Economic Development 

The state's biggest industrial prize of 1998, the Nucor steel plant in Hertford County (aerial view, right), is now up and running with a payroll of around 200 people and will pour its first steel next month, according to Plant Manager Giff Daughtridge. He gave us this report: “We now have about $416 million invested in the plant so far. It will take us another month to have everything up and running. Then another six or eight months to ramp up to our designated capacity. The local people we've hired, we couldn't be happier with them. We're so pleased with the talent we've found, the great work ethic. They're learning steelmaking and they're ready to go.”

It takes state, regional and local cooperation to keep
North Carolina's growth rolling along, a partnership known as

Team NC

The corporate jet lands at Asheville Regional Airport and rolls to the end of the runway, then taxis back toward the passenger terminal. But instead of stopping at the gates, where passengers wait inside, the jet continues rolling toward a low-slung brick building farther off the runway. It stops about 50 feet away, and two men in business suits deplane and enter the building. Minutes later, the gentlemen, accompanied by two other people, come back out and hurry over to a state-owned helicopter waiting nearby on the tarmac. They jump in, and the helicopter soon is climbing into the mountain air and banking north.

Welcome to the brave new world of industrial recruiting - at least as it's practiced in North Carolina, where economic development policy has taken lessons from the private sector: Give the customer great service while eagerly competing for business in a global, just-in-time economy.

The men on the jet are site selection consultants retained by a big company to scout the U.S. for the best location for a major new facility with several hundred new jobs. America is a big country and North Carolina is a big state, so the consultants have a lot of ground to cover in a limited amount of time.

Several states are being considered for the new facility and all its new jobs, and the consultants are being wooed at stops all across the Southeast. North Carolina hopes to sway the decision its way by impressing the consultants with a sophisticated level of service.

That's why the offices of AdvantageWest, the economic development consortium for the western part of the state, are located right at the airport. Talk about service - visiting big shots get the red carpet treatment as soon as they step off the plane.

The same is true in the Triangle, where the Research Triangle Regional Partnership offices are at Raleigh-Durham International; and in the Global TransPark Region, whose offices are at the Kinston Jetport.

But notice this shift to match local strengths. The offices of the Charlotte Regional Partnership, which markets the 12-county Mecklenburg region, aren't at the airport, they're smack in the middle of Charlotte's muscular heart - the big banks on Tryon Street Uptown - all but shouting that access to capital investment is no problem there.

There are other examples of the state's entrepreneurial approach to economic development policy. If one-stop shopping is good for business, the state figures it ought to be good for business growth. In Asheville and at other regional centers, officials from the state Department of Commerce and those representing the regions work out of the same offices to provide a seamless presentation of the sometimes confusing tax credits and incentives available to cut the cost of building the new facility in North Carolina. Eventually it will be that way statewide. All the information needed - Will the state build an access road to the site? Will the county help with water and sewer lines? What about worker training programs? - is available from one source.

The state is even moving rapidly to web marketing and e-commerce to remain competitive. Why? Officials know that before most site selection consultants hit the ground, they've done their homework by researching local markets all across the country to develop a list of the most appealing locations.

If you can easily search the web for the best deal on a new car, why can't you search for the best deal on a 250,000 square foot industrial shell building with rail access and natural gas located not more than 10 miles from an interstate highway? You can at Commerce's web site, www.investnc.com, or those maintained by any of its partners, the seven regional economic development organizations. Type in a request like that, and you'll quickly get an individualized research report at the click of a mouse.

"The technology and the need for speed has really changed the business," says John Atkins, a Durham architect and past chairman of the Research Triangle Regional Partnership, the organization directing the marketing of that 13-county part of the state.

"A while back a consultant working on a big project called us to say he had narrowed his search down to the Research Triangle and two other places. We said, that's great but we didn't even know we were in the running. And he said he had already compiled his list and then eliminated several locations through his Internet research.

"These days you've got to have a major-league web presence or you just don't get on a lot of these lists," Atkins adds.

