Economic Outlook - February 2008

Tony Copeland left the N.C. Department of Commerce in December after four years as assistant secretary for business development and trade. He’s now president of the international division of Raleigh-based Longistics Transportation Inc. At Commerce, he oversaw international trade and the state’s efforts to recruit and retain companies. From 2003 to 2006, the first three years of his tenure, the number of private-sector jobs in North Carolina grew 7%.

Why did you leave Commerce?

I had completed my mission, and the pipeline of jobs was full. I started the Commerce job on the eve of the filing of the largest bankruptcy in the history of North Carolina: Pillowtex. We had lost more manufacturing jobs than any other state.

You didn’t know it was going under?

No, that was my welcome present. People were really singing a song of doom and gloom. And there was a lot of finger-pointing, whether it was Asia bashing or trade-policy bashing. Things looked bleak. It seemed that North Carolina was suffering from an indiscriminate pounding as a result of global reallocation.

What was done to prepare for that?

The leadership in this state, from Luther Hodges to Gov. Easley, had done several things. They tried hard to provide an educated work force through the community-college and university systems, which are second to none. They put in a logistical infrastructure of highways second to none in the country. We have international airports. We have a superb rail system and are expanding our international seaport capacity.

Why are you getting into logistics?

Logistics are what moves commerce around the world. Every company, when it locates, has to have a work force and a logistical infrastructure that will allow it to move raw materials in and to move products out. In a global economy that becomes more important — especially now that our connections with Asia are turning into a very positive thing. We didn’t see that originally. North Carolina has the largest Chinese investment in America — Lenovo’s purchase of the PC division of IBM.

Does North Carolina’s central East Coast location help it much in a global economy?

Yes. We’ve got about 150,000 people here involved in the automotive industry. Much of that is in dealing with suppliers of parts. And that’s clearly because of our positioning, being able to have just-in-time delivery for those parts. One of the jewels in the crown of development during my tenure was the location of Honda aviation’s world headquarters in Greensboro. That happened because of our educated work force and geography. We’re beneath the flight paths of the whole East Coast. We’re within 1,100 miles of 80% of the customers in America, the largest economy in the world.

What changes did you notice in the state economy during your tenure?

The leadership in this state knew we were going to transition from an agricultural-and-manufacturing economy, but what did catch everyone by surprise is that it happened at such breakneck speed. Basically it just happened within a few years at the turn of this century. I don’t think we were prepared for that drama.

What surprised you most in your tenure?

The speed with which we recovered and attracted new jobs and new types of industries.

The state has expanded its use of incentives — even paying to retain jobs.

In 2003, we looked at what was happening, the indiscriminate pounding. In Caldwell County, where Google went, the unemployment rate was below 5% and then it went to like 15% in three years. There were a lot of people living lives of quiet desperation. The incentives were put in place by the current administration in a timely manner and allowed us to compete globally for companies, as the rest of the country and world was already doing. It put us on par. And we already had a trainable work force and logistical infrastructure in place.

How often did you reject companies seeking incentives?

I don’t have that number. The word ‘no’ was used many times. The administration has really focused on jobs meeting the county wage standards, and there has been a real disciplined approach to North Carolina’s incentives.

But companies have gotten incentives without meeting the average county wage.

Yes. Every situation deserves a thorough vetting. There’s a committee that oversees that process. All of the issues are taken into effect — the unemployment rate of the county, the economics of the county.

Not all companies that get incentives stay.

That’s right. Companies have to make business decisions based on the bottom line. And we’re in a period where business conditions can change overnight, where the value of the U.S. dollar is unusually low. So I would guess that many of these companies that are locating here via Europe are here because to sell their products in the United States, they have to come over here where there’s a favorable exchange. If that exchange rate were to change overnight for some reason, I’m sure they would have to reassess some of those decisions.

This century seems less stable for North Carolinians, economically, than the last.

Many of the companies that we recruited here are in industries that are very stable — if we look at what’s driving the economy and what’s growing today. North Carolina has been very smart in focusing on the next 100 years.

Private-sector employment has gone up, but in per capita income North Carolina has lost ground to the rest of the country since 1997. Should we worry?

Worry may be a little strong. When we see those things happening, we need to fine-tune our mechanism for delivering the kind of jobs that are going to improve that income stream. If you look at many of the jobs that have come in during the first part of this century, in the last three to five years, the income levels are exorbitant, if you look at GE, Lenovo.

Lenovo has cut back.

They cut back on some of the jobs, but they moved their corporate headquarters here. You look at Bridgestone, which is Japanese. They have over 2,000 employees in Wilson. They’re modernizing with over $200 million in capital investment. They’ll probably reduce jobs 100 or so. But that reduction will be through attrition. Meanwhile, the massive capital investment has made that company much more stable.

Why are we losing ground to the rest of the nation?

Probably because we’re still recovering from the first few years of this century. And some of the older workers have fallen out of the work force, and that transition has been very difficult for some people.

What might help Eastern North Carolina, which has traditionally lagged the central part of the state economically?

The development of the inner banks — the sounds and rivers along the coast. We’re seeing phenomenal growth there in retirement communities. You’ll see some other types of industries follow, including health care and other service industries. I think you’ll see clusters of development and knowledge-based industries around East Carolina University, Elizabeth City State University, UNC Pembroke, UNC Wilmington.

What about the Global TransPark?

The timing may have been off in building that.

How about the location in Kinston?

Well, the timing and location could have possibly been off. But the intent was to bring something to an area that had basically been left behind in the global transformation. Let’s hope its day will come. I’m not giving up on it.

What about the mountains, another region that has lagged economically?

Some of the same things. We see retirement communities. We see development of industries around their universities. We have Asheville. We’re seeing the aviation industry grow there. We’re also seeing the health-care industry develop there. Appalachian State, UNC Asheville and Western Carolina are going to be magnets for knowledge-based industries.

What are the state’s biggest economic challenges in the next 10 years?

Addressing the issues surrounding a 30% population growth. That means a sustained effort to improve our roads, airports and schools so they’re able to handle that. And we need to keep a positive business climate with low taxation on business.

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