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Bullish on Durham

Tobacco’s decline gives way to stunning growth
in the county’s industrial base and quality of life

By Suzanne W. Wood

When a city relies heavily on one industry for its jobs and tax base, it's all too apparent what happens — and who suffers — when that industry begins to falter. Many American cities have struggled to remake themselves in the wake of closings and consolidations in the textile, steel, auto and mining industries over the last 50 years. But in the case of Durham County and its 220,000 residents, losing its main breadwinner has spurred nothing less than a renaissance.

Indeed, Greater Durham has made the transition from the town that tobacco built into a vibrant, growing community with a diversified industry base, a technology and R&D sector that is the envy of many cities, and an undisputedly high quality of life fueled by world-class medical facilities, top universities and schools, and a dynamic concentration of arts, cultural and sports amenities, including the famed Durham Bulls.  

Caption for photo above: A worker at the Freudenburg Nonwoven textile manufacturing plant prepares sample packets to send to prospective clients.

That Durham has found the right formula to create a sustainable future is evident from the depth and breadth of the accolades it receives:

Durham is the centerpoint of the three-city Triangle (Raleigh/Durham/Chapel Hill) that Money magazine recently selected as the "Best City in the South" and one of only six communities nationwide chosen as one of the magazine's top picks in its "Best Places to Live 2000" issue (December 2000). This marks the third time in seven years that Durham and its neighbors have made Money's coveted Top 10 list, including 1994's No. 1 ranking;

Durham was ranked the No. 2 city in the country for foreign investment, behind fellow North Carolina city Charlotte, by Site Selection magazine (January 2000). The many foreign-owned companies with a major local presence include Glaxo Wellcome, Nortel Networks, Rhone Poulenc, Sumitomo, Freudenberg and AW North Carolina;

Durham County companies received nearly half of all venture capital dollars invested in North Carolina companies, according to Pricewaterhouse Coopers (1998);

The area, including the other Triangle cities, has earned numerous entrepreneurial honors, including being chosen as the No. 1 city for small business by Entrepreneur magazine and the No.1 area for economic growth in the past 25 years ("Where the Money Is: America's Strongest Local Economies, 2^nd edition);

And in a nod to its quality of life, Durham in recent years has been named the No. 2 Healthiest City for Women (American Health magazine), one of the Top 10 cities for working mothers (Redbook magazine), the No. 3 ranking for Most Enlightened Place to Live (Utne Reader magazine), one of the Top Five places to raise kids (Child magazine), and one of the Top 10 urban hiking areas (American Hiking).

Durham leaders' commitment to jobs for all people recently was recognized by Gov. Jim Hunt, who last month honored the Greater Durham Chamber of Commerce's Work First program and its chief job developer, Linzie Atkins, for helping more people get off welfare than other communities averaged.

Durham is home to the country's eighth-ranked university (Duke), which just happens to have a medical center that is the nation's sixth-ranked overall hospital.

As local leaders tell it, the community has taken less than 50 years to transform itself from the City of Cigarettes to what they like to call the City of MERIT — medicine, education, research, industry and technology. Two major catalysts have been the growth of Duke University and the creation and expansion of Research Triangle Park — most of which sits in Durham County — into the premier research and development corporate park in the country with a more balanced portfolio than technology corridors in the San Jose or Boston areas.

Durham's evolution also has been a behind-the-scenes effort involving not only the major players, but also an inclusive array of local governments, economic development agencies and citizens’ groups as well, notes Bert Collins, chairman of the Greater Durham Chamber of Commerce and president of the 103-year-old North Carolina Mutual Life Insurance Co.

"We collaborate with and support activities of other civic groups that have growth and development as their primary focus, such as Downtown Durham Inc., the Greater Durham Convention & Visitors Bureau, and area economic and business councils," says Collins. "Some of the key factors behind the county's success are community leaders including city and county governments along with a concerned citizenry that is progressive in their vision and willing to move forward with alternative plans that offer the growth and survival opportunities needed to prosper."

Preserving the Past, Preparing for the Future

Some of those alternative plans embrace a vision that pays homage to the industry that put Durham on the map while creating another economic opportunity. In a city that already has recycled several former tobacco warehouses into successful retail, office and residential developments — including Brightleaf Square in downtown Durham (photo at left) — another major revitalization project is in the works. The American Tobacco Historic District project would renovate about 1 million square feet of old tobacco warehouses and related buildings into a mixed-use center-city development with office space, retail facilities such as restaurants and boutiques, a hotel, day-care center and fitness club, a theatre and eventually residential units. Some say it could be to Durham what popular Faneuil Hall is to Boston — both a tourist attraction and a heavily used local center of commerce.

