Dec
12
Why Do The People Charged With Attracting Jobs Still Have Theirs?
ByAsheville Volvo plant closing
SKYLAND — A plant where workers have built heavy construction equipment since 1977 will shut down, leaving 228 people out of work in a time of scarce manufacturing jobs.
Know any federal/state/local officials you can nag about helping thousands of North Carolinians find work?
50 Comments
December 12th, 2009 at 10:56 am
Let’s hope we can hold on to some of the great employers we do have, firms like Plasticard-Lockteck (the nation’s largest keycard manufacturer), Unison, Netriplex, AVL Technologies, SRC Earth Sciences Group, and Borg Warner Turbo Systems.
Some useful links from the Asheville Chamber of Commerce:
Some other interesting reports can be found over at the Chamber’s website.
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December 12th, 2009 at 11:47 am
I did a piece for Mountain Xpress ten years ago in which I compared the Asheville metro area to the Greenville, Hickory, Knoxville and the Tri-Cities metro areas. The surprise was that Asheville had a higher per capita income than those other areas, even though it had the lowest ratio of manufacturing-to-retail jobs (0.87 verses over 1 for the other areas).
Breaking down the numbers, Asheville’s higher per capita stemmed from a $1500 higher per capita income from dividends, interest, rental and retirement income – not hourly wages. In essence, local workers made proportionately less income from hourly wages than their counterparts in neighboring metro areas. Our manufacturing-to-retail ratio has dropped since then, and Knoxville beats us on per capita income (2006 data). But the per capita income spread over those other metros from dividends, interest, rental and retirement income has widened since 1999 to about $3000 as the rich get richer and/or retire. ( http://www.bea.gov/index.htm )
I wrote at the time that the I-26 extension would inevitably open land along the interstate in northern Buncombe and Madison counties to further development. But more hotels and fast food isn’t exactly what out-of-work families need.
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December 12th, 2009 at 1:04 pm
Back in 2006, our local and state economic officials deserve much credit for working with Volvo on their announced expansion bring the manufacturing of excavators to the Asheville plant. The state, county, city, and Progress Energy committed millions of incentive dollars and AB Tech received the NC Community College System statewide award for collaboration with their partnership with Volvo.
It would have been easy for Volvo corporate to give up on us after their fabrication plant here closed in 2001 or 2002 (can’t remember the exact date) but the people at the Volvo plant fought really hard for the excavator line which we all thought ensured Volvo’s long term viability in Asheville.
The decline of the global construction industry cannot be blamed on these hard working folks or our local/state economic development officials. My only criticism is that if our federal government was going to spend and borrow almost a trillion dollars with the Recovery Act, very little went to infrastructure and the dollars that went to state DOTs really just replaced the deficits they already faced with dwindling gas tax revenues.
So what is a company like Volvo to do? The economy does not appear like it is going to turn around soon. They have tried to wait this out for the past year and while I wish they had not come to this conclusion, apparently they feel like the must cut their losses and reduce capacity now. My heart goes out to all those who will lose their jobs and all the small businesses and nonprofits who depended on Volvo. We still have their North American headquaters at Biltmore Park with 250 people after the reduction of 50 sales jobs.
This hurts so much because it is very difficult for WNC to attract new firms with these types of jobs. Our bread and butter remains expansions of existing businesses.
If you operated a company and looked at everything coming down the pike from increased healthcare costs, increasing taxes due to huge federal deficits, increasing utility cost with cap and trade, and demand that is over 30% below the peak, what are you supposed to do? You have two options, increase revenues (this means increasing production or prices or both which is very difficult in this environment) or reduce costs.
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December 12th, 2009 at 1:29 pm
Ths lnk mght b rlvnt t th ffcts, sms th GP cn’t cntrl th t prts.
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December 12th, 2009 at 1:35 pm
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December 12th, 2009 at 2:01 pm
I agree that Volvo has no choice, and I’m sure locals did everything they could – this economy is awful. But I’m viewing the closing in the context of the longer term decline I’ve seen here over twenty years.
Some of the failures in attracting new business here, as John Boyle’s article noted, can be attributed to deficiencies in the tools and support Raleigh gives development officials to work with. But some of it is, I’m convinced, we just suck at it. As I wrote in the AC-T last year, I work in an industry where we get paid for results, not good intentions. When I first looked up Advantage West back in the 1990s, their website didn’t even get updated for like 18 months! Few outside the old-boy network think they’re worth a damn. And Dale Carroll got rewarded with a top job in the NC Dept. of Commerce.
Furthermore, as I noted here, my view is colored by exposure to an economy an hour south that seems to have done a bang-up job of completely rebuilding and improving their manufacturing economy – despite embarking on that effort forty years ago with a low-skill/no-skill textile workforce, a podunk airport, a decaying downtown and no national image (“Greenville where?”)
My sense, based on watching twenty years worth of steady decline in our manufacturing base is that the people employed here to recruit industry would not last a year down there.
