SevOne to Delaware: “Thanks, Suckers!”
Perhaps Jack Markell’s favorite poster child for economic development has given Delaware the finger. SevOne is conducting a series of ‘brutal layoffs.’ And, of course, the Delaware Economic Development Office doesn’t know how much money the state won’t get back. Here’s the (no) money quote from the News Journal story:
“They are laying off so many people I had to wait [hours] to get my severance,” the worker said. “It’s like standing in a line for a guillotine.”
It’s not clear where Delaware will stand in this line. Here’s what we know:
Outfitting SevOne’s new building was backed by $1 million worth of taxpayer grant approved in early 2015 by the Delaware Office of Economic Development (DEDO). Most of that state funding was tied to SevOne’s promise to add 150 jobs through the start of 2021. The agency also approved another $480,000 grant for SevOne in 2012 that was tied to the addition of 122 jobs.
I’ll bet that those are far from the only commitments that DEDO has made to SevOne. And, unless I missed it, most of what DEDO does will remain sheltered from prying public eyes.
Because that’s the way everybody in power wants it.
“I told you so” doesn’t give me much satisfaction and it certainly doesn’t put that forfeited taxpayer money to a better use but maybe some politicians will open their eyes to the foolishness of this Administration and DEDO. Having cast one of only two votes against the Governor’s “Delaware Competes” act that allows billion dollar corporations to abscond with $60 million in Delaware revenue might give me the right to say “I told you so” but it doesn’t help Delaware’s economy unless the other 60 electeds finally say “no more” to these corporate welfare policies promoted by the Chamber of Commerce, the Business Rountable, six-figure lobbyists and this lame-duck administration.
Representative John Kowalko
Another little interesting tidbit of info. One of the venture capitalist companies that supplied $50 million in venture capital to SevOne before their first round of layoffs and headquarters move to Boston has a very familiar name. (This week’s round of venture capital was supplied by five firms – four of which are located in Boston – including Westfield Capital Management and “Bain Capital”) Bain Capital, Mitt Romney’s hatchet company bringing you layoffs and profit for CEO’s throughout the nation.
Rep. John Kowalko
Try to harpoon a whale that will bring “thousands” of jobs to the state and this is what you get. Disgusting. Worse…Kowalko is right. I am certain John Carney will have the exact same “economic development” handbook handed to him by the state Chamber.
Be a small company that consistently brings $7 million a year into the state, but may need a little financing help to grown from 25 to 30 employees, and all you hear from DEDO is crickets.
Sad little corrupt state. Too bad all the Republicans can manage is nominating comical freaks
1) The one million dollars is to pay for half of the payroll taxes of NEW employees – in other words, employees hired AFTER the agreement was made with SevOne.
2) It is UP TO one million dollars. And it is not like SevOne was given a million dollars.
3) It is performance-based – if SevOne does not hire additional personnel, it does not get any financial benefits from the State.
How is such an agreement bad for Delaware??? And why attack Jack Markell over such an agreement? Finally, it is not like SevOne is closing shop in Delaware AND opening shop elsewhere. These positions are gone! It is sad, yes, but Delaware did not get screwed nor did SevOne show it the middle finger!
“Outfitting SevOne’s new building was backed by $1 million worth of taxpayer grant approved in early 2015 by the Delaware Office of Economic Development (DEDO).”
Grant means cash paid out. But what’s a measly million, right?
At least they are doing straight-up layoffs instead of the usual tactic of engineering bogus perfomance issues and firing people “for cause.’ These days you take honor where you find it.
Nice to know that someone here is looking to be an apologist for SevOne. Or Markell. Or DEDO.
But, if you read the article, your assertion is not confirmed:
“DEDO officials were not immediately available to provide details about how much of SevOne’s most recent grants have been paid out or whether the company is in danger of missing benchmarks as a result of this year’s layoffs.”
Which also raises the question, why weren’t DEDO officials available on a non-holiday Monday afternoon (story was posted at 2:48 pm)?
And, yes they gave the state the middle finger. They secured the $1 mill grant in 2015 based upon a representation of future job growth. Then they skedaddled the HQ up to Boston. And now, somewhere between 1/3 to 40% of the remaining jobs are gone. Either they dealt in bad faith with the state, or something else changed their mind.
And, of course, this is but one in dozens of these giveaway deals that are largely done in secret. The taxpayers have yet to see any cost-benefit analysis on any of these dealings.
Why doesn’t the media ask any difficult questions of these folk?
Look at Vermont’s take on economic development:
Notice how it is focused on Vermont based businesses? It isn’t as if Delaware would have to reinvent the wheel to fix this bullshit. But check out the most important part of our mission statement:
Look at what we use to try and poach companies from other states:
It is utterly disgusting, and it is little wonder that this approach attracts con artists.
