Are State Treasurer Cowell and the Bowles too cuddly?
North Carolina’s $90 billion state pension is getting lots of attention this week, including a two-part series by Charlotte public radio station WFAE on why State Treasurer Janet Cowell is so fond of alternative investments and collecting campaign funds from New Yorkers with Wall Street ties. The series repeats previous criticisms of Cowell’s strategy, which has boosted state spending on hedge funds and investment groups that specialize in more complex strategies than traditional stock-and-bond investing.
Separately, the cozy relationship between Cowell and Charlotte business icons Erskine and Crandall Bowles was highlighted by International Business Times, a New York-based website affiliated with Newsweek magazine.
Charlotte-based Carousel Capital, which Erskine co-founded, got a contract in 2011 to manage money for the N.C. Innovation Fund, a $232 million state-sponsored investment fund overseen by the state treasurer, only weeks after a fundraiser for Cowell’s 2012 campaign was held at the Bowles’ Charlotte home. Such a fundraiser isn’t too surprising because the Bowles generally support Democrats such as Cowell. But Securities and Exchange Commission rules restrict campaign contributions from companies that manage public pension funds, including Carousel Capital and JPMorgan Chase, where Crandall is a director.
Erskine Bowles told the International Business Times he hasn’t had a role in raising funds for Carousel Capital since 2005 and hasn’t talked to North Carolina or anyone else about investing in the firm during that period. Crandall Bowles, former CEO of the Springs textile empire and the party’s host, didn’t comment. The money apparently helped Cowell, who won about 54% of the vote during her elections in 2008 and 2012, while Republicans gained control of North Carolina politics.
For a balanced perspective on all of this pension-fund talk, check out Andy Silton’s blog. He’s a former chief investment officer for North Carolina and offers an insider’s view of how public pensions work. One interesting point he makes: the State Employee Association of North Carolina slams Cowell for putting 22% of state pension fund into distressed debt, real estate and other alternative investments, up from less than 10% five years ago. Had she put the money in a U.S. stock index fund, instead of messing with all those costly Wall Street and Tryon Street sharpies, the fund would be billions richer, SEANC argues.
But SEANC doesn’t mention that over the past 15 years, including the recent bull market, stocks returned 5% annually vs. 6.9% for bonds. “If we’d followed SEANC’s prescription (even with index funds) over the past 15 years, the state’s pension plans would be in a very deep hole,” Silton notes. He doesn’t fault Cowell for trying something new.
Fayetteville's recovery from recession among fastest in U.S.
Fayetteville recovered faster from the Great Recession than all but two other U.S. cities, according to a survey by personal-finance website Wallethub.com. The city's economy is buoyed by Fort Bragg, the nation's largest Army installation and home to about 57,000 soldiers, according to the Associated Press.
Raleigh ranked No. 10 on the survey of 150 cities, while Durham was No. 22. Greensboro and Winston-Salem were Nos. 84 and 87. With much of its economy tied to the finance industry, which has taken longer to climb out of the recession, Charlotte ranked lowest among North Carolina cities included in the survey at No. 98.
The survey considered 18 metrics including unemployment rates, median household income growth, and increase in the number of college-educated workers moving to the area, to measure which cities experienced the most economic growth since the recession ended in June 2009.
Fayetteville also had the largest decline in the ratio of part-time to full-time jobs.
NC exports top $15 billion in first half of 2014
North Carolina exports topped $15 billion during the first half of 2014, an increase of 2.7% over the same period in 2013, according to a press release from Gov. Pat McCrory's office.
“Exports have not only increased for our traditional industries, such as textiles and food, but also for many of our newer industries as well,” said Sharon Decker, secretary of the N.C. Department of Commerce.
One of the new industries is wood pellets, benefiting after the European Union mandated that 20% of the region's energy come from renewable sources by 2020. Six wood-pellet production plants are now open or in development, including four owned by Bethesda, Md.-based Enviva LP, which is also constructing two storage domes at Port of Wilmington.
In our July issue, contributing writer Lee Weisbecker examines this growing industry, which environmentalists view as a threat to North Carolina woodlands.
Canton paper mill wins incentives from state
The billionaire owner of the Canton paper mill, a bulwark of western North Carolina’s economy for more than a century, got his state aid after lawmakers in Raleigh reversed course in less than 24 hours. Graeme Hart of New Zealand, who bought the mill in 2006 for $500 million and renamed it Evergreen Packaging, sought $12 million over six years to help pay for modernized boilers that burn more natural gas and reduce coal use to meet new federal rules on emissions. The plant provides more than 1,000 jobs with average annual compensation of more than $78,000. A bill enabling incentives was approved today, after another bill, which also included assistance for Evergreen, was defeated yesterday."It's a small insurance policy for a company that has a $100 million annual impact," says state Rep. Nathan Ramsey, a Fairview Republican who voted for the bill.
Champion Fibre and its successor entities ran the mill for decades until selling it for $200 million to an investor group, which included employees, in 1999. Upgrading boilers will cost up to $44 million, which would have no adverse impact on its finances, according to Evergreen’s 2013 annual report. “We’re afraid [Hart’s] going to say, ‘I’ve had enough of this,’ and just shut it down,” says Sen. Jim Davis, a Republican from Franklin who voted for the bill. Hart, who spent more than $16 billion assembling a packaging empire the past decade and is often called New Zealand’s richest man, may sell as much as $7.9 billion of assets, according to a July government filing. Talk around Canton is that Koch Industries’ Georgia Pacific might buy the plant, former Mayor Pat Smathers says. Evergreen officials didn’t return telephone calls. Georgia-Pacific had no comment.
Just appreciate, baby!
Complain all you want about its concussions, its tin-eared commissioner and its players who carry more guns than common sense — the NFL is doing just fine, thank you very much. Forbes released its annual ranking of most-valuable NFL franchises today, and 25 of the league’s 32 teams are worth more than a billion dollars. North Carolina has 36 public companies worth that much.
Last year’s Carolina Panthers, which posted a 12-4 record and won the NFC South, secured the franchise’s first playoff spot since 2008. That earned Carolina an 18% increase in value, from $1.05 billion to $1.25 billion. It improved one spot on the list, climbing to 17th. Also important to the pocketbook of Jerry Richardson — whose ownership group paid just $200 million for the expansion team in 1993 — is that though annual revenue grew only 4.4% to $283 million, operating income nearly doubled to $56 million.
But the Forbes list proves the business of the NFL is about more than winning, with all apologizes to late Oakland Raiders owner Al Davis. The Dallas Cowboys, which haven't been relevant since Troy Aikman was under center and were a middling 8-8 for the third-straight year in 2013, are evidently still America’s favorite team, worth a staggering $3.2 billion, 39% more than last year. Its operating income is only about $40 million less than the Panthers’ revenue.
Florida attracts BofA biggie
David Darnell’s move to Florida costs Charlotte its top-ranking Bank of America executive. But why don't more wealthy Tar Heels retire to the Sunshine State, where the temperature is high and the taxes low?
Darnell, 61, is a Charlotte native, Wake Forest University grad and ardent supporter of his hometown, having served as chairman of the Charlotte Chamber. He’s also regarded within the bank and community as a genuinely nice guy. BofA's North Carolina-based leadership team has dwindled since Brian Moynihan replaced Ken Lewis Lewis as CEO in 2010. Most of its key decision-makers now work in New York. However, Charlotte boosters could always point to Darnell, formerly co-COO, as evidence that Moynihan, who lives near Boston, hasn't turned his back on the bank's headquarters city.
That's a tough sell, now that Darnell will become a vice chairman based in Tampa and is no longer equal to COO Tom Montag, a former Goldman Sachs executive who oversees investment banking from New York. Darnell retains responsibility for business banking and wealth and investment management.
Darnell’s Merrill Lynch wealth advisers might recommend a move to Florida for tax-planning purposes. The Sunshine State doesn’t tax personal income, while North Carolina’s tax rate for the highest earners is 5.8% this year and 5.75% next year. His compensation has averaged about $9 million a year over the past three years, so living in North Carolina can cost income-earners at Darnell’s level a half-million dollars a year. Darnell owns a home near Bradenton, Fla., 45 miles south of Tampa, according to property records. "David’s decision was based on a desire to relocate with his family to Tampa and still provide strategic leadership to the company," bank spokesman Tony Allen says. "Nothing more than that."
The state has no way of tracking how many residents move to Florida for tax reasons, says Trevor Johnson, a spokesman for the N.C. Department of Revenue. It’s an impossible stat to gather because many motivations prompt moves, says Richard Borean, spokesman for the Washington-based Tax Foundation. But U.S. Census Bureau statistics rebut the idea of a surge of Tar Heels heading south. About 53,000 more Floridians moved to North Carolina between 1993 and 2010 than vice versa, according to the Tax Foundation.
Canadian manufacturer bringing 68 jobs to Scotland County
Cascades Tissue Group will invest $62 million and create 68 much-needed jobs over three years in a manufacturing plant in Scotland County, which had the highest unemployment rate in North Carolina in June at 12.1%. Based in Kingsley Falls, Quebec, Canada, the company makes recycled paper towels, tissues and napkins. Started in 1964, Cascades employs about 12,000 workers at more than 100 locations in North America and Europe, including 178 at plants in Kinston and Rockingham. Salaries will vary, but will average about $47,000 annually, 47% higher than Scotland County's average according to a press release from Gov. Pat McCrory's office. The company will receive up to $402,000 in grant money from the One North Carolina Fund if it meets job creation and investment targets.
Best-performing N.C. stocks
The best North Carolina-based stocks to own over the past five years were mostly companies in traditional, less-than-sexy industries, according to Business North Carolina’s annual ranking of the Top 75 public companies in the state.
