Far East

Leaders discuss how to orient the region's assets to promote growth.

Twice the size of New Jersey, Eastern North Carolina is an expanse filled with contrasts. Its seashore booms with tourism and million-dollar beach houses. But large swaths of the interior are mired in poverty, and 12 of the regionís 41 counties lost population between 2000 and 2004. So where is the East headed? Thatís what Senior Editor Edward Martin asked Charles Broadwell, publisher of The Fayetteville Observer; Jim Chesnutt, CEO of Washington-based National Spinning Co.; Tom Eagar, Wilmington-based CEO of the N.C. Ports Authority; Phillip Horne, president of the Greenville-based Foundation of Renewal for Eastern North Carolina; and Darlene Waddell, executive director of the N.C. Global TransPark Authority in Kinston.

What do you see as the regionís strengths and weaknesses?

Horne: Our strengths are abundant and apparent. Weíre home of five of North Carolinaís military installations. We have a significant opportunity to advance our economy as it relates to homeland security, the military and military procurement. We have 3,000 miles of mostly undeveloped coastline thatís quickly becoming developed. Our natural assets are unparalleled, and our people are known for their work ethic. Yet we are a region in transition. We have suffered the most agricultural and manufacturing job losses of any region, but now we have the opportunity to diversify our economy. Speaking of diversity, we probably are the strongest in those terms, because we are the most diverse ethnically, by gender and race. But one challenge is that we also have a more aged and unhealthy population.

Broadwell: I might add the issue of education. Our work force has got to grow and evolve as we see the economy changing. Also, being from Fayetteville, I think a lot of North Carolinians and Americans in general donít realize whatís happening with our military ó Fort Bragg, Pope Air Force Base, Seymour Johnson Air Force Base, Camp Lejeune. Our part of the state can become a military and industrial hub.

Waddell: The Global TransPark sits in the center of the bases, and that needs to be taken advantage of. The relationship between it and the ports needs to be strengthened to help not only Eastern North Carolina but the military, as well. And the military discharges 18,000 members in Eastern North Carolina every year. That certainly adds to skilled labor for the region.

Eagar: From the standpoint of ports, our concern is with transportation infrastructure ó or lack of it. Look at the truck traffic we generate in Wilmington: about 435,000 annual truck moves. In 10 years, weíre going to be looking at 750,000 to a million truck moves. We donít have infrastructure to accommodate that growth in Morehead City or at the port of Wilmington. But we certainly feel that weíre in a position ó given the facilities, resources and the deep-water ports that we have ó to help North Carolina grow economically.

Mr. Chesnutt, as a manufacturer, what do you think?

Chesnutt: Manufacturing has been significant in the success of this state, and at one time 30% of the jobs were in manufacturing. Now itís 11% to 12%. One of the sad things is to ride through places like Bethel or Whitakers that years ago had apparel operations, and ladies were cutting and sewing and had employment. Those small towns are dead, dried up, gone away. Our company at one time had 2,000 employees in North Carolina, and weíre about 1,000 now. A very important issue is that we have an aging work force. In our plant in Whiteville, the average age is frightening.

What is it?

Chesnutt: Probably in the 50s. But many of the younger people applying for jobs, even if they are high-school graduates, have been taught no social skills or responsibility. Their language is foul, and when you have women 50 and 60 years old working for you, thatís a problem. The younger ones donít understand you have to come to work every day, and they dress atrociously. In some jobs, if basic math is a necessity, you have to go back and teach them. And that older work force is expensive in terms of health care. Our average cost last year per employee was almost $5,000. Still, I think there will be manufacturing here for a long time. Thereís a chance for distribution tied directly to the ports. Why do you need to take stuff to Lincolnton or Gastonia to distribute it?

Former Gov. Jim Hunt has said the East needs something like the Marshall Plan, which rebuilt Europe after World War II.

Waddell: Heís absolutely correct. Itís up to the leadership, not only in Eastern North Carolina but at the state level, to do something. That includes not only the public sector but the private. Itís going to take entrepreneurs as well as those in state government. We need a champion.

Eagar: Itís partly a question of: What is it that we want to be? What is it that we are trying to attract into this region? Do we really have a master plan or a concept of what it is we need and where we need to take it? Iím not sure we do.

Chesnutt: We certainly donít have a national industrial policy, and Iím not sure that we have one in the state, either. Tom Thompson, the economic developer in Beaufort County, was discussing the hoops he had to get through merely to get some help out of Raleigh from the One North Carolina Fund for someone whoís coming with 150 jobs. He was beat up so bad over this much money, we almost lost it to Virginia. But there are other things near and dear to our hearts we have to deal with.

Like what?

Chesnutt: I could get kicked out of at least three towns in North Carolina for saying this. I know Greenville is proud of its airport, New Bern is proud of its airport, and Jacksonville is proud of its airport. But as a businessman, I get extorted every time I fly because we have three little airports and we need one damn big one. It costs me less to fly to San Francisco than to Charlotte.

