For Members Only is published monthly by NCCBI
when the General Assembly is not in session
 NCCBI’s
focus on economic development
makes progress; major meeting next week
Efforts
by NCCBI to strengthen the state’s economic development
programs appear to be making headway in Raleigh, with several
recent actions by legislative leaders and administration
officials showing they are focusing more on improving North
Carolina’s ability to create new jobs.
The campaign, initiated by Chair Sue W. Cole of Greensboro,
the U.S. Trust Co. executive, will intensify next week when
the full NCCBI Board of Directors will huddle in Greensboro
with state Commerce Secretary Jim Fain. The discussion is
expected to focus on how NCCBI and Commerce can cooperate on
economic development strategies.
The board’s strategy session with Fain follows a pivotal
meeting in Raleigh this week at which Cole and NCCBI First
Vice Chair Barry Eveland, the IBM executive, held a frank
exchange of views with the Commerce secretary that lasted
three hours. That Nov. 12 meeting led to a better
understanding of each other’s positions, officials said. The
meeting was prompted in part by Secretary Fain’s
displeasure with the editorial in the October issue of the
North Carolina magazine. That editorial and Fain’s response
to it are attached at the end of this newsletter.
About 60 of NCCBI’s 100 directors already have confirmed
they will attend the Nov. 18 meeting at the Grandover Resort
in Greensboro (see list below). Cole is urging all directors
to attend the meeting if at all possible. The board meeting
will begin at 2:30 p.m. on the second floor in the Nottingham
Room. Any directors who have not yet responded should
immediately contact Sheila Williams of the NCCBI staff at swilliams@nccbi.org
to let us know about your plans.
NCCBI board
members who have confirmed their attendance at Nov. 18
meeting: John Atkins, Tom Beard, Bill Johnson, Bruce Beasley,
Bruce Biggs, Laura Carpenter Bingham, Tom Bradshaw, Don Brady,
David Brody, Mary Clara Capel, Watts Carr, Jim Causby, Paul
Chapman, Sue Cole, Dick Daugherty, Linwood Davis, Sharon
Decker, Graham Denton, Phil Dixon, Nancy Dunn, Carla DuPuy,
Mike Edwards, Joe Epley, Barry Eveland, Paul Fogleman, Marye
Anne Fox, Phil Freelon, Bob Greczyn, Pat Henry, Marshall
Henry, David Huskins, Jim Hyler, Horace Johnson, Tom Keith,
Kelly King, Phil Kirk, Jim Konneker, Lynn Lail, Bob
Lowe, Connie Majure-Rhett, Louise McColl, Edwin McMahan, Henry
Mitchell, Lew Myers, Charlie Owen, Susanne Sartelle, Bob
Schwentker, Steve Showfety, Doug Stafford, Russ Stephenson,
Robert Stolz, Steve Stroud, Pat Sullivan, Joe Thomas, Bradley
Thompson, Tracy Crevar Warren, Dennis Wicker, Craven Williams,
Phail Wynn, Smedes York, Steve Zaytoun.
Background
on NCCBI’s strategy:
NCCBI’s renewed emphasis on economic development stems from
a three-point plan that the Executive Committee adopted in
September to grow jobs and investment. One leg of the
three-point plan involves improving government efficiency. The
other two points of the plan directly related to economic
development are as follows:
Tax Policy: North Carolina's corporate income tax of 6.9
percent is third highest in the South and much higher than
most of our neighboring states. North Carolina’s corporate
income tax is 50 percent higher than Texas, 33 percent higher
than South Carolina and 15 percent higher than Georgia. A
study done by Fluor this year shows North Carolina’s
business tax burden as third highest among 13 southern states.
The marginal personal income tax rate is 8.25 percent, the 8th
highest in the country and highest in the Southeast. According
to Fluor, North Carolina's business tax burden is 3rd highest
among 14 Southern states. To make the tax system fairer, the
Executive Committee recommended:
· The 2005 General Assembly should reduce the corporate
income tax from 6.9 percent to 5.9 percent. That would take
North Carolina from highest among neighboring states to second
lowest and fourth lowest in the South.
· Reduce the highest personal income tax rate from 8.25
percent to at least 7.75 percent. The reduction in tax
revenues would be compensated by greater government
efficiency, further study of tax fairness, and successful
economic development.
Economic Development: The Executive Committee felt NCCBI needs
to be more of a catalyst for change in the operation of the
state's economic development program, including the advocacy
of:
· More personal involvement of the governor in the business
recruitment process.
· More targeted recruitment of "new economy"
companies, such as biotech.
· Performance incentives for business recruiters, including
possible use of private funding.
