What parts of the Charlotte region’s economy show promise despite the downturn?

Dunn: Education. UNC Charlotte is embarking, with the North Carolina Research Campus, to build the nation’s largest bioinformatics program. But what makes us most excited is our participation in the energy industry. A significant energy cluster has gravitated to the region, and as a research university, we are central to advancing it. The university and the state are making an enormous investment — $75 million — in the Energy Production Infrastructure Center, which will produce engineers to build the next wave of energy production.

Carter: Roughly $40 billion of the stimulus package will be dedicated to modernizing the electric grid, increasing weatherization of homes and other energy advancements. The state can come out of this downturn ahead of the curve, from an infrastructure perspective, if those dollars are managed effectively.

Piemont: From a health-care provider standpoint, our enterprise has done well so far. We’re sometimes the last to enter a downturn in the economy. We’re often the first to emerge. As soon as something good begins to happen, I’ll let everyone know.

James: Let me tell you where the economy is headed first. We’re going to see continued slowing through ’09. The only thing that could arrest some of that would be the stimulus package. But it’s going to be six months before we see much effect. Currently, the unemployment rate in Charlotte is 8.3%. It’s going to get to 10% by year-end, dependent on the continued layoffs at Wells Fargo and Bank of America, primarily. The housing market is continuing to decline.

That’s a pretty grim picture.

James: In spite of that, the Charlotte economy is in much better shape than most of the rest of the country. The Fifth Third affiliate in North Carolina is in much better shape than most of the Fifth Third affiliates in the Midwest and, certainly, in Florida. While the economy is tough and it’s down, the recession will be milder here. And we will be one of the first to come out of it.

Cox: As a country and as a region, we face a real economic Armageddon. As for the stimulus plan, they talk a lot about 4 million jobs being created, which creates an expectation for people who have been laid off of, “Hey, I’m going to get my job back” or “My field is coming back.” I don’t think that’s the case. There aren’t going to be all those financial jobs or all those legal jobs or you name the market sector.

Don’t education, energy and health care also face changes?

Cox: It’s a great time for people to go back to school. But if all the people could go to school who wanted to, UNC Charlotte couldn’t hold them. Neither could the community colleges. In health care, Mark Nantz, president of Carolinas Medical Center-NorthEast, recently told our board that the hospital has $600 million in capital projects planned for the next 10 years, many of which they’re not starting. In the past, health care may have ramped up to anticipate demand. His point was that they were going to wait until the demand is there and then ramp up.

Things can change quickly.

Cox: Look at technology. The most technologically advanced fiber-optics plant in the world is in Cabarrus County, and it closed in 2002. Corning reopened it last year with some number of jobs. But the company just announced a week ago that it is cutting 3,500 jobs worldwide — 1,400 in Hickory — by the end of this year. The folks at the Cabarrus plant say they’re going through layoffs again. Look at a historically black college, Barber-Scotia in Concord. A few years ago, it had a thousand students, and the jobs attendant with them. It nearly closed. It’s the same in textiles and now tobacco. And motorsports.

James: Across the board, people are waiting until they’re hat in hand before launching some projects.

Is that the smarter way to go?

James: No, it’s not smart. A recession is nothing more than a state of mind. If we all say, “Things are getting bad, I better not take that vacation this summer, I better not buy that new car, I better not add on to my house,” then that becomes self-perpetuating, and we wind up in a spiraling-down recession. What we really need is for consumer confidence to come back and the public to be willing to spend some money.

Carter: What’s amazing is that, in any recession, the places that tend to stay focused on trying to advance, especially in economic development, and build up those cornerstones are the ones that succeed.

Piemont: You have to have a longer-term point of view. What happened last year was an enormous shock. People are trying to gather themselves and understand what it means. We all like quick solutions. Everyone wants to know exactly what’s going to happen and how this is going to affect them for what period of time.

Carter: But if we look at the opportunities to facilitate clusters, not just in energy but also in such fields as biotechnology, education and transportation, we can come out of this recession not on home plate, standing there with the bat ready to hit, but on second base. It’s always scary to invest against the curve. But Warren Buffett says, in a recession, buy real estate. It’s a scary proposition but fundamentally sound. Building up your infrastructure is an investment that will pay off as this thing turns around.

Piemont: To our employees, we’re saying it’s steady as you go. We don’t have a choice but to provide our service. We are part of the quality of life, as is education, energy, financial services, et cetera. We have to persevere a little bit, see what happens and go forward. It wasn’t too long ago that gasoline was $4.50 a gallon — if you could find it. Look where we are now. It’s a volatile time, but we’re not going anywhere.