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December 12th, 2009 at 4:00 pm
With the exception of Lowes, ECMD, and a few other stalwarts, big-name manufacturing has been dead in North Carolina for at least ten years now. AB Volvo Group is just one of the last remaining holdouts to consolidate their operations and going to play in somebody else’s sandbox.
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December 12th, 2009 at 5:22 pm
HEY why not have GOVERNMENT create more jobs like bike paths, greenways and parks. Surely the taxpayer can cough up again, after all GOVERNMENT can throw people out of their houses on the courthouse steps if they don’t pay.Just look at how successful the monument to government efficiency and productivity in front of the Courthouse/ City Hall was! Oh wait when I passed by there during construction I saw ONLY MEXICANS WORKING THERE.
December 12th, 2009 at 5:36 pm
Jim Reeves writes:
“…I saw ONLY MEXICANS WORKING THERE.”
I’d expect better than the same tired old race-baiting tactics from you, Jim. It diminishes your argument and makes you look like all the other whack-jobs in the GOP.
Just my two cents.
MM
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December 12th, 2009 at 5:41 pm
not race bating just an honest first hand observation.
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December 12th, 2009 at 6:10 pm
Let’s not devolve a serious discussion of the economic challenges for manufacturing companies in the Asheville area into the typical “lets blame the govt” or “lets blame the Mexicans” rhetoric.
Kudos to Tom, Michael and Nathan for their thoughtful and constructive comments. This discussion is far TOO important to our future and our children for us to make it a poltical football.
Both democrats and republicans are losing their jobs. Both north americans and central americans are trying to figure out how to support their families.
And it will take non-political postive-minded constructive debate to find solutions.
I’m from Greenville SC and remember what the economy used to be like there. BMW made a huge impact and continues to do so.
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December 12th, 2009 at 6:21 pm
I may design/build factories, but I don’t claim any expertise in industrial recruitment. I’ve just seen a stark contrast in results between here and the the Triangle, the Triad and Greenville-Spartanburg. People here who believe manufacturing is dead obviously don’t get out enough. And people being paid to do recruitment here aren’t getting the results they are getting only an hour to the south. Upstate SC is thriving and WNC is in a hole.
What we need to ask ourselves is, what are they doing right and what are we doing wrong?
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December 13th, 2009 at 12:17 am
From a longer term perspective, if you are comparing WNC with Upstate South Carolina, I think there are several factors to consider.
First, the Upstate has a manufacturing tradition from the textile industry for over a century. While many manufacturing firms have located in WNC over the years, we have always had a fairly diversified economy which is generally a good thing but they have a focus we lack. While everyone around here claims to want good jobs, Upstate SC has a more unified vision about what they want their community to be than we do. Our diversity is one of our strengths but it is also one of our weaknesses.
Second, the Upstate is a political power house in SC compared to WNC’s standing in Raleigh. Greenville – Spartanburg is known to be their state’s business hub, we have to compete with about six other metros of which we are one of the smallest relative to population. This has huge ramifications when attracting mfg. clients and locating state resources need for business development. GSP metro is also over twice as large with over 1 million in population while the Asheville metro is just under 400K.
Third, Spartanburg is home to Miliken & Company which is owned by Roger Milliken, who is or was a billionaire. His company has been transformed from a textile based firm to a high tech business, the largest privately held textile firm in the world. Mr. Milliken is a strong leader who has chaired the board of the GSP Airport for over 40 years. He is a staunch advocate for US mfg. although he has been criticized as a protectionist. How many billionaires do we have in WNC that have played a key role in our public policy? We have many influential leaders, many who own companies that employ hundreds or perhaps over a thousand people but I would submit we don’t have any one with Mr. Milken’s heft and financial capability.
Fourth, the Upstate is home to Clemson University which is the largest research university in SC. If WNC were home to the largest research university in NC, I would bet it would dramatically improve our economy in so many different ways.
And finally, I wouldn’t call it luck but the location of Michellin North America headquarters in the 80′s (after earlier building several mfg. plants in the area) and BMW in the early 90′s gave the Upstate a manufacturing brand identity known worldwide. If I asked you to name the first thing that came to your mind when I mention Greenville Spartanburg probably you would think of these two companies. What first comese to your mind when you think about Asheville? Probably not a mfg. firm, maybe the Biltmore Estate, mountains, Grove Park Inn, Blue Ridge Parkway, quirky downtown culture, etc. Brand identity is difficult to create and even more difficult to change.
We love to tout quality of life which is our strongest selling point, most people given the choice would rather live in the Asheville area as opposed to Upstate SC. But when you compare the cost of housing, cost and availability of industrial sites, available workforce, state tax structure, airport size, etc. how do you think we compare with GSP on these metrics? I would contend we have stronger public schools and one of the best community colleges anywhere, the other categories we don’t fare so well. We have come very close to landing projects that located in the Upstate like Charter, Hubble (Progress Lighting), etc. but close only counts in horse shoes and darts.
