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Slowdown threatens Jabil's growth

ST. PETERSBURG — The slumping economy could delay Jabil Circuit's plans for a new world headquarters in St. Petersburg, potentially jeopardizing $34-million in state and local incentives designed to help fuel the high-tech company's growth.

The news comes as St. Petersburg officials put the finishing touches on a deal that would require Jabil to start building on its Gandy Boulevard property by 2009 and maintain at least 1,838 employees in exchange for the city's $14-million share of the incentive package.

The struggling electronics manufacturing company has advised government leaders that it may not be able to live up to its obligations. It could not, however, provide specifics on how long a delay the company might need.

"We are still very committed to the project," said Bill Peters, Jabil's senior vice president of human resources. "We just want to get our arms around where we are and where (the economy) bottoms out."

The biggest question, Peters said, is whether the company will be able to maintain the necessary workforce. The deal, which comes before the City Council on Thursday, also calls for Jabil to add 858 jobs by 2012 and build a $50-million headquarters.

The state, St. Petersburg and Pinellas County have pledged a combined $34.4-million in subsidies for Jabil, which threatened to move its headquarters to Michigan or California from St. Petersburg. Jabil will receive the full package only if it meets all the requirements defined in the various government contracts.

The state's contract with Jabil allows the company to request a one-time delay of up to two years. The company said it will decide whether to pursue an extension based on its performance during the next several months.

"They are being very up-front," said Dave Goodwin, St. Petersburg's economic development director. "They are saying, 'We don't want anyone to say the day after this was approved that we didn't talk about the economic conditions.' "

If a two-year delay isn't enough for Jabil, Goodwin said, "basically, the deal is off."

Jabil has had a difficult year. The company has let go of at least 253 employees since September, including its most recent layoff of 133 workers on Dec. 1.

Jabil's workforce stands at 1,872, more than required under the incentives package, but company officials said they are wary of future economic circumstances.

"The last thing we want to do is go into this and start taking grant money and not be able to deliver," Peters said.

The company is not guaranteed an extension. If the company submits a request and is denied, its incentives package could be redirected to another international company looking for tax dollars to help shoulder its growing payroll. Jabil could also decline the deal.

"We are concerned anytime anybody meets an economic hardship that would prevent them from meeting their expansion goals, but given what's happening on the economic global scale it is not a surprise to us," said Dale Brill, director of the state Office of Tourism, Trade and Economic Development. "It is in the state's best interest that this company expand and grow."

Government officials said they will be vigilant in ensuring the company meets all requirements if the deal moves forward.

"In these economic times, every job is precious," Goodwin said.

Cristina Silva can be reached at (727) 893-8846 or [email protected]

Fast facts

About Jabil Circuit

Headquarters: 10560 Dr. Martin Luther King Jr. St. N, St. Petersburg

Business: Contract electronics manufacturer

Employees: Locally, 1,872. Worldwide, more than 85,000

Trade price Tuesday: $6.72 a share

Trade price in December 2007: about $17 a share

Slowdown threatens Jabil's growth 12/16/08 [Last modified: Monday, December 22, 2008 4:37pm]
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