Michael Almond, executive director of the Charlotte Regional Partnership, which markets the 12-county region around Mecklenburg, agrees. "We believe that more and more of the site selection process is becoming self-selecting, meaning that consultants are determining their short list on the information they get on-line."

Just look at the numbers, Almond says. "In 1998 the Charlotte Regional Partnership (web site, www.charlotteregion.com) had about 10,500 hits per months. Users were averaging between three to five minutes at the site. In 1999 it averaged 33,000 hits a month. In the first two months of this year," Almond continues, "we averaged over 40,000 hits and users were at the site over 10 minutes, some up to 26 minutes."

"Time is so valuable with industrial recruiters," says Gordon Myers of Asheville, the Ingles Markets executive who is chairman of the AdvantageWest regional partnership (www.awnc.org), and who's often been a helicopter host. "It used to be they would come in for three or four days; now they come in for a couple of hours. So we have to be ready, we have to know what they need. A lot of work is done prior to them hitting the ground."

Even in northeastern North Carolina, far from any of the state's metro areas, maintaining a sophisticated web presence is vital, says Rick Watson, executive director of North Carolina's Northeast 16-county regional partnership (www.ncnortheast.com). "We have a lady (on staff) whose title and job description is the Internet. We want to make sure we're doing all we can to keep from being disqualified from consideration before we even know about the project," Watson says.

Or as Commerce Secretary Rick Carlisle says, "The decision process is a lot quicker these days. Most of these major expansion and relocation projects we see now are on a fast track because the longer they drag out the project the more it costs. Speed rules."


Evolving Relationships

North Carolina hasn't arrived overnight at what obviously is a highly coordinated, technologically saavy approach to economic development. It's taken several years to build and fine-tune programs that now are obviously hitting on all cylinders.

A key tool was added in 1996 when the General Assembly adopted the William S. Lee Quality Jobs and Business Expansion Act, legislation granting a range of tax credits to new and expanding businesses for creating new jobs, investing in equipment, for worker training and other good purposes. The credits were available equally to existing businesses and those moving in from out-of-state. Although not as lavish as many other states - there's no upfront cash, just credits to lower a company's state tax - the incentives have worked wonders at accomplishing the main policy goal - creating new jobs. Specifically, the state targeted what it saw as high-paying, high-benefit jobs in a few targeted, "today's economy" kind of industries in a boots-strap strategy to replace thousands of disappearing jobs in such declining manufacturing sectors as textiles, furniture and tobacco.

"Not many people are really aware of it, but last year North Carolina lost a record number of jobs," says Commerce Secretary Carlisle. "And we are tracking that into this year. But luckily for us we have more than made up for that by the huge job growth we've experienced in just three key new industries - auto components, electronics and pharmaceuticals."

Another significant change was the creation of the seven regional partnerships. In addition to the statewide marketing programs of the Commerce Department, the state began augmenting its economic development efforts through the seven regions - geographic groups of counties that share common interests. This fundamental transformation, a little bumpy and uneven in its early years and a bit bruising on some egos, has by all accounts now matured into a smooth working relationship among the state, the regions and a host of local business-growth programs.

Commerce remains in control of overall economic development policy and still is responsible for "marketing the N.C. brand," as Assistant Commerce Secretary Jim Fain describes it. Commerce researches and develops targeted data on all 100 counties, advertises the state in national publications, maintains trade offices in several overseas capitals and takes other steps to burnish North Carolina's image. The department pounced on the opportunity to showcase the state during two major golf tournaments, buying a corporate tent and enteraining VIPs at the 1996 U.S. Women's Open at Pine Needles and the 1999 U.S. Open at Pinehurst. Commerce officials were very pleased with the results and plan to go the corporate tent route again at the Women's Open when it returns to Pine Needles next summer.

"You can wait for (CEOs and their site selection consultants) to call on you or you can be proactive and call on them, particularly the industry segments the state finds important," Fain says. "We believe it's more effective to be proactive."

Commerce also retains its traditional role as the primary client handler, meaning it's responsible for making sure industrial prospects see potential sites all across the state. But the agency says it makes sense to put resources down where the rubber meets the road, and that's at the regional level.