Raleigh-based Salix Pharmaceuticals Ltd. (ticker: SLXP) topped the list, increasing more than tenfold since June 2009 on increased acceptance of its drugs, which treat gastrointestinal illnesses. Other big gainers included companies with popular brands such as Greensboro-based VF Corp. (VFC) and Hanesbrands Inc. (HBI) and Krispy Kreme Doughnuts Inc. (KKD), both based in Winston-Salem. Each rose more than fourfold. Old Dominion Freight Line (ODFL), based in Thomasville, jumped 327%, while manufacturers Enpro Industries Inc. (NPO) and Carlisle Cos. (CSL), both in Charlotte, gained 306% and 276%, respectively.
In comparison, Bank of America Corp. (BAC) increased 18% during the five-year period, while the S&P 500 Index more than doubled.
See the top performers here.
Dollar General weighs bid for Family Dollar
Dollar General Corp. is considering a bid for Matthews-based Family Dollar Stores Inc., according to a Bloomberg report.
Chesapeake, Va.-based Dollar Tree announced July 28 it would pay $8.5 billion − $74.50 a share − for the discount retailer. Family Dollar's stock has been trading at or above that price since the announcement.
Goodlettsville, Tenn.-based Dollar General is currently the No. 1 dollar-store chain by number of stores. A combined Family Dollar and Dollar Tree would overtake the top spot.
Investor Carl Icahn, who took a 9.4% stake in Family Dollar in June (Under Fire, July 2014), aggressively pushed for a sale of the company, then dumped more than half of his shares after the Dollar Tree deal was announced.
BankNotes: The keys to community
There is no magic formula for building a successful community bank, but there are certain characteristics common among the most successful ones in our state.
The first is a very focused business model — in other words, the bank shouldn't attempt to be all things to all people or, for that matter, the right things to the wrong people. In fact, a leading community bank typically concentrates its efforts on the target client segment that gives it the best chance for success. In contrast to large national banks that employ a “one size fits all” approach, community banks should exhibit a very intentional focus on serving the unique needs of businesses, business owners and professionals. By focusing on one key segment or industry, a bank can realize greater return on investment by developing knowledge and services tailored to those areas.
Another key trait is never losing sight of what “community” truly means. These banks leverage the fact that they have local bankers with local ties — people who know, love and have roots in the area they serve — in order to build trust among customers. They also empower their bankers to make decisions on a local level. This streamlines and speeds up critical processes for customers, who, in turn, will reward the bank through deeper loyalty and increased business.
Delving even deeper, a well-defined risk management infrastructure is not simply a characteristic of successful community banks — it’s a must for financial institutions of any size. This should include credit risk as well as operational risk, interest rate risk, market risk and Bank Secrecy Act/ Anti-Money Laundering (BSA/AML) compliance. Any perceived weakness in risk management can make an otherwise successful community bank a target for regulators.
Lastly, the most obvious attribute common to all successful community banks is high-quality financial performance on a consistent basis. Unfortunately, there is no magic formula for generating profits.
It's by combining these features with an institution’s own inherent strengths – including its connections to, deep understanding of and sense of responsibility toward the community of people it serves – that true long-term success is achieved.
Custer has been director and chief executive officer of Yadkin Bank since 2011 and director and CEO of Piedmont Community Bank Holdings since 2010. Before joining Piedmont, he served as chairman and CEO of RBC Bank (USA).
Welcome back, Fayetteville
Undoubtedly due to unwavering military might, Fayetteville ranks third among the largest 150 U.S. cities for growth since the end of the recession, according to WalletHub. “We used 18 essential metrics — from the inflow of college-educated workers and number of new businesses to unemployment rates and home price appreciation — to examine how each city has evolved economically in the past several years, ” the Washington, D.C.-based personal-finance website said in a statement. Fayetteville, near the Army’s Fort Bragg military base, ranked sixth in employment and earning opportunity and 11th in economic environment. Raleigh ranked 10th, Durham 22nd, Greensboro 84th, Winston-Salem 87th and Charlotte 98th. Coming in last among Tar Heel states isn’t the Queen City’s only bit of bad news via WalletHub today. It also was among the worst cities for recreation. Maybe if residents worked a little harder, city leaders would let them play a little harder.
Charlotte bubbles ahead
Landing 1,260 jobs and the headquarters of Sealed Air Corp. may rank among the best days in the history of Charlotte’s business community, on par with NationsBank Corp.’s purchase of Bank of America Corp. in 1998 or Royal Insurance’s U.S. headquarters relocation from New York City in 1986. The latter included 1,200 jobs, about half of them filled by existing Royal workers.
As the 345th largest U.S. public company, Sealed Air, which makes bubble wrap and other packaging, is the type of headquarters move that Atlanta or Dallas envy, much less Greenville S.C., which is losing more than 600 white-collar jobs as the company consolidates into a larger corporate campus, according to the Wall Street Journal. It’s a big victory for North Carolina over South Carolina, which a month ago was crowing after attracting potentially thousands of jobs from Charlotte through recruitment of Lash Group, a division of AmerisourceBergen, and LPL Financial Corp., both of which are seeking to reduce costs by moving across the state line.
Charlotte’s gain is also a loss for New Jersey, which has higher overall taxation and declining revenue from Atlantic City casinos. Sealed Air is now based in Elmwood Park, N.J., an affluent suburb 15 miles west of Manhattan. Losing headquarters is never good news for governors, especially when they are considering a presidential bid, such as New Jersey’s Chris Christie.
Charlotte benefited from the background of Sealed Air Chief Financial Officer Carol Lowe, a UNC Charlotte graduate who joined the company in 2012 after working for more than 10 years at for Carlisle Cos., another local Fortune 500 company. She joined the company just months before Jerome Peribere, who was initially president and then named CEO in March 2013. He had spent the previous 35 years at Dow Chemical Co., and brought new vision to the company.
Incentives of about $36 million helped make Peribere’s decision as he picked North Carolina over four states. It disproves the notion that the Tar Heel state won’t be competitive in doling out money to massive international companies. In April, Texas promised $40 million to Toyota Motor North America Inc., which is moving its headquarters and about 6,400 jobs to a Dallas suburb from California.
Sealed Air’s promised wages surely enticed North Carolina’s politicians. The average annual wage is about $120,000, though simple math suggests the reality may be closer to $100,000 for about 1,200 workers after excluding the top 50 executives, whose wages skew the average. In any case, it was a huge victory for Charlotte and North Carolina.
Raleigh tops 'Best Places for Business' list
Eat your heart out, Des Moines. Raleigh returned to the top of Forbes’ Best Places for Business and Careers in 2014, unseating the Iowa state capital. Our seat of state government was third last year, previously ranking No. 1 in 2011 and from 2007 to 2009.
“Fueling Raleigh’s consistent results are business costs that are 18% below the national average, and an adult population where 42% have a college degree, the 12th best rate in the U.S. (30% is the national average). Raleigh is home to North Carolina State University and nearby schools include Duke University and the University of North Carolina at Chapel Hill. The area’s appeal has led to a strong inflow of new residents to the city, which boasts the sixth fastest net migration rate over the past five years.” Also contributing were Research Triangle Park, which has spawned 1,800 startups since 1970, business recruitment efforts, such as those that landed Cisco System’s expansion last month, and low regulatory hurdles. Charlotte ranked 12th. “Charlotte’s economy continues to be one of America’s best performers with the metro’s gross metro product up 3.7% last year.”
The list wasn’t all sunshine and rainbows for the Tar Heel State. North Carolina also boasts Hickory, the 10th-worst city for business. Though it has the lowest business costs in the U.S., its job losses are third highest over the past five years — and this is simply the latest slight for the metro.
BankNotes: Life after The Great Recession
It’s hard to believe that it has been nearly six years since The Great Recession ripped through the U.S. Nevertheless, the sweeping reforms, shrunken budgets and countless bankruptcies it engendered continue to make headlines. Community banks have not been immune. A headcount in this state is proof enough: Five years ago, there were approximately 80 banks. Today, there are 60.
With our industry under greater scrutiny than ever, regulatory and compliance costs have increased, forcing community banks to reassess their strategic options. Because these costs escalated so considerably and so quickly, it has become significantly harder for smaller banks to generate the same level of earnings they did just a few years ago. In turn, reduced earnings have caused investors to shy away, making it all the more difficult to raise capital. If a community bank is able to raise new capital, it often comes at the expense of current shareholders — whose shares become diluted — stifling the bank’s ability to grow.
If this weren’t enough, advances in technology have altered community banking at the branch level. In an effort to keep up with the cutting-edge conveniences larger institutions offer, many community banks have commoditized the banking experience in a niche that was previously best known for customized solutions. By giving customers the online- and mobile-banking options they demand, community banks have essentially increased the distance between themselves and their customers, diminishing the close relationships and personal interactions that have historically set community bankers apart.
However, the forecast is encouraging. While analysts continue to debate the degree to which the U.S. economy has recovered, the signs of recovery are unmistakable. Now it’s up to every industry to learn to grow, thrive and innovate in spite of perceived hardships. If the best ideas are born during the most difficult of times, imagine the possibilities that lie ahead. With fewer banks in North Carolina, there is greater opportunity — and greater responsibility — for those still standing. I’ll explore both in subsequent posts.
Custer has been director and chief executive officer of Yadkin Bank since 2011 and director and CEO of Piedmont Community Bank Holdings since 2010. Before joining Piedmont, he served as chairman and CEO of RBC Bank (USA).
New jobs for Charlotte, Oxford
Spectra Group Inc., a Princeton, New Jersey-based software consulting company, plans to add as many as 250 jobs in Charlotte over several years after receiving a $2.9 million grant approved today by the N.C. Department of Commerce, agency spokesman Daniel Spuller said. The grant is spread over 12 years and hinges on the company meeting job targets. The jobs will pay an average annual wage of about $85,000.
Spectra’s clients include Royal Bank of Canada's RBC Capital Markets division and Boston-based State Street Corp., according to the company’s website. President Aditya Narra said Spectra considered Austin and Tampa before selecting Charlotte because of its proximity to the Northeast and quality of life issues. Its office opens Aug. 1 in a 12,864-square-foot space in BB&T Center in downtown Charlotte.
