Jeff Mordock

The News Journal

The state agreed on Monday to provide $7.9 million in taxpayer grants to Chemours with the hopes of keeping the company in Wilmington.

But Chief Executive Officer Mark Vergnano said the incentive package does not mean the company has made a decision.

"After looking at a lot of options, we are pleased that Wilmington has remained one of our best choices, although not as a cost-effective choice for us," Vergnano said Monday at a hearing before the Delaware Economic Development Office's Council on Development Finance.

Since being spun out of DuPont last summer, Chemours has been based in its former parent's old headquarters across from Rodney Square in downtown Wilmington. But the company has been considering whether to remain in the city or move elsewhere. Chemours is said to be considering locations in Pennsylvania and New Jersey along with other locations in Delaware.

Vergnano told the council Chemours has set an October deadline for a relocation decision, but an agreement could be in place by late summer. He said the $7.9 million funding package unanimously approved by the council on Monday would be an "important part" of the company's decision.

In exchange for the incentive package, Chemours would be required to retain 900 jobs in Delaware through 2020. About $695,000 of the package would be set aside to upgrade Chemours' downtown Wilmington headquarters.

DEDO Director Bernice Whaley said the grant package approved would not be disbursed until Chemours has made a commitment to remain in Delaware.

The loss of Chemours, she said, could cost the state 3,409 direct and indirect jobs along with $554 million of revenue. Chemours employs about 1,000 workers in the state between its Wilmington headquarters and scientists who are based at DuPont's Experimental Station, where the company leases research space.

In her remarks before the council, Whaley said Chemours' workforce includes researchers and executives who earn high salaries that support Wilmington-area shops, restaurants, parking garages and other businesses.

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Chemours has struggled since separating from DuPont on July 1. Sales of its key products – including titanium dioxide, Teflon and sulfuric acid – have declined, and the strong U.S. dollar has lowered investment returns in overseas markets. This month, Chemours reported its first profitable quarter as an independent company. The $11 million profit Chemours reported in the first quarter of 2016 is an 81 percent decline from the $59 million in profit it generated when it was still part of DuPont during the first three months of 2015.

Despite Chemours' financial issues, Whaley told The News Journal she is excited about the company's future. She called the company's five-point transformation plan, "solid and strong."

The transformation plan was unveiled last summer with the goal of improving Chemours' bottom line by reducing costs, reallocating funds to more profitable projects and overhauling its portfolio. Vergnano told the council the plan has already reduced expenses by $100 million and is expected to deliver another $200 million in savings by the end of the year.

Vergnano on Monday declined to comment on how Delaware's incentive package stacks up against offers made by other states.

"It's always been our preference to remain here and we are finding ways to make it fiscally work for us," he told The News Journal after the grants were approved. "A lot of states give you a lot of incentives when you come to them, but this evens the playing field."

The biggest obstacle to keeping Chemours in Delaware, according to Vergnano, had been the state's corporate income tax. The General Assembly alleviated that concern, he said, when it passed the Delaware Competes Act to modify how corporate income taxes are calculated. Some legislators have referred to the bill as "The Chemours Act" because it was aimed at keeping the company in Delaware.

Previously, Delaware taxed companies based on their property, employees and sales in the state. Under the DCA, that formula was modified to tax a company based only on sales. It also changed the way small businesses pay their taxes, allowing companies to pay in smaller increments and file their tax data quarterly instead of monthly.

"This and the DCA are the two pieces," Vergnano said of the incentive package. "It rounds out what we are looking for from the state."

Contact Jeff Mordock at (302) 324-2786, on Twitter @JeffMordockTNJ or jmordock@delawareonline.com.