Can't buy me love: Tax breaks and other financial incentives attract jobs, but that doesn't mean places that get them keep them.

• Author: Martin, Edward
• Position: Bristol Compressors Inc. to close Sparta plant after receiving state, local incentives - Cover Story - Statistical Data Included

Local lore says you can't throw a rock in Sparta without hitting an old-time banjo picker or fiddler. On Main Street, snow sleds and Radio Flyer wagons sit in the windows of Farmers Hardware, next door to the Alleghany County courthouse. The courthouse's four white columns are peeling, and its red brick is faded, though some here still refer to it as the new courthouse. It was built in 1933 when the old one burned.

Sparta is the only town in Alleghany County, which is hard by the Virginia line in the Blue Ridge mountains. On a hill over-looking Main Street stands the county's only high school, Alleghany High, home of the green-and-gold Trojans. In the fall of 1993, Adam Nilo was a sophomore.

He had earned a starting spot on the football team for the second year in a row, and homecoming was around the corner. But he didn't feel the elation he thought he might. "Sparta's a nice place to grow up, he says. "There are no strangers. But it's a small town. We all knew we were going to graduate and move off."

His brother had done that. He had graduated eight years earlier, served in the Army, then gone to college. Their father drove 40 miles to North Wilkesboro and his job as a truck driver. "There were just no opportunities here," Nib says, "no jobs."

That autumn, though, Bristol Compressors Inc., which makes air-conditioner compressors, was considering something that could change everything. It was seeking a site for a $40 million plant that would provide 750 jobs. Its top choices were Sparta and Wise County, Va.

Wise looked like the front-runner. A tax on its coal mines gave recruiters an $8 million fund to dole out incentives to attract companies. But Sparta rallied. Students were encouraged to write to Bristol executives. Nilo told them the plant would mean that he, his father and brother wouldn't have to leave to find work. Patrick Woodie, director of Sparta's Chamber of Commerce, a local boy with a Wake Forest law degree and jimmy Stewart drawl, pounded on doors up and down Main Street, collecting money. In all, 324 people chipped in. A store clerk gave $25, and a store owner contributed $50,000. Mayor John Miller, a farmer and retired school principal, talked up Bristol's potential to the pintos-and-corn-bread crowd at the Sparta Restaurant and to anyone else who would listen.

Local folks scraped together $600,000. The town, county, local telephone and electric co-ops and the state piled on more money, boosting total incentives to $15.5 million, the richest recruiting deal in North Carolina that year. In an announcement in November 1993, Bristol said yes. "It was like our field of dreams," Woodie recalls. "There was community euphoria I don't think I'll ever see again." Nilo adds: "Bristol was our great white hope."

Nilo, now 23, is an insurance adjuster in Connecticut, 700 miles from home. By the time he graduated from college two years ago, Bristol had cut off hiring at 465 workers and its investment in Sparta at $23 million -- little more than half what it promised. Sometime in February, it will lay off the last of those workers and abandon the sprawling, battleship-gray plant built on 50 acres of free land from the county. It's moving most of the operation -- and 350 jobs -- to its Bristol, Va., headquarters. That announcement came a month after it said it was shutting down the Sparta plant. "That was a real slap in the face," Woodie says.

Sparta is like the lover who awakens to find her beloved gone and purse missing. The town's consolation is that other desperate suitors around the state share her pain. After a decade in which the Tar Heel economy soared, recession has brought a new reality. Companies and the jobs they promised have disappeared, and some towns such as Sparta that paid dearly are struggling to get their money back.

Even worse, the incentives -- tax breaks and gifts of cash and land -- worked precisely as intended. They temporarily trumped market forces, enticing companies to put operations in places they didn't belong, places that didn't make economic sense. But you can only arm-wrestle Adam Smith's "invisible hand" so long. It doesn't care whether young people such as Nilo want to return home. It pushes companies to places with lower costs, closer customers and more skilled workers.

In Sparta, local officials are negotiating with Bristol to recover about half of $5.7 million in incentives they gave. Besides contributions from residents, the town, county and state...