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Regional Business Reports for February 2003


Granite Falls
Bank of Granite, in its first acquisition, enters Charlotte
Bank of Granite, headquartered in Caldwell County, is moving into Charlotte, the land of mega-banks, hoping its hometown banking style will lure new customers. Bank of Granite has agreed to buy Charlotte-based First Commerce Corp. for $18.5 million. John Forlines, Bank of Granite’s venerable chief executive, says the merger is a good combination. First Commerce’s three Charlotte locations give Bank of Granite a place to grow. Granite’s assets provide First Commerce with the capital to grow. The merger is Bank of Granite’s first acquisition. “We’ve been looking for a bank to merge with that made sense for us for several years,” says Forlines, 85. “We found a bank with a good guy running it. They need the things we got.” And Forlines adds that the Charlotte market is an attractive area for the Bank of Granite, which is looking to expand its customer base. “We hope to let the people in Charlotte see our special brand of banking.”

Wes Sturges, 53, chief executive of First Commerce, will become executive vice president and will be a candidate for CEO when Forlines, 85, retires. Forlines says for now he has no immediate plans to step down. Sturges started First Commerce Corp. in 1996.

The merger is expected to close in the second quarter and is dependent on regulatory approval as well as a vote of First Commerce Corp. shareholders. Under the deal, Bank of Granite will give First Commerce shareholders 671,612 shares of Granite stock and $4.6 million in cash, or $16.60 a share. First Commerce has more than 1 million shares of stock outstanding. Total assets for the merged bank will be $900 million, making it the ninth largest bank headquartered in North Carolina.

Bank of Granite was also recently honored for charitable giving throughout the counties of Burke, Catawba and Caldwell where it has offices. The Northwest Chapter of the Association of Fundraising Professionals named Bank of Granite Outstanding Philanthropic Corporation for 2002. The bank’s 200 employees are actively involved in a number of charitable activities, including the March of Dimes and United Way. Its operations center sponsored a group of children with gifts for the Christmas holiday. “Our people are by far the most aggressive supporters of the March of Dimes in this area and they do it without direction from management,” says Forlines. “It’s a culture with us. We don’t have to beg.”  -- Laura Williams-Tracy


Raleigh
Cautious optimism expressed at economic forecast forum
The standing-room-only crowd of more than 300 who attended the 2003 Economic Forecast Luncheon co-sponsored by NCCBI and the North Carolina Bankers Association at the Capital City Club on Jan. 6 were warned to be cautiously optimistic. Experts say that while North Carolina’s economy should grow by about 3 percent in 2003, the unemployment rate will vary little from its current 6.1 percent rate.

“By all objective measures, it’s going to get better,” according to state Treasurer Richard Moore, who was among the three panelists. Despite the state’s fiscal troubles, it has managed to retain AAA credit ratings from two of the three top credit review services. Rock-bottom interest rates are helping keep the costs of North Carolina’s debt at record lows. But Moore cautioned that there is no flexibility in the state’s budget and that the coming year will be a pivotal one for the state’s credit rating. “It could go either way,” he said.

Dr. Harry Davis, a professor of finance at Appalachian State University who advises the Bankers Association, said the recent downturn had been mild when placed in the context of other recessions over the past two decades. Last year’s GDP growth was roughly equivalent to the post-World War II average, though much of it rested on the backs of the U.S. consumer. “Consumers have a split personality,” Davis said. “Their confidence isn’t good, but they’re spending money like crazy.”

The current capacity of the U.S. economy to emerge from recession is greater than in the past, thanks to banking and financial reforms made over the past 20 years, according to John Silvia, chief economist at Wachovia Bank. “In contrast to Europe and Japan, U.S. financial institutions are much stronger in terms of their structure,” Silvia said. He concurred with Davis in the prediction that the Federal Reserve would likely hold short-term interest rates at current levels at least through the summer. While Silvia sees little evidence of inflation in goods, there is upward pricing pressure in services. “The story of inflation is not an easy one to tell,” he said.

