Officials of financially beleaguered Kimberly-Clark have some big problems to solve. But last month they proved they could deftly handle a small but embarrassing squabble over a $156,000 jobs-creation grant with Palm Beach County, Florida, and come out smelling like a paper rose.
Never mind that the diaper giant had laid off the workers and eliminated the positions that had earned them the jobs-creation grant. The Irving-based company wasn't going to give up the cash that easily.
The mess began in October when Scott Paper Company entered into a job-growth incentive agreement with the county's board of commissioners. The paper-products company agreed to move its corporate headquarters from Philadelphia to Boca Raton, Florida, creating 56 jobs in that area. In exchange, the county officials were happy to pay Scott Paper $156,000 in taxpayers' money to defray relocation expenses.
Two months later, on December 12, the day that Scott Paper sent over documents to Palm Beach County to get the grant money, Kimberly-Clark and Scott Paper announced the two companies were merging. Kimberly-Clark became the parent company of Scott Paper.
The following day, Kimberly-Clark announced it intended to lay off more than 2,700 workers nationwide and pare another 3,300 employees by selling plants. Included in the proposed cost-saving measures was shutting down Scott Paper's recently opened Boca Raton headquarters, eliminating by April those precious 56 Palm Beach County jobs.
No fool, the Palm Beach County Circuit Court clerk, Dorothy Wilken, whose office cuts the county's checks, questioned whether she should turn a $156,000 check over to Kimberly-Clark for jobs that would soon be gone. Wilken told local reporters that she intended to block the payment. The contract between Scott Paper and the County, Wilken said, "implies the jobs are supposed to stay here, not go away the next day."
Kimberly-Clark officials told the reporters that they were still deciding what to do with the grant.
Finally, at a county commissioners meeting on January 9, Kimberly-Clark and Palm Beach County officials came up with a face-saving solution for both sides.
Even though county officials would not cut the check to Kimberly-Clark for the money, the company's officials said they would record the $156,000 grant as income. The company would then offer to donate money--which it had never tangibly received---back to the County, earmarked for other jobs-creation programs.
Never mind that the County had already pledged to put $150,000 into those programs before Kimberly-Clark got so generous with its ghost grant.
Beyond the splendid public relations, the deal worked beautifully for the diaper manufacturer for tax purposes as well. The company intends to first record the grant as income, then identify it as a charitable contribution.
Most county officials, who knew that the legal costs of getting out of the contract with Kimberly-Clark would have been costly, were happy to play along with the charade.
"We came up with a solution where there were no out-of-pocket expenses, and we got out of the contract," says Larry Pelton, the director of the Business Development Board of Palm Beach, which helped devise the compromise for Kimberly-Clark. "We felt it was right to put [Kimberly-Clark's] name on the money. They had been very cooperative."
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Other county officials balked at being a part of the corporate window-dressing for a company that wound up destroying jobs as fast as it created them.
"I understood from our people that it has something to do with face-saving," says John Dame, the chief deputy for finance in the Palm Beach County district clerk's office about Kimberly-Clark's solution.
At Kimberly-Clark, Wendi Strong, the director of corporate communications, stands firmly behind the facade of largess.
"That money belongs to us. Never mind that they didn't cut a check. That doesn't matter. It's immaterial," says Strong. "We weren't pretending that the jobs were there...we wanted to make a charitable donation. I think everyone was essentially pleased with the results.