Aerotropolis

The plan was to build one around Kinston’s airport, but market forces blew it off course to Greensboro.
By Irwin Speizer

Some said their goodbyes to a way of life they expected to soon vanish. South of the city, the Neuse River would still spill into the swamps, but before long the narrow blacktops through the cotton fields around Kinston would be packed with commuters and trucks. There would be suburbs in the roadside fields where roasting ears and cantaloupes grew. The city would be here still — it has been since the 1790s — but new buildings would give it a skyline.

This is what was going to do it: a modern airline terminal, tan and clean-looking, surrounded by parking lots. Across a strip of concrete, several boxy warehouses shimmy in the heat rising from the two-mile-long runway. A new brick-and-glass building with an entrance like a small rotunda shelters training rooms with the latest in audio-visual equipment.

The North Carolina Global TransPark was going to change everything. Instead, farmers still grow cotton and roasting ears in Lenoir County. And on a damp morning in downtown Kinston, you can still catch a musty whiff of century-old buildings. At the futuristic cargo airport that was supposed to revitalize the region, the big parking lot is often deserted, and sometimes at midday an eerie silence prevails.

Not that the idea wasn't catchy. Build it — a modern, well-equipped airport that caters to manufacturing and business — and tenants would come. Big-name computer companies assembling high-dollar machines for worldwide markets. Makers of time-sensitive electronic wizardry. Maybe even exotic-car manufacturers locked into just-in-time production schedules dictated by waiting Hollywood stars or wealthy oil sheiks.

The idea is still appealing. It's happening, in fact. Just not here, north of Kinston, in a place that time still seems to have forgotten. The marketplace has spoken, and it said Greensboro — specifically, Piedmont Triad International Airport. “We have be-come the Global TransPark by default,” says Dan Lynch, president of the Greensboro Economic Development Alliance.

In the late ’90s, when Memphis, Tenn.-based FedEx Corp. went shopping for a sorting hub, Piedmont Triad International beat out the TransPark for the $350 million project. Earlier this year, the Triad airport pulled off another coup: the $60 million headquarters and factory for Tokyo-based Honda Motor Co.’s HondaJet, a new light aircraft aimed at the corporate market. The TransPark’s biggest success so far is a second-place finish for a Boeing aircraft plant. “I would have hoped that the Global TransPark would have been much further along,” says John Kasarda, the UNC Chapel Hill professor who came up with the idea of an airport-based economic engine nearly 20 years ago.

Then again, Kasarda never expected the fruit of his intellectual labor to end up in remote farmland. He had envisioned an airport as the center of a logistical network that included highways and rail lines, a strong trucking industry and an industrial work force — in short, a place like the Triad or Charlotte. “Kinston was not the ideal location,” he says. N.C. Secretary of Commerce Jim Fain remains optimistic: “I continue to believe that the TransPark could become a center of transformational economic impact. It just takes finding the right client.”

What the disparity between Kinston and the Triad points out is the difficulty of using government intervention to redirect market forces in the service of societal and economic change, especially when the target region is so far behind in development-ready infrastructure. To date, public funding of the Kinston project has reached an estimated $112 million, and the state provides $1.6 million for annual operations.

The Triad appears to have prevailed because of old-fashion capitalism that values its more-centralized location. It’s moving up in stature as a cargo center as the FedEx hub nears completion. Logistics Today magazine, in its rating of the 50 top logistics-friendly cities and metropolitan areas, ranked Greensboro-High Point tops in the state and 20th in the Southeast last year, up from 31st in 2005. It passed Charlotte-Gastonia-Concord, which slipped from 18th in the Southeast in 2005 to 22nd. Raleigh-Cary came in 28th in the Southeast in the latest ranking. Kinston wasn’t on the list.

It’s not that the other airports have no government investment. An estimated $190 million has gone to improve the Triad airport and surrounding infrastructure to accommodate the hub. But the money has been spent in response to a development project, not in advance of one, as was the TransPark’s case. Most of all, the work adds to an established network of highways and rail lines and an existing regional airport. Large airport developments need more than just a landing strip surrounded by cheap land. “It is so clear to me now that the factors that will drive a successful aerotropolis are probably not present, at least right now, around the Global TransPark,” says Don Kirkman, president and CEO of the Piedmont Triad Partnership.

Both the Triad and Charlotte fought hard to win the project after Kasarda proposed it in the late 1980s. Just-in-time manufacturing was a hot concept, as was global sourcing of goods and production. Airports were becoming more important as hubs in the development of more-efficient industrial logistics. Kasarda, who would go on to become director of the Kenan Institute of Private Enterprise and Kenan Distinguished Professor of Entrepreneurship, came up with the idea of development zones tailored to companies needing fast shipping, including a landing strip long enough to accommodate large cargo jets. He envisioned businesses clustered on or near runways, enabling instant loading and unloading of goods from planes.