Separately, New York-based Ideal Fasteners Corp. is adding 155 jobs over five years in Oxford, a Granville County city 40 miles north of Raleigh, according to a release from Gov. Pat McCrory’s office. The company, which now employs 226 people in Oxford, is receiving as much as $1.3 million over 12 years. The new jobs will pay an average of $35,200. Ideal Fasteners bills itself as the world’s second-biggest zipper manufacturer in the world.
Why Laura Bowles chose Movement Mortgage
Laura Bowles had worked in senior consumer lending jobs at three big U.S. banks before joining Movement Mortgage LLC, a fast-growing Charlotte-based lender, as chief financial officer earlier this year. Her father-in-law, Charlotte investment banker Erskine Bowles, urged Movement co-founder Casey Crawford to consider her for the job. At the time Laura Bowles was head of consumer and small-business lending products for New York-based Citigroup Inc.'s Citibank unit.
Lisa Davis, a contributing writer for Business NC, interviewed Laura Bowles for her article, “Catching a break” in the July issue. The following excerpts have been edited for brevity and clarity.
We met, and it gave me a chance to learn more about Movement Mortgage and what they did and what was unique about the company. And I talked a little about my experience with larger banks and some of the challenges that they face in the evolving regulatory environment and through some of the legacy issues from the financial crisis. We met periodically, talking about some of those things and got to know each other.
Toward the end of last year, beginning of this year, Casey was starting to feel that he needed to bring in someone with the expertise and somebody he was comfortable with to help drive the company to the next level and be able to realize the high level of growth the company has seen to date.
I lived in Charlotte and spent a lot of time in New York, that was really where all the people who worked for me were, it was where the bulk of what I needed to do was, so I spent a lot of time back and forth. I have a husband and small children, so the commute starts to wear on you.
The company has tremendous growth potential and prospects. I think the business model is unique relative to other independent mortgage companies given the very strong realtor relationships and the heavy purchase focus, and the high level of service that the company offers to its clients to its employees. It’s consistent in the culture throughout the company, so I think the business model is in an industry where I think companies struggle a little bit to differentiate themselves. That was very intriguing for me - that the prospects are tremendous because there is so much change in the industry. To have a differentiated model, to have realized such strong growth, is a tremendous opportunity.
A smaller company is able to be more nimble and that is something that I think is great. The larger companies have many more established processes, which can be a benefit at times and can also be a hindrance. I think given where we are in terms of the mortgage industry, to be able to be nimble is a huge advantage.
A lot of the things that are a challenge for more entrepreneurial organizations as they mature and become more established is being able to preserve the great culture that attracts a lot of people to it, while also developing a little bit more structure in process so that they can grow in a way that is efficient, particularly this highly regulated industry. So my goal is both to be able to continue the high level of growth while also developing more of the processes and efficiencies that you have with more established companies.
Biggest industry challenge
Since having been at the banks, I’ve really gotten to see how changing regulation has impacted the industry in such a big way. One thing that has been a benefit to Movement Mortgage is that the company was founded in the post-crisis environment where we’ve been fortunate to be able to build the business at the time the regulation was being formed, as opposed to having to retrofit the business to changing regulation, which for a large organization is very, very hard. It’s hard to move that fast, so I do think the continuously evolving nature of the regulation will be a challenge because it requires a lot of oversight and a lot of attention on the part of the leadership.
Five NC hospitals recognized among nation's best
Five North Carolina hospitals achieved national rankings in at least one specialty on U.S. News & World Report's 2014-15 list of top medical centers. The news outlet evaluated nearly 5,000 hospitals in 16 specialties.
Duke University Hospital was ranked No. 14 overall and was the top-ranked hospital in North Carolina. The 957-bed hospital achieved national rankings in 13 adult specialties. It ranked No. 4 in Cardiology & Heart Surgery and No. 5 in Pulmonology in the United States.
Here are the rankings of the Best Hospitals in North Carolina:
1. Duke University Hospital, Durham (nationally ranked in 13 specialties: Cancer, Cardiology & Heart Surgery, Diabetes & Endocrinology, Gastroenterology & GI Surgery, Geriatrics, Gynecology, Nephrology, Neurology & Neurosurgery, Ophthalmology, Orthopedics, Pulmonology, Rheumatology, Urology)
2. Wake Forest Baptist Medical Center, Winston-Salem (nationally ranked in 4 specialties: Cancer; Ear, Nose & Throat; Nephrology, Pulmonology)
3. University of North Carolina Hospitals, Chapel Hill (nationally ranked in 2 specialties: Cancer; Ear, Nose & Throat)
4. Carolinas Medical Center, Charlotte (nationally ranked in one specialty: Urology)
5. Mission Hospital, Asheville (nationally ranked in one specialty: Pulmonology)
To see how other North Carolina hospitals fared, click here.
Read how BNC ranked the state's top hospitals in our March 2014 issue:
Raleigh a top 10 place for STEM graduates
The Raleigh-Cary metro area ranked No. 8 on NerdWallet.com's list of best places for graduates in science, technology, engineering and math fields.