Dunn: If you look at higher education as a business, our customers are the employers. There are some bold businesses out there that are trying their best to boost the infrastructure, to be ready whenever recovery comes, whether it’s six months from now or 18 months or however long. Those are the ones that will emerge the strongest when we come out of this.

Given the troubles of the banking industry, is the region too dependent on it?

Dunn: Banking and finance account for 9.7% of the jobs in Mecklenburg County, which contracts to 7.5% as you move outside the region a little bit. That suggests we have diversity in our employment base. Now, if you look at it from a wage standpoint, certainly the scale is tipped a lot higher. But we are underpinned by a relative amount of diversity.

James: There are 580,000 jobs in Mecklenburg County, and if you take the top 25 employers, there are only two banks — Bank of America and Wachovia. Those two combined make up about 6% of the jobs in the Mecklenburg County. The two major hospitals employ more than the two banks. So we were never too dependent on banking.

Cox: It’s one of those industries that we don’t recruit for. Banking self-recruits, whether it’s employees or other divisions of its own companies. We might be recruiting for biotech or for manufacturing or for defense jobs, but banking is a stand-alone industry.

James: If you look across the country, every strong city has strong banks. Were Charlotte not to have the strength of the financial industry, I don’t believe we would have a strong economy and the vibrancy that we have today.

Carter: It’s like asking whether New York is too financially centered. It’s absolutely beautiful to have a very strong banking center in your city. You say, Joe, that the health-care industry is the first signal to the turnaround. I think the beginning of the turnaround starts with access to capital. That’s where the banking infrastructure plays such a huge role.

Dunn: Really where we could shore up those capital markets, though, is on the private-equity side. There are some outstanding private-equity firms here. But as a percentage of private-equity funds available in combination with banking capital, we’re probably underserved.

James: Let me come back to banking for one more point. We have diversity in banking as well. If we were Charlotte and had one major bank with 35,000 employees, we would be more dependent on that one bank. But we have got two very, very large banks. And we have a number of regional banks, like Fifth Third, like SunTrust, like BB&T, which are major players in the top 12-15 banks in the country. They have a large presence here, and there are the community banks. That makes us stronger.

What’s the best way to make sure that prosperity spreads across the region?

Cox: The key to that is how we interrelate with the region. If Charlotte does well, we’re going to do just fine. So it’s in our best interest for Charlotte to do as well as it can economically. The governor just opened an office in Charlotte. That makes her more accessible. The new secretary of commerce is very familiar with, at least, Cabarrus County. But we can’t operate as 12 counties that are not interrelated. We share the same roads, water, air and work force. So we can’t have water wars, air-quality wars or work-force wars.

Carter: That’s the way we’re moving forward with the planning for nuclear power. We’re trying to take a regional stance on generation. So we’re saying, ‘Hey, let’s take the gloves off, let’s work with Progress, let’s work with the SCANA, let’s work with the local electric utilities and see if we can’t solve this multibillion-dollar monster as a team instead of as an individual.’ One plant would double the size of our rate base. If you don’t need it all at once or if you can swallow that monster with other partners, then by all means, let’s talk about it.

How will the North Carolina Research Campus change the region?

Dunn: It will be a driver for us. The bioinformatics center is our link to the North Carolina Research Campus. We’re adding master’s and doctoral programs there. We fully expect the research that comes out of there to be a big driver. But there are lots of other drivers. We’re doing about $35 million a year in externally funded research. That can help employers build out new technology, new products, new services today and also attract companies.

What can be done to help?

James: The key is getting capital. Most entrepreneurs either know how to make something well or to sell something well. But they really don’t know how to start or run a business. We need support systems and education. Typically, it’s not a bank providing the first capital. It’s a venture-capital fund, or it’s a friend that loaned you some money — an angel investor.

Piemont: There’s no doubt that we have a pro-business attitude in this community. But we don’t have that basic risk capital available to these businesses. If the money is here, the entrepreneurs will be here, because we can offer them every other element they need.

James: We’re pleased to see the renewed emphasis on the Small Business Administration in the stimulus package, taking the guarantees up to 90% and reducing the fees for SBA loans.

Cox: When people question why the North Carolina Research Campus is in Kannapolis, one thing they point out is the lack of access to venture capital. Venture capitalists want to be 30 minutes from where they’re investing. We’re working to bring in a venture-capital firm from California and site it on the campus, and we’re very close.

Carter: The next big entrepreneurial opportunity will be in battery technology. We have the makings of an energy cluster here in North Carolina. But energy clusters are probably one of the hardest things to establish and grow. The banks could play a huge role, especially in this environment, where it could be a new product, and especially with the focus on the SBA. It just depends on what model the banks move forward with. It’s not going to be the same model, and they’re still figuring it out. But it’s a new normal for a lot of companies.