The type of company that would use such a site might be a logistics outfit like FedEx or a manufacturer like Boeing that would assemble high-value products from parts flown in as they were needed. Other companies would locate nearby to take advantage of the opportunities. As Kasarda saw it, the world would be dotted with similar airport developments served by giant cargo planes shuttling products and parts from one country to another. Since then, aerotropolis developments have sprung up around the world — the value of ex-ports shipped by air in 2005 was about $293 billion, $31 billion greater than the value shipped by ground transportation.

Kasarda spends much of his time jetting from one to another as an adviser. There’s one in Germany, others in the Philippines and China and a highly successful one in Fort Worth, Texas, developed by the city and billionaire H. Ross Perot. Memphis International Airport is anchored by FedEx, which has its headquarters there. The airport has an annual economic impact of $22 billion — about $19.5 billion from car-go. Successful ones also have developed in Denver and in Ontario, Calif., near Los Angeles. The idea behind them underpins the TransPark. But they have better ground connections than Kinston, plus the advantages of being in or near a major metro area.

How the TransPark ended up where it did revolves more around political and societal considerations than it does business. Kasarda’s concept was adopted by then-Gov. James Martin, who made it a key proposal in his 1991 State of the State address. The N.C. Department of Transportation commissioned a feasibility study, which came back with a glowing endorsement. If launched immediately, it reported, the project could result in 55,000 jobs by 1998. “The concept when it was presented was just a fantastic idea,” says Raleigh site-selection consultant Robert Leak Sr., a former president of the Research Triangle Park Foundation. In July 1991, the General Assembly created the North Carolina Air Cargo Airport Authority (now the Global TransPark Authority) and began shopping for a site. Eleven communities bid for it, including the Triad, Raleigh, Charlotte and several rural sites. Presentations and hearings followed as communities jockeyed for advantage.

As debate over the project unfolded, questions about which place held the most promise as a logistics supercenter competed against a very different question: Who was most deserving of the jobs the TransPark would produce. Should it go to a metro area and enrich a region already thriving? Or should underdeveloped parts of the state be given priority, even if it meant choosing a more difficult location?

The Triad and Charlotte had more infrastructure, but Kinston had poverty on its side, and in 1992, it won the prize. Money began flowing from the state and the Federal Aviation Administration, but environmental concerns about sensitive wetlands delayed major construction for years. That didn’t halt the effort to promote the project as an economic wonder. “Frankly, the TransPark was sold and too much hope was placed in it too quickly,” says Al Delia, president and CEO of North Carolina’s Eastern Region, the 13-county economic-development partnership based at the airport. “You can attract somebody with slick marketing, but they get to the substance fairly quickly. That substance is glaringly missing. The infrastructure wasn’t there.”

The Triad and Charlotte continued to develop their own airport cargo and industrial centers. Charlotte/Douglas International, which launched its Charlotte Air Cargo Center in 1991, steadily added businesses and traffic. Airborne Express and Burlington Air moved into new structures there in 1993. A new building was added for United Parcel Service in 1995. In the past few years, the state completed a leg of Interstate 485 near the airport, providing easier access for cargo coming from points south. Last year, freight carrier DHL consolidated four nearby offices into an 80,000-square- foot shipping center at the airport. Piedmont Triad International was developing as an aircraft maintenance and service center. Between 1991 and 1995, TIMCO Aviation Services built three hangars for its burgeoning commercial-aircraft maintenance operations, and the local company grew into one of the region’s largest employers. Wichita, Kan.-based Cessna Aircraft opened a service center in 1992.

The showdown came in 1998, when FedEx began looking for a site to build a Southeast regional hub. It seemed the right fit for Kinston, which fought fiercely to land it, even staging a rally at the airport that attracted 500. The TransPark touted its little-used runway as perfect for even the biggest cargo jets. Both Charlotte and the Triad, however, had superior rail and highway access. The Triad had other factors in its favor, including an established trucking center, with 100 companies operating in the region. Plus, its airport wasn’t as busy with passenger traffic as Charlotte/Douglas, which is US Airways’ largest hub.

FedEx ultimately picked the Triad, confirming one of the major concerns Kasarda now says he had about putting the TransPark in Kinston. “The battle for air cargo is won on the ground, not in the air,” he says, referring to the Triad’s rail and road access. The FedEx hub is scheduled to open in 2009. By the time all the improvements are complete, about $500 million will have been spent on it.

But Piedmont Triad isn’t the only airport where the market has proved even more powerful than the public money that went into it. Just up the freeway from the Queen City, Concord Regional — built in the ’90s as part of a nationwide wave of reliever airports to lessen congestion at their larger brethren — has become the industrial and commercial magnet that planners had hoped the TransPark would be.

In the late afternoon, from the cockpit of a landing plane, sun glimmers off the Bank of America tower and other downtown Charlotte buildings in the distance. Fifteen miles northeast of Charlotte/Douglas at Concord Regional, pilots made this turn or a similar one 65,000 times in 2006, landing and taking off from a 7,200-foot runway set in a suburban mix of homes, office parks and industrial buildings, some with their own taxiways to the runway. Airport Manager Richard Lewis singles out a twin-engine Convair 440 parked near the runway. “The owners say they can be in the air in 30 minutes anytime day or night. We always keep it parked toward the runway and never block it in.”