Is there a lack of cooperation within Eastern North Carolina?

Horne: What Jimís talking about is of great interest to us at FoR ENC. The whole issue of a master plan is what we facilitated at a summit for Eastern North Carolina in 2003. Some 600 people showed up, and they all have a vision. Theyíre looking for ball carriers whoíll take a grassroots-derived plan based on our strengths and challenges and coalesce it into a super-regional vision. We donít think of ourselves as one cohesive region, and weíre competing against places in the creative- and knowledge-based economy that do. Charlotte is known for financial services. The Research Triangle Park is not just a place, itís a brand. Unless we want to tout poverty as a brand, we need to recast ourselves and to make ourselves attractive to what Richard Florida calls the creative class. Itís all about how we define ourselves in the new economy.

Broadwell: Eastern North Carolina is hard to brand. For one thing, we have to lop off the entire coast because itís doing so well. We straddle Interstate 95, but Eastern North Carolina to me is almost a state of mind. If you take the coast out, what the heck is it? People can envision western North Carolina ó ĎOh, thatís the mountains.í Because weíre so diverse ethnically, geographically and otherwise ó from the Sandhills to the farming belt up north ó thatís a struggle. But the summit conference Phillip mentioned was a visible sign that there are some common interests. Transportation is one.

Isn't that what For ENC is trying to do with its Inner Banks branding campaign?

Broadwell: Right. Itís trademarking the Inner Banks because the waterways ó rivers, sounds, Intracoastal Waterway or what have you ó course all the way up the coast. We have a complementary brand we can market between the Triangle and the Outer Banks. What about medicine and research at East Carolina University and its University Health Systems?

Horne: Many people probably donít fully appreciate that weíve got a health system thatís roughly 29 counties and growing that also attaches itself to a medical school that is in the top 10 for its service area and service practice. If anything has proven that regionalism can cross county lines in Eastern North Carolina, itís delivery of health services.

Do you think Eastern North Carolina gets its fair share from the legislature and the rest of the state?

Chesnutt: We canít get some things done that are routinely done on the other side of Interstate 95. Thatís the demarcation line. The world changes when you cross 95.

Waddell: Itís apparent we donít, because we donít have the infrastructure the rest of the state does. We need a champion for infrastructure. Thatís going to make the difference for Eastern North Carolina.

Broadwell: One danger, though, is that just we end up poor-mouthing everything. We have gotten some stuff. Weíve gotten some pork ó and Iím not just talking about the hogs we raise down here. But historically weíve probably not gotten what the Triad and Charlotte and the Triangle have. You can look at the road figures. There are good signs, but weíve got a fight on our hands. Why arenít we getting some of these Dell and Dole plants that are locating in Guilford and Gaston?

Chesnutt: The success of the hog industry, though, was one of the worst things that ever happened to Eastern North Carolina. People made a lot of money, and you can ride through the countryside and see a lot of new double-wides and new brick houses you would never have seen without turkeys and hogs and chickens. But the hog thing has left the perception that Eastern North Carolina is one big lagoon.

Eagar: We were talking about getting some of the political pork, and in the four or five years Iíve been here, weíve seen a lot of Department of Transportation money coming into the southern portion of the region with the new Interstate 74/76, the Havelock Bypass and so on. And with the deepening of the Wilmington channel, work in Morehead City and the development of Radio Island, weíll be spending about $265 million. But when we got into this discussion with the Wilmington Chamber of Commerce, we began talking about what entices high-tech industries and professionals into an area: the quality of life. When you do that, you start talking about homes, education for the children and cultural events.

Horne: Weíve got in FoR ENC what we call our Virtual Incubator Platform, which attempts to address that. It matches opportunities across a diverse geographic region that are in multiple economic sectors, whether itís the military and procurement, travel, tourism and entertainment, real estate, or it might be in agritechnology or in biotechnology. Fully functioning, what it attempts to do is to match intellectual capital and opportunity. But on a broader scale, itís an attempt to prepare the way for our intellectual infrastructure so that we will be more attractive to what is commonly called the creative class. That theory suggests people are not looking so much to come to work for a specific company. Itís the community where I will live, be entertained and where my children will be educated.

Broadwell: One thing that troubles me is: Whatís going to happen to some of these small towns? Tobacco is going out. Youíre looking at a series of ghost towns, and thatís downright depressing.

Waddell: There certainly has been a brain drain in Eastern North Carolina, but our community-college system is doing a wonderful job in educating the labor work force that needs to be re-educated. Education is always going to be a major focus.

Chesnutt: I agree. When the community colleges rifle-shot something, they are phenomenal. But thereís a lot of fluff to get numbers up and make things look good, which I have a problem with. Basket weaving and pottery decorating ó Iím not sure thatís what we need to be doing in our community colleges.

Waddell: One of the military-related companies thatís coming to the TransPark, Workhorse Aviation Manufacturing, is a startup that will make structural components for aging military aircraft. The community-college system is playing a vital role training people for this company and, hopefully, others to come.