Panelists also speculated about the economic impact of war and terrorism. Much of that uncertainty is factored into current projections, though the costs of national security shouldn’t be underestimated.  “Fighting terrorism is expensive,” Davis warned. “It’s like a tax.” -- Lawrence Bivins


Asheville
Authority's major grant speeds web to mountains
Western North Carolina is the latest region to benefit — and for a second time — from a nonprofit group formed by the state to speed rollout of fast Internet connections The Rural Internet Access Authority, created by the General Assembly in 2000, has pledged $3 million to six organizations serving 15 counties, bringing the total award for Western North Carolina to $7 million. That’s more per capita than any other region of the state, says Jane Patterson, the Rural Internet Access Authority’s executive director.

AdvantageWest, an economic development organization, receives almost half the money, $1.45 million, for two projects designed to link Internet service providers with the telecommunications pipes that carry web traffic across the state and beyond. Verizon Communications received $240,000 to deploy its version of high-speed access, called DSL.

The authority was first funded by a $30 million donation from nonprofit research center MCNC. Since then, it also has received some federal money. The authority has about $2 million more to distribute this year, Patterson says, before completing its mission.  — Kevin Brafford


Charlotte
NCNG chief retires after 38-year career
Ware F. Schiefer, chief executive of Charlotte-based Piedmont Natural Gas Co., will retire at the end of the month after steering the company on a path of solid growth during a volatile time in the energy business. Schiefer joined Piedmont in 1964 as an industrial sales representative and worked his way up to president and COO in 1999 and CEO in 2000.

“I’m most proud of the fact that we kept the company on track during a time when a lot of energy companies were jumping into other businesses,” says Schiefer. “We stuck to our knitting, and we are financially stable”

Steady management has resulted in the purchase of North Carolina Natural Gas from Progress Energy in Raleigh. The two companies announced in October that Piedmont would buy NCNG for $425 million in cash. “It will give us a much larger market within North Carolina, and we are very bullish on North Carolina’s growth,” says Schiefer.

Piedmont currently serves the I-85 corridor in North Carolina and South Carolina, and the addition of NCNG will provide another 176,000 customers east of Raleigh and along the coastal region.

At Schiefer’s retirement, Thomas Skains, president and COO, will assume the leadership role. Skains joined Piedmont in 1995, coming from Houston-based Transcontinental Gas Pipe Line Corp. as its senior vice president for transportation and customer services.

At its February shareholders meeting, John Maxheim, a former chief executive of the company and current chairman of the board, also will retire as board chairman. Maxheim served as CEO from 1980 and retired from day-to-day activity in 2000. He will be awarded the honorary title of chairman emeritus.

Piedmont Natural Gas distributes natural gas to 725,000 residential, commercial and industrial customers in the Carolinas and Tennessee.  The Charlotte-based company is the second largest natural gas utility in the Southeast. -- Laura Williams-Tracy


Pinehurst
Sunburned golfers find help for damaged skin
Moore County residents generally are unaccustomed to being on the cutting edge of anything that doesn’t involve a golf ball, but beginning this month they can take advantage of the latest trend in medical care — a dermatological medical spa that is one of the area’s newest businesses.

The Spa at Carolina Skin Care is a cosmetic dermatology practice and medical spa directed by Dr. David I. Klumpar, a Duke University-trained aesthetic dermatologist. It’s not a place where you can get your nails or your hair done; rather, it’s a facility that offers non-invasive cosmetic procedures using products that have been medically proven to prevent and treat photoaging.

The medi-spa is the Sandhills’ first such facility and one of the few in the state. “Our goal,” says Klumpar, “is to affect a positive change in the actual health of the skin, which enhances appearance. Patients in a dermatological medical spa will see positive results from treatments for sun damage and other skin conditions.”

Treatments include the latest in laser facial rejuvenation, microdermabrasion, Botox, anti-oxidant facials and body treatments. It is the only facility in the Sandhills to offer Vichy shower hydrotherapy, or water treatment, to detoxify, hydrate and provide pressure point massage.

