How does the state balance recruiting with helping business already here?

Copeland: The state must maintain a business-friendly climate where we have a globally competitive cost of doing business and a well-educated, trainable work force. It also means maintaining roads and airports. There has been a revision in the legislature of what was known as the William S. Lee tax credit. It helps existing industry expand, and it is not a discretionary incentive but something that they're entitled to.

Bryant: Within this region, probably 70% of new jobs are created by existing businesses, not by the new industries that we bring in. The state that can find a way to address the concerns of the existing-business environment without being fiscally irresponsible will be the state that will be competitive and really position itself to retain a very strong existing-industry base.

Millar: I'll tell you the value of a good existing-industry program at the local level. We've had one in place for a number of years. Three out of seven visits this year have led to job creation or investment. That's a pretty good hit rate. Earlier this week, we had a new project in that wanted to do employer interviews. Had we not had an established relationship with existing industries, it would have been much more difficult to have those interviews set up and probably the word wouldn't have been as positive.

Weiss: A typical business would rather retain existing customers because it's cheaper than finding new customers. On the other hand, if you don't find new customers, your business will probably die. It's much the same with this or any state. As a matter of policy, the state has to treat both fairly. If the state is going to try to give an attractive deal to bring in a new business, that same deal under the same circumstances should be made available to an existing business.

Are there consequences?

Weiss: The state has to be always mindful that other states are trying to attract those same customers and what those other states are doing to attract them. And if there's a better practice someplace else, adopt it.

What makes North Carolina a good place for a newcomer to do business?

Weiss: There are a few things, including some that aren't unique to North Carolina. One is relative stability. Companies like predictability in a place they're going to do business. It's not just where's the flat-out cheapest place to go. Most of my decisions haven't been the cheapest. It's more risk allocation.

Explain that.

Weiss: It's the risk of going into an area and then finding it's not what we thought or finding a year later it changes or five years later it changes or it's a place that every other year there's a change in government policy or the taxes are always going up or this kind of thing. North Carolina, from the outside looking in, is a predictable place to do business.

What other factors matter?

Weiss: I can go on down the list: Right-to-work state. Good infrastructure. For the companies that are interested in telecom and connectivity, there is a reasonable amount of optical fiber. Charlotte's become not the biggest but a reasonably big fiber area along the East Coast. The airports. The location along the Eastern Seaboard. Reasonably good access to foreign markets between air and seaports. It's a convergence of factors. It's not necessarily that there's something unique about North Carolina: It's the collection of factors combined with predictability.

Hunter: The Charlotte Regional Partnership touched on a nice marketing theme a number of years ago that can be applied not only to the Charlotte region but also to the state: life in balance. It's business strength, quality of life, accessibility, transportation. This state, and this region in particular, has all those attributes.

Copeland: Any Japanese executive will tell you several things about North Carolina. They'll know the Charlotte region. They'll know the Research Triangle Park. They'll know our stellar universities. They've had a particular interest in Duke and the Fuqua School. And they know Pinehurst No. 2. We have an educated work force, quality of life. We have it all.

What can be done to make rural areas more attractive to companies?

Weiss: Rural areas need to think like a business, to understand what the business really needs. You don't have to be a sophisticated urban area. Any rural area can try to understand what's motivating the company and try to meet the company's business needs, understand its infrastructure needs, be very adaptive and quick on its feet. The more a rural area can think and act like a business, the more likely it is to end up doing business with that company.

Millar: I love that answer. That's guidance we could give some of these communities because as a state or as a region we try and legislate fairness in location decisions at different political levels, and we sometimes take out the opportunity for the guidance for local governments that they really need. We're seeing some projects in more rural areas of North Carolina because they are rural areas.

Bryant: We have been identifying manufacturing companies, primarily in western Europe, that are located in less densely populated areas that have a desire to be in the U.S. market. Our purpose would be to introduce them to our more rural counties. But probably the most distinguishing characteristic that separates rural areas that are seeing activity and those that are not is the quality of the transportation infrastructure.

Why has Lincoln County been so successful?

Bryant: In Lincoln, you combine highway infrastructure with a very innovative approach to public/private partnership in regards to speculative buildings and fast-tracking development, and you see the results.

Hunter: They've been able to do a tremendous amount with Charlotte-based developers putting together top-shelf industrial parks and probably the hottest industrial park in the state of North Carolina over the last three to four years. The U.S. 321 corridor is a fantastic location for companies to look.