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December 13th, 2009 at 2:37 am
Watching one factory after another close makes me ill, and I’ve been ill a lot over the last twenty years. I’m lucky(?). I’m mobile. I can go to where the work is. But there are lots of people in our region who are land rich, cash poor, juggling two jobs to make up for the one decent-paying manufacturing job they once had, and struggling to hold onto their five or ten acres and a home while trying to raise their kids and save (if they can) for retirement.
I think we have a lot we agree on: a) “Upstate SC has a more unified vision about what they want their community to be than we do”; b) “Brand identity is difficult to create”; and c) WNC doesn’t get the support from Raleigh that Upstate SC gets from Columbia.
But comparing Asheville to the Upstate SC of today misses the point. It ignores the decades of work it took the Upstate to get to where it is. I compare Greenville to what it was forty years ago – a much smaller, dying textile town. There was no brand. There was no Michelin, BMW or Fuji. No Peace Center. No Bi-Lo arena. Their little airport had maybe four gates and no air freight or customs. Haywood Mall was a woods on an empty two-lane road on the outskirts of town. Clemson was known as a “cow college.” I look at where Greenville is today – knowing where they came from – and ask how did they reinvent their manufacturing economy and, more importantly, why didn’t we? Why can’t we? How do we?
For more than a decade, when I ask why our region is not doing a better job for our citizens of rebuilding our decaying manufacturing base and improving their standard of living, I hear the same litany of excuses over and over as if read from a song sheet:
We don’t have the land.
We don’t have the water.
We don’t have the skilled workforce.
We don’t have the research university.
We don’t have the airport.
My reply to that is:
You don’t have a job.
YOU’RE FIRED.
The Upstate of SC had similar challenges forty years ago when they found their manufacturing economy going down the tubes. I was there. I had a front row seat for the transition. They didn’t make excuses for why they couldn’t fix their problems. They had leaders with vision who organized and got to work overcoming the obstacles. What people point to today as features that make the Upstate fundamentally different from Asheville is the result of work that began in 1971 with Gov. John West and Mayor Max Heller. Luck had nothing to do with it. Leadership, hard work and determination did.
BTW: I saw the movie “Norma Rae” with a friend from Greenville when it opened in 1979, but we saw it in a packed theater in West Hollywood. We realized we were probably the only people in the place who knew it wasn’t a period piece. Her textile mill looked like an old one in west Greenville.
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December 13th, 2009 at 9:20 am
The cost of living and property values are indeed elevated in the Asheville area in comparison to Greenville. Housing costs in particular seem inordinately high in Asheville. When my Mom put her 3 bedroom ranch house (with large lot, porches, decks, full basement, etc, good neighborhood) on the market there it was listed at 145,000 and I’ve seen similar homes here listed at 280k-350k.
I do seem to recall one large manufacturer who was poised to relocate a large factory to the Asheville area within the past 10 years, but we lost out at the last minute and the reason given was that they determined that their relocated employees wouldn’t be able to afford housing in the Asheville area.
Nathan list of factors seems very reasonable …but Asheville will probalby never have a Roger Milliken, Never have a large research university, and never have the influence in the state capital to compare with the SC Upstate. AND it seems doubtful that the cost-of-living discrepancies will have balance out.
So taking into consideration these fixed factors and obstacles, what specific things CAN Asheville (and WNC) do to bring manufacturing jobs to the area.
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December 13th, 2009 at 10:21 am
Q: How many psychologists does it take to change a light bulb?
A: One. But the light bulb has to want to change.
Do we? What the Greenville-Spartanburg example demonstrates – concretely – is that the obstacles are surmountable if there are people with a vision leading.
The Upstate is where it is today because forty years ago leaders with vision, drive and commitment didn’t settle for less. They decided where they wanted to go and set about getting there over 10-15 years. They started in the county with Michelin. They started in the city with Hyatt and a plan. They fine-tuned their tech schools and built a skilled workforce. They expanded the airport. They improved the university. None of it came overnight and little of it was a chicken or egg matter. They developed together. But it was doable with the right people driving the effort.
Drive along I-81 between Wytheville and Johnson City and you’ll see small factory after small factory. Drive along I-40 between and Morganton and Asheville and you’ll see them too – many of them have been closed for years. Volvo will soon join them.
We can settle for that. Or not.
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December 13th, 2009 at 12:49 pm
I appreciate Nathan’s comments here – even though we seldom agree, it’s clear he played a strong role in the County & he had his eyes open.
Here’s a side question – if we’re comparing Asheville to GSP, what differences are there that simply can’t be changed (at least overnight), and how do they affect the situation? Forget things like the political climate, taxes, etc. I’m thinking of things like higher fuel costs, higher water costs, higher cost of living for their employees, somewhat harsher winters, etc.? To what degree do manufacturers considering Asheville look at these factors, & how does it affect their decisions?
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December 13th, 2009 at 1:01 pm
Good questions, Barry…I was wondering much the same thing.
And how might demographics play into all this? I suspect that our population (in Asheville anyway) is significantly different from GSP’s — more retirees, more transplants, more second homes, higher average per capita net-worth, greater income disparity, higher educational levels, smaller families, “brain drain,” etc.
And how much is cause and how much is effect?
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December 13th, 2009 at 1:32 pm
The hard-to-quantify factor that I’m trying to drive home here is that the Triad, the Triangle and the Upstate have a can-do attitude. Problems are for solving, not for explaining away. There’s the difference that makes a difference.
Here’s the irony of the week. Over at Daily Kos, “former moderate conservative” DarkSyde has a front-page post, “There’s More Than One Way to Split an Atom” that advocates for experimenting with replacing some of our coal- and gas-fired power plants with the next-generation Integral Fast Reactor (IFR). Presently 55% of the Kossacks approve. 20% are unsure.
So now liberals are willing to discuss nuclear and the Tea Party crowd is holding “die-ins” at Senate offices. The End Is Near.
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December 13th, 2009 at 3:45 pm
What I’m getting from all this that we need a billionaire, a building or two and some good industry, right?
Well, we’ve got Stewart Coleman — so how’s about having him retrofit the old Ingles on Tunnel Road as a nuclear fusion plant. That’d be cool.
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December 13th, 2009 at 5:39 pm
An offline comment from a friend regarding “We don’t have the land”:
“Square D was here. BASF was here. Steel Case was here. Ecusta, Beacon, Lustar, Cooper-Bussmann. What’d they do, take their land with them when they left?”
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December 13th, 2009 at 5:52 pm
f w cnnd th ncntvs nd jst ct txs nstd, w cld ct th ncntv rltd brcrcy nd dd tht t th tx cts s wll, pls ttrct ths bsnsss tht ctlly hv th mst rsn t b hr nd ths hv rsn t sty.
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December 13th, 2009 at 6:27 pm
A more relevent question is what did the transnationals [BMW,Michelin,Fuji] gain by establishing in the U.S. and what did Square D et al gain by moving off-shore? Cheaper labor? Less taxation?
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December 13th, 2009 at 6:29 pm
City of Asheville had an agreement with Volvo to offer grant money after they completed a planned expansion. Contract here.
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December 13th, 2009 at 7:12 pm
link is about Girl Scout cookies, not Volvo.
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December 13th, 2009 at 7:55 pm
Well that’s weird, Jim. Let’s try again.
Link to the City of Asheville agreement with Volvo.
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December 13th, 2009 at 8:36 pm
Gordon gets a ‘thumbs down’ for teasing us with Girl Scout cookies.
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December 13th, 2009 at 8:46 pm
“If we canned the incentives and just cut taxes instead, we could cut the incentive related bureaucracy and add that to the tax cuts as well, plus attract those businesses that actually have the most reason to be here and thus have a reason to stay.”
And then we could cut funding for schools, right? Thumbs up! for creative backdoor way to advance your project…
“Kids? Eh, drown ‘em like puppies.”
James Dean, Rebel Without a Cause
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December 14th, 2009 at 12:35 am
One of the reasons the Asheville Hub was established in 2005 was to try to play to our community’s strengths. Hub is a strategic plan for increasing real wages in Asheville Buncombe. You can check it out at http://www.ashevillehub.org with its focus on six industry clusters. We should continue to try to compete for new locations of mfg. facilities but there are fewer of these large projects and the competition (which means more and more incentives) is fierce.
The county several years ago partnered with Fletcher Partners to construct a 40,000 square foot (expandable to 80,000) speculative industrial building at Asheville Commerce Park. It was completed in 2008. I haven’t heard of the status lately, but last I heard we haven’t found an employer to locate in the building. On the scale of risk this was a fairly low risk and so far it hasn’t paid off for our taxpayers and I will admit that I was a passionate advocate for this as a means to attract a new company to the area. Much more risk is involved in establishing a publicly owned industrial parks or other major investments which would run in the tens of millions of dollars.
As I said earlier, everyone (probably from the Cecil Bothwell end of the spectrum to the Carl Mumpower end) claims they want good paying jobs here. But you must make choices that inevitably involve tradeoffs. Its not always helpful comparing Asheville with GSP but if we’re going to do that, let me give you some examples of our lack of unified vision compared to theirs.
For example, I would contend our community’s dialogue (aka fight) about the I-26 Connector that has lasted over 15 years would not have happened in Upstate SC. They would have reached consensus and got the darn thing built. We fight over the details and ultimately there will probably be a lawsuit challenging whatever alternate NCDOT selects.
We talk about Max Heller’s significant contributions to Greenville including locating the Hyatt downtown. Asheville had much debate/argument over the Ellington project, and after GPI bent over backwards and bent over some more, city council finally approved the project. Most communities including GSP would have been tickled to death for this type of development in their downtown. Similarly with Tony Fraga’s proposed development across from the Grove Arcade which Council made clear at the time it wouldn’t be approved as presented. While these developments have been delayed because of the economy, I think this speaks volumes about our diversity of opinion and lack of unified vision. The proposed peaking units by Progress Energy would have received little opposition in Upstate SC, here we still haven’t come to a resolution (to my knowledge) about our looming energy gap despite the good work of the Community Energy Advisory Committee (CEAC).