· Continued refinement of the incentive program to maximize
dollars while ensuring fairness to companies and counties.
· Bringing together the House and Senate leadership and
Governor toward developing a strategic jobs plan for North
Carolina.
Positive
movement detected
In recent weeks, NCCBI has observed several developments that
indicate movement by the General Assembly and the
Administration to embrace our strategy.
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.
NCCBI
wants to hear your ideas on economic development
The
legislature’s Joint Select Committee on Economic Growth and
Development will be meeting during the next several months to
get input and make recommendations on what the General
Assembly should do to help stimulate economic development in
North Carolina.
At a recent
meeting the NCCBI’s Economic Development Committee, Sen.
John Kerr (D-Wayne) and Rep. Bill Daughtridge (R-Nash) gave an
overview of how the committee plans to proceed with its work.
The committee is not currently planning to hold public
hearings, but it will have meetings around the state and will
be inviting business leaders to make comments to the
committee. The next meeting of the joint committee will be on
Dec. 4 in Kannapolis. The time and location for that meeting
have not been announced. The January meeting of the committee
will be held in Raleigh on Jan. 8.
.
NCCBI is
making a concerted effort to receive input from members on the
issue. We recently mailed a letter to all board members and
all committee members requesting their input. We want to hear
from every NCCBI member about your ideas for strengthening the
economy, and will forward your comments to the select
committee. Below is the text of the letter we sent out:
What are
your recommendations for economic growth and development in
North Carolina? State leaders want to hear from you.
A Joint
Select Committee on Economic Growth and Development has
recently been named by the Speakers of the NC House of
Representatives and the President Pro Tem of the Senate.
The committee
will be meeting around the state over the next several months
and wants to hear from representatives of business and
industry about issues the General Assembly might consider to
help improve North Carolina’s economic development efforts.
We have been
asked to help identify business leaders who would be willing
to make presentations to the committee about what is and is
not working in North Carolina. The committee plans to hold
meetings across the state to gather input. These will not be
public hearings, however, the committee will be inviting
people to make comments and give them ideas. They want to hear
the answers to three basic questions:
- What
state policies or programs have benefited your business?
(basically “What is North Carolina doing that’s
working?”)
- What
policies or programs have hindered the growth of your
company?
- What
could be changed at the state level that you think could
help promote growth and development?
If you have
comments to share with the committee and would be willing to
publicly appear before the committee within the next six
months to discuss these issues, please let us know. We will be
working with the committee co-chairs and legislative staff to
identify potential presenters. If you are not willing to make
a presentation to the committee, but have comments you would
like for us to share, please forward that information to us as
well.
Economic
development is a top priority for NCCBI. This is a great
opportunity for our members to be involved.
Please send
your comments to any or all of the following NCCBI staff
members:
Phil Kirk, pkirk@nccbi.org
Leslie Bevacqua, lbevacqua@nccbi.org
Julie Woodson, jwoodson@nccbi.org
Economic
Development News
J-DIG
attracts two more industries to the state
North
Carolina’s new economic development incentive program has
attracted its fourth and fifth new industries to the state,
deals Gov. Mike Easley say represent 1,580 new jobs and $50.5
million in new investment.
In a flurry of recent announcements, state officials said that
the Job Development Investment Grant Program (J-DIG) had
proved instrumental in GE Nuclear Energy’s decision to move
its headquarters and 200 jobs from California to Wilmington,
where the GE Power Systems subsidiary already has nearly 1,600
workers; and in the decision by Goodrich Corp. to move some of
its New Jersey and Ohio operations to Monroe, creating 300
jobs.
Under J-DIG, the two companies will receive cash incentives
over the next several years worth up to $8.6 million. The
money will come in the form of rebates on state personal
income taxes paid by workers in the new jobs Goodrich and GE
Nuclear will create.
A sixth J-DIG grant was in the works to solidify the tentative
decision by R.J. Reynolds Tobacco to bring between 800 and
1,000 jobs to Winston-Salem following its merger with Brown
and Williamson, the U.S. cigarette business of British
American Tobacco PLC. RJR also is seeking an extension and
revision of the cigarette export tax credit as well as tax
credits to remediate and donate property in downtown
Winston-Salem to the city’s revitalization efforts.
RJR said the new jobs would pay average salaries of $56,000,
or over $100,000 with fringe benefits included.
GE Nuclear, which provides products and services for nuclear
power plants, will move its headquarters from San Jose to the
Wilmington area in 2003. The 200 new jobs will average
$100,000 a year.
Goodrich will invest nearly $11 million expanding its current
60,000-square-foot facility in Monroe, where an expected 300
additional workers will earn average salaries of $15-$18 an
hour. The new employees will staff a customer services
facility, close to the company’s headquarters in Charlotte.
