Out in the country

Things are starting to look up down east, but itíll take more than a recovery to rid the region of rural poverty.

Eastern North Carolina has long been a political colossus and an economic runt. Its politicians typically fill the governorís mansion and key leadership positions in the General Assembly, but the stateís economic might is concentrated farther west in the Piedmont. On the bright side, the region was on track to lose a smaller percentage of its jobs last year than other parts of the state. There are other reasons for optimism. Traffic has picked up at the state ports, the Global TransPark air-cargo complex in Kinston finally has gained some momentum, and a buildup of military personnel should provide opportunities. James Kleckley is director of the Bureau of Business Research at East Carolina University.

BNC: Why hasnít Eastern North Carolina been able to transform political strength into an economic advantage?

Kleckley: In a lot of ways, itís not political strength that dominates but the character of the economy. We donít have major metropolitan centers. We donít have something the size of Raleigh or Charlotte. We have an abundance of rural communities, and those rural communities tend to be some of the hardest-hit economically ó not just from recession but over the years.

How will the move of aircraft-parts maker Spirit AeroSystems to the Global TransPark affect the regionís economy?

One, itís a lot of jobs. And you get the bigger bang for the buck with the bigger manufacturers. Now that the TransPark has landed a large client, maybe more will come. ĎWell, Spirit decided to go there; maybe we ought to look a little harder there, too.í When you land a big prize like that, hopefully you can develop some momentum and push the region forward. The major benefit probably will be in Lenoir and contiguous counties ó Pitt, Wayne and Craven. They will supply most of the labor.

Traffic at state ports in 2009 was on track for an increase over 2008, though not 2007. Will that growth continue this year?

The prospect of Spirit using the Morehead City port is certainly going to increase traffic. Part of any increase may be due to the marketing efforts of the ports. When you look at the downturn in the economy, you would expect a similar downturn at the ports. So if the activity is staying pretty constant, I would say that they are doing a good job of increasing market share.

Whatís the economic impact of East Carolina University and its medical school?

Itís extremely important to the region. You have an extremely developed telemedicine program. University Health Systems owns not just Pitt County Hospital but four or five of the smaller hospitals in the area. If you are in a rural area and you need more extensive health-care services, you will probably come to Pitt. The fact that we have wonderful health care here helps the entire region recruit and retain businesses.

Does health-care reform threaten the growth stimulated by the med school and hospital?

I donít think so. Iíve long believed that we really needed to address the health-care issue ó that it was as much an issue for individuals and businesses, in terms of controlling cost, as it was for hospitals. In a lot of ways, there are more implications for businesses and individuals that have to pay for health care than there will be for the health-care providers.

The military is in the process of transferring thousands of people to the region. When will the benefits begin to show?

We are already seeing benefits. Throughout the region and the state, people are looking at the military as an economic-development tool. Not just the fact that military personnel will increase, but whether we will get industries related to the military and grow those, too. Youíre going to see benefits in Onslow, Craven, Carteret and Pamlico counties.

A recent survey of employers suggests that only two major U.S. job markets have a better outlook for 2010 than Fayetteville. Is that just because of the military transfers or something else?

A lot of it has to do with the military. When you have that large military impact thatís going to stay there, it makes it more of a stable community. People in Fayetteville can play that stability to their advantage to bring in other industries. The thought behind the military task force is to bring not just military jobs but jobs that can serve the military. The region around Fayetteville is obviously a place that could take advantage of that.

How should government bodies balance the interests of fishermen, developers and the hospitality industry along the coast?

Itís a dilemma theyíve faced for a long time. The issue is how much development do you want on the coast, and how much can you feasibly support? Should you develop the barrier islands? In some of the counties ó Dare comes to mind ó its main economic activity is tourism. Itís taking advantage of those beaches. Thatís an issue that they deal with every day. Commercial fishing doesnít have nearly the economic impact that it used to. In the northern part of the North Carolina coast, you have to go through the Oregon Inlet, which is a chore. I donít think a lot of the big fishing boats are able to get through there anymore. An area like Wanchese that used to be pretty dependent upon fishing isnít nearly as dependent on that industry. Thereís kind of a parallel to traditional agriculture. In agriculture, thereís difficulty with the small farms. Weíre seeing more of the large corporate farming. Youíre seeing the same kind of thing in the fishing industry. Itís harder for that individual fisherman to make ends meet. We donít see as many fishing boats as we used to.