Capitol Broadcasting Co. in Raleigh owns an option on the property and will exercise it as soon as it has enough lease commitments, says Peter Anlyan, general manager of the project. So far, Duke University is the only tenant who has made a commitment, but it's a big one — 120,000 square feet of office space, with a specific department or unit yet to be announced. The first building on the American Tobacco Co. campus opened in 1874, and today the entire property is on the National Register of Historic Places. Visitors and prospective tenants are treated to the unmistakable aroma of tobacco that still fills the air.

Project supporters say the development will be a tremendous boost to the city revitalization efforts that soldier on despite record prosperity, especially in the suburbs and the surrounding business parks that include RTP. 

"What downtown Durham really needs is feet on the street — more people working downtown, more people after hours," says Anylan, who sees the American Tobacco project as a magnet for growth as well as a way of preserving tradition.

Of course, projects like the American Tobacco revitalization wouldn't be necessary if two trends hadn't intersected in the 1960s and 1970s: the decline in smoking in the United States and the shifting of tobacco-products production jobs overseas. From the early days of mechanized-cigarette production in the 1860s to the heyday of cigarette making near the turn of the 20^th century, a dozen tobacco companies operated in Durham, including American Tobacco Co. — the brainchild of pioneering tobacco farmer and scion Washington Duke — which was capitalized at more than $25 million in 1890. Tobacco brought railroads, manufacturers of tobacco-supporting products including textile mills that made tobacco sacks, as well as other infrastructure necessary for growth. And it was Duke family money, particularly James B. Duke's $40 million investment, that remade Trinity College into a wealthy, progressive and prestigious university that has itself been the catalyst for much of Durham's past and present growth.

During World War II, Durham produced one-quarter of all the cigarettes made in the U.S. Twenty-five years later, only four tobacco plants remained standing. Last fall, Liggett shut down what had been the last tobacco factory in town. But thanks to economic magnets such as Duke University, Duke University Medical Center and Research Triangle Park, unemployment rates are not catastrophic but enviably low, currently below 3 percent.

Location, Location, Location

The list of companies that have put down roots in Greater Durham during its transition is both long and impressive for the number of international and Fortune 500 companies with major sites here. That list includes RTP residents IBM, which at 14,000 employees is the largest manufacturing employer in the county; Nortel Networks, which employs 8,000; and Glaxo Wellcome, which and currently has 4,900 Durham County employees and will become the No. 2 drugmaker in the world after its pending merger with SmithKline Beechum.

It also includes newcomer AW North Carolina (photo at left), a Japanese-owned company that is helping to broaden the area's industry mix with its auto-parts manufacturing plant in the Treyburn community. Attracted in part by the county's location — its close proximity to Interstates 85 and 40, Raleigh-Durham International Airport, and job-training opportunities provided by Durham Technical Community College — the company chose Durham out of 276 sites it considered worldwide, says Will Collins, the plant's human resources manager. "Durham's reputation in Japan is very favorable due to the number of Japanese companies already located here," says Collins. When it begins full production in April, the plant will supply 30,000 Toyota Camry automatic transmission sets a month to an auto component plant in Buffalo, W.Va., and employ about 250 people. "We have made a $100 million investment in Durham County," he notes. "Everyone's been very comfortable with our decision."  

Caption for photo above: Bradley Tuck and Ruby Arnette inspect a piston from the drum assembly line at the new AW North Carolina plant.

Another international company with an established presence in Durham County is also banking on Durham's reputation as well as the company it keeps. Freudenberg Nonwovens Group, which has three plants in Durham that make automotive carpet backing, apparel underlinings, and hygienic coverstock, is in the midst of a 52,000-square-foot expansion of its spunbound polyester nonwoven capacity, which represents a $35 million investment. Located in Eno Industrial Park, Freudenberg is a division of Carl Freudenberg & Co. of Weinheim, Germany, and has had a presence in Durham since 1984, when it was called Lutravil Co. Freudenberg also has plants in Lowell, Mass., and Hopkinsville, Ky.

"The general economic climate and availability of all factors of production and distribution have made Durham the preferred site in North America," says Lee J. Sullivan, general manager of the company's tuft division. "Of all our locations, Durham offers the best balance of culture, travel support, skilled workers, and other available factors of production."