The plane, one of 180 based here, ferries parts to and from local makers to automakers on just- in-time manufacturing schedules. Other planes at the airport include the latest, fastest regional jets, a DC-9 airliner and ranks of corporate craft. Many are based here by business owners who want to avoid stackups in landing and taking off at Charlotte/Douglas. About 60% are connected to NASCAR-related businesses. Lowe’s Motor Speedway is only three miles away.

Roush Fenway Racing, which has five Nextel Cup racing teams —each with a budget as large as $25 million a year — bases operations in an industrial park at the airport. Nearby, Chip Ganassi Racing, which fields four Nextel Cup teams, plus cars for Indy and international racing, is building a hangar and shops that connect to the runway. Another racing team is constructing a wind tunnel, where teams from around the world are expected to fly in cars for testing. NASCAR built its $10 million Research and Development Center across the street from the airport.

“We’ve fed on each other,” Lewis says. “NASCAR says it never would have built the center if the airport hadn’t been here. But look around and you’ll see a lot of big hangars. They were built by local money. Like real estate, it’s a matter of location, location, location.” The airport is less than 15 miles south of the $1 billion North Carolina Research Campus being built in Kannapolis by Dole Food owner David Murdock, and it will be a key factor in attracting the more than 100 biotechnology companies expected to locate there.

As Concord Regional grew and Piedmont Triad continued the long process of getting the FedEx hub built, the TransPark still looked for that breakthrough tenant. It finally won environmental approval from the feds in October 1998 and began the final runway extension. It’s now 11,500 feet — longest in the state and one of the longest on the East Coast. Workers began building a better road to U.S. 70. Up went new buildings, including one for general aviation, a distribution center and a cargo terminal. Construction began in 2004 on a speculative 120,000-square-foot industrial building. A few aviation and military-related companies opened operations or began using the airport. But finding that one big company remained elusive. Three years ago, Boeing, the Chicago-based aircraft manufacturer, began shopping for a site to build a new passenger jet, since named the 787 Dreamliner. The $900-million project would employ 1,200 and spur millions more in related development and investment; it could transform the TransPark into a major industrial site.

This was the kind of project Kasarda had envisioned: a major manufacturer in need of an airport location with plans to assemble a high-value product out of parts and raw materials, many of which would be flown to the site. Kinston’s remote location wasn’t a problem; its long runway was a major plus. Nearby military bases would provide a steady stream of discharged airmen, soldiers and Marines trained in air maintenance. Landing Boeing was a high-stakes poker game, and North Carolina went all-in to lure the project to the TransPark. Incentives offered reached $534.1 million, but that wasn’t enough. In December 2004, Boeing announced it would expand operations in Everett, Wash., thanks to an eye-popping package worth an estimated $2.2 billion.

That was a major blow to the TransPark — and possibly a validation. Kasarda, citing conversations he has had with site-selection consultants, is convinced the TransPark might have won if the state hadn’t been so far outbid on incentives. “I was told the consultants recommended the TransPark out of 1,500 airports that put in bids. Boeing would never get that far if there wasn’t something there.”

Ultimately, an aircraft plant did come to North Carolina but went to Piedmont Triad. Honda, which had opened an aircraft research-and-development center there in 2000, announced in February it would build a HondaJet factory and hire 300. It was a far less ambitious project than Boeing’s, but it furthered the Triad’s goal of being the state’s primary industrial airport.

For the TransPark, these setbacks have been a reality check. The once-lofty goal of becoming a cargo supercenter that attracts multinational corporations has been scaled back. “The original view that we would have eight or 10 or 15 major Fortune 500 companies lining the runway, making widgets, flying them out, I don’t think that is what will happen there,” Delia says. “My own view is that smaller to midsize business is probably the place we need to be looking.” Darlene Waddell, executive director of the Global TransPark Authority, says the aim now is to find companies that might find the TransPark runway useful but would not be put off by limited road and rail access. “We are going to be target-marketing. We have not done that in past. We are going to be marketing to air-freight forwarders, maintenance repair companies, some manufacturing companies.”

That sense of resignation contrasts with the bold optimism in the Triad. In mid-June, Kasarda updated a group of the region’s business leaders on the airport’s future. Once FedEx and Honda complete their operations, he says, employment at the airport will be about 6,000. Other companies that will locate at the airport could triple that number. Across the region, the FedEx hub alone will spawn more than 20,000 jobs within 16 years. Drawn to it will be other logistics service providers, drug companies, semiconductor and computer makers and suppliers of fresh seafood, fruit and flowers.

This will be an aerotropolis, he believes. “It’s inexorable. The only question is how it’s going to look and function — whether it will be a well-planned and -marketed one or one that springs up haphazardly. Fast-cycle logistics should become the region’s new competitive tool. You’re not going to differentiate yourself by incentives. But there’s only a handful of places that have air-express hubs, and there are even fewer that have them serviced by major interstates.”

Feedback + Comments

First Name : 
Last Name : 
Company Name : 
E-mail address : 
Title of Article : 
Comment on this article :