If the company creates all the jobs promised, the state will
provide a grant equal to 66 percent of the personal state
withholding taxes those workers pay, a sum valued at $2.7
million over the life of the grant.
For each year in which GE Nuclear meets its job-creation
targets, the state will provide a grant equal to 70 percent of
the personal state withholding taxes derived from the creation
of new jobs. If the company creates all the jobs promised, the
grant would be worth $5.9 million.
Elsewhere, state officials said:
Elkay
Southern Corp., a division of Elkay Manufacturing Co., will
add 68 new jobs to its existing facility in Lumberton,
expanding its workforce to 450 people. The company
manufactures stainless steel sinks.
GOJO
Industries has chosen Laurinburg to manufacture its instant
hand sanitizer, creating 250 jobs and a $10 million
investment. The company will occupy an existing facility
donated by Abbott Laboratories. GOJO received $250,000 in One
North Carolina money.
Environmental
Issues
Note: NCCBI is keenly aware that the state’s tough
approach to environmental protection can adversely impact
economic development. We believe in protecting our air and
water quality, but we believe we don’t need rules tougher
than those imposed by the federal Environmental Protection
Administration. NCCBI stressed that point in the op-ed column
below that was published recently in the Raleigh News &
Observer:
Undoing
EPA’s NSR rule undermines economic development
Listening
to some of the rhetoric directed at the Environmental
Protection Agency (EPA) and its recent clarification of
so-called New Source Review (NSR) regulations, one might
conclude that the Clean Air Act was an endangered species.
Not so. In fact, the much-needed NSR changes – which
clarify and update certain confounding provisions in the
existing rule – will encourage investment and upgrades that
will improve business efficiencies in North Carolina and
across the country, strengthening air quality and preserving
jobs in the process.
In the months ahead, North Carolina air quality officials are
expected to begin evaluating the recent actions taken by the
EPA. The review process is important and a thorough
dialogue will be instructive. But let’s be clear,
EPA’s NSR revisions are providing businesses the certainty
they need to invest. Any effort to enact different
regulations on the state level would invite more confusion and
hurt an already weakened economy. Such action would make
it harder and more costly for existing manufacturers to
maintain facilities and send a chilling signal that could push
manufacturers and other industries away from our state.
Business and industry has spent hundreds of millions of
dollars just in our state to make the environment cleaner.
We do not object to spending money for environmental
improvements when it is necessary and helpful. However,
environmental laws and regulations should be based on sound
science, not political polling and focus groups.
EPA’s NSR rule represents a common-sense approach to
environmental policy. Importantly, these rules maintain
a proper balance between our environment and economic growth.
Nowhere is that more important than North Carolina.
The Tar Heel state’s push to improve air quality and the
environment is unrivaled. North Carolina has a proven
commitment to meeting federal air quality standards. And
thanks to the leadership of Gov. Mike Easley and the General
Assembly, along with the collaborative efforts of
environmental groups and the state’s major utilities,
passage of legislation in 2002 now ensures emission reductions
far beyond those set by the federal Clean Air Act. North
Carolina’s new air quality standards represent a workable
model that other states should follow.
According to the state’s Department of Environment and
Natural Resources, the so-called “Clean-Smokestacks” bill,
calls for Duke Power and Progress Energy -- the state’s two
largest utilities -- to reduce their nitrogen oxide emissions
by 77% in 2009 and sulfur dioxide emissions by 73% in 2013.
This represents about a one-third reduction of the total NOx
emissions and a one-half reduction of the total SO2 emissions
from all sources in North Carolina. Duke Power and
Progress Energy will undertake some of the largest capital
projects in the state of the next decade, investing
approximately $2.3 billion to meet the requirements set by the
new law. Importantly, the EPA’s NSR rule impacts none of
these efforts to clean North Carolina’s air.
Unfortunately, our economy has struggled mightily in recent
years, wracked by manufacturing losses in textiles, tobacco,
furniture and more. North Carolina’s unemployment rate
has been higher than the national average for nearly three
years. We have lost more than 160,000 manufacturing jobs
alone, and most of those are lost forever. There appears
to be no end in sight to the continued loss of jobs because of
trade policies, the depressed economy, automation, and other
factors. For the government to even consider adding
regulations which will cause the job loss to accelerate is
unbelievable and shows a lack of concern for the working men
and women in this state.
Strong environmental policy is important to all of us, helping
to protect the quality of the air we breathe, the water we
drink and the food we eat. But rules and regulations should do
more than simply fortify our physical health; policies should
support the health of our economy as well.