SevOne has sponsored 18 H1-B visas in 2016 alone if I am reading this database correctly:
http://www.myvisajobs.com/H1B-Visa/SearchLCA.aspx?E=Sevone
Let’s see if any of them are among those laid off.
Is this what DEDO is paying for?
John Carney’s plan – more of the same corporate welfare. Giving cash and regulatory breaks to large companies to try and poach them from their home state:
John understands that the role of government in promoting a strong economy is to create an environment where businesses can thrive and invest in Delaware. That means moving faster than any other state when it comes to helping locate or grow a business that will create good jobs. It includes a regulatory environment that is fair, thoughtful and timely.
I have a rhetorical question. Let’s assume that Delaware demands the money back, and let’s assume that SevOne says, “We’ll remove all Delaware jobs if you insist on getting your money back.”
How quickly do our leaders fold? Because fold they will.
And who is watching to see if Bloom Energy makes their hiring goals? you never read about that!! They have 12 H1-B visas. The DEDO is a mess!
Keep voting D baby..
It’s easy to say this John many of us saw this one and FIsker, etc etc and many other Dem led disasters. Give us a solution my friend because 6.6% income tax and shitty schools are keeping folks from moving to DE even when there companies do..
“I told you so” doesn’t give me much satisfaction and it certainly doesn’t put that forfeited taxpayer money to a better use but maybe some politicians will open their eyes to the foolishness of this Administration and DEDO. Having cast one of only two votes against the Governor’s “Delaware Competes” act that allows billion dollar corporations to abscond with $60 million in Delaware revenue might give me the right to say “I told you so” but it doesn’t help Delaware’s economy unless the other 60 electeds finally say “no more” to these corporate welfare policies promoted by the Chamber of Commerce, the Business Rountable, six-figure lobbyists and this lame-duck administration.
Representative John Kowalko
“6.6% income tax and shitty schools are keeping folks from moving to DE even when there companies do.”
Give it a fucking rest. There’s no evidence at all of this — none — for any but the highest earners or people with lots of kids. If you have two kids, by the time you fork over $12,000 a year in property taxes you’ve spent just as much as if you send them to private school in Delaware. You have to make a comfortable six figures before it’s a prudent financial move, and why should we care anyway? If they earn that money in Delaware, the state gets a decent slice no matter where they live.
Besides, Pa.’s rate is 3.07% with no personal deduction. So if you pay an extra $9,000 in property taxes, you have to make $300,000 before you’re paying more in Delaware. In short, you’re just fucking wrong, you thick-headed dope.
Seriously. Just shut the fuck up. Nobody wants to hear it and nobody cares.
“Give us a solution my friend because 6.6% income tax . . . [is] keeping folks from moving to DE even when there [sic] companies do.”
I’m in the process of moving to DE because of a job transfer. Of the four states in the area–PA, DE, MD, and NJ–DE had by far the lowest tax burden for me personally. So I don’t know where you’re getting your information.
1) Again, the original article in delwareonline.com got it wrong about what the $1M was for. If the company hires more people, it gets help with their payroll taxes up to a total of $1M. That is it!
2) Where, pray tell, do you suggest a Delaware-based software development company should find enough qualified software and network engineers? The only alternative to an H1-B is to outsource the positions overseas. You can’t have it both ways! If you want job growth in this sector AND the taxes paid in Delaware, you need to be OK with a software development company applying for H1-B’s.
“And, yes they gave the state the middle finger. They secured the $1 mill grant in 2015 based upon a representation of future job growth. Then they skedaddled the HQ up to Boston. And now, somewhere between 1/3 to 40% of the remaining jobs are gone. Either they dealt in bad faith with the state, or something else changed their mind.”
How many people actually work in their Boston HQ compared to their Delaware operation? I bet it is less than 10%.
And what do you mean by “changed their mind”? I asked earlier and I am asking again – are these positions being closed in Delaware and opened elsewhere? Or, are they being closed for good? Because, as far as I can tell, it is the latter. So, if I am correct, there was no mind changing or dealing in bad faith – both assertions make no sense in this situation! And, further, if I am correct about the nature of the grant, they benefit not one iota from all this…
Get your facts straight, then analyse them logically, and then write something meaningful, please! Otherwise, it sounds like propaganda or the low-quality kind.
Let’s see SevOne’s sales numbers for 2016 whenever they come out, because it is my guess that they are not as good as they used to be – and the reasons for that could be a thousand – but none have a thing to do with DEDO or Gov. Markell. You want to criticize these two – this is the wrong topic to pursue.
