The economy of the Triad — famous for making textiles, apparel, furniture and cigarettes — is changing. As production moves overseas, the 12-county region’s manufacturing sector dwindles — jobs decreased 10.4% from mid- 2002 to mid-2004 — and its focus shifts from traditional industries to new ones created by research and development. Senior Editor Arthur O. Murray discussed this trend with Sue Cole, regional CEO of U.S. Trust in Greensboro and past chairman of North Carolina Citizens for Business and Industry, the state chamber of commerce; Richard Dean, president of Wake Forest University Health Services in Winston-Salem; Charlie Greene, president of furniture maker Classic Gallery Group in High Point; James Renick, chancellor of North Carolina A&T State University in Greensboro; and Penny Whiteheart, senior vice president of the Piedmont Triad Partnership economic-development agency.
What's higher education's role in this?
Renick: If we’re seriously concerned about economic development and the viability of our community, we’ve got to leverage the intellectual capital that occurs on our campuses and relate more closely to our community, particularly the business community.
How does that relate to creating business?
Dean: There’s a cliché that after 40, people don’t invent in science. So really, it’s the post-doctorate fellows — the young thought-provoking people who are challenging the dogma they were taught — who are creating knowledge. You need to have something going on that brings young people together. They demand certain services, and that leads to the self-perpetuating growth of entertainment and activities. The pathway that we’re going down will allow us to not create a new Triad but reinvigorate the persona that was the Triad in the remote past.
Dean: Using Winston-Salem as indicative of the Piedmont Triad, the life cycle of commerce here became profoundly successful through the entrepreneurialism of people like R.J. Reynolds. So we have had in our remote past a profound level of entrepreneurialism by young people. But as part of the cycle, the companies become so profoundly successful that eventually the leadership cannot allow too much more entrepreneurialism because it will undermine the establishment.
Cole: Those entrepreneurs who became very, very successful and created these very large firms in the Piedmont Triad ended up downsizing due to problems or combining with other companies or whatever. It really resulted in the company not being loyal to the employee. So young people see that maybe working for a big company is not what they want to do. I think they have become more entrepreneurial, and that is a good thing.
Renick: The question is, how do we engage young creative people in the process? Our community still says that if you’re 45 or older, you maybe get a shot. But anybody under 45 really is not running much around here. And that sends the message to 20-somethings that ‘I’ve got to wait 20 more years.’ How do we work to include them in the mainstream so they’re excited about entrepreneurial activity, business and industry? That is going to be increasingly important. Until we break down those barriers, I think, that’s going to be an Achilles’ heel.
Is the Triad still in a down cycle?
Dean: We’re on the upswing. The depth to which one falls is how long it takes to have the population — the critical mass of the population — recognize where it is and insist on it being different. People stop being in the bleachers and being just cheerleaders and get out on the floor and become participants.
Renick: Some of the recovery will be driven by external factors. Some of it is actually driven by our students. For example, my student-government president has a Web-based business, and he’s got a couple of employees, maybe three employees now. He’s outgrown the dorm, and he’s going to go to a local business incubator.
Cole: Just look at what we’re doing in biotech. The Department of Labor awarded Forsyth Technical Community College a great program to be the leader in biotech training. Winston-Salem State University is looking at a degree program in biotech, which will not only help diversity in that segment but will give us exactly the type of workers that we need to fill that industry.
Dean: For about the last three or four years, we’ve been developing infrastructure in Winston-Salem that will lead to sixth-, seventh- and eighth-graders getting interested in science. Whatever their level of intellectual capability is, they can rise to that level in a growing biotechnology industry. I won’t identify which minister gave me the insight, but he said, ‘Dick, you have to understand that historically when kids wanted to succeed and they looked around in their community, the successful person they saw was a person that maybe graduated from high school, got hired at R.J. Reynolds or the equivalent and 25 to 30 years later is very well off, is very comfortable.’ That’s the model that is prevalent in our community, and we have to infect the community with people that have other directions that they have succeeded in.
Cole: The kids get it. I’ve had the honor of interviewing Morehead Scholars for this region, and over 70% of them said their primary interest was in science and biotech.
But every place is touting biotech.
