Executive Voices

Stimulating Times
Bold leadership will restore North Carolina's economic growth

By Dale Carroll

As I conclude my year as president of the N.C. Economic Developers Association, my thoughts are with our state’s working men and women. For me, this is not some abstract concept but a part of my heritage. My late grandfathers, John Carroll at Thomasville Furniture Industries and Kermit Bolick at Carolina Mills, helped build North Carolina’s manufacturing economy.

The good news is that I have seen in our state leaders a remarkable determination to address our economic challenges. In my opinion, the General Assembly’s level of interest in recommended economic solutions is at an all time high and will be reflected in new legislation, as early as the current session. I am confident that I speak for the over 600 members of NCEDA when I say thank you to everyone involved with passage of the “Economic Stimulus and Job Creation Act” last year. We are getting closer to seeing results from the act’s Job Development Investment Grant component that was promoted jointly by Commerce, the Economic Development Board, NCCBI, and NCEDA.

While we are making progress in a number of areas, we must continue to strive to increase North Carolina’s ability to compete in retaining and attracting quality jobs. At NCEDA, we have based our priorities on the findings in the “17th Annual Corporate Survey” conducted by Area Development and studies completed in recent years by Ernst & Young, Anderson Economic Group, KPMG, NCSU economist Mike Walden, and Fluor Global Services.

The Area Development Survey for 2002 confirmed a rule-of-thumb that those of us in the economic development profession have learned over the years. Every state claims quality of life as a strength that distinguishes it from the competition. But the survey demonstrates that quality of life issues, while not unimportant, are in fact secondary to numerous factors related to the cost-effectiveness of starting and operating a facility. Therein lies a lesson for us in North Carolina: our reliance on what is arguably a great quality of life must be refocused on improving our business climate.

Specifically, the survey ranks site selection factors by combining the percentage of respondents that rated a factor as important or very important. The top four factors are essentially tied, with very similar scores: Availability of skilled labor, 90.9 percent; labor costs, 89.9 percent; tax exemptions, 88.2 percent; state and local incentives, 88.0 percent

The remaining top 10 site selection factors are also focused on the business climate: Highway accessibility, 86.6 percent; corporate tax rate, 84.6 percent; proximity to major markets, 83.7 percent; occupancy or construction costs, 82.4 percent; energy availability and costs, 80.9 percent; environmental regulations, 76.7 percent.

Benchmarking the 2002 results with the 2001 survey confirms that a skilled workforce and a productive workforce remain as the top two factors. This is why the recommendations from last year’s workforce development summit are crucial. NCEDA and NCCBI served as sponsors for the review completed by the Anderson Economic Group entitled “N.C. Workforce Development Summit: Recommendations and Analysis.” I will highlight the top four recommendations:

Consolidate workforce-training programs.

Emphasize retention of existing businesses.

Review the best practices for delivering workforce training, unemployment insurance, business climate, and economic development.

Encourage career opportunity training in middle and high schools.

At NCEDA, we believe it is also crucial to focus on three telling changes from 2001 to 2002 in the scores leading to the rankings by Area Development. Tax issues and other government-related financial incentives increased substantially in importance as site selection factors:

Tax exemptions, from 88.2 percent to 82.7 percent.

State and local incentives, from 88.0 percent to 81.4 percent.

Corporate tax rate, from84.6 percent to 79.0 percent.

The studies completed by Ernst & Young, KPMG, NCSU economist Mike Walden, and Fluor Global Services reaffirmed the trends documented in the Area Development Corporate Survey. More importantly, the studies identified the need for improvement in our tax policies and approach to economic development incentives.

So, using the best available information from the survey and studies, and adding our practical experience, we are confident that we have arrived at a sound set of recommendations. Our most important recommendations, approved by the NCEDA board as a legislative agenda for 2003, are:

We recommend that a balance of $15 million always be available for industry recruitment and retention in the One North Carolina Fund.

We support the Job Development Investment Grant Program, to support existing and new industries that agree to locate major projects in North Carolina.

We support continual review of and enhancements to the William S. Lee Act.

NCEDA supports continued grant disbursements from the Golden LEAF Foundation to communities for economic development projects.

NCEDA supports the creation of Project Development Financing or Economic Development Financing as a viable local economic development tool and advocates for legislation providing for another referendum on the measure.

Whether it is efforts to strengthen workforce delivery, improve the business climate, or add to the economic development tool kit for competitiveness, the sense of urgency couldn’t be greater.

Dale Carroll of Asheville is CEO of AdvantageWest and the outgoing president of the N.C. Economic Developers Association.

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