Honda Aircraft announces $19M expansion in Greensboro
With sales of its $4.5 million jet looking promising, Honda Aircraft Co. announced a $19 million expansion at its headquarters at Piedmont Triad International Airport in Greensboro.
The first HondaJet aircraft, a light corporate jet that can carry up to seven passengers, is expected to obtain FAA certification in early 2015. It has logged more than 2,000 hours of testing at more than 70 U.S. locations.
The expansion will increase its total space to more than 680,000 square feet and brings Honda’s total capital investment to $160 million. It includes a 49,968-square-foot expansion of its headquarters and a 24,405-square-foot hangar. Construction is expected to be complete in the second half of 2015.
The company, founded in 2006 as a subsidiary of Japan-based Honda Motor Co., opened a 90,000-square-foot maintenance and service center in 2013. Its 250,000-square-foot factory opened in 2010.
In February, the company employed about 900 workers. HondaJet employs more than 1,200 workers and expects to add 150 more before customers take delivery, according to its statement.
Nearly 500 new jobs for Greenville
DPx Holdings B.V. will invest $159 million in an expansion of its Patheon pharmaceutical manufacturing plant in Greenville and will create 488 jobs by 2019. Average annual salary for the new jobs will exceed $54,000, higher than Pitt County’s $39,845.
DPx was formed earlier this year when Durham-based Patheon combined with Dutch vitamin-maker Royal DSM in a $2.6 billion deal. The Durham-based company employs about 1,680 in the state, including more than 1,000 here, and about 8,000 at 20 locations worldwide.
The company will receive $6.3 million in state grants if it meets job creation targets.
DPx's CEO is James Mullen, former CEO of Biogen Idec Pharmaceuticals Inc., one of the world's largest biotech companies. Its management team includes Gary Shope, chief of staff to the DPx executive committee and a former officer of the Research Triangle Park Foundation.
Cowell named among world's top pension officials
North Carolina Treasurer Janet Cowell’s resume got a nice boost with the Sovereign Wealth Fund Institute ranking her 18th on its list of the world’s 100 most influential public investors.
The New York-based group studies public pensions and sovereign wealth funds and bases its ranking on fund size, investment performance and industry trends.
Cowell ranked fifth among U.S. investment officials on the list, which was topped by André Bourbannais, global head of private investments at the Canadian Pension Plan Investment Board. She was the second-highest ranked woman.
Cowell oversees the North Carolina Retirement Systems, the nation’s tenth largest public pension with $90 billion in assets. It provides retirement benefits for more than 900,000 people, including teachers and state employees.
Cowell, who is an elected official, outranked chief investment officers of neighboring states, both of whom are in appointed positions. Ron Schmitz of the Virginia Retirement System, was 22nd, while Hershel Harper of the South Carolina Retirement System Investment Commission was 86th.
Carolinas come up short on Forbes 400
The annual Forbes 400 listing of the richest Americans shows how poorly North Carolina and South Carolina stack up when it comes to the richest billionaires.
North Carolina has three people on the list: SAS Inc. co-founders James Goodnight and John Sall and Charlotte investor C.D. “Dick” Spangler Jr. South Carolina has one: Anita Zucker, widow of Charleston investor Jerry Zucker, who died in 2008.
Almost 60% of the wealthiest live in the four most populous states. California, a tech hub, is home to 93 billionaires on Forbes’ list. Finance center New York has 65, Texas, 39, and Florida, 31. Texas has gas and oil, Florida has beaches, and neither state taxes income or dividends, providing a whopping subsidy for the wealthy.
By comparison, Illinois, Ohio and Pennsylvania, the nation’s fifth, sixth and seventh most populous states, have a combined 25 on the list. They each have income tax rates of at least 3%.
To make Forbes’ list, one needed a net worth of $1.55 billion this year, versus $1.3 billion in 2013. Yes, the rich are getting richer.
Having billionaires in a community matters — just ask anyone responsible for raising funds for everything from venture capital to the local food bank. It’s an organic process and one can’t mint billionaires. But the concentration of wealth — and the ensuing power — in the four biggest states is not a positive trend.
U.S. economic outlook solid, PNC forecasters say
Investors can sleep soundly, two senior forecasters at PNC Financial Services told the bank’s customers in Charlotte today.
The U.S. stock market has been on a roll for five years and “there’s nothing to point to suggesting this thing is coming to an end,” Bill Stone, chief investment strategist at PNC Wealth Management, told the group assembled at Quail Hollow Club.
Stocks are trading at fair value, neither expensive nor cheap based on historic standards, he said, adding that the past three bull markets have lasted six, eight and 10 years.
PNC expects the U.S. economy to grow by 2.2% this year, 2.9% in 2015 and 2.6% in 2016, according to a company report. Unemployment should decline from 6.3% to 5.3% over the next two years, said Bill Adams, senior international economist for the Pittsburgh-based company, which is the second-largest U.S. regional bank with assets of $327 billion.
The best historic indicator of a pending recession is the spread between the yields of 10-year Treasury bills and 30-year Treasury bonds, Stone said. The past four recessions occurred after the spread declined to less than zero. The current spread is about 0.70%, or 70 basis points.
PNC bought Royal Bank of Canada’s Raleigh-based RBC Bank USA for $3.5 billion in 2012.
Three Charlotte women on power ranking
Three women based in Charlotte rank among the nation’s 25 most powerful bankers, according to an annual report by the American Banker trade publication.
Bank of America Corp.’s Cathy Bessant, global technology and operations executive, is rated seventh, while Laura Schulte, president of eastern region community banking at San Francisco-based Wells Fargo Corp., is 19th. Andrea Smith, global head of human resources at Bank of America, is 22th. Bank of America is based in Charlotte, though the bank's CEO, Brian Moynihan, lives in Boston.