Patient care at medical spas is a top priority, says Klumpar. Both the facility’s medical and spa staff are aware of a patient’s medical history, including current medications and preferred treatments. “People want to be treated well, in spa and medical environments,” he says. “They’re busy working, raising families and multi-tasking. We want patients to leave everyday cares behind and know that upon exiting our facility, they’ll look and feel better.” -- Kelly Gray


Greensboro
UNCG spinoff develops water terrorism defense
The University of North Carolina at Greensboro has created a new biotechnology spinoff designed to identify potential terrorist agents in water supplies. EcoGenomix Inc., a tenant in the Nussbaum Center for Entrepreneurship in Greensboro, in collaboration with UNCG, is developing the “WaterChip,” which provides a unique approach to water surveillance by using microarray technology to give a complete profile of all constituents in a water sample. The test can show changes in the water’s makeup and reveal contamination by pathogens, toxins and chemicals.

The technology, which has been supported by a $1 million grant from the Environmental Protection Agency, is based on research conducted at UNCG in the Department of Biology by Parke Rublee, Vincent Henrich and former faculty member Neal Stewart. A patent is being sought for the WaterChip.

“We are taking information from years of research and developing a faster, cheaper and more comprehensive method to evaluate water system quality,” says Rublee, who will lead the scientific operations of the new company along with Henrich and Jennifer Freeman. They combine Rublee’s expertise in water quality assessment, Henrich’s research in molecular genetics and Freeman’s experience in diagnostic research.

Eric Button, a biotech entrepreneur who earned a bachelor’s degree and an MBA from UNCG, will direct the early development of EcoGenomix as chairman and CEO. Button is president and managing director of BioEmerge Partners, a biotech consulting company in Clemmons. Jerry McGuire, director of the UNCG Office of Technology Transfer, also will serve on the board along with Button.

“The unique blend of genetic and ecological talents in the UNCG biology department has produced an entirely novel approach to the assessment of water quality and the detection of potential pathogens planted by terrorists in the water supply,” Button says. “Much work has been done to lay the groundwork for this company, and it is clearly ready to move on to the next steps.” — Jim Buice


Raleigh
Utility's expansion plan electrifies downtown mall
Fayetteville Street Mall hasn’t been the long-term answer to bring renewed vitality to downtown Raleigh; now, Progress Energy plans to take a shot at boosting the capital city’s civic, commercial and cultural interests with the construction of a $100 million, 19-story structure that could be completed as early as mid-2004.

The building will include three elements: one level of street retail, six levels of parking and 12 levels of office space. When completed, Progress Energy will have approximately 380,000 square feet of new office space. The company will occupy the entire office space in the new complex by relocating operations from several sites and satisfying growth expectations for 2005 and beyond. Progress Energy plans to continue to occupy its current main building along Fayetteville Street Mall as part of the centralization.

“We are proud to be part of the effort to bring renewed energy and potential to downtown Raleigh,” says Bill Cavanaugh, chairman and CEO of Progress Energy and the man who’s credited with hatching the idea. “We have more than 2,300 employees working downtown and believe strongly in the vitality of downtown as a civic, commercial and cultural center. We believe this development can be a catalyst for future growth of downtown Raleigh.”

In addition to the large office space, the mixed-use project will include 25,000 to 30,000 square feet of retail space that is being marketed by York Properties Inc. Residential development is a separate component of the site plan, and current plans call for constructing up to 78 residential units.

The energy giant, formerly Carolina Power & Light, closed on additional downtown property in November, most of which is bounded by Davie, Wilmington, Martin and Blount streets. One parcel fronts Fayetteville Street Mall and Martin Street. Progress Energy plans to develop a mixed-use project on this land once the initial mixed-use development is completed. -- Kevin Brafford


Asheboro
Zoo renames pavilion for mysterious benefactor
Just before Christmas, the N.C. Zoological Society received a $2.5 million gift, the largest in its history, from the estate of a North Carolina native. T. Walker Lipscomb III of Alexandria, Va., died last Feb. 4 and left the majority of his estate to the zoo society. The gift was received as a wire transfer from a bank office in Washington, D.C. Another $250,000 is expected in a final distribution this year. The zoo society will recognize Lipscomb’s generosity on April 5 by rededicating the recently renovated African Pavilion in his memory.

