Editorial

Credit Where It's Due

Seeing government actually respond to the public is a rare and beautiful thing that deserves recognition when it occurs. That seems to be the case in North Carolina’s economic development policies.

Legislative leaders deserve much credit for getting the ball rolling. During the 2003 session they held meetings to solicit advice on how to change the state’s approach to economic development. The General Assembly also financed a study of the state and regional economic development programs that criticized the lack of leadership of the state’s program. House and Senate leaders then created the Joint Select Committee on Economic Growth and Development, which will make recommendations to the 2004 short session. In addition, political leaders in both parties called for a federal crackdown on violations of international trade laws that are devastating North Carolina’s traditional industries.

Gov. Mike Easley, after spending the past three years dealing with the worst budget crisis since the Depression, seized the mantle of economic development leadership worn by every governor for more than a half century. In rapid-fire succession during recent weeks we’ve seen the governor:

Fill the long-vacant, but badly needed position of Assistant Secretary of Commerce.

Travel across the state announcing new industrial investments.

Get personally involved in luring R.J. Reynolds Holdings to bring 800-1,000 manufacturing and administrative jobs to Winston-Salem.

Ask the General Assembly to replenish the governor’s One North Carolina incentive fund, something he refused to do in his budget request earlier this year.

Strongly support reduction of the state’s corporate income tax.

Consider an exemption that would allow three-fourths of corporations to pay no income tax at all.

Even the media have caught a little economic development fever. For the first time in recent memory a Raleigh News & Observer editorial said that a corporate income tax reduction might be needed. It even pointed out that North Carolina’s advantage of low property taxes had to be discounted because neighboring states give property tax exemptions to new and expanding industries for up to 20 years.

But the real credit for these positive signals goes to the membership of NCCBI and business leaders throughout the state. It was you who wrote the letters and buttonholed legislators and the governor about issues like taxes, jobs and trade violations. It was you who told the Commerce Department and governor that we couldn’t rest on our economic development laurels. It was you who supported the creation of NCBEST, which is NCCBI’s new research arm that has played a role in providing information to shape the debate on some of these issues.

Keep it up. -- Steve Tuttle



Letters

Editor:
Regarding your October editorial about economic development, I believe you hit the “bulls eye” but chose the wrong target — the slam shouldn’t have been against the N.C. Department of Commerce. All economic development agencies issue press releases about our favorable rankings, but we certainly realize this isn’t going to win any specific project — it’s simply a chance to attract attention.

As for mega-projects, the sad truth is it isn’t about who has the best business climate, the lowest corporate tax rate, or the best quality of life. It probably isn’t even about which state has the best workforce or educational system.  Basically, all these factors are “generally” considered equal among southeastern states. The unfortunate circumstance is that N.C. hasn’t been willing to match the incentive packages offered by our competitors, and, as much as I detest the fact that so many projects are largely driven by incentives, it is reality.

However, I wholeheartedly agree that we can’t rest on our laurels. I believe most people consider value, not just cost, when choosing a product, whether it’s a drill bit, a boat, or even a state. Unfortunately, too many business leaders view the world today as a matter of what’s going to help my bottom line now — not next year and certainly not ten years from now. If we want more jobs and we believe these mega-projects are worth recruiting, then we must give our ED folks the tools to get the job done. While the Job Development Investment Grant program adopted by the legislature last year will help, in my opinion it’s a disgrace that we have reduced our state ED budget for the last two years and have virtually eliminated the marketing budget altogether.

Finally, as has been discussed at almost every N.C. Economic Development Board meeting, our entire policy can not be directed solely at “buffalo” recruitment. Considering our significant job losses, however, it is one important component we should pursue.  These large, advanced manufacturing projects are one of the few types of manufacturing that are expected to remain in the U.S. Furthermore, these projects depend upon significant support from existing area vendors and also drive a number of specialized suppliers to locate facilities nearby.

As a member of the N.C. Economic Development Board, a local economic developer, and a small business owner, I want to see North Carolinians with money in their pockets that comes from jobs created through tourism, technology transfer, entrepreneurship, existing industry expansion and recruitment. To be successful we need all the help we can get, but help in the form of positive dialogue, not chastisement for people who are just doing the best they can under very difficult circumstances.

John D. Chaffee
Executive Director
Pitt County EDC


Editor:
In response to your editorial on economic development, North Carolina needs to revamp its economic development efforts. From the state level down, all parties involved need to be on the same page and communicate with one another. The problem with some efforts is the very secretive nature in which the economic game is played. Better communication at all levels would help in the recruitment of business and industry.

Our elected officials should promote the state in media outside of North Carolina. Their needs to be a collective effort in this marketing process and it needs to be strategic. Alabama, South Carolina, Mississippi are becoming sought after states to land big projects. North Carolina needs to get back in the game and send some projects to my home county, Stanly County.

Michael L. Morris
Albemarle


Editor:
Your editorial, “Economic Development” (October), provided, to use your Halloween reference, a puzzling bag of “tricks” regarding our state’s status in terms of economic development. I’d like to set the record straight.

Site Selection magazine annually ranks states using a number of different criteria. In your comments, it appears that you selectively drew from two of these rankings while clearly ignoring others, giving an incomplete representation of the Site Selection data. Like a lot of things in economic development, the total picture is more complex.

You looked at the 20 largest projects lists, with no comment on how North Carolina ranked on total and small town projects or on how Commerce ranked among economic development agencies.  Here are the facts. In 2002, North Carolina was ranked first in the country for the number of small town projects and fifth in total projects. Additionally, our department was cited as the fourth most competitive in the nation.

With regard to large projects, they are often driven by unique factors, and a careful interpretation of such ratings is important.

But if you prefer to look at specific results rather than rankings, North Carolina has enjoyed a number of major announcements this year including headquarter facilities established by R.H. Donnelly, General Dynamics ATD Division and GE Nuclear. We’ve also had major investments by Honda, Infineon, RF Micro, Goodrich and Bank of America, among others.

The bottom line is that our department is very good at what it does, and I’m proud of our employees and the long hours and energy they put into their work daily. In challenging times, they’ve found creative, new ways to do more with less, and they deserve better than your editorial gave them.

With regard to Site Selection’s consistently high ranking of our state’s business climate, the simple fact is that it’s true. It is confirmed by the Economic Development Journal (Summer 2003), which ranked North Carolina No. 2 in the nation, and is the result of decades of fine public and private sector leadership.

That’s not to say that we don’t have work to do, and we’ve laid out a legislative agenda that would enhance our recruiting and retention activities. I suggest we work together on making the case for those initiatives rather than describing a positive rating of our state as a “cruel trick.”

Economic development is about much more than recruiting, as important as that is. It’s about education, for which NCCBI and Gov. Easley have been steadfast advocates. It’s about community development, infrastructure investments and workforce development. It’s about tourism and international trade. And as we transition our economy, it’s about innovation and investment in science and technology. These are the things that will maintain North Carolina’s high-ranking and its economic growth over the long haul.

Jim Fain,
Secretary, N.C. Dept. of Commerce

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