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Win or lose, Panthers' Big Cat keeps it close to the vest

Spencer Campbell on February 2016 at 4:00:00 pm 
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Most journalists I know don’t read their stories once they’re published. Doing so just reminds them of all the things you could have done better. As in other professions, we move on and try to do better next time. But some stories haunt you. Not because you erred or because you misquoted someone, but because you had a chance to get at something important—and you failed. For me, that story was about Carolina Panthers owner Jerry Richardson.

Jerry RichardsonIt was my first feature for Business North Carolina, assigned soon after the 2011 NFL lockout, an event that did Richardson no favors. You can read my story for the particulars, but essentially Richardson, more than any other NFL owner, came out looking greedy and condescending—which didn’t jibe with the homespun, fan-first image he’d spent decades crafting. The lockout also arrived on the heels of Richardson canning his own sons. So it was a bad time for the Big Cat. But as I started reporting, Richardson’s fortunes began to change. The main reason: first-round draft pick Cameron Newton, who had led Auburn to a national championship.

I spent about a year writing and reporting the story. The number of interviews I conducted escapes me (Richardson, of course, refused to speak with me, befitting his history of only talking to friendly sportswriters), but I recall typing through 13 drafts. The result, I think, is a fine piece. Really.

What haunts me is what it could (should!) have been. Here’s arguably the most powerful businessman in Charlotte. His company is the Queen City’s standard-bearer nationally, probably more so than even Bank of America, now mostly run from Boston and New York. And yet … what do we actually know about him? I spent nearly 12 months reporting a profile on him, and I can barely recall the sound of his craggy voice. During my first or second staff meeting, I declared my intention to spend draft night with Richardson. My colleagues laughed. (Howled might be a better word.) I got the joke soon enough: Richardson is not interested in letting you inside. It was my job to crack his veneer; I barely scratched it.

Is Richardson the righteous diplomat who so desperately wanted to advance the reputation and notoriety of the Carolinas that he paid for his own stadium? Or is he the potential kidnapper, who insinuated that the Panthers might benefit from a fresh start in another city—unless taxpayers paid for upgrades to Bank of America Stadium? I can’t help but feel like the answer is somewhere in the stuff, most of which didn't make it into the story: his troubles at Flagstar (which you can read more about here), his first meeting with Cam Newton, his telephone call to a TV reporter who had dared criticize him, his decades-old relationship with Hugh McColl Jr., who as a junior NCNB banker help finance Richardson's fast-food business.  So on and so forth; both good and bad.

Before I left BNC, I attended a Panthers football game and sat a few rows below Richardson’s suite. He sat stoic and unmoving throughout the contest. (I may have watched him more than I watched Newton.) But after Carolina beat the Bears, fans lined up in front of him, reaching up on their toes to pay respects. Richardson reached down, grabbed their fingers, and said things I couldn’t hear.

More than a year ago, I moved to Colorado, which has to be the most beautiful place on earth. I love my job, I love my new friends, and I’m even learning to love skiing. And, yes, I’ll be rooting for the Broncos in Super Bowl 50. I do miss Charlotte — my friends, my church, the year-round golfing weather. But seeing the city rise up around the Panthers during their Super Bowl run (the dab! the pep rallies! Cam!) — this may be the first time I’ve yearned to be back in the Old North State. I’m missing all the fun!

So I console myself with the fact that it probably doesn’t matter what is underneath Richardson’s veneer. He's responsible for bringing professional football to the Carolinas, and helping transforming the Queen City into a world-class town. Maybe that’s all we need to know about Jerry Richardson.

Spencer Campbell edited and reported for Business North Carolina from 2011-14. Like most natives of the Longhorn State, and every graduate of Texas A&M University, Campbell fancies himself as a football afficionado. He is associate editor for 5280 (The Denver Magazine) in the Mile High City.

 

           

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Football pays off for ex-pancake and burger king Jerry Richardson

David Mildenberg on February 2016 at 7:00:00 am 
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Jerry Richardson’s success in building a model National Football League franchise is a remarkable story getting deserved international attention this week.

That success is a big contrast to the latter part of Richardson’s business career before he won an NFL football franchise. After building a large restaurant company, Richardson’s last several years running the business was marked by controversy and red ink.

Richardson’s business story started in 1961 when the former Baltimore Colts receiver and his partner Charles Bradshaw grew one Hardee’s hamburger joint in Spartanburg, S.C. in 1961 into a business that went public in 1969 and was sold 10 years later for $80 million to airline operator Trans World Corp. Eventually the business would sport more than 2,000 Hardee’s, Denny’s and Quincy’s company-owned and franchised restaurants.

In 1989, the Coniston Partners private equity firm paid $1.7 billion for Spartanburg, S.C.-based TW Holdings, the company led by Richardson. Coniston, like many other PE firms during those go-go days, could borrow lots of money, but didn’t show great skills at improving how a business operated. Debt-burdened TW lost money for 10 consecutive quarters, totaling more than $130 million, with Richardson at the helm.

In 1992, much larger PE firm Kohlberg Kravis Roberts & Co. invested $300 million to buy about half the company, aiming to succeed where Coniston had failed.

The deficits continued with Richardson still in charge, including a $1.7 billion loss in 1993, then the largest annual corporate loss in the history of the Carolinas. The loss included a $1.5 billion write-down of goodwill and other assets.

Things got  worse when the company, renamed Flagstar, faced allegations over racial discrimination at Denny’s restaurants. In May 1994, Flagstar paid $54 million to settle complaints with 295,000 aggrieved customers — the largest public accommodations settlement ever. The settlement came a year after the NFL awarded a franchise to a Richardson-led investor group for $206 million. (Or $338 million in 2016 inflation-adjusted dollars.)

It’s hard to believe now, given Richardson’s inspiring relationship with star Cam Newton and so many Panthers’ players, many of them African-American. But Flagstar’s reputation for racial relations once was as sour as a 1-15 NFL season.

In a 1996 story, Fortune magazine noted that only two of Hardee’s 200 suppliers were minority-owned, though a third of its customers were minorities. Fortune quoted Bill Boggs, a consultant hired by Richardson, expressing surprise over the company’s approach. “Jerry turned to me and said, `I’m sure you’re right about our being behind on diversity, but I just never thought about it,” according to Boggs. “The company was 20 years behind the curve and Richardson didn’t move nearly fast enough or deep enough.”

By then, Richardson was no longer CEO. He resigned in January 1995, then 58 years old, saying he wanted to devote more time to the Panthers and his family. Flagstar lost another $55 million in 1995.

When he left Flagstar, Richardson owned about 2% of its stock, or about $6 million. He leveraged that money and other funds secured during the previous 35 years to invest in the Carolinas’ new NFL team, with equity backing from the Belks, Closes and other iconic regional families. It’s turned into a world-beating investment with the team now valued at $1.56 billion — a nearly eight-fold increase since 1993, according to Forbes. More than half of the equity is owned by Richardson, according to various media reports.

Things didn’t turn out as well for other Flagstar investors. The company filed for bankruptcy in 1997, emerging a year later as Advantica Restaurant Group. It then sold its Hardee’s subsidiary to California-based CKE Restaurants Inc. Advantica changed its named to Denny’s Corp. in 2002. The publicly traded company, still based in Spartanburg, operates 1,710 franchised and company restaurants. Its stock market value is now about $760 million — about  half as much as the Carolinas’ favorite football team.

Moral of the story: There's a lot more money in football than pancakes and cheeseburgers.

 

 

 

 

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Real-estate expert forecasts record development in '16

Allison Williams on February 2016 at 5:00:00 pm 
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It would have been interesting to attend an Outlook on the Commercial Real Estate Market forum where Robert Verrone had more air time.

How is the outlook? "Cautiously bullish," said Sean Coghlan of real-estate services giant JLL on Thursday. Coghlan walked wine-sipping attendees, who filled most of a large ballroom at the Ritz-Carlton hotel in downtown Charlotte, through the statistics, found here. The ninth annual forum was sponsored by Charlotte-based law firm Katten Muchin Rosenman LLP and GreerWalker LLP, a locally based accounting firm. Frank Arado of Katten (pictured, left) moderated a follow-up question and answer session. 

Coghlan is head of investor research at one of the world's largest real-estate leasing and management companies, with $6 billion in revenues last year. So when he talks, people listen. Multi-family projects are reaching their peak, he said, but office and retail are on the rise. He predicts that investment will continue increasing this year, surpassing the heights of 2007.   

But if Coghlan and fellow panelist Chris Thomas, a retail development partner at Childress Klein, sounded optimistic, Verrone offered a warning note. Interrupting the Q&A discussing the merits of Google Fiber, he said, "This is the most polite panel in the world." In other words, with all of the challenges facing commercial real estate right now, a panel was busy discussing Google's plans to bring gigabit-speed Internet to Charlotte? 

“Real estate is a leveraged asset, and everyone who lends money on real estate is under pressure now,” Verrone said. "Something's got to give."

He even went as far to compare 2016 to 2006. In 2006, Verrone was helping turn Wachovia into the No. 1 underwriter of securitized commercial real estate debt. The program biography noted he managed about 600 employees and oversaw a debt portfolio valued in excess of $80 billion, including some of New York's most prominent skyscrapers. Verrone resigned just months before Wachovia was acquired by Wells Fargo & Co. in 2008 in a regulator-driven takeover that wiped out massive amounts of wealth, particularly in North Carolina. A Bloomberg Businessweek profile of Verrone in 2010, titled The Ballad of 'Large Loan Verrone,' noted that Wachovia reported commercial real-estate losses of more than $770 million in 2007-08. He now runs  Iron Hound Management Co., the firm he founded in New York in 2009.

On Thursday night, Verrone was just getting warmed up as the forum was winding down. Too bad. 

 

 

 

 

 

 

 

 

 

 

 

 
 

 

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Elkin hospital takes step to stay independent

David Mildenberg on February 2016 at 6:00:00 pm 
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Hugh Chatham Memorial HospitalNorth Carolina is down to about a dozen independent community hospitals, and Elkin’s Hugh Chatham Memorial Hospital doesn’t want to join the consolidation wave.

To remain a viable local force serving its region, Hugh Chatham is taking some initiative. It is among the first two North Carolina hospitals to join the Washington, D.C.-based National Rural Accountable Care Organization, a federally backed nonprofit that helps smaller hospitals collaborate to promote better, more cost-efficient health care. The other N.C. hospital joining the new limited liability corporation is the Northern Hospital of Surry County in Mount Airy, while eight independents in Kentucky and Tennessee are also members.

Accountable care organizations, or ACOs, is a health-care industry term for connecting patients with doctors, hospitals and so-called care coordinators, hoping to promote preventative health and avert expensive emergency-room visits and unnecessary hospital stays. The Affordable Care Act, or Obamacare, is built on a balance of expanded access to health care and reduced costs related to more preventative care. One way to make that happen is to reimburse hospitals and physicians based on their patients’ health outcomes, rather than just paying for every test or procedure.

So far, evidence suggests federal health reform has succeeded in enabling more people to have health insurance — but there’s little evidence that costs have moderated. For that to happen, ACOs will likely need to be part of the solution.

Hugh Chatham’s board has to be realistic as the health care industry consolidates, but joining the ACO is an important step to remaining a vital locally owned organization, President Paul Hammes says. The hospital has 81 beds and tallies about 5,000 overnight patients annually, while its 19 practices receive about 120,000 visits annually. It employs 28 physicians and is an important economic force in Surry County, which has a population of about 75,000.

Under the new ACO, Hugh Chatham will hire a “care coordinator” who will work with physicians’ offices and Medicare patients to encourage better communications. Hammes cites the example of a diabetes patient with a lousy refrigerator that doesn’t keep insulin at the proper temperature. “It would make more sense to buy the patient a refrigerator and make sure they are taking their drugs properly than to wait for a major incident,” he says.

Such common-sense approaches can reduce the cost of care for patients with chronic conditions by more than 20%, says Lynn Barr, chief transformation officer at the National Rural group, citing research by the Commonwealth Fund. The 10 member hospitals will also share data that helps physicians and staffs make better medical decisions.

“The level of commitment to [Hugh Chatham] by our board and community is extraordinary,” says Hammes, a former chief operating officer at Novant Health’s Forsyth Medical Center in Winston-Salem. He moved to the Elkin hospital in 2013. “There is a sense of pride and ownership, and our goal is to be the best community hospital in the nation.”

Sadly, more than 600 rural U.S. hospitals are threatened for closure because of worsening financial conditions, Barr says. Most of them are located in North Carolina and other states that have declined to expand their Medicaid insurance programs for the poor, a battle that has divided lawmakers for years.

“We've been inspired by the movement toward quality-based care, but we were concerned that rural hospitals are being left behind,” Barr says. Now more than 200 U.S. hospitals are taking part in efforts similar to the group that Hugh Chatham joined, she says.

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China gets some North Carolina love — and admonishment

David Mildenberg on January 2016 at 11:00:00 am 
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North Carolina received its most important guest of the year in Charlotte Wednesday and his name wasn’t Trump, Obama, Clinton — or even Lebron James or Stephen Curry.

Cui Tiankai, China’s ambassador to the United States, attended a reception to celebrate the Chinese New Year and encourage more ties between the Carolinas and China. More than 200 Chinese living in North Carolina and South Carolina attended the event at the downtown Sheraton, along with several dozen business and political leaders, including Gov. Pat McCrory, N.C. Rep Rodney Moore, Charlotte Mayor Jennifer Roberts, Commerce Secretary John Skvarla, Central Piedmont Community College President Tony Zeiss and Raleigh lawyer Larry Robbins. (Earlier in the day, Tiankai visited Waddell Language Academy, an outstanding Charlotte public school where Mandarin is taught.)

Even with its economic growth slowing to 6.9% last year, Tiankai said China still accounted for more than a quarter of the world’s output gains. He noted North Carolina ranks among the two or three leading centers of direct Chinese investment in the U.S., with a cumulative total of $5.5 billion. Among the big investors are computer maker Lenovo, meat producer Shangui International Holdings, which bought Smithfield Foods, and textile manufacturer Keer, which opened a $28 million plant last year just across the state line in Lancaster County, South Carolina.

China also relies on North Carolina’s educators — about 5,000 Chinese students attend colleges and universities here, he said.

China’s five-year economic plan emphasizes a shift from selling its products to overseas customers to more internal consumption, he said. That is a bit late for the hundreds of thousands of textiles, furniture and other manufacturing jobs lost in the Carolinas over the past 30 years. But the inward focus should enhance the ability of U.S. companies to export their products to the Asian nation, he said. 

The most interesting speechmaking involved U.S. Rep. Robert Pittenger. While McCrory, Roberts and others stuck to the “Let’s all get along” theme, the Charlotte congressman said China needs to clean up its act by stopping cyber attacks on U.S. business and abusing the human rights of too many Chinese. He noted that the U.S. has plenty of its own warts, citing rampant violence and the often vulgar, coarse nature of our media-obsessed culture.

Later, I asked Pittenger why he confronted the ambassador in such a convivial setting. “I believe in honest relationships,” he said. “There is no price that can be applied to the value of liberty.”

(If you want to know more about the current status of civil liberties in China, go here to read Human Rights Watch’s 2015 report.)       

So did the straight talk upset the ambassador? Not at all, Pittenger said. The ambassador invited him for further talks at the Chinese embassy in Washington, D.C.

 

 

 

 

 

 

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A discriminating fan experiences "f'in" Panthers mania

Cathy Martin on January 2016 at 12:00:00 pm 
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“It’s 49 to f'in 15, man!” I heard this at least a dozen times near the end of the fourth quarter of the NFC Championship Game Sunday night in Charlotte. Thanks to winter storm Jonas, which left my brother-in-law and his family buried under 2 feet of snow in D.C., and therefore unable to make the trip to Charlotte, I received a last-minute ticket to attend the game. The 20-something woman behind me seemed almost demure when she first took her seat. But after knocking back about three NoDa Hop, Drop ‘n Rolls, she was “going f'in nuts,” as she told her husband about halfway through the third quarter.

We’ve all been there – sitting directly beside or near an obnoxious or intoxicated (or both) fan at a game or concert. I have to admit, once the high-pitched screaming and near constant f-bombs started flying out of her mouth (I’m no prude, but there were fewer utterances of the word in The Wolf of Wall Street), I wondered a couple of times if maybe I wouldn’t enjoy this game a little more from the warm comfort of my living room sofa, with my dog asleep on my lap. (The falling temps didn’t help.) But it was the playoffs, and the Panthers were killing it, so I told myself to quit whinin' and let fans be fans.

Like the guy sitting in front of me, who superstitiously had to high-five everyone within three rows of him every time the Panthers scored, or got a first down, defensive stop, completed a pass, etc. etc. etc. After the first five or six times, my husband gave me one of those looks like, is this going to go on all night? But by the time Luke Kuechly intercepted the ball and ran 22 yards for a touchdown late in the fourth quarter, I found myself practically hugging this total stranger before I realized what was happening.

After college, in the mid-1990s, I lived in the Queen City briefly then moved out west for a few years. Whenever I told anyone I had moved from Charlotte, I’d get a quizzical look, and then “Oh, that pretty town on the South Carolina coast, right?” (No, not Charleston.) Or “That’s in Virginia, right?” (No, not Charlottesville.) When I returned to Charlotte a few years later, it took awhile (okay —  about 10 years) for me to really warm up to the city. It lacked the diversity of other places I had lived, and I found it hard to meet new people.

But Charlotte has changed, with folks moving here from all over the U.S. and the world, and we’re not just a buttoned-up, banking town anymore. Now that the Panthers have raised the city’s profile, maybe people from all over will finally know where Charlotte is — and what a great, exciting place it is to be right now.

And we’re going to the f'in Super Bowl, man!

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The governor's Johnston County turnaround

David Mildenberg on January 2016 at 7:30:00 am 
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There’s a good reason governors often struggle holding on to their office or moving up: They have to make very tough decisions while the Washington D.C. senators spend their time making speeches.

That’s obvious from Gov. Pat McCrory’s quick turnaround on CSX’s plan to place a $272 million plant in Johnston County that would speed the transportation of goods from the North Carolina ports to rail cars and trucks.

The project fits perfectly with McCrory’s repeated support for improved connections between Interstate 95 and the ports and his many speeches extolling the virtues of long-range transportation planning in a fast-growing state. When it was announced on Jan. 12, McCrory praised the project as an economic development winner.

But McCrory was supporting CSX’s plan before checking the local pulse of Johnston County. Key landowners there have no interest in selling their property to the railroad, even if the project has great economic potential for eastern North Carolina. They immediately turned to their elected officials, who have quickly denounced the project as a land grab foisted on the county without enough transparency. Not in my back yard!

On Tuesday McCrory said he didn’t think the project location was viable and said he would work with CSX to find another site. That will be interesting because CSX officials have repeatedly said they didn’t want to look elsewhere in Johnston County.

Railroads have been fighting land battles for more than a century, so the CSX honchos at the Jacksonville, Fla. headquarters probably aren’t too surprised by the ruckus. Like 'em or hate ‘em, railroads tend to get their way. If they didn’t, the U.S. economy would be mightily stunted. The railroads also may have the law on their side to push through the project, given North Carolina’s rules on eminent domain.

For McCrory, supporting the project would clearly enrage the conservatives who dominate Johnston County politics. Blocking eminent-domain land deals, and protecting property rights, rank among the highest priorities of many conservatives.

And McCrory can’t afford to anger any more Republicans than necessary. He’s already facing a major uprising in the heavily conservative areas north of Charlotte over the N.C. Department of Transportation’s contract permitting toll lanes on Interstate 77. So far the governor has stuck with the Charlotte Chamber and DOT Chairman Ned Curran and resisted calls for him to block the contract with Ferrovial SA, the toll-lane developer.

But that stance may cost McCrory several thousand reliably Republican votes in north Mecklenburg and Iredell counties in the November election. That’s a big risk, which he clearly does not want to see compounded by another revolt in Johnston County.

 

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Could Texas oil slump provide opportunity for BB&T?

David Mildenberg on January 2016 at 8:00:00 am 
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In 2009, BB&T entered Texas as part of its purchase of $20 billion in assets and $22 billion in loans from the failed Colonial Bank. The deal gave it a toehold in Dallas, which BB&T has since expanded to more than 120 Texas branches by opening its own offices and acquiring others from Citigroup and other lenders. The timing seemed shrewd as Texas, the second-largest state, led the nation in job growth and economic activity for much of the past decade, bolstered by soaring oil and gas production. Texas was, literally, the Next Big Thing for Winston-Salem-based BB&T.

As you may have noticed, though, energy prices have plummeted and Texans have lost a bit of that trademark swagger. Dozens of oil companies are scrambling to survive, houses aren’t selling as well in Houston, Midland and other energy-dominated cities and fears of a prolonged slump in prices and company valuations is creating concern throughout the state.

So how is BB&T faring in Texas? CEO Kelly King and other bank executives told analysts last week that there’s no reason for alarm over the company’s move into the oil patch. With $1.4 billion in loans to energy companies, “we have no delinquencies, no losses and no non-accruals.” King said.

It’s a pretty remarkable achievement, because it's common for new banking entrants to make the poorest lending decisions because of a lack of experience or an effort to grow too fast. BB&T appears to have avoided that fate, so far. The bank has a 5% reserve in case some of those loans turn sour, CFO Daryl Bible said. King added that two-thirds of the loans are for “upstream” companies, namely those that explore and drill for oil and gas; 30% are for “midstream” companies that transport, store and market the product; and only 3% is with services companies, which repairs wells and other parts of the system. The latter companies are often the first to suffer when oil prices decline.