Using data from the Bureau of Labor Statistics, the financial website analyzed criteria including annual pay for STEM jobs, median rent and availability of jobs in STEM industries.
The study cited N.C. State University's STEM education program, which helps teachers learn to prepare local students for work in the area's STEM-related companies upon graduation.
Best Places for STEM Graduates
view the report here
1. San Jose-Sunnyvale-Santa Clara, Calif.
2. Seattle-Bellevue-Everett, Wash.
3. Washington-Arlington-Alexandria, D.C.-Va.-Md.-W.V.
4. Houston-Sugar Land-Baytown, Texas
5. San Francisco-San Mateo-Redwood City, Calif.
6. Austin-Round Rock-San Marcos, Texas
7. Boston-Cambridge-Quincy, Mass.-N.H.
8. Raleigh-Cary, N.C.
9. Denver-Aurora-Broomfield, Colo.
10. Dayton, Ohio
Wake Forest gets $280M settlement
It’s Christmas in July for Winston-Salem’s largest employer. Wake Forest Baptist Medical Center settled a patent lawsuit with Kinetic Concepts Inc., a San Antonio-based company, which has agreed to pay $280 million in royalties through 2017.
The medical center will use income from the settlement to fund “major initiatives of strategic importance,” according to a statement issued today.
Wake Forest licensed technology for closing wounds, developed by faculty members Louis Argenta and Michael Morykwas, to KCI in 1993. The device led to about $500 million in royalties for Wake Forest, according to a 2012 Fortune story written by BNC contributing editor Ken Otterbourg.
Those royalty payments ended in 2010 after KCI said it was freed from the licensing agreements due to a federal court ruling invalidating the product’s patents. That prompted a lawsuit in which Wake Forest and KCI have accused each other of acting in bad faith.
Today’s statement notes that KCI will pay $80 million in 2014, $85 million in 2015, $85 million in 2016 and $30 million in 2017.
“The agreement negates the need for further litigation and fully releases all claims and counter-claims that were previously scheduled to go to trial in San Antonio, Texas, next month,” according to the statement.
KCI, founded in 1976 by Jim Leininger, is a private company owned by a group of pension funds and private-equity firms.
Triangle among top life-science clusters
The Raleigh-Durham metro ranks fourth among U.S. life-science clusters, according to Chicago-based Jones Lang LaSalle Inc.’s 2014 Global Life Sciences Cluster Report. It ranks behind Boston, San Francisco and San Diego, and is in front of New York City and Los Angeles. It was also fourth last year.
The report ranks clusters based on concentration of employment, employment growth, concentration of life-science establishments, venture-capital funding, National Institutes of Health funding and patents. Its employment (21,072) is 1.2% more than last year, while number of establishments (813) grew 5.2%. It racked up $262.6 million of venture capital (3.1% of the U.S. total) and $893.1 million from the NIH (4.0% of the U.S. total). (To read BNC's report on venture-capital funding in the biotech industry, click here.)
According to the report: “The Triangle’s rich talent pool, stable socioeconomic structure, proximity to universities and high quality of life has attracted some of the big names from the life sciences sector to the region. Agro-biotech firms have displayed strong growth in the past few years. The region is already home to four of the top five ag-tech companies including Syngenta, Bayer CropScience, BASF and Monsanto. Agro-biotech being one of the strongest industries in North Carolina, the state has the natural resources to support the research and development of these firms. Bayer CropScience recently completed a greenhouse laboratory on its campus and plans to double its investment in biotechnology operations over the next 5 to 10 years. Switzerland-based firm Syngenta announced plans to expand its campus in RTP by $94.0 million, which will bring 150 new jobs by 2018. Syngenta is also expanding its crop protection and seed development operations which will bring new laboratory and office facilities to its campus.”
Welcome to the Hornets Nest
The Charlotte Hornets’ quest to make Queen City residents care about basketball during the summer continued this week with the franchise’s unveiling of its new playing surface at Time Warner Cable Arena. The court goes all-in on the new/old name, with the hard-maple flooring — made by Cincinnati-based Robbins Sports Surfaces — displaying a “cell pattern.” The result ends up looking a little more like a honeycomb than a hornet’s nest, but we get the idea.
More important, from a business perspective, is another new addition: The Novant Health logo in front of both benches (and subliminally inserted on the big screen in the photo circulated by the team). “As the official healthcare provider for the team, Novant Health is proud to have our brand on this new court to further connect our two organizations,” Novant Health Executive Vice President and Chief Consumer Officer Jesse Cureton said in a statement. “We’re as excited as the rest of the community that the Charlotte Hornets are back.”
Also from the announcement: “The floor is made up of more than 200 sectional panels, each of which are 4 feet by 8 feet and weigh approximately 175 pounds. It features a revolutionary locking system designed to speed up arena changeovers and provide a tight, monolithic appearance. The floor is designed to enhance the safety, comfort and performance of the players as it will absorb about 60% of a player’s impact energy. The intent is to provide a surface that allows for exciting play while at the same time reducing wear and tear on the players’ bodies.”