Renick: There really isn’t a silver bullet. Part of the strategy has to be a diverse approach to growing our region and growing the economy. Some things are more or less in vogue, and your point is really a good one. How do we create a diversified portfolio to attract activity? Because it won’t all be biotech. It could be entertainment. It could be athletics. It could be recruiting a government agency to come to town. One really, really good way to think about it is: What are those clusters of activity that would allow us to, in a diversified portfolio, hedge our bets a little bit? That way we’ll be in a better position to capitalize on what’s possible.
Greene: One of the things that happened in our region was that the changes were so fast — the loss of textiles, the loss of furniture, the loss of the peripheral businesses — that folks out of a job in their mid-40s, early 50s come to a community college looking for, in my mind, a miracle: ‘Tell me what I can do to get back to where I was.’ These are the ones I’m concerned about. They’ve got 15 to 25 years left before they can think retirement. What are we going to do with those folks? Because you can’t take them into a biotech program. You can’t take them into a high-level technology program. I’m very grateful to see Dell come because that would be a job that many of those folks could fill.
Cole: An advantage we’ve got is that work ethic. Some of those people can be retrained for basic manufacturing.
Greene: But they will never again make what they were seeing when they left the job. They’ll make something, but they won’t do that well. The problem is that those people are looking to see now how they can get back on track. What are we going to do if we don’t have manufacturing? What are we going to do when that entrepreneurial spirit hits a home run and comes up with something? Are we going to have to take it offshore to get it built?
Dean: I agree with you. And I would venture to say that while manufacturing is not going to see the growth that it was seeing 30 years ago, you can prevent the rate of decline that would naturally occur if one is not paying attention.
How long will biotech take to replace those jobs?
Dean: It’ll take 15 years for the biotech initiative to develop as a burgeoning economically contributive engine. It took a lot longer to get Research Triangle Park going. None of us has enough resources to survive for 20 years. This is where the Partnership comes in. There have to be jobs for people.
Whiteheart: A lot of times people ask us, ‘Why is manufacturing a recruiting target when it’s declining nationally?’ The answer is, that’s the pressure we have. That’s our market demand: to provide jobs for these people you’ve described. We believe that the Piedmont Triad has a competitive advantage for manufacturing today. So to the extent that companies, because of cost pressures, are consolidating, taking critical looks at existing facilities when deciding where to upgrade equipment, we feel like we’re competing to save what is here. In cases where companies may consolidate a Richmond-Atlanta situation, we think that the Piedmont Triad can be the location for that. And so we find ourselves competing for a lot of diverse manufacturing. Companies that are in more traditional manufacturing can be successful here.
Dean: You don’t start declining from the top 20-30% of things. You decline from the bottom feeders of the world first, the ones that failed. As long as we can create an environment for manufacturing here in textiles or furniture that allows it to compete against its own industry, it will do OK compared to everywhere else. We don’t need to be ecumenical about sharing the losses across the whole country. Let everybody else lose more than we do.
Whiteheart: You can look across the region and see companies investing millions of dollars in manufacturing facilities. Dell has certainly gotten a lot of the headlines, but Unilin is building an $80 million plant in Thomasville. Unilin is a Belgian company that makes Pergo flooring. So I want to speak up for manufacturing. It’s not maybe where innovation is right now, but we think we can have success there, and we need to. We have a demand for it. I don’t want to make it sound like we think we’re going to increase the manufacturing employment here, but we’re definitely working to stem the decline.
How can the Triad capture its share of biotechnology?
Dean: We have the resources in the research universities. If you look at a lot of these places that want to have biotech centers, they do not have a feeder system of scientists that are spitting these ideas out. It’s that level that gets it going and keeps it going.
But there’s catching up to do to be as successful as places such as Boston.
Dean: High-tech manufacturing in the Northeast, in the Boston area, is a major piece of their biotech industry that places them at the front. As places start, they create these small businesses. They grow a little bit. They’re bought by these firms or corporations in Boston, and all their manufacturing is right there. What we need to do is get a critical mass of things that are growing here, in which the manufacturing is done here. This is a better place to be than Boston. It is.