For those who have followed BB&T for decades, the Texas experience is consistent with the company’s methodical, conservative lending approach that has left it with the capital to pounce when rivals struggled. Much of its growth in the 1980s and ‘90s involved almost risk-free takeovers of failing savings and loans. More recently, it snapped up Colonial in a deal that appears as lucrative as Wells Fargo’s much larger 2008 purchase of Charlotte-based Wachovia Corp. 

BB&T is now focusing on integrating its acquisitions of two Pennsylvania-based banks that extend its operations in slow-growing, stable mid-Atlantic markets. Those deals cost about $4.3 billion. The talk about much expansion in Texas has mostly died down.

But if the energy sector keeps stumbling, taking down some of Texas’ lenders in the process, it wouldn’t be surprising if BB&T saw an opening for a bigger step into the Lone Star State.

For a more in-depth, more skeptical look at BB&T, here's bank analyst Josh Arnold's explanation on why BB&T stock is trading at its lowest level since May 2013:  http://seekingalpha.com/article/3833856-bb-and-ts-yield-enough-overlook-glaring-flaws

 

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Muggsy's still got it

Allison Williams on January 2016 at 12:30:00 pm 
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It's been 15 years since Tyrone "Muggsy" Bogues played professional basketball, but the NBA's smallest player still knows how to bring in a big crowd. The stars of the day were the "MVPs" of Bogues' nonprofit, Always Believe Inc., and guest speaker Kenny "The Jet" Smith, another retired pro (and UNC Chapel Hill standout in the 1980s) who now works as a sports analyst for TNT. Smith auctioned a visit to the set of his show to winning bidder and former Carolina Panthers player Steve Smith. NBA All-Star Eric "Sleepy" Floyd was on hand, too. (Where can I get a cool nickname?) But even these sports stars could not claim the limelight. That honor belongs to Bogues, easy to pick out among Floyd, Steve Smith and Kenny Smith, below. 

 

Tables were still full at the end of a nearly two-hour luncheon Wednesday at the Harvey B. Gantt Center in downtown Charlotte to watch Bogues hand out awards and listen to his brief remarks. Recipients are:

  • Jessie Cureton, chief consumer officer for Novant Health (Robyn Hamilton, Novant's director of corporate and sports partnerships, accepted on his behalf),
  • Reggie Isaac of Microsoft, which introduces children to computer science through its YouthSpark program,
  • Brian Lee of sneaker brand Reebok and
  • Mike and Wendy Kahn, owners of the Charlotte Checkers ice hockey team, who have given millions to benefit children and families in need, Bogues said. 

Michael Kahn, upon receiving an award and a basketball mounted in a glass cube, said it was the first time he had ever been able to look a NBA star eye to eye. It's difficult not to marvel at the 5'3" star dwarfed by players who easily top him by a foot or even two. (See our photo collage, below) Bogues enjoyed a 14-year NBA career, scoring more than 6,800 points before retiring in 2001. Most notably for North Carolinians, the small player with the huge grin -- and former Wake Forest University star -- helped steer a newly-formed Charlotte Hornets in the late 1980s and into the 90s. Folks coming of age in that era (ahem) might also recognize him from his cameo in the 1996 cult classic movie Space Jam with animation star Bugs Bunny and the real-life Michael Jordan, Patrick Ewing, Charles Barkley, Shawn Bradley and Larry Johnson. What, you didn't see it?! Jordan gets kidnapped by Bugs and friends in order to lead them in a basketball game against conquering alien forces … oh, never mind.

Today, Bogues runs Always Believe with his daughter, Brittney Bogues. Daughter and father stand together, left, in the photo, right. The organization, which helps at-risk youth, began before Muggsy Bogues' retirement but when his mother died in 2001, Bogues said, he put it on the back burner. Things changed after Brittney finished college in 2009 and joined forces with her dad who said they hope to build an after-school center in Charlotte. This week's luncheon was the first of its kind for the nonprofit. A video during the meal included testimonials from some of the children Always Believe has helped. "I was one of those kids," Muggsy Bogues said. For him, "Basketball was a safe haven." Bogues said many of the kids helped by Always Believe don't have the same opportunities.

 

 

 

 

 

  

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BofA stock slides after earnings report

David Mildenberg on January 2016 at 7:00:00 am 
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Bank of AmericaBank of America Corp. released its annual financial results Tuesday, showing that the largest North Carolina-based public company is past its recession-era woes and ready for a big bounce once interest rates increase. Investors were so impressed with the $16 billion in annual profit – the best showing in a decade — that shares declined 1.5%, with the company’s stock now trading at the lowest level since 2013.

Sadly for BofA shareholders, the bank still gets little respect because chances of higher rates have lessened due to the slumping stock market, depressed oil prices and China’s slowing economy. Until rates rise and BofA can boosts its net interest margin — the spread between what it pays on deposits and charges on loans — investors seem uninterested in bank shares.

Mixed in the annual filing were some interesting facts about the company, which employs more than 15,000 people in Charlotte:

  • The bank has 13% fewer branches than it did in 2012. Total deposits have increased 8%.

  • 15% of deposits are now made via mobile devices, reducing the need for bank offices.

  • The bank has 11% fewer employees than a year ago — an 11,000-person reduction. About half of the reduction involved fewer people working out poorly performing mortgages.
  • A lot of Wall Street analysts asked how BofA planned to cut more costs and staff  — no surprise there. None of them live in Charlotte.

  • CEO Brian Moynihan pledged to keep pressing on expenses. He said the bank paid $130 million in severance in the fourth quarter.

  • The bank charged off a half of one percent of its loans last year. The charge off ratio has declined by two-thirds in four years, reflecting tighter credit standards and a better economy.
  • Even so, total charge offs equaled $4.3 billion — a lot of bad debt by any measure.

  • Total consumer deposits increased 15% over the past four years, to $809 billion. Low interest rates and all of the bad publicity afflicting BofA haven’t stopped people from dropping money into the bank’s vaults.

  • BofA pays no interest on 79% of its business customers’ deposits, which total $308 billion.

  • Credit card losses are running at record low levels, Moynihan said.
  • If oil prices stay at $30 or less for nine straight quarters, BofA expects it would suffer $900 million in losses from loans to energy companies.

  •  But lower oil prices promises to bolster consumer spending, Moynihan said.

  • Moynihan says BofA is targeting a 12% return on equity. During the years in which Hugh McColl and Ken Lewis ran the bank, a 15% ROE was a common target, but low interest rates have skewed that measurement.

  • BofA’s shares fell 5.9% in 2015, and have declined 16% so far this year.
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Can Qorvo reverse the slide?

David Mildenberg on January 2016 at 9:00:00 am 
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Even in a bad stock market, Qorvo has proven to be among the most disappointing North Carolina-based stocks.

The company was formed on Jan. 1, 2015 through the merger of Greensboro-based RF Micro Devices and Hillsboro, Ore.-based TriQuint Semiconductor. Most of its revenue stems from selling chips for Apple’s iPhone and other smartphones – a truly great opportunity in 2016. Last June it was added to the S&P 500 index, a prestigious listing.

But shares, which started trading at about $69 when the merger took effect and topped $87 in June, closed Friday at $36.60, including a 30% decline over the last month. Sales of iPhones haven't matched expectations in recent months, damaging many companies that make its components. The dip accelerated last week when Qualcomm said it had formed a partnership with Japan’s TDK that experts said would compete directly with Qorvo and other companies that make chips for smartphones and other mobile devices.

Qorvo remains a favorite of tech industry analysts with 17 of the 21 people who follow the company rating it as a “buy.” Earnings per share are expected to increase 21% over the next year.

Qorvo’s success is important for Greensboro, where it plans a $25 million expansion that is expected to add 100 jobs within three years, at average pay of $80,000 annually. The expansion includes a 150,000-square-foot plant next to corporate headquarters. To entice the expansion, state and local officials pledged more than $1 million in incentives.

Analysts have an average one-year target price for Qorvo of $59, or a 60% gain. Let's hope smartphones keep flying off the shelves, to Qorvo's benefit.

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How will Blue Cross restore customers' trust?

Allison Williams on January 2016 at 7:00:00 am 
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The new year dawned with a scary question: Did I have health insurance?

Chances were good. One of the fortunate 49% of Americans, I'm offered health insurance through my employer, the owners of this magazine. I filled out the paperwork to leave my husband's plan on Dec. 31 and join Blue Cross and Blue Shield of North Carolina on my own. But Jan. 1 arrived without a health insurance card. No letter. Nothing. Should I double up on my portion of good-luck black-eyed peas and collards and hope for the best this New Year's Day? #hoppinjohn

 

Turns out, I was a victim of bad timing. Thousands of customers had it much worse, accidentally enrolled by Blue Cross into the wrong health plans. Blue Cross drafted bank accounts for incorrect amounts, often overcharging. Most of the people affected are insured under the Affordable Care Act, but others on individual policies were also swept up in the chaos. As customers began to suspect problems, they flooded call centers, which reported a 400-500% increase in traffic.

CEO Brad Wilson apologized in a video, in personal phone calls to customers and on Blue Cross' website

But has Blue Cross really owned up to how widespread the problem really was and still is? Wilson said the problems affected 1% of its 3.9 million customers. But how many others like me were indirectly affected, awaiting subscriber cards? Days before news of the problems broke, I was astonished when a recorded voice on the other end of Blue Cross' customer service line informed me that the insurer was experiencing technical problems. Click. Multiple follow-up calls put me on hold for more than an hour. One woman reportedly waited seven hours on hold.

Customers took to social media to complain. 

Angry posts filled the insurer's Facebook page from frustrated customers caught by what they saw as Catch-22 suggestions. A callback option would save long waits on hold - but only until a daily queue was filled. Checking coverage online only worked if you had a subscriber ID. Customer service hours that mostly begin at 8 a.m. and end at 7 p.m. further infuriated commenters. 

When I reached a live (and amazingly upbeat) customer service representative who sympathized with my frustration that I couldn't get an answer to a simple question - was I covered? - I was still shuttled to different call centers and, like others, disconnected more than once in the process. I was told that I needed to talk to someone in billing. Billing told me I had reached the department handling individual policies and needed to talk to someone who handled group policies. Didn't they have different phone numbers for these departments? No, I was told.

I eventually gave up. The insurance card I had been waiting for arrived on Jan. 9. I felt like Willy Wonka receiving the golden ticket.

Despite the several hundred million dollars Blue Cross invested in IT provider Trizetto, which was acquired by Cognizant Technology Solutions Corp in a $2.7 billion deal in 2014, my reassurance came the old-fashioned way, by U.S. mail.

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LendingTree topples 29% after raising growth estimates

David Mildenberg on January 2016 at 6:00:00 am 
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Doug LebdaIn Business North Carolina's annual “Best stocks for 2016” feature, we asked five North Carolina investment pros to offer their three favorite stocks — and one to avoid. Charlotte asset manager Don Olmstead of Novare Capital Management suggested investors be wary of LendingTree LLC, noting it had tripled over the past three years and “its high valuation implies high expectations.”