A few of those bodies will be decided tonight. The 2014 NBA Draft begins at 8 p.m., and it should be a big one for the Hornets. The team has the ninth pick and the 24th, as well as the 45th. This is being hailed as a talent-rich class, so here’s to hoping no Adam Morrison types get the privilege of Time Warner Cable’s cushy new floor.
Hanesbrands to acquire European apparel company for $550M
Hanesbrands will acquire DBApparel, a Rueil-Malmaison, France-based underwear and intimate apparel manufacturer, for about $550 million.
It's another big acquisition for the Winston-Salem-based company, which paid $583 million for Iselin, N.J.-based Maidenform Brands in October.
DBApparel's largest brand is DIM, which accounts for about half of sales. The company also markets Playtex and Wonderbra, which also are sold by Winston-Salem-based Hanesbrands.
The two companies were both owned by Chicago-based Sara Lee Corp. until 2006, when Sun Capital Partners acquired DBA and Hanebrands became an independent, publicly traded company.
"Together, we will be a nearly $6 billion company utilizing our disciplined Innovate-to-Elevate strategy and leveraging our global supply chain," said Richard Noll, Hanesbrands' chairman and CEO, in a statement.
Hanesbrands employs 49,700 globally, including more than 3,200 in North Carolina.
The transaction could close as soon as the third quarter.
North Carolina ranked No. 5 Top State for Business
North Carolina ranked fifth in CNBC's annual America's Top States for Business study, up from 12th last year.
The study used 56 metrics separated into 10 broad categories to gauge performance. The Tar Heel state earned high marks for the quality of its workforce and strength of its economy, but achieved lower scores in education and quality of life.
Categories are weighted based on criteria states use to market themselves for economic development. North Carolina earned 1,569 out of a possible 2,500 points in the study.
Cost of doing business, which was determined by factors including taxes, utility costs and rental costs for office and commercial space, was given the most weight. Access to capital carried the least weight.
Georgia ranked at the top of the list, followed by Texas, Utah and Nebraska.
Here are the results for North Carolina:
|23||Cost of Doing Business|
|34||Quality of Life|
|21||Infrastructure & Transportation|
|12||Technology & Innovation|
|17||Access to Capital|
|14||Cost of Living|
Lighter tax burden in N.C.?
The local tax burden lightened in North Carolina in 2012 compared with the previous year, according to a new report by the John Locke Foundation, the Raleigh group that promotes limited government.
Local tax and fee collections were 3.9% of per capita personal income in 2012, down from 4.2% the previous year. More recent information is not available.
State and local governments collected about 10 cents of every $1 earned by North Carolinians in 2012. State taxes accounted for 6%, with local governments making up the balance, according to the report, which was based on the State Treasurer’s annual financial information report.
Durham had the heaviest local tax burden, 5.7% of per capita income, among North Carolina’s 10 most populous counties. Here are how they ranked by tax collections as a percentage of income.
New Hanover 4.84
BNC honored for Editorial Excellence
Business North Carolina won four 2014 Editorial Excellence awards from The Alliance of Area Business Publishers on Saturday during the organization’s summer conference in Baltimore. “The annual competition recognizes excellence in journalism, photography and design achieved by regional business publications,” according to the press release announcing the awards. “Twenty-seven judges are comprised of faculty members from the University of Missouri School of Journalism, with qualifications in respective area of expertise.”
BNC won two gold awards in the magazine competition. Senior Contributing Editor Edward Martin took home first place in Best Body of Work for “Out of Sight,” “A Place Apart,” “Wordly Things” and “Critical Care.” "Martin’s stories are fine examples of how to humanize business stories without losing sight of the numbers,” the judges noted. “The writing has many lovely turns of phrase that keeps the reader engaged to the very end.”
Editor-In-Chief David Kinney and Merissa Jones, our then-art director, were awarded gold in Best Cover for February 2013’s “Always Low Wages." "BNC took Wal-Mart’s slogan and happy-face visuals and turned it on its head to create a humorous cover with an edge,” according to the judges. “The title focuses the magazine’s angle on the impact of low wages on the economy."
In the Best Local Coverage of a National Business/Economic Story category, open to magazines and newspapers, the judges awarded a silver prize to contributing editor Ken Otterbourg for his piece on blu eCigs, "Vapor Trails." “Using social media, great graphics and wonderful story-telling, Otterbourg tells the fascinating story of the birth of e-cigarettes. Lots of detail is packed in the story, giving great twists and insight about how an industry is being re-invented amidst health concerns and heavy regulation.”
Finally, Kinney, Art Director Jim Denk and Managing Editor Spencer Campbell won bronze in Best Recurring Feature, also an open category. “The ‘Regional Report’ uses inviting graphics and crisp text to show readers from anywhere in North Carolina how their own locale stacks up. The beautifully illustrated data sets cover an impressive array of topics.”
The competition featured more than 659 entries, up from 573 the year before.
NC unemployment rate rises in May
North Carolina's May unemployment rate increased to 6.4%, up from 6.2% in April. The U.S. rate remained at 6.3%.