Chesnutt: We relocated a plant from Georgia to North Carolina with a completely new set of technology. They did a phenomenal job of helping us train these people and get them up to grade. But donít be teaching half the retirees in town how to repair their lawnmower engines. Horne: Letís return to whatís going to keep small towns from becoming ghost towns. Historically, they were microeconomic hubs. They were tobacco markets. They were commercial centers for a dispersed region. Every city operated as a microeconomic system. One of the dangers, if we donít become creative about how we stimulate the reinvestment of, for example, tobacco-buyout funds back into the communities, is that we are going to accelerate the loss of these micro-economies. We can be a lot more creative in terms of turning to private equity and venture capital to stimulate entrepreneurship.

Broadwell: To me, todayís microeconomic system, if you think about it and where these towns were, is Wal-Mart. Thatís scary.

How good is education and the work force, and what effect has the Hispanic influx had on them?

Broadwell: We have somestellar institutions, but the poverty in some areas is devastating. You brought up the first mention here of the immigrant class. Many of them work, but many are on the fringes. You see them in a county like Robeson, which is historically triracial ó white, black and Indian. Now thereís a Spanish-speaking class there. So the demand on a school system like that of Robeson or Hoke is tremendous. We are going to need some money ó weíve got to bring them up from the bottom.

Chesnutt: I donít know if we can fix the immigration thing at the state or local level ó itís a national thing. And maybe Iím too conser-vative, but my feeling is if I come here I better come with a full understanding that Iím going to learn English if I stay.

Eagar: The question I have is, though, at the college level ó at UNC Wilmington, for example ó how many of our graduates actually stay in North Carolina?

Horne: Unfortunately, exportation of intellectual capital out of Eastern North Carolina has helped to build some of the greatest corporations in this country. Many of the executives in the bank towers in Charlotte grew up in Eastern North Carolina. How do we incentivize intellectual capital to remain?

As to infrastructure, more than $200 million has been invested in the Global TransPark, and thereís still controversy about its value.

Waddell: The TransPark had the best year yet this past fiscal year. We were created in July of 1991, and this project has been misunderstood in a lot of aspects. We went through more than a 41/2-year environmental-impact study that projects earlier on, such as the Research Triangle Park, didnít have to go through. So, in essence, we didnít get off the ground until late 1998. And since then, weíve gone through a recession and 9/11.

What's happening now?

Waddell: Companies that are looking at it say itís impressive. We have the infrastructure, the long runway, industrial park, educational center. But to score a major win such as Boeing or Airbus, there would have to be other things, such as rail. This is one way Eastern North Carolina could certainly be strengthened ó by linking the TransPark to the port of Morehead City.

Does the Ports Authority share that positive view?

Eager: The future is bright for the Global TransPark and ports. We see tremendous growth in international trade, which will double again by the year 2020 at the rate you see today. China has emerged as a global manufacturing center. They make up about 70% of the Asian imports to North America today. The container industry is growing at a rate that will see it double again by 2015. West Coast, South Atlantic and East Coast ports are congested. Charlestonís got the old Navy yards theyíre going to develop. But after that, theyíre basically out of capacity. Savannah is not going to have enough capacity come 2012 to accommodate the projected growth.

What does that mean for North Carolina's ports?

Eager: Thatís why weíre moving forward with investment today in Wilmington, in addition to buying other properties, to really double again what we have. And in Morehead City, Radio Island is a tre-mendous asset. What Darlene has in the TransPark ó itís a Foreign Trade Zone ó is a tremendous resource of property and facilities. It doesnít take too much imagination to see not just major distribution centers there but even assembly-type operations.

The original concept was that the TransPark would be a global just-in-time manufacturing complex. Is that still valid?

Chesnutt: Probably not, because now labor is so cheap in other parts of the world that even assembly would be difficult to make work here. If it were difficult manufacturing that was labor-intensive, it would be somewhere else.

Eagar: The Airbus project would have been an excellent example, though, of what could have been done there. Thatís the kind of project you need at the TransPark. [Airbus in June picked Mobile, Ala., for an 1,100-worker plant to build airborne refueling tankers.]

Chesnutt: And time. As a young person who had just graduated from East Carolina, I was sent in 1968 to the Research Triangle Park in a branch of North Carolina National Bank. I said, ĎIím going to be a part of this big research park, and Iím so happy to be here.í I would have had to stay in the same job for 30 years to have seen it come to what it is today. People just have not been willing to be as patient with Kinston.

Waddell: Economic development, as we know, is a long process. You donít just do a little bit and think everybodyís going to come. That certainly is true of the Global TransPark.

Broadwell: The Research Triangle Park forced a region to think of itself as a region and to be more open to people who came from outside bringing new ideas and new affluence.

Will that happen in the East?

Waddell: We certainly need to embrace regionalism, but diversity is also a good thing for Eastern North Carolina. I like to think ofthe region as a family, and families squabble among themselves. But at the end of the day, Iíd like to see the region pull together and embrace all of the assets it has.