Olmstead proved prophetic Wednesday as LendingTree (TREE) tumbled 29% on another bad day for stocks. The Charlotte-based company this week said it expects to report annual revenue growth of 51% when it releases earnings later this month. Meanwhile, its earnings before interest, taxes and depreciation should increase about 80%, the company said.

“Both our mortgage and non-mortgage business continued to perform exceptionally well in the fourth quarter," said Doug Lebda, founder and CEO said in a statement this week. "Our mortgage business continued its growth trajectory through what is typically a seasonally-challenging period and despite market fears over rising interest rates. Additionally, we continue to see new growth drivers emerge and we're particularly pleased with the performance in our credit cards and home equity marketplaces.”

The comments obviously didn’t impress a lot of investors of the Charlotte-based company, which the Motley Fool investment website calls “somewhat of a leveraged bet on the greater online lending business.”

The company made a presentation at an investment conference Wednesday, prompting Motley Fool to suggest “one can only speculate about what might have slipped during conversations with investors and analysts.” LendingTree’s website did not include any presentation materials for the conference.

The company is not aware of any reason to justify the decline, spokeswoman Megan Grueling says.

At Wednesday’s close of $61.14, LendingTree still trades more than 40% higher than a year earlier. Shares traded for less than $2 during the 2008 financial crisis, but rocketed as high as $133 last spring.

Lebda owns 15% of LendingTree’s shares, according to a November filing.

Close observers may remember LendingTree as the company for which N.C. Governor Pat McCrory and U.S. Rep. Mark Sanford, a former South Carolina governor, briefly served as directors.

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Investment startup could be just what the doctor ordered

David Mildenberg on January 2016 at 8:00:00 am 
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Lee RobertsN.C. Budget Director Lee Roberts left state government last week to join a startup asset management company called SharpVue Capital, whose parent company is Medical Mutual Insurance, the Raleigh-based company that sells medical malpractice insurance to more than 10,000 physicians in 27 states. As its name suggests, Medical Mutual is member owned, meaning the docs are sharing the malpractice risk with each other, rather than paying a specialty insurer for the coverage. And they share the profit.

SharpVue plans to manage part of Medical Mutual’s investment portfolio and accounts of its physician members, along with outsiders, according to CEO Dale Jenkins. The company will use ETF model portfolios and alternatives such as real estate and private equity. Its invested assets totaled $438 million at the end of 2014, according to the most recent annual report.

About 10 institutional investors now manage Medical Mutual’s assets, including representatives of First Citizens Bank, Morgan Stanley and Wells Fargo. The goal is to shift those assets to SharpVue over time, Jenkins said.

“Our whole goal is to help physicians in a variety of ways and many were saying we would like you to do more,” Jenkins said Tuesday. The company already owns about 30 commercial-real estate properties stretching from Atlanta to Richmond, Va.

SharpVue will be led by Roberts, Matt Mongia and Geremy Conner, with a staff of about 10 hired later this year, Jenkins said. It received SEC approval as a registered-investment advisor last year.

If SharpVue can start managing a fraction of the assets of those 10,000 doctors, it’s a pretty interesting idea that could produce a player among the state’s investment management firms. For example, if a fifth of Medical Mutual’s members invested $200,000 each with SharpVue, the company’s assets would top $500 million, in addition to the company's money (Many docs in 2016 have $200,000 laying around, right?) Certainly existing investment advisers will work to retain their doctor-client’s assets. But Roberts and SharpVue will have an interesting value proposition. 

             A quick look at Medical Mutual’s  2014 annual report showed some interesting information:

                - The company has 10,020 physicians in 27 states, a 10% gain from the previous year.

                - Gross premiums are about $100 million a year over the past four years, with net investment income in the $12 million to $15 million range.

                - Assets topped $1 billion in 2014.

                - Members equity totaled about $362 million on Dec. 31, 2014.

                - Net income was $30 million in 2014.

 `              - They paid total claims of $44 million for medical malpractice in 2014, 12% less than a year earlier. Six claims topped $1 million.

                - In 18 malpractice cases that went to trial, 15 resulted in defense verdicts.

                - The company’s board chairman,Thomas McCoy, is a hip and knee surgeon at OrthoCarolina in Charlotte. 

 

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Spellings picks Boston Consulting to give UNC a close look

David Mildenberg on January 2016 at 11:15:00 am 
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Margaret SpellingsOne of Margaret Spellings’ first decisions as UNC President — she starts officially in March — was to recommend the hiring of Boston Consulting Group to review the UNC System’s operations, the News and Observer reported. Sounds like a smart move, particularly because some unidentified Mr. X or Mrs. X is picking up the $1.1 million tab. (Free lunch at Price’s Chicken Coop if you identify the donor first,  before the rest of the press herd.)

BCG is a hotshot consulting firm that attracts scores of resumes from high-achieving college grads, who then spend a few years honing their strategic skills working 70-hour weeks on projects such as the UNC review, before many head off into corporate America. It has annual revenues of $4.5 billion and ranked second in Fortune's ranking of "Best Companies to Work For" in 2015. One of the most notable BCG alumni in North Carolina is Red Hat Inc. CEO Jim Whitehurst, who also worked as a top executive at Delta Air Lines before making the move to Raleigh.

Look for a lot of attention to be paid to this line in the N&O story: State audits show that spending on salaries and benefits in the General Administration increased by 21% from 2010 to 2014.

One suspects the analysis of UNC will closely track this report filed by BCG last year on key trends in higher education: https://www.luminafoundation.org/files/resources/five-trends-higher-education-apr-2014-tcm80-157815.pdf

The final paragraph in the 2014 BCG report notes, “Rising pressures are driving universities and colleges to transform themselves so they can remain in business. The array of pressing challenges requires education leaders to act with unprecedented strategic clarity and vision in order to seize the opportunities that lie ahead.”

Let's hope we get more than that for $1.1 million.

 

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Parker Poe marking 50 years in Raleigh

Press release on January 2016 at 10:00:00 am 
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2016 marks the 50th anniversary of Parker Poe Adams & Bernstein LLP in Raleigh. The law firm, known for its general corporate, litigation, environmental, tax, real estate, lending and public policy practices, boasts a staff of 98 in its downtown Raleigh PNC Plaza office. With firm roots dating back to the late 1960's, Parker Poe attorneys have made major contributions to the growth and development of Raleigh and the greater Triangle community.
 
Parker Poe will celebrate its golden anniversary with a series of community events. To recognize Parker Poe's history and overall contributions to Raleigh, the firm has partnered with the City of Raleigh (COR) Museum to curate a special installation highlighting the firm's role in the City of Oaks over the past five decades. The installation will feature exhibits and banners of historical milestones, and will be on free public display in the City of Raleigh Museum lobby from January 15 through the end of the month.
 
The installation will be previewed at a private Parker Poe cocktail party on January 14 for 300 invited guests including clients, business and community leaders, and current and former employees. Local theatre actors portraying area historical figures including Sir Walter Raleigh and Dorothea Dix, will be on hand to provide entertainment and interact with guests.
 
To reaffirm the firm's commitment to Raleigh, Parker Poe will work with the City of Raleigh Parks, Recreation and Cultural Resources Department to make a donation toward the redevelopment of Moore Square, one of the founding historic squares of the city.
 
"Parker Poe's 50th anniversary celebration highlights the tremendous work the firm has done since opening its doors in Raleigh in the 1960s," says Kevin Chignell, Parker Poe's Raleigh Office Managing Partner. "We are extremely proud to be citizens of this great city. With a rich history and tradition of excellence behind us and a tremendously talented group of attorneys, we look forward to continued service as leaders in the Raleigh community and across the state."
 
Milestones for Parker Poe's Raleigh Office include:
•       1965 - The firm is founded as Sanford and Cannon, begun by former North Carolina Governor Terry Sanford
•       1973 - Dan Blue joins Parker Poe and is the first African American lawyer at a major law firm in the state of North Carolina
•       1975 - J. Allen Adams serves in the North Carolina House of Representatives for five terms
•       1982 - Catharine Biggs Arrowood becomes the first female partner at Parker Poe
•       1990 - Parker Poe Thompson Bernstein Gage & Preston merges with Raleigh firm Adams, McCullough & Beard
•       2001 - Charles Meeker is elected Mayor of Raleigh and goes on to serve five consecutive terms in office
•       2007 - Russell Killen is elected Mayor of Knightdale and serves in that capacity for eight years
•       2010 - After a nearly ten-year project led by Charles Meeker, Fayetteville Street reopens to traffic, marking the revitalization of downtown
•       2012 - Parker Poe receives the Medal of Arts from the Raleigh Arts Commission, the City of Raleigh’s highest arts honor, for its lifetime extraordinary achievement in support of local arts
•       2012 - Raleigh Hall of Fame inducts J. Allen Adams, Retired of Counsel, for his career in law, public service, and civic leadership and his powerful advocacy for equality and justice, arts and education and cultural institutions serving the City of Raleigh and State of North Carolina
•       2015 - Raleigh Hall of Fame inducts Charles Meeker for his role in the modernization of Raleigh
 
Parker Poe, through legal and charitable work, continues to play an important role in the growth and prosperity of the City of Raleigh. Parker Poe attorneys are involved with economic and civic organizations in the city, and serve on numerous boards including Advanced Energy, Alliance of AIDS Services Carolina, Burning Coal Theatre Company, CAM Raleigh, Carolina Ballet, Equality North Carolina, Finance and Administrative Legislative Committee, Governors Commission to Modernize State Finances, Greater Raleigh Chamber of Commerce, Marbles Kids Museum, North Carolina Economic Developers Association, North Carolina League of Municipalities, North Carolina Symphony, Raleigh Transit Authority, Urban Land Institute, and Wake County Mayor's Association.
 

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Which NC stocks took biggest hit in first week

David Mildenberg on January 2016 at 9:30:00 am 
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The stock market’s historic, bloody first week of trading took out 10% or more of the market value of about 15 of North Carolina’s publicly traded companies.

Worst hit was drug developer Cempra (CEMP), down 30%. Other big losers included building-materials dealer Stock Building Supply, (STCK) at 17%, exterior-siding company Ply Gem Holdings (PGEM), 16%, grocer Ingles Markets (IMKTA), 15% and semiconductor maker Qorvo (QRVO), 13%. The two biggest N.C.-based banks got slammed, with Bank of America (BAC) losing 10% and BB&T (BBT), 9%.

Among the companies bucking the downturn were cigarette maker Reynolds American, community bank Park Sterling and snack maker Lance, each gaining 2%.