Lipscomb, who was born and raised in Asheville, taught for a time at the University of North Carolina and also had lived in New York City. He was a software engineer and computer consultant. According to zoo officials, Lipscomb had spoken with staff members before creating a will in 1999 but was never a member of the zoo society. When the N.C. Zoo started raising money for Afghanistan’s Kabul Zoo late in 2001, Lipscomb contributed $1,000 to the effort.

“We have been told that Mr. Lipscomb was proud of his state zoo and had an interest in helping endangered and threatened animals,” says Russ Williams, executive director of the zoo society. “We wish we had had the chance to thank him and better understand why he chose the society and the zoo for his generosity.”

In addition to the zoo, more than 40 individuals benefited from the Lipscomb estate. Given without restriction, Lipscomb’s gift will join other gifts in the zoo society’s Lion’s Pride Fund, a quasi-endowment that generates ongoing income for the N.C. Zoo. When complete, Lipscomb’s gift will nearly double the total in the fund. — Jim Buice


Charlotte
NBA makes a fast break back to the Queen City
The Queen City only went seven months without her NBA crown. Two major hurdles necessary to bringing major league basketball back to Charlotte were cleared by the end of the year. In November, the City Council voted to commit $200 million of public money to building a new uptown arena. In December, the NBA’s expansion committee recommended that Robert Johnson, 56, founder of Black Entertainment Television, be given the opportunity to pay $300 million to own the new Charlotte franchise. Johnson becomes the only African-American with a majority ownership stake in a major-league sports franchise.

Charlotte’s regaining of an NBA team is among the fastest recoveries for a major league city. It was just seven months ago that the Charlotte Hornets left Charlotte for New Orleans after several years of acrimonious negotiations and a failed referendum to build a new arena. Owners George Shinn and Ray Wooldridge said they needed an arena with lucrative club seats and luxury suites to make the team economically viable.

The quick replacement means the city will go just two seasons without a basketball team. Johnson’s team will take to the court in 2004. Local investors in the team are expected to include retired Bank of America Corp. Chairman Hugh McColl Jr., a friend of Johnson’s; and former Hornets player and crowd-favorite Muggsy Bogues. Johnson is expected to sell 30 percent of the team to a group of local investors. Charlotte will also keep its six-year-old WNBA team, which had been owned by Shinn. As part of the NBA deal, Johnson purchased the Charlotte Sting.

Planning and construction of the new arena, which carries a pricetag in excess of $265 million, is expected to begin immediately. From the operations side, Johnson must begin work for find a new team name, logo and colors, as well as hire basketball administrative and marketing staffs.   — Laura Williams-Tracy


Hickory
Hosiery maker socks it to cheap overseas competition
With free trade initiatives and foreign competition taking their toll on the hosiery industry in the United States, domestic manufacturers are looking at automation as one way to fight back. Neuville Industries in Hildebran recently became one of the first to invest in cutting-edge sock boarding and packaging technology that dramatically decreases the number of employees needed to board and package the athletic socks it makes.

The four new automated boarding and packaging machines cut the manpower needed for those specific tasks by two-thirds, says company CEO and President Jeff Neuville. Neuville, which makes socks for the Keds, Dickies, Wrangler and Starter brands, invested more than a half-million dollars in the equipment as part of its strategy to compete with foreign hosiery manufacturers.

“We did it to keep our operations efficient in competing against low-cost domestic operations and low-cost imports,” says Neuville. “We are trying to find the right combination of automation to make sure we stay competitive.”

It’s a difficult task. Sock manufacturers in countries like China and Turkey pay employees less that a dollar an hour and don’t have to provide benefits or meet government regulations. It’s one reason that scores of U.S. hosiery mills have closed, and those that remain say it will take a combination of strategies to survive. Many have begun incorporating into their own lines imported items while others say niche marketing and automation are the keys.

