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UPDATED: NN Inc. to move headquarters to Charlotte

Nathan Baker • Updated Sep 22, 2017 at 6:58 PM

A company that won tax breaks from the city and county three years ago to bring its global headquarters to Johnson City now plans to move its base to Charlotte.

And city and economic development officials say it may be able to keep benefitting from its tax incentive program here.

NN Inc. announced in a press release Friday afternoon it intends to move its headquarters to North Carolina to take advantage of Charlotte’s more robust transportation and technology infrastructure.

In the release, President and CEO Rich Holder said the move, expected in 2018, “aligns closely with our strategy of building a diversified industrial business by being closer to our customers and ensuring greater collaboration between our business units.”

The company brought its headquarters to Johnson City in 2014 with much fanfare.

Holder, city and county officials and legislators held a press conference on the steps of the Suntrust Bank building in north Johnson City, which NN planned to purchase to install its corporate offices, to announce the move. With the new headquarters, the company would bring 200 new jobs paying more than $75,000 annually.

Holder said NN Inc considered other Southern metro areas for the company’s headquarters, but eventually settled on staying in Johnson City, “where (the company’s) heritage lives.”

For keeping the offices and jobs local, the city and county agreed to a schedule of tax incentives, which exempt the company from paying property and taxes on equipment for five years before gradually increasing the proportion of taxes paid by 10 percent over the next five years.

The original agreement as signed required NN to bring at least 160 jobs to the office building by January of this year, but in April, Johnson City and its Industrial Development Board moved that deadline back to 2019, when the company said it misunderstood the requirements. NN Inc representatives said they mistakenly believed the deadline for job creation was originally five years after the tax agreement was signed, the same time period used by the state for its incentive requirements.

Mitch Miller, CEO of the Northeast Tennessee Regional Economic Partnership, and Pete Peterson, Johnson City Manager, said they believed the company would be able to keep its tax incentives if it lived up to its job creation commitments.

“Our opinion on the tax agreement is that as long as they meet the employment numbers and salary numbers outlined, there will be no impact,” Miller said in an email. “The jobs they are planning on keeping tied to the shared services division are high paying positions and those positions paying over $27.05 per hour and receive benefits worth at least 30 percent of the annual wage will qualify towards meeting their job numbers.”

The press release from NN said the company “will continue to have a presence in Johnson City,” although it didn’t specify what that presence would entail. Peterson said he believed that presence would still be 200 jobs. Miller referred questions about the company’s future plans to NN Vice President of Strategy and Investor Relations Robbie Atkinson, who did not return the Press’ call Friday.

The resolution passed by the City Commission in 2014 and re-approved in April says it was enacted “in order to implement the public purposes enumerated in the Act and in furtherance thereof to induce the company, that is undertaking a site selection search that is known as ‘Project Stone,’ to locate its headquarters, in the City of Johnson City, Tennessee, the improvement, construction, acquisition, expansion, equipping, owning and leasing of which the IDB to the Company is expected to maintain or increase employment in the area …”

Miller said legal counsel didn’t believe the mention of the headquarters in the resolution was binding, only the requirement for job creation and wages.

Johnson City Mayor David Tomita said the NN announcement took him by surprise.

“Obviously, I’m very surprised,” he said. “We’re going to have to see what happened.

“I wish them well, and we’ll certainly take a look at what might have led to them leaving.”

City Commissioner Ralph Van Brocklin, who voted against amending the original tax agreement to give the company more time to meet the job requirements, said the company’s announcement was a disappointment.

“When NN came back to the IDB and requested that time to meet their jobs target be extended, I felt that it indicated a softening of their commitment to this community — which was one of the reasons that I voted against allowing the IDB to forego collecting the penalties that should have been assessed for not reaching the number of jobs promised,” he said in an email. “Unfortunately, the announcement of their move to Charlotte bears my concerns out.”

Van Brocklin said he was glad to hear NN indicated it would keep 200 jobs in the community, but said “we all need to question the sincerity of that indicated commitment.”

In August, NN closed a $375 million deal to sell its precision bearing group, which included manufacturing plans in Erwin and Mountain City, to Tsubaki Nakashima Co., headquartered in Japan.

According to Miller, Tsubaki Nakashima planned to bring its North American headquarters to the same building that housed NN’s offices.

Both Miller and Peterson thanked the company for keeping its headquarters in Johnson City up until now, saying the corporate jobs had a positive effect on the community.

“We’ve been very fortunate to have them as a great corporate citizen for years,” Peterson said. “It’s bittersweet they’re moving their corporate headquarters, but I’m proud they’ve been able to grow to the point that they need to be centrally located to where they’ll have a national transportation hub.”

According to the Charlotte Business Journal, NN will expect to bring 175 to 200 employees to its headquarters there, paying a minimum of $139,900.

The North Carolina Economic Investment Committee voted unanimously to approve a job development investment grant to the company worth $2.8 million Friday. Local incentives from the city and Mecklenburg County could add up to $288,000.

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Previously reported:

Shortly after renegotiating a tax incentive deal with Johnson City, a global corporation is moving its headquarters out of state.

In a press release issued Friday, NN, Inc. announced plans to move its headquarters from the north side of Johnson City to Charlotte, North Carolina. The release says the move will further the company’s strategy of “building a diversified industrial business through improved access to customers, the availability of advanced infrastructure and enhanced logistics.”

NN President and CEO Rich Holder said Charlotte’s role as a national transportation hub put the business closer to customers and allowed business units to better collaborate.

According to the release, NN will transition to the North Carolina city in early 2018. Approximately 200 employees will be based at the new corporate headquarters, the same number the corporation promised to bring to Johnson City.

The release also says NN will “continue to have a presence in Johnson City,” although it doesn’t say what that presence will be.

Northeast Tennessee Regional Economic Partnership CEO Mitch Miller, who helped craft the tax incentive deal, called the move “unfortunate,” but commended the company for being a great corporate citizen in Johnson City. 

“NN has been a great corporate citizen to Johnson City and the region,” according to a statement from Miller.

“It is unfortunate that they will be relocating their corporate headquarters, but we are truly appreciative of the impact they have made on Northeast Tennessee. Current plans include retaining their shared services division and we will continue to work closely with NN to help with any potential future growth.”

In July, NN announced plans to sell its Erwin and Mountain City precision bearing plants to Tsubaki Nakashima Co., along with other manufacturing sites producing similar products. That $375 million sale closed on Aug. 17.

In April, the Johnson City Commission agreed to extend a job creation deadline in the tax incentive agreement with the company, giving it until 2019 to bring at least 80 percent of the 200 jobs it promised in return for being excused from paying property taxes on the building it bought to serve as its corporate headquarters.

According to company representatives and economic development leaders, NN, Inc. misunderstood the deadline for creating the jobs, thinking it fell at the same time as state requirements for tax abatements.

Reached Friday afternoon, Johnson City Mayor David Tomita said he was surprised to learn of the company’s decision to relocate.

“Obviously, I’m very surprised,” he said. “We’re going to have to see what happened.

“I wish them well, and we’ll certainly take a look at what might have led to them leaving.”

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