Renick: Your example of Boston is interesting, I was talking to a Gillette executive yesterday, and with the pending merger with Procter & Gamble they’re going to lay off 6,000 people. So they’re going to have some issues and problems shortly.
With Dell coming and the Sara Lee spinoff, the Triad seems to have momentum.
Whiteheart: Well, the national economy is improving. In the economic-development business, two or three years ago was doom and gloom because no one had near-term expansion plans, certainly not in manufacturing. We’ve seen our inquiries, our visits, our announcements increasing over the last 18 months. It’s much, much better. Probably that spins off to the bankers.
Dean: And the venture capitalists.
Whiteheart: And the hospitals and the universities probably feel that economic optimism. Does it get easier? It’s very hard to compete right now. I love hearing testimony about the Piedmont Triad’s quality of life, but I guarantee you that everyone who lives along I-85 thinks that their quality of life is superlative. It’s excellent here, but it’s hard to differentiate it from Richmond or Greenville, S.C.
Dean: It’s hard to sell it until they’ve experienced it.
Cole: I think we are our own worst critics. Think about the beauty of this state and how diverse it is and what that can mean to tourism, which is what, Penny, a $12 billion or $13 billion industry now?
Whiteheart: The state says it will be our top industry in the future.
Cole: And then our climate. Look at the state’s location — halfway between Atlanta and D.C., halfway between Miami and New York. We’ve got a lot of things going for us. The work that Action Greensboro does to focus on the downtown as a gathering place for people is really important. The collaboration between High Point, Winston-Salem and Greensboro is as good as it’s ever been.
Did the bidding war for Dell damage that?
Greene: Just the opposite.
Cole: It was enhanced.
Greene: The difference between where we are and where we’re headed is narrowing every day because the difference between how long it takes to get from the west side of Winston-Salem to the east side of Greensboro is shortening every day. You can get anywhere in the Triad in 20 to 30 minutes. A lot of the folks from Dell are buying homes in High Point and Greensboro. As we pull together this whole Triad, we’re going to eliminate a lot of our problems. We’ve got the best educational facilities in the state within 30 minutes of any one of us.
Cole: Higher education, community colleges.
Greene: Guilford Technical Community College President Don Cameron probably has more vision than any person I’ve ever worked with. He has no fear of hiring the person who could be his replacement to do a secondary job. We talked about entertainment. Guilford Tech in High Point now has the Larry Gatlin School of Entertainment.
Cole: And the culinary school.
Greene: It’s the ones from 25 or 30 up who have lost their jobs that we really have to find something they can do, and then we go on from there. I don’t think, as a country, we can operate without manufacturing. It’s a very dark road if we start thinking that we can be the inventors but let somebody else make it.
What kinds of roadblocks do entrepreneurs face?
Renick: We have 60-somethings designing programs for 20-somethings. That approach is going to create some missed opportunities. I’m a little nervous about some of the tech-transfer conversations people are having, even though they really don’t understand the basic science behind the tech transfer.
Is financing a problem?
Renick: I think that’s changing. When young people are coming up with ideas, there are people around that want to help them, nurture the idea, point them into the direction where they might get capital to advance the idea. We’re seeing younger, more organized people thinking about their future. I see more attention being paid to idea generation coming out of that younger set and their being more entrepreneurial and not necessarily thinking solely of, at least for the college kids, going to a company. Going to a company is great. But for many kids for such a long period of time, that was it. Now I’m noticing that they have some interesting ideas about what they want to do, and they’re not what they were 10 years ago.
Cole: Well, the cost of entry for some of these ventures is not as great as it was. As you said, your student-government president is operating a business out of his dorm room with his computer.
Dean: If you look at venture capital, North Carolina is way behind many other places. The Piedmont Triad is behind even in the state.
Why is that?
Dean: We’ve got to remind ourselves of what we’re coming out of. It’s the worst thing that’s happened in several decades. As of this moment, it is difficult for entrepreneurs to find the capital — local venture capital — in North Carolina. But I do know there are several venture-capital firms that are looking at this area. One has got a branch office in Winston-Salem. Others are being formed. So it’s on the correct trajectory. It’s just going to be awhile before it’s so prevalent that it’s not going to be an issue. Maybe it’s always going to be an issue.