If economic development succeeds, local economy wins big
By Dave Yochum.
The U.S. is still the best marketplace in the world, and a "huge number" of foreign companies are planning to either establish or expand their operations here, according to one of the top economic development consultants in the Southeast, Robin Hiott Spinks.
North Carolina, the Charlotte region in particular, is a "hot commodity," Spinks says, citing suburban areas such as Iredell, Lake Norman and Cabarrus. Spinks is a partner at Greenfield, a 10-year-old development company based in Williamson, N.C.
When the economy is suffering, a new corporation moving to the area is a potent economic shot in the arm.
But Spinks, who has been in the corporate relocation business for more than a quarter century, says the competition among economic development corporations in North Carolina, not to mention the rest of the country, is stiff.
Spinks predicts "a ton" of corporate relocations and expansions in the next couple of years, especially in the manufacturing sector. Spinks, who literally helped write the book on economic development in North Carolina, was interviewed after speaking to Lake Norman Economic Development Corp. members.
The Golden Crescent area of North Carolina, which encompasses the motorsports region of Lake Norman, Mooresville and Cabarrus, has a good history of attracting businesses from other parts of the country.
John Cox, head of Cabarrus Economic Development, says economic development efforts constitute an "engine that will help pull us out of" a downturn.
He said the number of inquiries is up, despite the world-wide economic woes. Indeed, he suggested that real estate developers who are considering spec buildings right now will be pleased with the outcome. "We're encouraging those who can, to build because we think opportunity exists. In communities where available spec buildings are, the greater the opportunity is that we can put someone in," Cox said.
"Conversely, there are some companies going out of business, and what that does is generate the available inventory of space, although, typically, these spaces are somewhat smaller," he said.
In Lake Norman, Jerry Broadway, executive director of the EDC, said there has been more activity in the last couple of months, including companies involved in power generation, motorsports-related, distribution and a call center.
These are projects that could be announced in three to six months.
Broadway said he expects to see the first projects having something to do with the basics of industry. Power, for example, is a basic that doesn't go away. "We are at maximum capacity and any little hiccup would cause us to come up short. The companies that are involved in power production are going to see that more manpower is needed and will make arrangements to build new plants, overhaul existing operations and, in general, do the things that are necessary to keep up with demand."
As these basic companies add capacity and jobs, or expand their operations to new, business-friendly locales, Broadway says they will help the overall economic situation. "These things go in cycles," he says, "usually manufacturing leads the way out of these recessions. Manufacturing in the cycle helps pull other cycles up."
Tourism is another area where the Golden Crescent region can benefit. With many people scaling back on spending, a vacation closer to home is better than no vacation at all. Cox said the zMAX Drag Strip in Concord almost literally saved tourism numbers in Cabarrus County this fall. The National Hot Rod Association races in September propped up hotel occupancy, he said, which had been declining during the year. First-quarter occupancy in Cabarrus hotels was 64 percent, vs. 67 percent during the first quarter of 2007. "What saved our September was the NHRA races. Without the drag strip, the decline would have caught up with us," he said.
Still, the average occupancy rate for September was flat compared to a year ago, when construction on the drag strip was just getting under way. New hotels in the area, especially the Great Wolf Lodge, will help ensure that Cabarrus gains a national reputation as a tourist destination on the order of a Gatlinburg.
"Thank goodness we have tourism, but until consumer confidence increases, they will not spend their disposable income," he said.
Cabarrus' ace in the hole, of course, is the North Carolina Research Center. PepsiCo has announced plans for a 4,000 square foot lab at the David H. Murdock Core Laboratory Building. The number of jobs have not been announced, but company officials said it is a major investment. Economic development efforts have recently paid off in terms of expansions at PreGel, an Italian gelato company, and Connexions, a call center.
Broadway said consumers retrench, cut back their spending and focus on basics like the mortgage and food. "That's where manufacturing comes in-getting back to the basics," he explained.
Manufacturing is the dream business for economic developers-and the municipalities where they locate. Manufacturing requires expensive equipment, which is taxed. Distribution centers and call centers are more likely large boxes, representing small capital investments.
Spinks, the economic development consultant, said it's essential to have buildings ready for a company recruited from elsewhere to move into quickly. "If you don't have any buildings, you might be lucky if you have two projects every 100 years," she said, explaining that companies are wooed with every kind of incentive imaginable. "There is no time to wait" in the recruitment process, she said. "You have to be ready."
Indeed, there are 10,000 communities vying for about 2,500 economic development projects every year. Half of those are expansions, meaning the home team is in luck. That leaves only about 1,250 projects.
With luck, the average community can land one project every 10 years. The Golden Crescent is in a better position, however, based on the weather, proximity to the Charlotte-Douglas International Airport and the relatively low land prices. The NCRC, the motorsports industry and Lake Norman are additional plusses.
Spinks made the following observations about the region:
o There's a good opportunity to recruit boat manufacturers because of the high cost of doing business in Florida. At the same time, it's too expensive for workers to find homes in the Sunshine State.
o The corporate selection process is designed to reduce 10,000 choices down to one. So any reason to eliminate a community will be used by the selection committee.
o Corporate relocation projects are very project specific. In one case, it might be proximity to raw materials; in another, it might be transportation or infrastructure.
o Real estate prices should be honest and highly competitive. A price tag listed as "negotiable" may cause the selection committee to move on.
o Rail sites are a precious commodity. It may very well be best to pass on a project that doesn't use rail, and keep recruiting one that does.
o Companies looking at this area generally expect the labor force to be union-free.
