Stamina1914
11-18-2009, 11:03 PM
I came across this article. It is a great read and makes you wonder what else does the VI government have in store.
http://www.siteselection.com/ssinsider/incentive/Billion-Dollar-Bottles-of-Rum.htm
I actually wrote th author and here is his response along with my questions.
Jack-
Good day. I read your above article and I found it to be very informative and well researched. I was born and raised on St. Croix and I am excited about what the future holds for St.Croix and its rum industry. I was hoping that you would be able to shed some additional light on a few questions that I had about the article.
1. Since the rum cover program applies to rums in Puerto Rico as well, why didn’t PR act more aggressively keep Captain Morgan on the island? Was PR overconfident that Diageo would not leave?
Diageo was making Capt. Morgan through a contract manufacturer and it wanted its own plant. According to VI officials, Diageo had already decided it wouldn't site its plant in PR. I don't know Diageo's reasoning. As for the cover-over issue, PR is capped by statute at 10 percent. So they'd have to change the regulation to make a higher offer.
2. I know that law was done in 1917, but what are the chances that congress repeals this act between now and the next 30 years? The entire foundation of these plans rely on this, can we wake up one morning and it no longer exists?
That's a question that I'm curious about; I never resolved that issue in my research and interviews.
Donna M. Christensen, the Virgin Islands’ delegate in the U.S. House, has introduced a bill that would make the full “cover over” payment permanent. That would do away with the need for congressional votes every year or two, according to Christensen. "The measure effectively would lock in the billion in rebates that Diageo and the Virgin Islands expect to split," says one report on that legislative attempt.
The odds seem to be that that legislation won't pass this year.
And even if it did pass, what's to keep Congress from revoking it? Frankly, I don't know.
3 First Diageo, then Fortune brands….dear I ask who is next? I have got to believe that other companies are seeing what the VI government is doing and the huge breaks companies are getting. Can you see another company in the near future moving there operations to St.Croix.
VI officials say that they're not actively going out and recruiting rum manufacturers. But the generosity of the cover-over funds could attract some other companies. On the other hand, for some rum manufacturers other issues (logistics, operational costs, etc.) may be more important.
I hope this adds some clarity to a very complicated situation. Thanks for reading.
I am very interested in getting the thoughts of the individuals on this board.
http://www.siteselection.com/ssinsider/incentive/Billion-Dollar-Bottles-of-Rum.htm
I actually wrote th author and here is his response along with my questions.
Jack-
Good day. I read your above article and I found it to be very informative and well researched. I was born and raised on St. Croix and I am excited about what the future holds for St.Croix and its rum industry. I was hoping that you would be able to shed some additional light on a few questions that I had about the article.
1. Since the rum cover program applies to rums in Puerto Rico as well, why didn’t PR act more aggressively keep Captain Morgan on the island? Was PR overconfident that Diageo would not leave?
Diageo was making Capt. Morgan through a contract manufacturer and it wanted its own plant. According to VI officials, Diageo had already decided it wouldn't site its plant in PR. I don't know Diageo's reasoning. As for the cover-over issue, PR is capped by statute at 10 percent. So they'd have to change the regulation to make a higher offer.
2. I know that law was done in 1917, but what are the chances that congress repeals this act between now and the next 30 years? The entire foundation of these plans rely on this, can we wake up one morning and it no longer exists?
That's a question that I'm curious about; I never resolved that issue in my research and interviews.
Donna M. Christensen, the Virgin Islands’ delegate in the U.S. House, has introduced a bill that would make the full “cover over” payment permanent. That would do away with the need for congressional votes every year or two, according to Christensen. "The measure effectively would lock in the billion in rebates that Diageo and the Virgin Islands expect to split," says one report on that legislative attempt.
The odds seem to be that that legislation won't pass this year.
And even if it did pass, what's to keep Congress from revoking it? Frankly, I don't know.
3 First Diageo, then Fortune brands….dear I ask who is next? I have got to believe that other companies are seeing what the VI government is doing and the huge breaks companies are getting. Can you see another company in the near future moving there operations to St.Croix.
VI officials say that they're not actively going out and recruiting rum manufacturers. But the generosity of the cover-over funds could attract some other companies. On the other hand, for some rum manufacturers other issues (logistics, operational costs, etc.) may be more important.
I hope this adds some clarity to a very complicated situation. Thanks for reading.
I am very interested in getting the thoughts of the individuals on this board.