StarTek was lured to Virginia with state grants

More than $600,000 from the state's Governor's Opportunity Fund and the Tobacco Revitalization Commission helped entice StarTek to set up three call-center operations in Virginia.

One, in Petersburg, has been closed; a second, in the Martinsville area, will be closed in July; and a third, in Lynchburg, has laid off some of its employees. Collectively, more than 1,100 Virginians either have been laid off or will be laid off.

The Collinsville facility in Henry County, near Martinsville, received $250,000 in 2004 from the Tobacco Indemnification and Community Revitalization Commission. StarTek announced this week that the Collinsville facility will close in July, eliminating 631 jobs.

The Lynchburg call center opened the same year. It received a grant from the Governor's Opportunity Fund of $150,000. StarTek laid off 69 workers there in January.

Carrie Cantrell, deputy Secretary of Commerce and Trade, said StarTek in Lynchburg repaid $18,450 to the state because it did not meet all its job goals.

The Petersburg plant, which opened in 2006 and shut down in 2008, eliminating 454 jobs, will also have to repay money to the state after receiving $225,000 from the Governor's Opportunity Fund. Cantrell said the amount is being negotiated.

Cantrell said opportunity-fund grants are performance based, so if the company doesn't meet expectations, a portion of the grant must be returned. This is called a "clawback provision." How much is returned is negotiable, she said.

The Governor's Opportunity Fund was created in December 1992 by then-Gov. L. Douglas Wilder. Grants are based on the number of jobs and capital investment contributed to the state and created in a certain time frame.

According to the Virginia Economic Development Partnership, grants are made at a locality's request. The locality, which participates with a matching financial commitment, executes a performance agreement with the company to ensure fulfillment of promised job creation and capital investment.

Between Oct. 1 and Dec. 31, a total of $5.835 million was committed from the opportunity fund to aid six projects relocating to or expanding in the state, according to a quarterly report sent Jan. 28 to the chairmen of the state legislature's money committees. The six projects were expected to create 895 jobs and invest a total of $382.5 million, according to the report from Jeffrey M. Anderson, president and CEO of the Virginia Economic Development Partnership.

Cantrell said StarTek did not notify Gov. Bob McDonnell before it announced the prospective closing in Collinsville.

After the Martinsville announcement, Brian Moran, the state Democratic Party chairman, noted that McDonnell has taken credit for jobs created.

"It is also a critical time for our leaders to explain what they did to convince StarTek that Virginia is the best place to stay and grow and why those efforts failed," Moran said.

In response, Tucker Martin, director of communications for McDonnell, noted that prior administrations provided the incentives for StarTek. Two came under former Democratic Gov. Mark R. Warner and the Petersburg facility came under former Democratic Gov. Timothy M. Kaine.

"No spin can change the fact that the unemployment rate is down over a full point since Governor McDonnell took office," he said.

StarTek makes phone solicitations and performs other contract services for clients. In the case of the Henry County plant, it served one client, reportedly AT&T.

At McDonnell's request, the General Assembly put $36 million into the opportunity fund last year to help attract businesses and jobs to the state. McDonnell made creating jobs a central part of his winning campaign for governor in 2009.

The grants have come under fire from some Democrats and free-market conservatives. At the request of Sen. Janet D. Howell, D-Fairfax, a member of the Senate Finance Committee, the General Assembly's investigative arm — the Joint Legislative Audit and Review Commission — will begin looking into the grants this year, with the study scheduled to be completed late next year.

Rosemary Hanratty, director of public relations for Denver-based StarTek, said changing business circumstances caused the closings. It does not reflect against the performance of the Virginia employees, she said.

StarTek is a publicly traded company listed on the New York Stock Exchange. It lost $19 million in 2010 on revenues of $265 million, in part because it consolidated operations in Colorado and closed a site in Ontario, according to a quarterly statement.

It also opened a 440-employee facility in Costa Rica and opened a second facility in the Philippines, the report says. Offshore revenue represents 18 percent of total revenues, a year-end report states.

Like any business, StarTek seeks incentive grants where it can get them, Hanratty said.

twhitley@timesdispatch.com

(804) 649-6780