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Snyder's-Lance skips stock market slide, and Fresh Market refreshes management suite

David Mildenberg on January 2016 at 7:00:00 am 
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Some things to know about interesting North Carolina businesses and people

 

-- Thursday was a horrible day for investors, but there was at least one silver lining amid the gloom: Snyder’s-Lance Inc. (LNCE) gained 3.6% to $35.09. The Charlotte-based company, which has traded between $29 and $39 over the past year, was recently cited as one of the five best U.S. consumer stocks by Gabelli & Co., a New York investment company. One guesses that investors also like Lance because they expect to be eating a lot more crackers this year after seeing their accounts shrink rapidly in the first week of trading.

 

-- Four of the seven members of the N.C. Utilities Commission have now been appointed by Gov. Pat McCrory after former Revenue Secretary Lyons Gray was tapped Thursday to replace Susan Rabon. Gray, a Reynolds family heir with a long record of public service, joins three other McCrory appointees: retired engineer Don Bailey of Monroe, High Point PR man James Patterson and former state representative and retired insurance agent Jerry Dockham of Denton. Others appointed by former Democratic governors Mike Easley or Beverly Perdue include Chairman Edward Finley (who was also reappointed to his seat by McCrory), Greensboro lawyer ToNola Brown-Bland and former Department of Crime Control head Bryan Beatty.

It’s a nice government gig, paying about $140,000 a year, while lacking the pressure and excitement of past years when there was more vigorous competition in the telephone, electric and natural-gas industries. Consolidation and deregulation has taken power away from the commission, which over the years has featured some more aggressive personalities. Reduced newspaper coverage of state government because of the financial problems afflicting the press also have led to less coverage of the commission, giving it a lower profile.

 

-- Greensboro-based The Fresh Market Inc. (TFM) refreshed its management this week, appointing Pamela Kohn as executive VP and chief merchandising officer. She is responsible for merchandising, marketing and supply chain efforts, along with what the company calls “enhancing the customer experience”

Kohn will report to Rick Anicetti, who became CEO in September. Buyout rumors constantly circle Fresh Market because of its sluggish stock-market performance and heavy institutional ownership: Columbia Wanger Asset Management held about 10% of shares as of Sept. 30, while Vanguard and Champlain Investment Partners each had 6.5%. The company went public at $35 in 2010. Shares closed Wednesday at $22.79, down from a 52-week high of $42.

Fresh Market needs a lift as it fights increasing completion at the higher-priced end of the supermarket industry. Only four of the 20 analysts tracking Fresh Market now rate it a buy with a consensus forecast of flat earnings per share in 2016-17.

Kohn brings big-company experience to Fresh Market, which operates 183 stores in 27 states. She most recently worked for 12 years at Wal-Mart, heading the perishables business at the giant retailer. Earlier in her 20-year-plus career she worked as chief merchandising officer at Salisbury-based Food Lion.

 

-- Charlotte-based Enpro Industries (NPO) is one of the least sexy $1 billion market-cap companies based in North Carolina, making sealants, components for compressors and braking systems, and other nuts and bolts stuff used by manufacturers. It was spun off by Goodrich Corp. in 2002 and gets about half of its sales from overseas.

Maybe nuts and bolts are nice investments during stormy days on Wall Street. All six analysts that follow the company rate it a buy and they have a median price target of $67 – 49% higher than Thursday’s closing price of $45.13. -- it gained 9% on Wednesday, then dipped 4.5% Thursday. (It traded as high as $70 in the past year.) Enpro’s board includes two veteran Charlotte businessmen: David Hauser, a former CEO of Fairpoint Communications, and Bernard Burns, a lawyer with McGuire Woods and former senior executive at United Dominion Industries Inc. 

 

-- A Morgan Stanley report Tuesday noted that “since 1960, the S&P 500 has posted a loss in January in 23 years, and in those 23 instances, the S&P 500 went on to finish the year positive more than half of the time. Broadly speaking, weakness in January does not have any outsized significance on how markets perform over the rest of the year, and should not be looked at as a prognosticator for the future direction of equity markets.” Nice try, but still not enough to make one feel much better about the worst first-week showing by the stock market in many decades.

 

-- WRAL.com broke an interesting story this week about Gov. McCrory’s recent meeting with Duke Energy CEO Lynn Good and other company officials. Given the governor’s efforts to distance himself from Duke after the coal-ash debacle, it was a curious decision. But it also made me wonder why Duke would have put the governor in such a tenuous position. If the nation’s largest electric utility asks for a meeting, what is a governor supposed to do?

I posed that question to a friend who has been a keen observer for Duke for decades — and is skeptical about the skills of McCrory’s PR advisors. His response:  “I would have told the governor to say sure, but let’s invite some folks from Dominion Resources, Piedmont Natural Gas and some muni systems. Then a PR guy could have called the News & Observer’s Under the Dome crowd and note, “Hey, the gov is meeting privately with some utility execs to discuss the state’s energy needs and the role of utilities in economic development. Just wanted you to know.’”

Pretty smart advice, but obviously not what happened. Instead, the private meeting with one company guarantees that highly partisan criticism blaming the governor for crony capitalism will continue through the November election.

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New sheriff in town overseeing North Carolina budget

Press release on January 2016 at 5:00:00 pm 
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Raleigh, N.C. - Governor Pat McCrory announced two cabinet-level personnel changes today.
 
At an Executive Mansion ceremony, Governor McCrory announced the appointment of Jeff Epstein as North Carolina’s Secretary of Revenue to replace Lyons Gray, who the governor had appointed to serve on the North Carolina Utilities Commission. Gray's immediate move to the North Carolina Utilities Commission is an interim appointment to replace Susan Rabon who resigned effective January 1. The governor also named Industrial Commissioner Chairman Andrew (Drew) Heath to succeed outgoing Budget Director Lee Roberts who is returning to the private sector.
 
“Jeff Epstein and Drew Heath will continue the high standards of excellence and leadership that have been set by their predecessors,” Governor McCrory said. “Lyons Gray will bring his considerable experience and common sense wisdom to the utilities commission, a regulatory body that affects nearly every North Carolina citizen. Lee Roberts will be helping to create jobs and invest in our state as he builds a new investment management business. I’m grateful for the service of these fine individuals.”
 
Customer service was greatly upgraded under Secretary Gray’s tenure. A second taxpayer assistance call center was opened in Guilford County. The agency expanded electronic filing for many taxpayers. Gray, who was appointed in January 2013, also led efforts that have reduced fraudulent tax returns and bolstered the agency’s audit division.
 
Under the governor’s and Roberts’ leadership, North Carolina ended the previous fiscal year with a $445 million budget surplus. Roberts has spearheaded the governor’s $2 billion Connect NC bond proposal, which will go before the voters in March. Roberts, who was appointed in August 2014, also has driven Project Phoenix, Governor McCrory’s plans to better utilize government facilities across the state, and directed the NC GEAR effort, which led to a series of restructuring and reform initiatives. Roberts was also instrumental in finalizing the sale of the Dix property.
 
Epstein has served as Chief Operating Officer at the Department of Revenue since April 2013. In the Fall of 2013 Governor McCrory appointed Epstein as Acting Secretary while Gray was on medical leave.
 
After graduating from The American University with a B.S. in Finance, Epstein served in the Reagan White House before moving to his current hometown of Charlotte. There Epstein had an extensive career in business and real estate and held numerous community service roles.
 
Heath was appointed by Governor McCrory to be Chairman of the North Carolina Industrial Commission in 2013. At the industrial commission, Heath implemented Governor McCrory's directive to form the Employee Classification Section to combat employee misclassification abuse. Heath also oversaw an employer compliance program, established to ensure that North Carolina workers are insured for on-the-job injuries. The program has increased the number of businesses in compliance and increased penalties assessed and collected from non-compliant businesses.
 
An attorney, Heath graduated with a B.S. in Management from the University of North Carolina at Asheville. While attending the Robert H. McKinney School of Law at Indiana University, Heath served as a legal intern in Indiana Governor Mitch Daniels' Office of the General Counsel. He also served on the Board of Directors of the New Hanover County Bar Association.
 

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NC Railroad Co. land buy juices Triad hopes for an auto plant

Edward Martin on January 2016 at 2:15:00 pm 
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The announcement Tuesday that the state-owned N.C. Railroad Co. would buy about 875 acres in a Randolph County industrial megasite for $13 million is “a marriage meant to be," says Jim Melvin, former Greensboro mayor, current octogenarian and Triad booster extraordinaire. Time will tell whether another budding megasite on the Chatham County side of Randolph is being jilted, but one thing’s for sure: Site-selection consultants everywhere are about to have Melvin and his Greensboro-Randolph Megasite Foundation, along with other local industry hunters, in their face.

“We haven’t been doing any hard marketing because we weren’t ready,” Melvin (pictured right) says. “Now we’re ready. We’re going to be out there in front of everybody.”

Tuesday’s development effectively seals the deal, boosting the site to 1,450 acres either owned outright or under foundation control. That’s not the 2,000 acres some analysts say will be needed to attract an automaker or similar transformational manufacturer that local economic developers want. But Melvin says if a prospect gets to the ring-and-vows stage, the foundation, Greensboro and Randolph County, all major players in putting together the site, will make the remainder fall into place quickly.

Randolph has spent more than $10 million acquiring land for the project already, and the N.C. Railroad move has county commissioners breathing a little easier. “They’ve been out there for about a year by themselves,” Melvin says.

The move also focuses attention on N.C. Railroad, a sometimes overlooked player in economic development. It was created by the state more nearly 170 years ago — in fact, before the Civil War — and owns a corridor running 317 miles through the heartland, from Morehead City to Charlotte, North Carolina’s hottest industrial turf. It runs no trains itself, but one of its charter functions is economic development.

“Part of our strategic plan is to work with economic developers to make targeted investments in the N.C. Railroad corridor as well as surrounding branch-line corridors,” says Megen Hoenk, director of corporate communications.

Fear not, Charlotte, with your booming new intermodal yard. Yes, it’s similar in acreage to N.C. Railroad’s Randolph purchase, but the Raleigh-based state entity won’t be building anything on its new land. Hoenk and Melvin say the purchase effectively completes the Greensboro-Randolph site, and development would be sufficient payback. Similarly, Melvin adds, if a Ford, GM or Toyota — and don’t rule out Honda, which loudly sings the praises of its new HondaJet plant in Greensboro — happens along, the intent is to donate the site as part of the Triad’s dowry, rather than selling it.

“Jobs, jobs, jobs,” Melvin says. “That’s why we’re all in this. Look at the Piedmont Triad. In the last several decades we’ve lost 90,000 jobs, and a lot of them were high paying. This is a step in the right direction.”

Is somebody coming out on the short end, though? Maybe. On the other side on Randolph County is another would-be megasite, sharing a border with Chatham. It too has aspirations for a car maker or similar whopper, and Tuesday’s announcement seems to give the Greensboro-Randolph site a leg up.

Outside economic developers question if there’s room for two megasites so close, though Hoenk insists N.C. Railroad’s move doesn’t mean it’s casting its lot with the western site. “Absolutely not,” she says. “We know the state has other megasites. Our focus is on economic development, and we have the flexibility to invest in other infrastructure when it makes sense do so for transformational manufacturing.”