You are never going to have a prospect come to town and say we will locate 500 jobs here that pay an average of $40,000 with a $30 million investment, do you want us? You’ve got to lay all the ground work years ahead of time so by the time the prospect calls (checks out our website, talks to site consultants, etc.) all the preparation has been done and everyone knows the community will welcome this type of development. My personal view is that the asheville mayor or county commission chair or a business leader or other individual cannot create that type of unified vision. Asheville is a bottom up community, not top down and my fear is that we are becoming less, not more united on what we want our community to become.
It is important that we don’t always view the glass half empty as opposed to half full when evaluating our community. We have many good things happening here even in the midst of this wicked recession but none of us should be satisfied because too many talented people are forced to leave the area or continue living here and barely making it.
As far as Tom’s initial question about who we should fire, it is important to note that the economic development staff people at EDC, Advantage West, and NC Dept. of Commerce that I am familiar with are very professional and capable. To the extent that we haven’t been as successful as we would all like, we didn’t lose because these folks didn’t do their job. Sometimes as a community we need to look in the mirror and see if there is anything we need to change about ourselves.
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December 14th, 2009 at 3:06 am
So according to the City/volvo agreement the only penalty for Volvo’s breach of contract is paying the interest on the grant money received Because since the grant money equaled the property tax value of any improvements made the additional property tax returned would have been paid anyway. Will the City have a loss from reduced property tax valuation of the property occuring due to the current economic climate negating any interest repayment obligation?
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December 14th, 2009 at 9:21 am
Volvo never received any of the grant money, Jim. They weren’t going to receive it until completing their end of the expansion bargain, so it’s revenue neutral in that sense.
Re: property taxes – until revaluation, the landholder will continue to be responsible at the current value/tax rate.
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December 14th, 2009 at 10:29 am
In the present economy, not much is going to happen, and yet…
Excellent point from Nathan regarding the I-26 controversy. GSP is indeed more unified behind development – any kind of development. I joke that the attitude there is, “Toxic waste? What toxic waste?” (I kid.)
Greenville was essentially rebuilding downtown from scratch when they landed the Hyatt. Nearly a decade after that in Asheville, Chinese food was the Paradise and Jared’s was the breakthrough restaurant downtown. I’m unclear on how things turned around over time, but it’s nice to be in a position now to have lively arguments about what kind of development we have downtown.
Nathan is right that, “You’ve got to lay all the ground work years ahead of time … “
And yet, some of that was done here years ago. I’m not talking about bulldozing pristine mountainsides to build McMansions. My main focus is not green field development (often opposed inside Asheville city limits). As I noted elsewhere, AdvantageWest shows around 1.5 million sq. ft. – plus surrounding acreage and utilities – of existing manufacturing space standing idle in Buncombe County, another million in Henderson, and more around the region along I-40 and elsewhere. As noted above, many other facilities around the region where people once had jobs have been standing idle for years. (Ask someone in Asheville, of course, and they’ll recommend turning them into parks.)
I told someone the other day, if some of the smaller existing sites are not marketable as is, bulldoze them and turn them into green field sites. The major structures on some are merely four tin walls, a built-up roof and a simple concrete slab. If necessary, find a way to make that kind of site prep part of the incentive package for prospective owners. I’m not sure I even want to know how many tax $$$ SC Gov. Carroll Campbell gave to BMW in site prep, but it was huge, although I’m talking much smaller scale. As the BMW example illustrates, that kind of assistance is generally state-funded. That’s why I intend to start making a nuisance of myself with our state delegation. Squeaky wheels, you know?
Diverity of opinion in Asheville is not to blame for the failure to resurrect our regional manufacturing economy. My “why do they have jobs” provocation is meant to spark just this sort of debate about why we are failing at that. To borrow a well-known quotation, “There are those who look at things the way they are, and ask why… I dream of things that never were, and ask why not?â€
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December 14th, 2009 at 10:54 am
Hey Nathan – let’s not forget the Parkside and GPI condos controversies as two more reasons we’re unable to bring manufacturing jobs here.
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December 14th, 2009 at 11:39 am
I still have hopes for the old Ecusta site. I’m missing what the debates about building new hi-rise condos in the heart of downtown Asheville have to do with renovating regional manufacturing sites like that, plus Steel Case, Colbond, Drexel, Cone Mills, Beacon, Lustar, etc.
Blame the DFHs? Man, if they have that kind of power to control the course of the regional economy, I may have to start wearing clothes made from hemp.
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December 14th, 2009 at 12:08 pm
This discussion about industrial recruitment as the sole means of economic development amounts to little more than rearranging the deck chairs on the Titanic. This sclerotic industrial age thinking will not serve us in a 21st century economy. Unfortunately, economic development and civic leaders continue to pursue this strategy to the exclusion of more opportune models. Jack Schultz, a well-regarded economic development expert, describes the industrial recruitment issue: “The problem is that every year there are only about 200 major projects (those with over 200 employees) done in the US every year.” He has stated that 100,000 communities every year are attempting to go after these 200 projects. He said this in 2006, before the recession.
http://www.eda.gov/PDF/EDAWinter2006.pdf
Entrepreneurialism and retention strategies should take priority in the 21st century, with strategic linkages to industrial recruitment efforts, but only when there are specific types of companies which we can’t grow ourselves, or retain and expand. There have been plenty of assessments and analysis of WNC strengths- see the HUB strategic plan and the Advantage West plan (completed by Kenan-Flagler Professors). These are valid assessments, but what is missing is prioritization and action.
I agree with Nathan about the role of economic developers in this particular situation. The global economic contraction has made this situation fairly ubiquitous around the country.
Perhaps we should be asking better questions about how WNC does economic development.
Do we have the civic leadership and infrastructure to enact a new economy? The days of top-down, hierarchal dynamics are over. As a region, we should be able to quickly recognize opportunities, garner the resources and get things done. Bureaucratic mindless incrementalism will see us (perhaps) identifying good opportunities (those based on our existing assets), but any competitive advantage will be lost if it takes years to get the basic infrastructure in place, as evidenced by the Land of Sky Clean energy initiatives and Advantage West’s AdvantageGreen Initiatives.
Do our economic development organizations have the human capital (know how), social capital (know who) and fiscal capacity to actually do what needs to get done, beyond ribbon cutting political photo ops. For instance, Advantage West has absolutely no money (their state appropriations have been cut yearly and are not recurring), little know how and lots of political might. So no one organization can get anything done without AW getting a cut of the budget for their questionable “marketing” and “recruitment efforts”. The HUB is another example of an economic development organization with little authority. They call themselves a “catalyzing” organization, but their tedious processes (how many years have they been strategic planning?) and hierarchical structure just provide a useful means of doing the same old things with the same old players.
As a region, we need to ask ourselves who we want to be. Economic development in the 21st century is not your father’s economic development. This transition and adaptation to global economic changes require a great deal of hard work and prioritization, investment in the right things the first time. Unfortunately, as is all too typical, economic development is wedded to politics. A ribbon cutting ceremony at a new plant built with incentives for a company relocation is all too often only a political win, and rarely leads to sustainable economies.
December 14th, 2009 at 1:25 pm
Firelady just caused me to push my first green thumbs-up button.
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December 14th, 2009 at 1:39 pm
This is an encouraging discussion (and a great link, firelady). I agree that the the future will not be “your father’s economic development,” and do not believe industrial recruitment is “the sole means of economic development.” Since I work in the industrial sector, that is a focus of mine and what prompted my recent posts. I do not expect to see many large-scale projects, but I also hate seeing all these decaying sites sitting idle. People used to have good-paying jobs there and they could again if we did a better job of placing start-ups in them or attracting established manufacturers to expand there. But I doubt we’ll be landing any big fish with over 200 employees. Again, John Boyle’s article laid out some of the problems we have with that.
I was at AdvantageWest in 2004 when Gov. Easley parachuted in for his photo-op to take credit for bringing Jacob-Holm (and 70 jobs) with help from his One North Carolina Fund. Jacob-Holm has a hundred-something employees now, I think. That’s about the scale we can expect. But other than the deal to keep Volvo (sigh), that’s about the only recent success story of any size I’m aware of. (Nathan, I’m sure, can supply other examples.)
I have cited examples of places that are better at attracting manufacturing than we are. Success at this game is not just a matter of size; it’s matter of talent and commitment. So here’s another. In 2007, Forbes profiled Rome, GA for its successes in landing new over 1,000 jobs from ten foreign manufacturers since 2001, some of those under 200 employees. Somehow, I don’t think Rome (half the size of Asheville) gets the attention from the state capitol that Greenville-Spartanburg does, and yet…. (I know about Rome because I have a sister who lives there.)
What is Rome doing that we are not? Whose arms do we have to twist to see better results? What additional tools/help do we need to get from Raleigh? Professional or not, if those being paid with taxpayer dollars to do recruiting in WNC aren’t getting the job done, why do they still have jobs when hourly workers are losing theirs? Isn’t that how the vaunted private sector works?
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December 14th, 2009 at 2:37 pm
Gee, thanks Michael. Tom- I think if you look at Rome, you’ll find a region that has been more strategic in their overall efforts. Typically, companies will opt to locate where there is adequate workforce development (linked to overall economic development efforts and to education- gasp, not holistic thinking). Efforts to better meet the needs (now and on the horizon) of companies within the region (Please note I stated what companies need, as opposed to what economic developers think they need) in timely manner is good for all entrepreneurs- those thinking of starting a new company, those already up and running and those thinking about relocating.
Dense networks between all players in a regional innovation system is crucial. These networks increase the rate of knowledge diffusion, which increases the rate of innovation. Places that thrive have these networks of connected players, resulting a an entrepreneurial region which can quickly recognize opportunities and respond. It’s a win-win for everyone, rather than the zero sum game of recruitment.