In four of the seven regions, Commerce and the regional organizations have fully integrated their services to new and expanding industries. In the AdvantageWest region around Asheville, in the Piedmont Triad area, in North Carolina's Northeast region and in the Research Triangle counties, state and regional economic development officials share offices and work side by side. Co-locating state officials and those of the three other regional groups - North Carolina's Southeast, Charlotte Regional Partnership and the Global TransPark area - will occur in the future.

Fain says "a lot of hard work has gone on in the past year to make sure that the three primary players in economic development are working well together - Commerce, the regional partnerships and local developers. Everybody now understands the important role they have to play in order to avoid redundancies and make best use of resources." The local developers he refers to include economic development programs run by local chambers of commerce, county economic development commissions, committees of 100 and other such groups.

Having state and regional economic development officials share offices is smart, Fain says. "We find that really lends itself to teamwork and good communications," he says.

This collaborative effort between the state and the seven regional partnerships, each of which receives funding from the General Assembly, is managed through an umbrella organization, the N.C. Partnership for Economic Development (NCPED). The chairs of each of the seven regions have seats on the NCPED, as do officials from the Commerce Department. The NCPED is led by two co-chairs - the secretary of Commerce and the chairman of one of the regions.

Having largely solved the organizational and logistical challenges of melding the efforts of the state Commerce Department with that of the seven regional organizations, this year Commerce took the partnership theme to the next level - bringing into the tent the many local economic development groups around the state such as those run by local chambers of commerce and committees of 100.

Fain said the department has established an advisory group composed of local developers to represent each of the seven regions. "I will meet with them quarterly. We want to hear from them about things that will help us be helpful to them."

Atkins is enthusiastic. "We have a lot of people now at the state, regional and local level all working on economic development, and it's taken a while but we're all working fairly smoothly together now," the architect says. "We call ourselves Team NC."


The Jobs Magnet

With so many oars all pulling in the same direction, it's not surprising that North Carolina is sailing into its ninth year of economic expansion. During calendar 1999 the state recorded $5.5 billion in investments by new and expanding industries, growth that created more than 42,000 jobs, according to Commerce Secretary Carlisle.

Those figures are down from the record $7.8 billion in investment the state achieved in 1998, a fall-back many attribute to the two hurricanes that struck the state last year as well as the worst snowstorm in many years.

But the trends remain positive. Throughout 1998, 1999 and into the first half of 2000, the state is picking up between 3,000 and 4,000 new jobs a month. North Carolina continues to win its share of the national recruitment prices. In 1998 it was the Nucor steel plant and the FedEx hub last year. So far this year it's been more growth by Corning, a Midway Airlines maintenance center at RDU and several thousand computer industry jobs at Cisco Systems, Nortel Networks and others. For an update on the FedEx project, see Regional Reports, page 12.

An encouraging sign is that two-thirds of the new jobs and the millions of dollars invested in plant and equipment are coming from expansions by existing North Carolina companies. Of the 1,272 industrial announcements tracked by the Commerce Department in 1998, 839 were by existing business expanding their North Carolina operations. In 1999, 732 of the 1,055 announcements tracked by the state were expansions by existing industries.

Similarly, of the 42,089 new jobs created last year, more than 28,000 were as a result of expansions by existing industries.

Investment in North Carolina by foreign companies continues strong, with $911 million coming into the state in 1999. Attracting international capital is very important, especially in the Charlotte area, where the regional partnership there recently opened a branch office in Frankfort, Germany.

"Last year we added three new international flights" at Charlotte-Douglas, Almond says. "This now means that from Charlotte you are at most one plane change away from any significant business location in the world. That degree of accessibility is extremely important."

This year is on a pace to exceed the 1999 industrial development totals and may even challenge the record-setting numbers of 1998, officials say.

In February, Corning Inc. announced that it planned to invest $650 million and create 500 new jobs through an expansion of its North Carolina fiber optics manufacturing facilities. Corning said it would invest $550 million expanding a relatively new facility in Cabarrus County (one of the state's biggest industrial prizes of 1998) and $100 million modernizing its New Hanover County plant.