Melvin says two sites might even help attract a biggie. “Frankly, if one of us is successful, there might be a role for the other to cater to a facility like this,” he says. “The user will ultimately make that decision.”

Of course, he notes, the Greensboro site has water, sewer, roads, natural gas and other infrastructure already lined up and deliverable probably within a year, if the right prospect proposes.

Related: Breaking up is hard to do (July 2015)

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How tax reform is cutting your power bill by 96 cents a year

David Mildenberg on January 2016 at 6:30:00 am 
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Five things you should know about interesting companies, people and trends in and around the Old North State:

— N.C. State Senator Bob Rucho, House Majority Leader Mike Hager and other North Carolina lawmakers held a hearing in Raleigh Monday to discuss various energy issues. During the meeting, Becki Gray, head of outreach at the conservative-leaning John Locke Foundation, sent out a Tweet noting, “ @SenatorBobRucho gets clarification from Utility Commish: reduction in corporate income tax results in lower utility rates.”

Sounded like great news, so I called the N.C. Utilities Commission and spokesman Sam Watson directed me to a filing showing that the corporate income tax reduction, from 5% to 4%, that takes effect Jan. 1, will reduce energy costs by 0.008 cents per kilowatt hour. (Presumably, that is because Duke Energy Corp. is passing on its savings from the tax cut.) The average N.C. household uses about 1,000 kilowatts a month, so that is a savings of eight cents a month, or about 96 cents a year. Not a typo – that’s 96 cents, Watson confirmed. If you have a big holiday lights display or you like to keep the temp down in the low 60s in August, you might use 2,000 kilowatts and save $2. It follows a similar reduction that took place a year ago, saving folks another buck or two. Better than nothing, for sure, but don't count on the savings to pay for that cup of Starbucks.

Here’s the filing if you want to see the Utilities Commission’s explanation, which only a diligent utilities lawyer could ever find on their website. http://starw1.ncuc.net/NCUC/ViewFile.aspx?Id=7ff282d4-0430-4e52-8cc4-ed716b80b037

 

Nikki Haley— South Carolina Gov. Nikki Haley will give the Republican response to President Obama’s last State of the Union address, marking a nice honor for a talented leader who has exceeded many people’s expectations during her tenure in Columbia. A lot of people think she will be the Republican vice presidential candidate in November. While South Carolina’s economy has improved, growth in the Palmetto State hasn’t benefited a lot of residents by one important measure. Median household income in 2014 remained 14% less than in 1996, adjusted for inflation. And South Carolina ranks 43rd in median household income. Same is true in many states, unfortunately.

Here's an explainer: http://www.advisorperspectives.com/dshort/updates/Household-Incomes-by-State

— Chapel Hill drug developer Cempra Inc. (CEMP) is raising $175 million in a secondary stock offering. It’s the kind of stock that appeals to the speculative-minded investor. It went public in 2013 at about $6, and traded at more than $40 in July 2015. Since then, it tumbled as low as $10 before recovering. It closed at $28.73.

— Speaking of speculative drug stocks, we asked the winners of a state stock-picking competition for high schools students to suggest their favorite picks. The winners Alex Matthews and David Styers attend Highland School of Technology – they beat 719 other teams from across the state in the three-month competition. We published their selections in our January edition, and wouldn’t you know that one of David’s picks for 2016 was Durham-based Chimerix (CMRX), which declined more than 80% last week when a clinical trial produced disappointing results? Glad there wasn’t real money involved in that contest.

 

— Speaking of struggling investors, how about that Omaha guy named Warren Buffettt? Shares of Berkshire Hathaway (BRK.A, BRK.B) declined more than 12% in 2015, much more than the Dow, S&P 500, Nasdaq. No wonder he urges investors to buy and hold for decades. One suspects Berkshire, which has a big position in Bank of America and owns newspapers in Greensboro, Winston-Salem and various North Carolina cities, will have a much better 2016.
http://www.bloomberg.com/news/articles/2016-01-04/why-buffett-s-50th-anniversary-was-a-dud-for-investors-4-charts

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Five things you gotta know about NC stocks

David Mildenberg on January 2016 at 6:00:00 am 
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Five things I just learned about North Carolina-based public companies.

  • Asheville-based Ingles Markets (IMKT.A) lost 13% of its value on Monday, topping the list of biggest losers among N.C. stocks. Ingles shares more than doubled in value over the year ended Nov. 1, partly on speculation of a possible sale as the grocery industry consolidates and Publix advances into its key North Carolina markets. But after peaking at about $54.50, the shares now trade for about $38.
  • Highwoods Properties Inc., North Carolina’s largest real-estate development company, is selling 18 properties in Kansas City’s Country Club Plaza district for $660 million. The Raleigh-based company (HIW) said its real estate there is 95% leased and anyone who visits that area can understand why — the development has distinctive architecture and is very cool.
  • Capitala Finance (CPTA)’s investment adviser, Capital Investment Advisors LLC, plans to forgo its quarterly fee charged for managing the company’s portfolio. If it hadn't done so, the company would have paid out more in dividends than its net interest income. Charlotte-based Capitala lends money to small businesses at rates typically higher than charged by commercial banks. CEO Joe Alala controls both companies. The company’s shares gained 2.5%, bucking the overall market’s rotten performance. But the shares now trade for $12.38, after debuting at $18 in September 2013. Investors buy so-called Business Development Companies for their yield; Capitala's is now 13.8% for you gamblers out there.
  • Wells Fargo & Co.’s operating margin is now almost 40%, exceeding the boom times of 2006. Though Wells Fargo (WFC) sailed through the recession better than its peers, its margin bottomed at 7.8% in 2008. The company’s isn’t based in North Carolina, but it should be given how it essentially stole Wachovia Corp. at the depths of the 2007-09 recession, overcoming a richer bid from Citigroup Inc.

 

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Best North Carolina stocks for 2016

David Mildenberg on January 2016 at 4:00:00 pm 
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Looking for stock ideas with a Tar Heel twist? Five investors with decades of experience following North Carolina-based stocks offered their favorite selections for 2016 — and one to avoid. The rationale for these picks is included in the January edition of Business North Carolina.

            Bobby Edgerton, co-founder, Capital Investment Cos., Raleigh

            Cree Inc. (CREE)

            Duke Energy Corp. (DUK)

            Krispy Kreme Doughnuts (KKD)

 

            Avoid: HanesBrands Inc. (HBI)

 

            Frank Jolley, president, Jolley Asset Management LLC, Rocky Mount

            Bank of America Corp. (BAC)

            Cree Inc. (CREE)

            Nucor Corp. (NUE)

 

            Avoid: Red Hat Inc. (RHT)

           

            Don Olmstead, managing director, Novare Capital Management, Charlotte

            BB&T Corp. (BBT)

            Bojangles’ Inc. (BOJA)

            VF Corp. (VFC)

 

            Avoid: LendingTree Inc. (TREE)

 

            Christy Phillips, director of research and senior portfolio manager, Franklin Street Partners, Chapel Hill.

            Insteel Industries (IINN)

            Laboratory Corp. of America (LH)

            Martin Marietta Materials Inc. (MLM)

 

            Avoid: Tanger Factory Outlet Centers (SKT)

 

            Ann Benjamin Zuraw, president, Zuraw Financial Advisors LLC

            Bojangles’ Inc. (BOJA)

            Old Dominion Freight Line Inc. (ODFL)

            VF Corp. (VFC)

 

            Avoid: Highwoods Properties Inc. (HIW)

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North Carolina now has 10 million-plus residents

Press release on December 2015 at 1:52:00 pm 
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WASHINGTON, Dec. 22, 2015 /PRNewswire-USNewswire/ -- By adding an average of 281 people per day during the last year, North Carolina's population crossed the 10 million mark, making the state the ninth in that category, according to U.S. Census Bureau state population estimates released today.

North Carolina's population gain over the July 1, 2014, to July 1, 2015, period ranked it behind only Texas, Florida, California, Georgia and Washington.

Notably, Florida added more people than California for the first time in nearly a decade. Florida's gain of 365,703 people also pushed it past 20 million, becoming the third state to reach that milestone. California continued to be the most populous state on July 1, 2015, with 39.1 million, followed by Texas with 27.5 million.

North Dakota was the nation's fastest-growing state or equivalent over the last year, for the fourth year in a row. Its population increased 2.3 percent, followed by 1.9 percent growth in Colorado, the District of Columbia and Nevada. Each of the 10 fastest-growing states was in the South or West with the exception of North Dakota.

Seven states lost population between July 1, 2014, and July 1, 2015: Illinois (22,194 or -0.17 percent), West Virginia (4,623 or -0.25 percent), Connecticut (3,876 or -0.11 percent), Mississippi (1,110 or -0.04 percent), Maine (928 or -0.07 percent), Vermont (725 or -0.12 percent) and New Mexico (458 or -0.02 percent).

The United States as a whole saw its population increase by 0.79 percent over the period to 321.4 million, slightly faster than the rate of growth over the previous one-year period (0.78 percent).

In addition to the 50 states and the District of Columbia, the new statistics also include estimates for Puerto Rico. On July 1, 2015, Puerto Rico had an estimated population of 3.5 million, a decline of 60,706, or 1.7 percent, from one year earlier.

The Census Bureau produces population estimates each year, allowing the public to gauge the growth and demographic composition of the nation, states and communities. These statistics use administrative data to estimate population change between census years, using the decennial census count as a starting point. Local governments use estimates to locate services, and the private sector uses them to locate businesses.

The Census Bureau also released today estimates of the number of people 18 and older in the U.S., states and Puerto Rico. The downloadable file also includes total population and the percentage of people 18 and older. In 2015, there were 247.8 million voting-age residents in the U.S., comprising 77.1 percent of the nation's population. Internet address: http://www.census.gov/popest/data/datasets.html.

During 2016, the Census Bureau will release estimates of the 2015 population of counties, cities and towns, and metropolitan and micropolitan statistical areas as well as national, state and county population estimates by age, sex, race and Hispanic origin. Population estimates for Puerto Rico and its municipios by age and sex will be released as well.

The 10 Most Populous States on July 1, 2015

Rank

State

Population

     

1

California

39,144,818

2

Texas

27,469,114

3

Florida

20,271,272

4

New York

19,795,791

5

Illinois     

12,859,995

6

Pennsylvania

12,802,503

7

Ohio

11,613,423

8

Georgia

10,214,860

9

North Carolina

10,042,802

10

Michigan

9,922,576

The 10 Fastest-Growing States from July 1, 2014, to July 1, 2015

Rank 

  State        

Percent Change

     

1

North Dakota    

2.28

2

Colorado            

1.89

3

District of Columbia 

1.88

4

Nevada          

1.85

5

Florida           

1.84

6

Texas            

1.82

7

Utah              

1.75

8

Washington      

1.52

9

Arizona            

1.48

10

Oregon        

1.45

The 10 States with the Largest Numeric Increase from July 1, 2014, to July 1, 2015

Rank

State

Numeric Increase

     

1

Texas                

490,036

2

Florida               

365,703

3

California           

352,527

4

Georgia             

117,728

5

Washington      

107,185

6

North Carolina  

102,415

7

Colorado            

100,986

8

Arizona            

99,282

9

South Carolina   

66,986

10

Oregon        

57,775

 

The Census Bureau develops state population estimates by measuring population change since the most recent census. The Census Bureau uses births, deaths, administrative records and survey data to develop estimates of population. For more details regarding the methodology, see http://www.census.gov/popest/methodology/index.html.