I think the questions in your last paragraph are interesting. I think there is a perception both within WNC and outside of WNC about WNC’s cultural insularity. I had discussions with the Rural Center a few months ago- they said that the “mountains seem to make do on their own.”
I also think the political dynamic of Raleigh (being Raleigh) reinforced/exacerbated/potentiated the recruitment focus. Advantage West’s legislative mandate is to focus on recruitment. Even their “Certified Entrepreneurial Communities” program is basically an attraction strategy. The metrics of success (JOBS) create a feedback cycle that tells folks on the ground that short term “jobs” at any cost, are to be rewarded. I did some research a few years ago that showed that of all of the billions spent on economic development at the state level, only 1% was spent on entrepreneurial development and North Carolina was at that level in 1999. A study last year demonstrated little movement- again, only 1% of state ED funding was on entrepreneurship. So not only are we not spending any funds on this superior strategy, what we are doing for entrepreneurs isn’t effective (I need to find a link to Greg Lichtenstein et al article with the list of eight things done incorrectly- hysterically and painfully accurate according to policy makers and entrepreneurs I’ve presented the list to).
It is difficult to do things differently when there are economic development organizations struggling financially- it’s a Mad Max world right now.
December 14th, 2009 at 3:25 pm
Does anybody know how Pisgah Labs ended up in Transylvania? That’s an example of the kind of small-footprint, high-tech manufacturer I’d like to see us attract more of. (In 2000, I installed a Clean-In-Place system for a biotech lab in Gaithersburg, MD. They adapted former FedEx offices in an office park. You’d never know they were there.)
Here’s background on how PharmAgra Labs got there.
The NC Dept. of Commerce helps promote that sort of thing, but the NC Biotechnology Center does too.
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December 14th, 2009 at 5:35 pm
Thank you Tom for the post and conversation. I frequent Scrutiny Hooligans, but I usually never reply.
I wanted to thank FireLady for expressing her thoughts so eloquently. (I agree)
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December 14th, 2009 at 8:12 pm
As a community, I don’t think you can manufacture entrepreneurs. But if Asheville nutured Bob Ingle to create a $3 billion company, Jim Oliver to start AVL Technologies at some leased space from AB Tech which now has around 200 employees, Mark Goldberg with PLI that grew from very humble beginnings to employ around 200, Joe Kimmel to establish Kimmel & Associates in his home to employ over 100 people, and others, why can’t we create more of these success stories?
Look at Raleigh Durham where Jim Goodnight and John Sall, both grad students at NCSU started SAS which has over 4000 employees in Cary – 11,000 worldwide. Both are billionaires. CREE started in Durham and now employs over 4000 people making energy efficient LED lighting. There are many other stories, how can they be replicated in WNC especially without a major research university?
Small businesses will always be the backbone of WNC’s economy, but as great as they are, how can firms with just a few employees become the gazelles that create most of the jobs?
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December 14th, 2009 at 8:29 pm
Nathan- I believe an entrepreneurial culture breeds entrepreneurs. Regions which celebrate risk taking and support entrepreneurs, along with creating a pipeline of entrepreneurs, will thrive. I believe that the Law of Substitutability may apply to the situation related to the research university. There have been many places, mostly expansive rural regions, where a dynamic community college system has served as the launching pad for entrepreneurs. I think the biggest obstacle WNC faces is the proclivity to argue for its own limitations. No we are not SC. But we have numerous underutilized assets which could be re-deployed for economic development.
One of our greatest underutilized assets is our 18-45 demographic. We have educated, dynamic, smart and committed people who live here. I am continually impressed by the intelligence of this age bracket. As John McKnight says, “A weak community is place where people can’t or won’t give their gifts. A strong community is place where people are willing and able to give their gifts.” There is a great deal talent and energy in this region which is going to waste- nothing like underutilized capital, and human capital is the greatest waste.
Now, the question is what is needed to tap this talent and energy. Our region has a history of being a closed system-we need to recognize the Good ol Boy network is alive and well- and not to threaten anyone’s manhood or power dynamic, but new ideas need to gain entry into the region. If WNC is going to thrive, people with ideas, energy and talent need to be able to quickly connect to the community networks.
I agree with Nathan about the lack of community investment by the people with money. Fascinating in a really sad, pathetic way.
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December 14th, 2009 at 9:27 pm
Firelady, perhaps you misunderstood my comment about the wealthy in this community relative to some other regions. There are many here who have donated millions to our schools, nonprofits, and other worthwhile organizations. One of the best examples is the Janirve Foundation, established by Janice and Irving Reuter who retired to Biltmore Forest because they loved Asheville. Mr. Reuter was one of the ten original investors in General Motors in 1922. Their foundation has given tens of millions of dollars to WNC schools and nonprofits.
What we don’t have is someone like Jim Goodnight of Cary, Jim Clayton or James Haslam of Knoxville, Roger Milliken of Spartanburg, etc. who have the dynamo to lead the region with their advocacy, pocket book, and their company.