Industry experts believe that most basic white socks eventually will be foreign-made because of the low-cost of labor in those countries. Domestic manufacturers have the benefit, however, of being able to turn around goods much faster than their foreign counterparts.

“Internal production will have to be as efficient as possible using new technologies and equipment,” says Neuville. “This new equipment is not the entire answer for our business but part of the puzzle that will allow us to stay competitive and maintain some level of domestic manufacturing.” -- Charlene H. Nelson


Dobson
Yadkin Valley gains official designation as wine region
Winemakers and grape growers in a seven-county area in the Yadkin Valley region are expected to reap substantial benefits from the region being officially designated, beginning this month, as an American Viticultural Area (AVA) — a first for the state. The distinction should help brand the region’s emerging wine industry on a national basis. There are six bonded wineries and more than 400 acres devoted to vineyards in the Yadkin Valley. Several more wineries are planned or are now being built in the area. In addition, Surry Community College has the only viticulture and enology degree program on the East Coast.

“We are very excited that the Yadkin Valley AVA has been approved,” says Ed Shelton, along with his brother Charlie a co-owner and developer of Shelton Vineyards, which led the two-year effort to gain recognition by supplying all of the necessary information to the U.S. Bureau of Alcohol, Tobacco and Firearms for approval. “It has been a long process but we are happy with the outcome.”

The Yadkin Valley encompasses 1.4 million acres. It includes all of Surry, Wilkes, and Yadkin counties, and portions of Stokes, Davie, Davidson, and Forsyth counties. “We are seeing considerable interest in opening more wineries in this year,” says Chanel McIntyre, marketing and programs coordinator for the N.C. Grape Council. “Five entrepreneurs have contacted us with intentions to open bonded wineries in 2003. In addition, three vineyards intend to apply for wine producer permits in the next two years.”

The wine producer permit allows a farm to ship its grapes to a bonded winery and, in return, receive wine made from their own grapes under their own label. “The Yadkin Valley is unique in climate and soil,” says Charlie Shelton. “We think the wines produced from grapes grown in the Yadkin Valley are distinctive, and being able to put Yadkin Valley on our labels will help the consumer better identify the wines they purchase.”  — Kevin Brafford


Raleigh
IBM's Gerstner to keynote Emerging Issues Forum
Louis V. Gerstner, chair of IBM, and Mary Haney, deputy prime minister of Ireland, are among the leaders who will address the 18th annual Emerging Issues Forum that’s set for Feb. 10-11 at the McKimmon Center on the campus of N.C. State University.

“In order for North Carolina’s economy to be successful, we must apply the latest thinking and most innovative approaches to economic development,” says former Gov. Jim Hunt, chair of the Institute for Emerging Issues. “At this year’s forum, national and international leaders will focus on the fundamental challenges facing our economy in the decade ahead.”

Speakers will assess traditional means of economic development and analyze new strategies for fostering high-growth entrepreneurial firms and applying new technologies to traditional firms.

Gerstner has chaired the board at IBM since 1993 and is author of Who Says Elephants Can’t Dance? Inside IBM’s Historic Turnaround, a firsthand story and case study in managing a crisis that focuses on the principles  of leadership. Gerstner has also served as chair and CEO of RJR Nabisco and president of American Express.

Harney has served as Ireland’s deputy prime minister and minister for enterprise, trade and employment since 1997, and has been at the forefront of  transforming Ireland’s economy into a high-tech powerhouse that now leads Europe in software exports.

Other speakers include David Sampson, assistant U.S. secretary of commerce for economic development; Richard Florida, professor of economic development at Carnegie Mellon University and author of the acclaimed book, The Rise of the Creative Class; John Hansen, Colorado’s secretary of technology-designate and a founder or CEO of numerous high-tech companies; Robert Atkinson, vice president of the Progressive Policy Institute; and Mike Cassidy, director of the Georgia Research Institute.

To learn more, visit www.ncsu.edu/eif or call 919-515-7741.   — Kevin Brafford


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