Like Freudenberg, Durham employer EMC is investing for growth. As a result of its acquisition of Data General in 1999, the data-storage company currently employs 680 people in the Triangle, including 230 at a software R&D facility in RTP. But those numbers could double in the next two years, in large measure due to EMC's recent announcement that it will open a training facility in RTP for employees and customers that will serve more than 5,000 people a year, many of whom will stay in the area's hotels, use the local airport and shop in the community's stores. The EMC Southeast Training Center will encompass 28,000 square feet, including 10 classrooms and a 6,000-square-foot lab. It should open early this year.

Location, convenience and an attractive talent pool have influenced the company's decision to not only locate its new training center here, but to groom its local operations for growth.

"RTP is just a two-hour or less flight from anywhere on the East Coast, and EMC is just a 10-minute cab ride from the airport. When our clients or employees are here, the amenities are top-notch, including among some of the world's best golf courses," says Joel Schwartz, senior vice president and general manager of EMC's Midrange Storage Division. "And without a doubt, being close to so many world-class academic institutions has and continues to play a critical role in EMC's recruiting efforts."

Education: Training Hands, Testing Minds

Those academic institutions, when the offerings in Raleigh and Chapel are added to the mix, represent an embarrassment of riches; even when Greater Durham's schools stand on their own, their programs, achievements and contributions are impressive by any measure. Its three institutions of higher education — Duke University, N.C. Central University, and Durham Technical Community College — support the economy through their payrolls, student populations and visitors. They also provide thousands of degreed and skilled young people each year as raw talent for neighboring companies. And Durham Tech is also an important part of the community's corporate recruitment and retention efforts because of its esteemed worker training programs.

There's no mistaking Duke's influence on Greater Durham's economy, quality of life and reputation. The university and medical center together employ nearly 18,000 people, making Duke the largest employer in the county. That's nearly 10 percent of the county's population. Most of them, no doubt, stick their chests out a little more at this time of year. The Blue Devils’ men’s basketball team has taken its usual place among the nation’s elite, and now has been joined by the women’s team, which reached the Final Four two years ago and again is among the best in the country.

There’s more. Through the university’s cultural offerings, such as theater productions and documentary festivals, and outreach efforts, such as community enrichment and educational partnership programs, the community's livability is heightened. Its professors and students create a community of scholarship that brings a certain cachet to the area. And now it is about to go on what one local newspaper recently described as a "spending spree," thanks to the success of its current capital campaign.

The university initially set a fundraising goal of $1.5 billion, and had raised nearly 90 percent of that by early December — with three years of the campaign remaining. So it raised its goal to $2 billion, joining only three other schools — Harvard, Columbia and the University of Southern California — who have set such lofty expectations. Duke plans to spend $500 million of that money on faculty and laboratories to upgrade its science, engineering and business programs, which while well-regarded, have historically lagged behind its liberal-arts programs in funding and prestige. This largess comes on the heels of a bull market that has boosted the university's endowment to $2.7 billion. (For comparison's sake, Harvard's endowment is $19.2 billion; the University of North Carolina at Chapel Hill's is $1.1 billion).

As Duke gets stronger and more heavily invested in science, engineering, technology and business, the benefits to local companies should be plentiful. Passage of the state bond issue to fund improvements to community colleges and public universities will greatly benefit Durham due to the presence of two recipients of those public millions, N.C. Central and Durham Tech. N.C. Central, or NCCU, is the oldest publicly supported, historically black university in the country. It currently employs more than 1,100 and has an enrollment of 5,476, but has big plans for growth. To help absorb much of the increase in UNC-system enrollment projected over the next 10 years, NCCU is set to expand its enrollment by 50 percent by 2008, and in the process become more racially diverse. Already, enrollment in the school's evening programs, which are some of the most comprehensive in the area, has increased dramatically, from 798 in 1999 to 2,060 in 2000. And it plans to use some of its $121 million share of the bond money to build a new science complex. Outgoing Chancellor Julius L. Chambers feels the university should focus on the sciences, now that it has a new Biomedical-Biotechnology Research Institute and plans are under way to create a new program in genomics and bioinformatics.

Durham Tech's share of the community-college bond money will be apportioned among most of its units, including its corporate education department, which is closely tied to economic development in Greater Durham. "Over the last three years, we have provided skills training for 5,000 students a year," says Gordon Copeland, associate dean for corporate education. Durham Tech's on-the-job, customized training programs for both new and existing employers are so well-regarded — as are all the community college system's campuses — that they figure prominently in a company's decision to locate or expand in the area, notes Copeland. Last year, Durham Tech worked with 500 companies — some were mom-and-pop joints that wanted computer training, and others were large multinational companies opening a new division and in need of trained machine operators.