The Corning announcement was the state's largest single business investment announcement ever, a record that many thought would stand for a long while. To everyone's pleasant surprise, it was a record that stood barely a month.

In March, Raleigh developer William Horton said his company, DFI Group, would invest $1.4 billion to build three ethanol plants in Eastern North Carolina and bring as many as 1,200 new jobs to the region. The announcement also was a big boost to the state's agribusiness community, because the plants would produce the fuel additive from 22 million bushels of corn and 60 million bushels of North Carolina-grown sweet potatoes. North Carolina is the country's biggest producer of sweet potatoes.

The ethanol plants would be located in Martin, Greene and Onslow counties. The Martin County facility apparently will be the first one built; the plant is slated for a 650-acre site just west of Robersonville, with groundbreaking early next year.

Other major industrial announcements so far this year reinforce the conclusion that Team NC continues to pull in thousands of just the right kind of jobs the state says is needed:

u John Deere announced a $66 million relocation of a lawn tractor assembly plant to Wake County with 1,350 jobs.

u Allstate Insurance said it would expand its Charlotte offices and hire 1,150 more people.

u Cisco Systems announced yet another major expansion of its Research Triangle campus and the need for 2,000 more computer engineers.

u Nortel Networks, just down the road from Cisco in RTP, announced it planned to expand by 1,500 people in a major ramp-up of its network switching capacity.

u Lucent Technologies announced it would build a 500-employee optical networking R&D center on N.C. State University's Centennial Campus.

u United Healthcare said it would expand its Greensboro operations and create 860 new jobs. And the list goes on. See the list on pages 19-20 of all announcements of new and expanding companies made in the year ended June 30, which came with an announced investment of at least $10 million or at least 50 new jobs.


Legislative Initiatives

You don't have to be an insider to know where North Carolina is headed in industrial recruitment. Anybody who sits in the galleries at the General Assembly building knows what's going on. That's because each year the legislature amends the Bill Lee tax incentive law to accommodate whatever big new project might come to the state.

This summer the legislature debated and by wide margins passed amendments that extend the incentives program to the anticipated Midway Airlines maintenance facility at RDU. Of course, the legislation doesn't mention Midway by name. It says the tax credits, which already are available to a number of specific industries, now will also be available to "airline maintenance and repair facilities associated with interstate air carriers." Besides the Midway Airlines maintenance hangar, which should be announced any time now, officials at Charlotte-Douglas have a shot at landing a major expansion of the US Airways maintenance facility there.

Also, lawmakers agreed to extend the carryforward period in which businesses could claim the Bill Lee Act tax credits from five to 10 years for investments of between $50 million and $150 million. That was a big help to some companies that weren't able to take full use of their tax credits before they expired.

But perhaps the most interesting issue in economic development circles is the possibility that the Golden Leaf Foundation, the entity created by the legislature to receive half of the state's $4.6 billion from the national tobacco settlement, may award sizable grants to the regional partnerships.

Half of the money coming into the Golden Leaf Foundation is earmarked for economic development in communities hard-hit by the decline in tobacco. In late July the foundation began soliciting grant proposals for what eventually will be a fund of more than $1 billion. Atkins, the Durham architect who at the time was chairman of the Research Triangle Regional Partnership, and Almond, the president of the Charlotte Regional Partnership, made a strong case to the foundation that part of that money ought to go to the seven regional partnerships.

Their message was that the fastest and surest way to bolster the economies of tobacco-dependent communities is to attract new industries to those towns. And who is better able to attract those new industries than the regional partnerships?

"What we wanted to convey to them," Atkins says, "is that we already have the mechanism and the people in place to accomplish what they're after. It will cost the foundation less money to use us to achieve their goals than by starting from scratch with a new program."

Obtaining funding through the Golden Leaf Foundation would be a major boost to the partnerships, which received total state appropriations of $6.7 million, divided according to need. The foundation will announce its first grants in December. It's not clear whether the state Commerce Department is eligible for grants from the foundation.


COPYRIGHTED MATERIAL. This story first appeared in the September 2000 issue of North Carolina magazine.

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