Well, the facts came from the newspaper, which you claim got them wrong. But we’re just supposed to accept your say-so that the paper got the facts wrong. Tell me again, who is spewing propaganda of the ‘low-quality kind’?
And, since you’re apparently new here, the modus operandi of Markell and DEDO are well established. They’re public cheerleaders for the deals they cut while keeping the cost-benefit results of such deals out of the public’s eye. That, by definition, is propaganda of the the low-quality kind.
Show me a corporate crook and I’ll show you a corporation incorporated in Delaware
This whole regulatory and tax break arbitrage is really sad on Delaware’s part. And it doesn’t really work. It doesn’t work because….
1) We don’t have the scale or ability to actually offer better deals than other states.
2) We have a terrible education system.
3) It’s a cultural wasteland compared to states with major cities.
4) Public transportation is non existent.
One could go on.
We do have low cost of living and tax free shopping. Woo hoo.
What ends up happening is the dregs of the barrel take our deals, thus this happens.
JTF – DEDO is aiming at the managerial-class jobs that can afford private schools and wouldn’t be caught dead on public transit.
Puck- Public Transit when planned and executed properly is for all classes.
If not for the DC et al transplants in eastern Sussex County, it would be little different than Mississippi here.
For what it is worth, and to sow more confusion about facts on the ground. The Delaware Online checkbook shows that DEDO cut 4 grant checks to SevOne, Inc. in FY 2015 totaling $ 341,661. For FY 2016, DEDO delivered 5 grant checks to SevOne, Inc. in the total amount of $ 407,617. Of the FY 2016 amount, 3 checks totaling around $ 360K were cut in May, 2016. I do not know for sure whether these check payments were made under the grant mentioned in the newspaper article, but they do show significant payments being made to SevOne by DEDO within the last year, including a large chunk of change just 3 months ago.
Does DEDO report on any performance metrics for these grants? Like what the ROI is? Are they required to? Or do they only do it if there’s a good story to tell?
“Public Transit when planned and executed properly is for all classes.”
Who told you that, the socialism fairy? It can be used by all classes; it is not used by the upper classes, as you’d know if you’ve ever ridden public transportation anywhere in the world.
Nobody rides the bus if they can afford to do otherwise, if only because it saves time.
“What ends up happening is the dregs of the barrel take our deals, thus this happens.”
See, again, get the facts before you write “thus this happens”. All these facts are readily available – you do not have to do more than a couple of Google searches, I promise!
SevOne was created by three UD graduates in New Castle County in 2005. Two of them were born in Bulgaria (but for the xenophobes here – not to worry, they already had their US citizenship). It was started in one of the guy’s mom’s basement, then it moved to a garage off of Main Street in Newark, then to the Delaware Tech Park off of Rt. 2 in Newark (first to one building, then to another, larger one in the same park), then it moved to a larger building off of Rt. 7 by Goldey Beacom College, it expanded there, and then it moved to the new UD STAR campus in Newark. This has been a very real Delaware success story!
“For what it is worth, and to sow more confusion about facts on the ground. The Delaware Online checkbook shows that DEDO cut 4 grant checks to SevOne, Inc. in FY 2015 totaling $ 341,661. For FY 2016, DEDO delivered 5 grant checks to SevOne, Inc. in the total amount of $ 407,617. Of the FY 2016 amount, 3 checks totaling around $ 360K were cut in May, 2016. I do not know for sure whether these check payments were made under the grant mentioned in the newspaper article, but they do show significant payments being made to SevOne by DEDO within the last year, including a large chunk of change just 3 months ago.”
Yep, as I have been saying all along – the State is paying half the payroll taxes of all new hires, up to $1M. And SevOne, apparently, hired like crazy late last year and in the beginning of this year. It was a performance-based incentive! How is that a bad thing?
I don’t know Theodore Grocer…. I bought Chemours’ stock at 20 and it dropped to 3. But I invested in a Delaware company. How is that a bad thing?
Kevips, that is a bad thing – you lost a bunch of money. I do not quite see the analogy, though…
My point was that SevOne grew from three people to something like 600 people over the last 11 years, and they kept the bulk of its operations in Delaware (2/3rds to 3/4ths, from I could deduce). Believe me, recruiting top-notch high-tech talent in Delaware is not an easy feat! On top of that, you can bet your bottom dollar that other states stepped in and offered SevOne all kinds of incentives to move their operations. Yet, they stuck to Delaware. Frankly, a million dollars in the form of a performance-based grant does not really sway such a decision towards staying in Delaware! I am not saying a million dollars is not a large amount, but it is peanuts compared to what such a company is worth. This was a company culture-based decision!