According to the trade publication, Bessant has more influence than Bank of America’s Anne Finucane, global chief strategy and marketing officer, who is 13th. She is based in Boston
Bessant told the publication her recently completed stint as president of the Foundation for the Carolinas helped her handle the stress of the financial crisis. The Charlotte-based community foundation had assets of $1.4 billion on July 31. "During the toughest years in banking I would have been lost if not for the offset of my civic work," she says. "Imagine the opportunity to go every other month and sit with important, caring, inspirational people. What a rejuvenation."
Charlotte software company to create 603 jobs
AvidXchange, a Charlotte-based software company, said it will quadruple the size of its local workforce, adding 603 jobs to its existing 200 by the end of 2018.
Founded in 2000, the company provides automated accounts-payable systems to small- and mid-sized businesses.
The company will invest $21.4 million in a new, 115,000-square-foot headquarters at the NC Music Factory in uptown Charlotte.
The new jobs will pay an average annual salary of about $61,651, slightly higher than Mecklenburg County's $59,046, according to a press release from Gov. Pat McCrory's office.
“AvidXchange is deeply rooted in the Queen City, and as we continue to prosper, it is important for us to grow and contribute to the city that has supported us from our days as a small startup to the Inc. 5000’s 20th fastest-growing company in the Charlotte metropolitan area," CEO Michael Praeger said in the release.
AvidXchange employs more than 300 people in North Carolina, New Jersey and Georgia.
"The direct and indirect impact felt to our local economy as a result of the more than 600 jobs created will be significant,” Bob Morgan, Charlotte Chamber president and CEO, said in a statement.
The company could receive more than $7.5 million over 12 years from the state's Job Development Investment Grant program if it meets job creation goals.
Raleigh clinical trials company plans IPO
Raleigh contract research organization PRA Health Sciences Inc. filed for a $375 million public offering, a year after Kohlberg Kravis Roberts & Co. LP bought the company for $1.3 billion.
PRA, one of the largest clinical trials companies in the world, reported a $14 million loss on $712 million in revenue during the first half of 2014. KKR owns 99% of the shares after buying PRA in 2013 from Genstar Capital LLC, a San Francisco-based private equity company.
The company has 10,000 employees in more than 80 countries, running trials on experimental drugs for pharmaceutical companies.
PRA CEO Colin Shannon is a former executive at Wilmington-based Pharmaceutical Products Development LLC. He was paid $8.8 million last year, according to the IPO filing. Chief Financial Officer Linda Baddour, also formerly of PPD, received $5.86 million.
The Facebook effect: $707 million in NC
Facebook Inc.'s Forest City data center, which employs fewer than 100 people, has had a $707 million economic impact since the Menlo Park, Calif.-based company started construction in 2010, according to a report prepared by Research Triangle Park-based RTI International. Much of the benefit stemmed from construction spending of $526 million, which includes data-center equipment, software and infrastructure at the 800,000-square foot facility that is about 75 miles west of Charlotte.
Forest City is one of three locations in the world where Facebook stores billions of photos, videos and comments from users. Other sites are in Prineville, Ore. and Lulea, Sweden, while a fourth is under construction in Altoona, Iowa.
The social-network service provider spent $17 million in operating expenditures in 2013, which supported 310 jobs and had a total statewide economic impact of $27 million.
Western North Carolina is home to other large data centers such as Google Inc. in Lenoir and Apple Inc. in Maiden, all drawn by the region's plentiful supply of electricity and relatively low costs.The Facebook site once housed a Burlington Industries Inc. textile mill and later, a boat manufacturer.
In July, Facebook announced a partnership with Tryon-based PANGAEA Internet and Rutherford County to provide free Wi-Fi access to homes of about 100 students in Forest City, where more than a third of residents had income below the federal poverty level between 2008 and 2012.
The company also has issued $450,000 in community grants to Rutherford County schools and nonprofits since 2011.
Four energy companies to build $4.5 billion pipeline in NC, Virginia
Dominion Resources, Duke Energy and two other energy companies will construct a 550-mile pipeline that could create thousands of construction jobs and bring 1.5 billion cubic feet of natural gas per day from shale basins in Pennsylvania, West Virginia and Ohio to North Carolina and Virginia.
Atlantic Coast Pipeline LLC is a joint venture of Richmond, Va.-based Dominion, Charlotte-based Duke Energy, Charlotte-based Piedmont Natural Gas and Atlanta-based AGL Resources.
The $4.5 to $5 billion pipeline will run from Harrison County, W. Va., to Robeson County. Pending regulatory approval, construction could begin in 2016 with service beginning by late 2018. The pipeline would transport natural gas from the Marcellus and Utica shale regions to the utilities, which are reducing their use of coal-fired power plants.
The construction phase of the project is expected to create 738 jobs per year in North Carolina and will have an economic impact of $680 million, Gov. Pat McCrory said in a statement.
Dominion will have a 45% ownership stake and will build and operate the pipeline. The company, which provides electricity to more than 120,000 customers in northeast North Carolina, operates about 8,000 miles of pipeline in six states.
“The Atlantic Coast Pipeline is a transformational project for our region," the companies said in a joint statement. "It will create thousands of construction jobs during development and significant new revenue for state and local governments throughout North Carolina, Virginia and West Virginia. The expanded source of gas will also help fuel economic development across the region as businesses and homes rely more on natural gas."
Duke Energy will have a 40% ownership stake, while Piedmont and AGL Resources will own 10% and 5% respectively.
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.”