I would contend we do have an entrepreneurial community in the sense that so many start their own business because they cannot find a job here to support their family. We do have many twenty and thirty somethings starting their own business. One of the great assets in our commnity is the Technology Commercialization Center at AB Tech Enka which helps these entrepreneurs to go from two or three employees to dozens and hopefully more. Most of these business people are younger than me. They would contend we have very little venture capital, angel investors in this area despite efforts by BRAIN and others to address this need.
Referring to your point about entrepreneurial efforts in rural areas, one of the best examples in WNC is Drake Enterprises, a tax software company, in Franklin which has over 500 employees.
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December 15th, 2009 at 5:56 am
Nathan, my comment about wealth in the community was meant to address the big wallet, big vision kind of “investor” you mentioned.
You are correct that as compared to many places, Asheville does have more of an entrepreneurial base and there are examples of successful entrepreneurs throughout WNC. However, WNC, in general, is not as focused on entrepreneurs as they should be. Within the context of the original post, my point has been that the economic development system is fragmented and more focused on industrial recruitment. Erik Pages did an assessment of entrepreneurs in WNC and contends that overall, entrepreneurs are relatively isolated and do not feel supported by their local economic development leaders. Whether it is the implementation of entrepreneurial network strategies (important in a largely rural region) or retention/economic gardening strategies (by the way, in order to nurture the Gazelles, you have to have a pipeline of entrepreneurs, so those companies have the chance to get to that stage), there are better ways to develop a regional economy besides the historically inefficient and ineffective “shoot anything that flies, claim anything that falls” industrial recruitment focus.
To be fair, the finance issue is fairly ubiquitous, outside of the usual suspect locations like Silicon Valley and RTP. You are also correct about the community college system here- however, for the most part there is not sufficient connectivity between entrepreneurs, ED leaders/organizations, workforce development organizations. Yes, it is better here than in many places, but not to the extent that the community college system can substitute for a research university (Stuart Rosenfeld from RTS in Carrboro has done excellent work in this area). It is a critical mass of innovation activity that is required for WNC to garner the level of competitive advantage needed for significant economic impact (this is especially true now). This means thinking of the entire WNC region (we are in the middle of one of the fastest growing megaregions in the nation- that matters), and rapidly connecting the disparate components of our regional innovation systems. This is the civic infrastructure I am describing.
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December 15th, 2009 at 7:33 am
This has to be the most thoughtful thread I’ve ever read on Scrutiny Hooligans.
Kudos to Firelady, Nathan Ramsey, and Tom Sullivan for elevating the discussion in such an engaging and informative way.
MM
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December 15th, 2009 at 8:58 am
I am grateful to have the opportunity to contribute to a subject which I am passionate about, especially with people who I really respect, and who have different experiences and perspectives from my own.
Now how can we bring this discussion to a wider audience, with the same level of civility? Civic discourse is crucial at this juncture.
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December 15th, 2009 at 10:24 am
This subject has been a passion for me as well. A dozen years ago, I met a fellow cross-country skier (a school teacher) at Roan Mountain. We found that we both lived in the Asheville area, but worked in South Carolina. The reasons, in both cases, were more jobs and better pay just hours from Asheville. Asked why he thought that was, he replied, “someone’s not doing their job.â€
Obviously, his comment stuck with me.
The question here is, how do we collectively do a better job? For example, how we can get the same level of energy and commitment that goes into opposing projects like the Ellington channeled into creating more jobs that promote the general welfare, not just developers’ and owners’ bottom lines? And how do we ease local movers and shakers out of their tourist economy comfort zone?
The only reason I have time for this thread is that I am between contract jobs and not at work hours away from here. I’ve worked in everything from paper to plastics to biopharmaceuticals, from south Georgia to northern New Hampshire, big towns, small towns, etc. Working in places where people don’t need several service/seasonal jobs to get by colors my perspective. As I tell Gordon, housing is more affordable if you are making better money.
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December 15th, 2009 at 3:56 pm
Now that’s a sizable chunk of new jobs.
“Through Gov. Perdue’s JobsNOW initiative, the state will work aggressively to create jobs, train and retrain our workforce, and lay the foundation for a strong and sustainable economic future.”
More of that
eastwest of Statesville, thank you. Is Thermo Fisher Scientific tied in with A-B Tech, I wonder? Expect their booth to be swamped at the Homecoming Job Fair on Dec. 29.Rate this comment:
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December 15th, 2009 at 3:23 pm
Tech manufacturing company expands in Asheville. AC-T:
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December 15th, 2009 at 4:38 pm
Just did a quick google, & all I can see is that reps from Thermo Fisher participated in a panel discussion at AB Tech in October aimed at educators. They talked about what students should be focusing on to get good jobs in the region.
http://abtech.edu/cr/techtalk/ttArchives/2009tt11/readarticle.asp?articles/educators_in_industry.htm
Also, remember that town in New Hampshire – what is one of their big growth industries? Bio-tech, just like this Thermo plant.
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