Should drilling for oil and gas be allowed off the coast?

Well, the fear is that if you drill off the coast youíre going to have oil spills. And if you have oil spills, it will keep the tourists away and devastate the local economy. But if the technology has advanced to the point where you can minimize the probability of the spills, there might be a situation where Eastern North Carolina could benefit financially from drilling. My guess is the drill rigs would be far enough out that you couldnít see them if you were lying on the beach, so that wouldnít be an issue.

Whatís the potential for wind-energy farms in the east?

A recent study looked at the places along the coast that could support wind energy. My understanding is that Duke Energy is going to put windmills in Pamlico Sound near Hatteras Island. Could it support the energy needs of Hatteras Island? If so, you could really turn that around as something positive in terms of being environmentally safe or sustainable. Business is picking up on this green aspect ó that you can make money out of it. What Iím seeing along the coast, from a tourism standpoint, is a sense that maybe we should look at that as a way to keep our economy alive, keep the environment clean and maybe help our local tourism industry.

What about manufacturing?

We donít have a lot of manufacturing in Eastern North Carolina. Lenoir County is an exception, and itís going to be picking up Spirit AeroSystems, so thatís certainly positive. I think nationally weíre going to start seeing manufacturing coming back over the next few years. Over the last 15 years, of course, weíve sent jobs overseas, but I think there is a recognition by a lot of people that we need to do things to keep those jobs. If we could start turning around the tide of manufacturing going elsewhere, thatís going to benefit Eastern North Carolina and the rest of the state.

Many farm and factory jobs are held by immigrants. Does that help or hurt?

The benefit is it keeps part of the economy going. But do the immigrants come and displace local people from jobs, or do they come in and fill jobs local people donít want? Thereís probably a little bit of both. Over the last few years, weíve seen the development of some small businesses that cater directly to immigrants, including grocery stores and restaurants. The jobs are created because people are coming in. The language barrier is certainly a drawback. Health care is one example. To effectively treat a patient who doesnít speak English, youíre going to have to have somebody in the room to interpret. I suspect you are going to see the immigrants changing to a permanent population. We are seeing more of them making Eastern North Carolina their home and starting businesses and so forth.

Whatís the outlook for agriculture?

As I mentioned, weíre seeing a transition to larger corporate farms. You used to have the small farms that provided income to the family. But weíre seeing, in some cases, you canít make ends meet doing that. Or thereís a lack of interest in the next generation. I was in one place last week where the farm had been in the family for years and years, but the man doesnít have any grandkids who want to stay in farming. Meanwhile, other parts of the economy have grown up around farming. Thatís true with tobacco in Pitt County. Pitt is still a large producer, but there are other things going on: the university, some of the major private employers in town. There are other opportunities for people.

What are Eastern North Carolinaís top infrastructure needs?

Transportation. Limited-access highways. To be able to drive from Raleigh to the port at Morehead City without hitting a stoplight. A similar thought is behind the expansion of U.S. 17, which will be an alternative north-south artery between the coast and I-95. If itís easier to move goods or people from place to place, you open up opportunity for others.

Overall, will the regionís economy fare better or worse than it did last year?

Hopefully, it will be better. Our health and vitality is dependent upon what goes on nationally, so if the national economy recovers, we will see recovery in Eastern North Carolina. I believe we are on the right track. Weíre not there yet, but we are going to see recovery in 2010. If we go back to the way it was, it still means the regionís unemployment rate is probably going to be higher than the stateís. There are eastern counties where it is extremely high. So the task gets back to how to help those economies overcome the real poverty problems they have.

Do you have a prediction for the regionís unemployment rate in 2010?

Right now, the unemployment rate in the Southeast regional partnership is less than the stateís. The central Eastern Regionís is less. The Northeast Commissionís is a little higher. But you have pockets in each that are certainly higher. I would like to think that in North Carolina weíre about as high as weíre going to get. We are at about 11% now. I really donít think weíre going to get higher than 11.5%. I would like to think weíre starting to turn around that unemployment rate. If thatís the case for Eastern North Carolina, weíll be about the same as the state average. Some counties will be a little better, but unfortunately there are too many counties that will be a lot worse. Thatís the big thing that we have to overcome here.