March 2002

Economic News
State’s unemployment rate drops a little
North Carolina's unemployment rate dropped in January for the first time in 18 months, falling from 6.5 percent -- a 17-year high -- to 6.4 percent, according to the N.C. Employment Security Commission. The drop can be attributed in part to a slowdown in job losses in the manufacturing sector and growth in service industries, ESC officials said.

Manufacturing lost 1,100 jobs between December and January, while the service industry added 21,100 jobs in the past month. Most of those jobs -- 13,500 -- were added in the finance, insurance and real estate sector, an increase of 7.1 percent that brought total employment in the area to 203,600. The textile industry, which has suffered huge job losses over the past two years, lost just 200 jobs between December and January.

Despite the slight decrease in the unemployment rate, the state still paid out a record $135.9 million in unemployment benefits, a 26 percent increase from the $108 million record set in December. The ESC received 187,624 first-time jobless claims in January, almost double the previous month. The highest number of new claims, 8,420, was in Davidson County. Guilford County was in second place with 8,039 initial claims, while Randolph County saw the third-highest number of initial claims at 7,801. Even after the steady declines in furniture, textiles and other traditional industries, manufacturing still accounts for 709,900 jobs in North Carolina, according to ESC figures.
 

Economic Development News
Expansion by optics maker brings 1,500 jobs to Franklin County
Flextronics said it will locate its new East Coast design and manufacturing facility focused on optical technology in Youngsville, a $20 million expansion that will create 1,500 new jobs over three years in Franklin County. The new facility on 75 acres in the Youngsville Commerce Park will design, engineer, test and manufacture optical communications products.

Flextronics already has a major presence in Youngsville, where it employs 300 people, and was considering several other states for the expansion. The new facility will grow as large as 825,000 square-feet over the next five years.

Flextronics is the leading electronics manufacturing services provider in the world with 100 facilities on four continents and over 70,000 employees worldwide. The facilities in Youngsville and Dallas will be Flextronics’ two key technology campuses in the U.S.

Flextronics may be eligible for incentives under the William S. Lee Quality Jobs and Business Expansion Act and has already been approved for $500,000 from the state’s One North Carolina Fund. In addition, the Golden LEAF made a $1,975,000 grant to the Research Triangle Regional Partnership Foundation to be used for a unique training initiative for Flextronics, involving Vance-Granville Community College and N.C. State University.


Commerce reassigns counties in economic tier rankings
Eighteen counties changed their economic development tier rankings during the annual review by the N.C. Department of Commerce. In the 2002 evaluations, Richmond, Columbus, Montgomery, Onslow, Cumberland and Franklin moved up one tier level, while Vance, Lenoir, Rockingham, Greene, Pender, Nash, Macon, Dare and Lee all moved down one tier level. Alexander, Transylvania and Davie also moved down two tiers. All other counties remained at 2001 tier levels. The Department of Commerce evaluates North Carolina's 100 counties annually and assigns them a ranking from one to five, with Tier 1 as the most economically distressed and Tier 5 as the least challenged. The changes are based on annual evaluation of population growth, unemployment rate and per capita income.

Tier designations determine a variety of economic development opportunities available to each county in terms of the available amount of tax credits for job creation, worker training and investment in machinery and equipment. Businesses locating or expanding in counties that are more economically distressed receive greater tax credits than those that locate in more prosperous areas. Potential benefits to companies under each tier designation include:

Tier 1 - $12,500 tax credit per new job created and a seven percent tax credit on new machinery and equipment.
Tier 2 - $4,000 tax credit per new job and a seven percent tax credit for machinery and equipment expenditures more than $100,000.
Tier 3 - $3,000 tax credit per new job created and a seven percent credit for machinery and equipment investments over $200,000.
Tier 4 - $1,000 tax credit per new job created and a seven percent credit for machinery and equipment purchases over $500,000.
Tier 5 - $500 tax credit per new job created and a seven percent investment tax credit for machinery and equipment investments over $1 million.

In addition, counties in Tier 1, 2 and 3 are eligible to receive financial assistance through the state's industrial development fund, which provides new and existing firms with $5,000 in additional funding for each new job created, up to $500,000, to provide infrastructure to new or existing sites. Below is the new tier chart for all 100 counties: