Working with
state officials, the town of 4,000 crafted a deal that included free land and
a 10-year exemption from real estate taxes. But Baxter Springs trumped Joplin
by finding a low-interest loan from the U.S. Department of Housing and Urban
Development. The final tab: $15.8 million, or more than seven times the size
of the town budget.

Not surprisingly, Baxter Springs won out. In 1994, Bagcraft closed the Joplin
plant and moved 20 miles west across the state line to a new $12 million,
265,000-sq.-ft. facility.

All this was cause for celebration in Baxter Springs when, on Nov. 18, 1994,
corporate and civic leaders gathered to dedicate the new plant. Of the
participants, none was more pleased than then Kansas Governor Joan Finney.
"Dreams are the seedlings of reality," she told the crowd. "Seeing what has
been brought to reality here, through governmental cooperation at all levels
with the company, is perhaps one of the best days I've had in 42 years of
government service at different levels."

Let's hope not.

Baxter Springs did get 350 jobs, but Bagcraft did not create 350 jobs. Roughly
half the work force transferred from the Joplin plant when it closed.
Additional employees migrated from other Bagcraft plants that were closed.

The bottom line for the company's payroll: in 1993 about 700 people were
making bags and other paper products at four Bagcraft plants. According to a
company spokesman, today that number is the same.

WHAT WAS PAID OUT
$15.8 million, including free real estate, a 10-year freeze on property taxes
and a low-interest loan from HUD

HOW IT PAID OFF
It didn't. Bagcraft closed plants in Missouri, New Jersey and Georgia. New
jobs created nationwide: zero

--WITH REPORTING BY LAURA KARMATZ AND AISHA LABI, AND RESEARCH BY JOAN
LEVINSTEIN