Is 11 years of steady growth not a pretty impressive stretch? Mind you, the average salaries in a high tech company are likely to be at least 50% higher than the average.
Bain Capital acquired a majority stake in the company in 2012. Bain Capital is Boston-based. So they moved the HQ to Boston, because many executives running the company now are likely from Bain Capital and, thus, live in the Boston area.
I do not know what happened to cause this mass firing. My guess is, SevOne hit some unexpected business turbulence. From what I gather, the company is laying off people NOT just in Delaware but in all their offices around the world and is actually closing the positions rather than relocating them.
H1b critic = xenophobic I see what you did there.
It reportedly costs about $5k to sponsor an H1-B. That would make a decent relocation bonus for US workers from other states, in addition to the lower cost of living in Delaware.
As I previously said, it is very-very difficult to hire high-tech talent in Delaware. What I should have said was that it is very-very difficult to attract high-tech talent to Delaware.
SevOne is a software development company. The average career length of a software development engineer as a developer (someone who actually writes code) is 13 years (just googled it). So, let’s assume they finish college at 22. That means they move on to doing something other than writing code (being an IT architect, project manager, academic, entrepreneur, etc.) by the time they are 35 – again, on average. That would make the mean age of such talent 28.5.
In all seriousness, is Delaware an attractive destination for a 28.5 yo who likely graduated MIT or CalTech or U of Texas – Austin? Nope! It becomes an attractive destination when you have kids and you want to settle down, and even then – for some. And the average highly qualified talented developer (90%+ males) is not even married at the age of 28.5…
So, the obvious alternative remains – outsource overseas! However, if we are looking for real talent, overseas is no longer cheaper than the US. Yep, the car companies outsourced for lower cost, but the software companies outsource simply because there is not enough talent in the US, and the salaries have evened out in the US and elsewhere. And I want to emphasize – we are seeking highly qualified, top-of-their-class talent here, as SevOne’s software is really-really complicated – it is not like creating websites. And it is not like you can take a bunch of average developers and train them. They will still be average developers, even if trained.
The only other alternative is to try to keep some of the good foreign students here. If SevOne was an accounting company or a legal firm and they were going after H1-B visas in Delaware, I would say – they are just lazy, because such professionals abound in our state. But that is not the case. If SevOne was not paying well, we could say they are cheap – but there is no evidence to support that, either. So, if we are criticizing SevOne for going after (the very scarce number available each year of) H1-B’s, we are saying that we do not think software development companies should be based in Delaware. Plus, with an H1-B, the recipient pays taxes in Delaware and not in a foreign country, so that is good, right?
I’ll grant that SevOne and DEDO may be coping rationally with what is a horrible national policy on imported labor. Delaware can’t fix national policy on its own. But that doesn’t make it a good policy, and it still rankles to be subsidizing it, and for our Congressional delegates to support it.
Foreign workers are not intrinsically more talented than US workers. What you call “talent” is really an accumulation of:
1. The willingness to work for less than US workers.
2. Indenture – the H1-B program does not allow the employee to change jobs without the sponsor’s permission.
3. Age discrimination – there are plenty of well-qualified older US developers who did not become executives or entrepreneurs.
4. Lack of an entry-level on-ramp for US Java developers. Indeed.com lists 7404 jobs for Java developers, but only 41 jobs for “entry level Java developer” (just as a gross unscientific indicator).
Immediately after graduation, “talent” is obtained by two or so years working as a new coder in a development shop where you can gain hands-on experience in actual business applications. That is what “talent” or “skillset” really means. US employers no longer hire or train entry-level Java developers; those shops that do hire and train entry level workers are all located offshore.
Instead of subsidizing imported labor for our best jobs, taxpayers should be subsidizing US computer science undergraduate students, starting in high school. Or subsidizing apprentice-type programs for US entry-level developers (or re-entry) .
“Instead of subsidizing imported labor for our best jobs, taxpayers should be subsidizing computer science undergraduate students, starting in high school. Or subsidizing apprentice-type programs for entry-level developers.”
Which one do you think costs employers less? Before answering, remember that the last 25 years of the destruction of public education were undertaken at the behest of the business community.
Corporations are the enemy within.
“Plus, with an H1-B, the recipient pays taxes in Delaware and not in a foreign country, so that is good, right?”
Better than having the whole shop offshored. But not nearly as good as having a US worker do the job and pay the same taxes.
That is why US policy needs to steeply raise the cost of offshoring and level the playing field for US workers.
@ Theodore Grocer: There are plenty of qualified tech workers in the US, isn’t that were the founders of Sevone came from?
Look at Bloom Energy, they have 12 H1-B visas, WHY??? Delaware is giving them $620 million, so why aren’t they hiring US workers???