EPA’s revised NSR rule does both. North Carolina
should get on board and embrace these common-sense changes.
Business
community speaks out on proposed rule changes
On
Oct. 30 and Nov. 5, the N.C. Environmental Management
Commission (EMC) held hearings to receive comments on a
proposed rule change regarding hydrogen sulfide. The hearings
were in response to action taken by the commission on May 8,
2003. At the May meeting, the commission voted to send forward
to public hearing a range of options for adoption of a revised
Acceptable Ambient Level (AAL) for hydrogen sulfide under the
North Carolina air toxics rules. NCCBI has raised
concerns about the impact that the proposed rules will have on
several member companies and on economic development efforts
across the state.
Jim Davis with the Craven County Economic Development
Commission represented NCCBI at the Oct. 30 hearing in
Greenville by speaking in opposition to the rule changes. At
the Nov. 5 hearing in Asheville, NCCBI was represented by Dave
Porter with the Asheville Chamber of Commerce.
Davis told the commission that “Eastern North Carolina has
suffered because of a down turn in the economy and we have
been working to try to keep jobs in our communities and to
bring jobs to this area of the state.” He noted that 6,100
jobs have been lost in eastern North Carolina (east of I-95)
so far this year and that the proposed rule changes targets
several large employers in eastern North Carolina. Davis
expressed the concern that this rule change would adversely
affect jobs.
Porter noted that, “We compete regionally, nationally and
globally for jobs. We do not need to put North Carolina at a
competitive disadvantage. We want and need current industries
to stay in the state and to expand when possible. We want and
need new companies to consider locating here.”
Both hearings were dominated by speakers opposed to the
proposed rule changes. It is expected that the EMC will take
action on this issue at their meeting in either January or
February.
Below is the text of the editorial in the October issue of
the North Carolina Magazine:
Later this month, about the time we all are stocking up on
Halloween candy and decorating the lawn with witchy yard art,
Site Selection magazine will publish its annual ranking of
states with the best business climates. And if recent history
is any guide, North Carolina will be listed among the two or
three best, perhaps even at the very top as we have been for
two years running.
What a cruel trick to play on a state that could benefit from
a few economic treats. With the shock of the Pillowtex
bankruptcy still echoing, it would be painful to read another
upbeat press release from the Commerce Department citing the
Site Selection survey and repeating its “we’re No. 1”
mantra.
It’s understandable that Commerce engages in such puffery
– promoting the state is part of its job and citing such
surveys helps maintain the state’s lustrous image, whether
that image is accurate or not. But there’s a downside to
that. Legislators who read press releases implying that our
current business recruitment efforts are working are
understandably hesitant to try something new. If it ain’t
broke why fix it?
It should be explained that there’s more than a little smoke
and mirrors behind the business climate rankings in Site
Selection, the bible of economic developers. First, all the
data is self-reported by the states using their own
definitions of what constitutes a business expansion and the
number of jobs created. It’s long been suspected that some
states count new gas stations and convenience stores as
industrial expansions. Second, 50 percent of the survey is
based on nothing more than an opinion poll of corporate real
estate executives.
A more accurate measurement of how North Carolina stacks up in
business recruitment is another list that Site Selection
publishes. The “Top Deals” list, published each May, is a
matter-of-fact tracking of which states were chosen for the
year’s largest economic development prizes, in terms of
capital investment and jobs created. For North Carolina, there
is an eyeopening disparity between the two lists.
In 2000, Site Selection said we had the nation’s third-best
business climate. But that year we landed just one of the 20
largest U.S. industrial announcements, Corning’s expansion
of fiber optic manufacturing facilities totaling about $1
billion. Virginia landed five of the biggest deals totaling
$3.5 billion and was ranked eighth in business climate.
North Carolina supposedly had the nation’s best business
climate in 2001 but we again landed only one of the year’s
20 largest industrial expansions and relocations, the
commitment by BSH Home Appliances to invest $220 million
expanding its Craven County facilities. South Carolina had two
that year, both as big or bigger than the BSH deal.
North Carolina remained atop the business climate survey in
2002, but guess how many of the 20 top deals came our way?
None. Almost every state in the Southeast landed at least one,
including all of our neighbors. South Carolina landed the BMW
expansion (400 jobs), Virginia got the Eli Lilly insulin
manufacturing plant (700 jobs) and Tennessee won the new
Saturn SUV assembly plant (600 jobs).
North Carolina should be proud that it has long been
considered to be among the nation’s elite. But let’s not
forget that economic development is about recruiting jobs, not
where you rank on some magazine list.
Below is the text of Commerce Secretary Jim Fain’s
response to the editorial:
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 number two 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.
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