The number of people in the labor force grew by 18,982, while the number of people unemployed increased by 8,795, or 3% over the previous month.
The leisure & hospitality industry had the largest net increase in jobs over the previous month, adding 7,400 workers. The professional and business services industry posted the largest decrease, with 3,400 fewer jobs.
Government and manufacturing jobs showed the largest year-over-year decrease.
The information was reported by the N.C. Department of Commerce.
Triangle ranked 2nd for growth prospects
Raleigh-Cary will rank among the nation’s five fastest-growing metro areas over the next seven years, according to a report issued by the U.S. Conference of Mayors.
Economic output in Raleigh-Cary will expand 4.3% annually between 2013 and 2020, trailing only Austin, Texas, among the 100 largest metros, the report predicts. Durham-Chapel Hill is fifth, trailing Fayetteville, Ark., and Riverside, Calif., in the report by IHS Global Insight, a New York-based research firm.
Charlotte ranked 19th with annual growth of about 3.5% expected. Greensboro-High Point is predicted to expand by 2.7%, and Winston-Salem 2.6%.
The report notes that the Charlotte metro — which includes Gastonia, Concord and Rock Hill, S.C., and is the 22nd largest economy in the U.S. — makes up about 26% of the state's total output. The Triangle (Raleigh-Cary and Durham-Chapel Hill) accounts for 22% and the Triad (Greensboro-High Point and Winston-Salem) 13%.
Charlotte Partnership CEO says S.C. has unfair recruiting edge
Charlotte-area companies considering relocating within the region shouldn’t get incentives tied to their existing jobs, Charlotte Regional Partnership CEO Ronnie Bryant says.
Bryant wants lawmakers in Raleigh and Columbia, S.C., to change the rules to create a more even playing field, which he says is now tipped in South Carolina’s favor.
Earlier this week, South Carolina lured Boston-based LPL Investment Holdings Inc. and Chesterbrook, Pa.-based Amerisource Bergen Corp.’s Lash Group, which announced plans to move a combined 2,200 jobs from Charlotte to Fort Mill, S.C. Both companies now have offices in Charlotte within 15 miles of their new locations.
South Carolina was able to count existing employees at LPL and Lash as “new” jobs as part of their incentives offering, with additional benefits provided if the companies add more positions as expected. North Carolina doesn’t permit such incentives to retain current employment levels, Bryant says. LPL plans to eventually employ 3,000 people at the Fort Mill site, CEO Mark Casady told reporters June 16.
Bryant’s organization includes representatives from 12 counties in North Carolina and four in South Carolina, and its purpose is to promote the region without favoritism. The state of North Carolina has paid dues since the group was launched in 1991, though funding is ending on June 30, Bryant says. South Carolina has never contributed to the partnership.
“When you consider incentives, South Carolina is in a much better position because they have more flexibility in their incentives program,” Bryant says. “The state of North Carolina isn’t structured to provide incentives for existing jobs.”
U.S. senators condemn e-cigarette companies over marketing tactics
At a U.S. Senate committee meeting Wednesday, lawmakers harshly criticized e-cigarette companies, saying they intentionally market their products to youth and children.
The debate, reported by Reuters, came a day after Reynolds-American announced it will roll out distribution of its VUSE electronic cigarettes across the U.S. The Winston-Salem-based company said in May it was creating 200 jobs at its plant in Tobaccoville to manufacture VUSE cigarettes.
Leaders of e-cigarette companies say their ads are targeted only to adults.
The use of e-cigarettes among teens in America doubled between 2011 and 2012, Reuters reports, and the Journal of the American Academy of Pediatrics reported this month that youth exposure to e-cigarette ads on TV increased 256% from 2011 to 2013.
It's still unclear if any health risks are posed by use of e-cigarettes. But the FDA has proposed a rule that would extend its regulatory authority to cover e-cigarettes and would prohibit sales to youth.
How e-cigarettes work:
Asheville's FLS Energy plans eight new solar farms in NC
FLS Energy, ranked as North Carolina's fastest growing company in 2011 and 2012 by Inc. magazine, will build eight new solar farms across North Carolina. The projects will add 38 megawatts to the 50 megawatts of solar projects FLS owns and operates in the Southeast. Charlotte-based Duke Energy will purchase the electricity generated by the solar farms.
The Asheville-based company, started in 2006 by co-founders Dale Freudenberger and J. Hardy LeGwin, announced in May it had received an undisclosed amount of money for expansion.
Investors include Hanover, N.H.-based New Energy Capital Partners; the CleanTech Alliance Fund, managed by Minneapolis-based North Sky Capital; and Alexandria, Va.-based Novus Energy Partners.
FLS plans to add a total of 80 megawatts in 2014 and 150 megawatts in 2015.
The company's 2012 revenue was $38.6 million, according to Inc. magazine.
Earlier this week, Green America named FLS Energy one of three winners of its quarterly "People and Planet" award. The Washington, D.C.-based environmental advocacy group recognized U.S. companies with 50 or fewer employees for their commitment to the environment in business strategies and operations.