 

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German appliance maker adding 460 jobs in New Bern

Press release on December 2015 at 11:35:00 am 
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Governor Pat McCrory, North Carolina Commerce Secretary John E. Skvarla, III, and the Economic Development Partnership of North Carolina (EDPNC) announced today that BSH Home Appliances Corporation plans to create 460 new jobs in Craven County during the next five years and invest nearly $80.7 million at the current site through the end of 2019.
 
“The expansion of BSH in Craven County is evidence that our improvements to North Carolina’s business climate and workforce development are helping ensure our manufacturing economy is firing on all cylinders,” said Governor McCrory. “We salute the continued growth and success of this prestigious name in Eastern North Carolina’s business community.”
 
BSH Home Appliances is a wholly owned subsidiary of BSH Hausgeräte GmbH, headquartered in Munich, Germany. The company is the largest manufacturer of home appliances in Europe and one of the leading companies in the sector worldwide. BSH Home Appliances manufactures small and major home appliances that are known across North America for their high-quality and superior innovation. Headquartered in Irvine, CA.,  BSH Home Appliances built its first plant in New Bern in 1997 and has since undertaken several expansion projects. BSH facilities in New Bern produce and distribute dishwashers, ovens, ranges and cooktops. Its existing North Carolina workforce totals more than 1,000 employees.

“Companies like BSH are the reason why North Carolina leads the southeastern U.S. in manufacturing employment,” said Secretary Skvarla. “The company’s expansion is a credit to the workforce in Craven County, but also to the global accessibility, infrastructure, business-savvy leadership and quality of life it has found here.”
 
BSH will expand its central distribution and call center operations in New Bern. New positions will include production personnel, logistics specialists, administrative and other staff. While the salaries of the new positions will vary, salaries will average no less than $42,188, which is well above Craven County’s current average annual wage of $34,897.  
 
“The investment BSH Home Appliances will make to expand its manufacturing, central distribution and call center operations in New Bern exemplifies our ongoing commitment to the State of North Carolina,” said Frank Rebmann, commercial director at BSH Home Appliances. “We would like to thank the State of North Carolina and Craven County for its support of this important expansion.”
 
BSH Home Appliance’s expansion in Craven County will be facilitated, in part, by an award to the company from the state’s Job Development Investment Grant (JDIG) program that was approved by the state’s Economic Investment Committee today. Under the terms of the company’s JDIG, BSH is eligible to receive up to nearly $4.1 million in total reimbursements. Payments will occur in annual installments over 12 years pending verification by NC Commerce and NC Revenue that the company has met incremental job creation and investment targets. JDIGs reimburse new and expanding companies a portion of the newly created tax-base with the goal of increasing the overall tax benefit to the State of North Carolina.
 
By law, JDIG projects must result in a net revenue inflow to the state treasury over the life of the award. For projects in Tier 2 counties such as Craven County, 15 percent of the award amount is directed to the state’s Industrial Development Fund – Utility Account to help finance economic infrastructure in less populated counties. BSH Home Appliance’s expansion could provide as much as $455,200 in new funds for the Utility Account. More information on county tier designations is available at http://www.nccommerce.com/Portals/0/Incentives/CountyTier/2015%20Development%20Tier%20Rankings.pdf.
 
“Today’s announcement by BSH Home Appliance is evidence that Craven County is doing its part to keep North Carolina the Southeast’s #1 manufacturing state,” said N.C. Senator Norman Sanderson. “I commend the company and the county for their continued success.”
 
“Congratulations to BSH for the exciting expansion it is about to undertake,” said N.C. Representative George Graham.  “We appreciate the company’s choice of Craven County for these new jobs and investment.”
 
Several partners joined NC Commerce and EDPNC in supporting BSH Home Appliance’s expansion. They include the North Carolina Community College System, the Eastern Carolina Workforce Development Board, Craven County and the Craven 100 Alliance.

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Campus Crest closing Charlotte office as part of sale

Andrew Dunn on December 2015 at 6:00:00 pm 
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(From the December 2015 edition of Business North Carolina)

With more universities pulling back from dorm construction and the strongest apartment market in decades, the initial public offering of Campus Crest Communities looked well-timed in October 2010. Five years later, Chicago-based Harrison Street Real Estate Capital is paying about $7.03 per share to buy the Charlotte-based real-estate investment trust, a 44% decline. The sale, which values the company at about $1.9 billion, comes after the board ditched its management team and brought in turnaround consultants Alvarez & Marsal in April to reduce debt and search for a buyer. Privately held Harrison Street, which manages more than $7 billion and has invested jointly with Campus Crest on some projects, stepped up for the deal expected to close in the first quarter of 2016.

As of October, Campus Crest’s portfolio included 79  apartment communities, offering swimming pools, fitness centers and game rooms. Holdings include 16 joint ventures and encompass more than 15,000 units in 24 states. Former CEO Ted Rollins and former vice chairman Michael Hartnett started the company in 2004, banking on the trend of students preferring fancy apartments to spartan dorm rooms. In 2013, the company bought a 48% interest in Copper Beech Townhome Communities — its 35 properties include one at East Carolina University — and then bought the rest of the business in 2015. Debt nearly doubled from $351 million in 2012 to $695 million in 2014, proving onerous as leasing activity didn’t meet projections.

“The company has certainly struggled with growing quickly, both organically when it was in the development and construction business and also through acquisition,” David Coles, interim chief executive officer, said on a July conference call. While investors got stuck, Rollins and Hartnett received a combined $8 million in 2012 and 2013, according to the company’s proxy issued last year. Company officials declined requests for an interview.

On Dec. 9, Campus Crest Communities said it was closing its Charlotte operation next year, putting 70 employees out of work, according to the N.C. Department of Commerce website.

 

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Vaping, North Carolina style

Clayton Hanson on December 2015 at 12:00:00 pm 
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Once marketed as a way to quit smoking, e-cigarettes and “vaping” have turned into an underground novelty now making a push into the mainstream. Their growing popularity has captured the attention of Hollywood, teenagers, entrepreneurs, Big Tobacco, lawmakers and regulators. Vape shops filled with young people (mostly men, many fond of tattoos and black clothing) are sprouting across North Carolina, popular for their comfortable lounges, free Wi-Fi and “cloud competitions.”
 
Common KURE
Demonstrating the rapid growth is KURE Corp., a “vaporium” franchise headquartered in Charlotte that plans to open 22 new stores in the Carolinas over the next few years and franchise dozens more. Among its backers are Charlotte private-equity group Siskey Capital LLC. In an effort to stand out from the 15 or so other vape-shop companies with a presence in North Carolina — including Mooresville-based MadVapes — KURE portrays itself as more than a store. Along with selling supplies, the stores encourage lounging, with overstuffed chairs and heavy-metal music. It’s free to hang out for those 18 and older.
 
“We serve the same demographics as the local coffee house, only our guests can vape, snack and shop with other people in the vaping community,” says Jonathan Benjamin, CEO of Kure’s franchise division. He was previously chief development officer
at Atlanta-based Huddle House, a diner-style restaurant with franchises in 21 states.
 
Vaping conventions draw hundreds to test the latest flavors. Vape Mania, sponsored by MadVapes and other retailers, booked the Benton Convention Center in Winston-Salem in September. More are expected at VaperSlam in March in Charlotte. MadVapes was started by former computer programmer Mark Hoogendoorn, with 70 locations in eight states, stretching from Texas to Massachusetts.

Tobacco road
Traditional cigarettes still reign at the large tobacco companies, but they, too, are trying to capitalize on the vaping trend. R.J. Reynolds Vapor Co., a subsidiary of Winston-Salem-based Reynolds American and maker of VUSE,  the nation’s top-selling electronic cigarette, recently announced it would move all manufacturing to its 2 million-square-foot plant in Tobaccoville. The shift will help expand VUSE production in response to higher demand, says Reynolds spokesman Jacob McConnico. Reynolds has also tripled its e-cigarette flavorings from two to six. Lorillard Co., acquired earlier this year by Reynolds in a $25 billion transaction, had to sell off its blu e-cigarette brand because of antitrust concerns. If Reynolds had kept blu, the company would have controlled more than 58% of U.S. e-cigarette sales. Not to be left out, Philip Morris last year unveiled its own e-cig, HeatSticks, in Italy and Japan. HeatSticks contain tobacco, not the liquid form of nicotine that is found in other products, in an effort to appeal to traditional smokers. Philip Morris expects the device to account for 15% of total revenue within a decade, according to The Wall Street Journal.

Test takers
E-cigarettes are unregulated, but that is likely to change. The Food and Drug Administration sent proposed rules to the White House in October. That could mean more business for Durham-based Enthalpy Analytical Inc., which was acquired by Irvine, Calif.-based Montrose Environmental Group Inc.  in January.  Enthalpy has been testing e-liquids for about three years, making it one of the oldest labs in the industry.  Gene Gillman, technical director at Enthalpy, says e-cigarettes account for about half of the company’s business and is a growing segment. Not surprising considering  that there are about 7,764 unique e-liquid flavors, by one count. Even though e-cigarette manufacturers aren’t required to test, many do, Gillman says.  “They really care about the health of their users, many of whom moved away from combustibles. They perceived (e-cigarettes) as healthier, and manufacturers realize they have an obligation to hold up to that expectation.”

What’s next
E-cigarettes (or “vape pens”) have the same appearance as traditional cigarettes except they come with self-contained batteries and retail for about $10, compared with $5 to $15 for a pack of traditional smokes. Vaporizers are larger and allow for a greater variety of liquid flavors than the slim pens found in gas stations or convenience stores. “Mods” range from about $40 into the hundreds.  When a user draws on either device, the battery heats the nicotine-laced liquid, creating an inhalable water vapor.  The resulting clouds have prompted some local governments to extend “no-smoking zones” to “no-vaping zones.”  Other states are looking at taxing e-cigs , following North Carolina’s lead.  Critics accuse the industry of targeting children with flavors like cotton candy and waffles. 

 

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Corning sticks it to Hickory, not surprisingly

David Mildenberg on December 2015 at 7:00:00 pm 
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Corning Inc.’s plan to move the headquarters of its optical communications division from Hickory to Charlotte over the next two years should send a shiver through thoughtful state leaders, who want all parts of North Carolina to remain robust economically — and not just Charlotte, the Triad and the Triangle.

The company, which has its corporate headquarters in the bucolic town of Corning, N.Y., plans to move more than 400 white-collar workers from Hickory to a pending $38 million site in northwest Mecklenburg County and add 150 jobs as part of the move. In return, North Carolina is offering $2.35 million in incentives over 12 years.

Corning is one of the nation’s most enlightened companies with a heritage dating back to 1851. It has a market capitalization of $21 billion. It is a global powerhouse that has been an important corporate citizen of North Carolina for decades, employing more than 3,000 people in the state, including about 1,000 who will remain at a Hickory manufacturing site. But it also competes in a ruthless telecom equipment market; its shares now trade at about the same level as 2005.

Hickory, which has relied on Corning and other fiber producers to help overcome the loss of furniture, textile and other manufacturing jobs, will get stung by the decision. Catawba County officials have tried valiantly over the last two years to reverse Corning’s move, which had been widely anticipated. Hickory officials know they have to raise the level of their game, creating a more inviting community with stronger K-12 schools. A September 2014 story explained the city's turnaround hopes. But Corning’s current leadership in Hickory has made it clear to Catawba County officials that they prefer to live in or closer to faster-growing Charlotte and the Lake Norman area. Clark Kinlin, the executive vice president of Corning Optical Communications quoted in a press release announcing the move, has owned a home in a Charlotte SouthPark neighborhood of $1.5 million to $2 million properties since 2007, property records show. He took the top post at what was called Corning Cable Systems in 2008 from longtime executive Larry Aiello.

Corning is sending a disappointing message: The state's eighth-largest metro area does not have the pieces in place to attract top talent anymore and serve as an important white-collar technology center. It isn’t surprising, given the preference of most tech professionals in their 30s and 40s to live in bigger cities. Average pay for the relocating jobs is $80,000, while median family income in Hickory is about $47,000.

It is discouraging given that longtime North Carolinians know Hickory, with its population of about 40,000, as one of our state’s finest smaller cities with a reputation for minting talented business people, serving as the home for a good private university, Lenoir-Rhyne, and positioned as a gateway to northwest North Carolina's mountains. It takes about an hour to drive from Hickory to downtown Charlotte, except at rush hour. But for many employers, that’s become too far, a struggle that Wilson and Rocky Mount are also facing given their similar proximity to Raleigh.

Patrick McHenry, the Republican congressman who represents the Hickory area, said he was "greatly disappointed Corning’s New York leadership has made this decision, and I believe they will quickly realize that everything is not better in the big city. Their decision to retain manufacturing and R&D jobs in Hickory is a positive development in the face of this unfortunate news."

Charlotte and other metro regions were successful in blocking a General Assembly bill this year that would have sent some sales tax proceeds from wealthier areas to poorer peers. Redistribution of taxes doesn’t work, representatives of the bigger cities argued, though the state is happily awarding incentives to Corning for its transition from Catawba to Mecklenburg. But the concerns of state Senate Majority Leader Harry Brown, a Jacksonville Republican, and other rural lawmakers who promoted the effort because of the state’s widening urban-rural economic gap — and the loss of substantial white-collar jobs in smaller cities — deserve constant scrutiny. Just ask the folks in Hickory.

P.S. - Here's an article from Governing magazine that emphasizes the challenges North Carolina faces concerning rural-urban development.

 http://www.governing.com/columns/assessments/gov-urbanization-north-carolina.html?utm_medium=email&utm_source=Act-On+Software&utm_content=email&utm_campaign=No%20One%20Knows%20How%20Many%20Homeless%20Kids%20Are%20in%20America&utm_term=Resisting%20Inevitable%20Urbanization

 

 

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Red Ventures promises to add 500 jobs in NC over five years

Press release on December 2015 at 5:00:00 pm 
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Raleigh, N.C. –  Governor Pat McCrory, North Carolina Commerce Secretary John E. Skvarla, III and the Economic Development Partnership of North Carolina (EDPNC) announced today that Red Ventures will expand its Mecklenburg County operations by adding 500 jobs over the next five years. The technology and marketing company plans to invest $5 million at its facility in Charlotte over the same period.
 
“This great American success-story continues to grow its business and flourish in our state,” said Governor McCrory. “By adding 500 new jobs, Red Ventures has shown that North Carolina has the workforce and business climate to grow and succeed.”
 
Founded in 2000, Red Ventures is the country’s largest technology-enabled platform for sales and marketing organizations. The company uses advanced analytics and proprietary technology to optimize client leads and close sales for some of the nation’s top brands. Operating across a variety of high-growth industries, including home services, insurance, energy, financial services and software, Red Ventures seamlessly connects customers with the products and services they need most.
 
The privately-held company employs more than 2,800 people, including 544 in North Carolina. For each of the past eight years, Red Ventures has been named a “Best Place to Work in Charlotte” by the Charlotte Business Journal.
 
“This globally connected company could operate from anywhere,” said Secretary Skvarla. “Red Ventures chose Charlotte for this expansion because it knows that nothing compares to North Carolina’s technology talent, pro-business environment and exceptional quality of life.”
 
Red Ventures will look to fill positions  including software developers, analysts, I/T specialists and inside sales agents, just to name a few. The additional workforce will result in a payroll impact of nearly $24.5 million annually.
 
“Our continued investment in the Charlotte region centers around attracting and retaining the best talent,” said Ric Elias, CEO of Red Ventures. “We’re excited to have established a partnership with the State of North Carolina that brings top-tier jobs and facilities to the region.”
 
The project was made possible in part by an award to Red Ventures from the state Job Development Investment Grant (JDIG) program, approved by the state’s Economic Investment Committee earlier today.  Payments under the award occur only after two state agencies, NC Commerce and NC Revenue, have verified job creation and other performance measures. Under the terms of the company’s JDIG, Red Ventures is eligible to receive up to $2.65 million in total reimbursements over the 12-year life of the award.
 
JDIGs reimburse new and expanding companies a portion of the newly created tax-base with the goal of increasing the overall tax benefit to the State of North Carolina. State law also requires a financial commitment to the project on the part of local government.
 
Red Ventures’ JDIG will result in as much as $88,650 in new funding for the state’s Industrial Development Fund – Utility Account to help finance economic infrastructure in less populated Tier 1 and Tier 2 counties. When JDIGs are made to companies in more prosperous Tier 3 counties such as Mecklenburg, 25 percent of the award is directed to the IDF-Utility Fund. For more information on the county tier designations, visit http://www.nccommerce.com/research-publications/incentive-reports/county-tier-designations.
 
Since Governor McCrory took office in January of 2013, North Carolina has witnessed the net creation of nearly 240,000 private sector jobs.
 
Joining NC Commerce and EDPNC in helping facilitate Red Ventures expansion is the North Carolina General Assembly, the North Carolina Community College System, Mecklenburg County, the City of Charlotte, and the Charlotte Chamber of Commerce.
 
For more information about Red Ventures, including available positions, visit www.redventures.com.

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State's big health groups forming Medicaid plan

Press release on December 2015 at 3:00:00 pm 
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North Carolina’s largest health systems announce a collaboration to investigate development of a provider-led and owned Medicaid only Prepaid Health Plan (PHP) in support of the General Assembly and Governor’s goal to transform the State’s current Medicaid system to a program that provides budget predictability for the taxpayers of the State while ensuring adequate access and high quality of care to those in need.

The Medicaid Reform Landscape

Medicaid supports the health care needs of 1.8 million North Carolinians at a cost of roughly $13.5 billion. Despite the cost (roughly 75% of the health care budget), the current program does not optimize the health of its beneficiaries or maximize efficiency. For this reason, many providers across the state, including the largest health systems, support the goal of significant Medicaid reform.

Medicaid can be structured to provide greater value to all of its stakeholders — both beneficiaries and taxpayers. To this end, the Legislature and Governor McCrory set in motion the enormous and delicate task of reforming North Carolina’s Medicaid program with the passage and signing of House Bill 372. The House and Senate each proposed models with important similarities but also some key differences. The final legislation is a hybrid approach of the two models, including both Accountable provider-led entities (PLEs) and commercial managed care plans (CPs). With the hybrid model that was passed, providers will play a more integral role in delivering effective and coordinated care for all Medicaid beneficiaries.

PLEs and CPs will assume the financial risk for service utilization of Medicaid enrollees from the State, while the State retains the risk of enrollment growth and mix among eligibility groups. Instead of unpredictable bills from multiple providers, the State will pay participating PLE or CP entities on a per member per month basis based on the Medicaid enrollees in each group. Under this approach, there is a vested financial interest in delivering high-quality, cost-efficient care to Medicaid enrollees.

Common Goal — Enhanced by Provider Collaboration

Provider-led organizations and physicians strongly supported the PLE model to address Medicaid reform. Providers across the state are preparing for and investing in value-based care to benefit Medicaid beneficiaries and the State of North Carolina by delivering more predictable costs, higher quality outcomes, and enhanced patient and provider experiences.

The health system partners that make up this collaboration continue to believe that doctors and clinicians should make decisions that impact the clinical wellbeing of Medicaid patients. By collaborating through a state-wide provider-led and owned Medicaid-only Prepaid Health Plan, they can continue to act in the best clinical interests of the patients they treat every day, while at the same time coordinating care and administrative functions through the size and scope that come with a state-wide network.

Provider-Led and Patient-Centered Care Goals

Commitment to Constructive Partnership

The final reform law includes a state-wide CP option and the provider-preferred PLE option, with PLEs only operating in pre-defined regions. These options cause increased complexity for the provider community to determine their best path to achieve patient-centered results. As a result, the group of health systems below are evaluating a state-wide provider-led and provider-owned PHP to maximize patient-focus and clinical effectiveness. These health systems plan to develop a PHP that aligns incentives to provide high-quality, cost-efficient care that supports population health management and focuses on prevention and wellness. This option would not preclude any of these health systems from participating in, organizing, or contracting with PLEs or other CPs.

As North Carolina moves forward with the implementation of Medicaid reform, all providers, CPs, PLEs and the State will need to collaborate with one another to design and implement the transformative changes required to benefit the citizens of North Carolina. The current health system members of Provider-Led and Patient-Centered Care, LLC support key principles that are consistent with the direction the governor and legislative leaders advocate, and they are committed to working together through a constructive partnership to implement Medicaid Reform. These members encourage transparency and fairness in the process, and more importantly, encourage all parties to place the patient at the center of all decisions and ensure that providers are at the table for the design and implementation phases.

Current Members of Provider-Led and Patient-Centered Care.

  • -  Cape Fear Valley Health System

  • -  Carolinas HealthCare System

  • -  Cone Health

  • -  Duke University Health System

  • -  Mission Health

  • -  New Hanover Regional Medical Center

  • -  Novant Health

  • -  University of North Carolina Health Care System

  • -  Vidant Health

  • -  Wake Forest Baptist Medical Center

  • -  WakeMed Health & Hospital

 

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