That goes back to marketing the county's advantages and playing to its strengths.

Weiss: That's right. There's maybe an unfair handicapping that some rural areas go into at the global stage: 'They won't look at us seriously, or why would they want to come here?' They need to get rid of that view of themselves. It is wide open.

That won't work everywhere, will it?

Weiss: Some are obviously better fits than others. But the idea that most any team that has its act together can compete is very valid, and it comes down to the people involved and having the right attitude that we can understand what the company wants and try to deliver. And if we can't, let's just be clear about that and move on.

Copeland: One of the things we've got to do a better job of as a state is helping rural areas define themselves. It's routine to hear rural counties say, 'Would you please bring us some jobs?' But they haven't done a specific analysis of themselves. They haven't looked at their dropout rate, their labor pool, what infrastructure they need. There are funds that can help with those things, but someone has to be in a position to ask for them. And be specific.

Weiss: A lot of the rural areas of the South have been beaten up with job losses and industry shifts, and that sometimes leaves an attitude: 'Why would some of these new high-fliers want to take a look at us?' There are some good reasons. It may be that some of the infrastruc ture that worked for the old economy works for the new economy or some of the cost structures that maybe don't work anymore for one industry do work for another. These rural areas really need to understand their strategic advantages. What worked for them once may still work for them now but for a different industry. Maybe what didn't work still doesn't work, but they really need to take a good look at themselves and understand they may actually have some very good advantages for the right industries.

Copeland: One of the things some rural communities have been successful in is recruiting nonwoven textiles. We've got about five operations from Israel that are kibbutz-owned. It's a matter of working with some of these counties to know what kibbutz-owned management needs and looks like.

Hunter: The theme is that these rural areas have to be able to accentuate the positive of what they have, and they have to go through that process of inward analysis. The state's going to enhance what rural areas can do for companies by way of incentives. Obviously rural areas can do a little bit more in terms of offering job tax credits as well as potentially enhance discretionary incentives. But until that rural area truly knows itself and arms itself, those are going to be additional arrows in its quiver that really never get used, because they'll be out of the site-selection process early.

When Toyota was looking at the Triad, all the large tracts available were in rural counties. Can that be a problem?

Bryant: Just availability of acreage is not what makes an area competitive. What Toyota was looking for - and what we lack especially in the Charlotte area - is a supersite: 1,500 acres or more with infrastructure, utilities, et cetera, in place. If a company decides to locate on that site, it can meet its construction timeline. The timeline from making the decision to making an investment to when a company wants a product out the door has shortened dramatically. Pressure has been put on communities to ensure that they have permitting and zoning in place, not something that has to be debated during the process.

How?

Bryant: Someone has to look at the development of public/private partnerships to ensure that there is investment in a particular site - patient investment because it has to sit there a little while. That, in most cases, does not totally work from a private-sector perspective, so the public sector has to play a role. The question was asked back during the Toyota search: Why weren't they looking at Charlotte? There's only one supersite within the 16 counties of this region, and it's in Chester County, S.C. In the North Carolina counties, there's not a site that's ready to be marketed as an automobile or other large manufacturing site.

What about neighboring counties within a region competing with each other?

Millar: It's the responsibility of counties to do what their constituencies pay for. I'm responsible for Catawba County, and my first responsibility is to encourage investments there. The next is to see that it happens within my trading territory and then to move broader and broader. Free trade is going to go where free trade determines it needs to go. Our responsibility is to provide the right environment for those opportunities, wherever that might be and whatever our constituencies are.

Copeland: Ultimately it's going to be the company that determines where it wants to go. Up until that time, we will be showing them sites, and the counties will be showing them also. If a competition takes place, we think that it's really the company competing against the entire state or even nationally and internationally.

Bryant: Competition is good. It's competitive forces that really drive the improvement of individual counties. It's what makes you try to create a better fiscal environment for companies.

How often do companies do what Dell did in 2004: choose the general location, then solicit local offers?

Hunter: Generally, companies will look toward a state and then really home in on a regional site-selection search. What was interesting about that project, however, was that Dell decided it was coming to a particular region before really homing in on the exact location, meaning it did play two cities off one another within the region. A lot of the driving force for North Carolina being subdivided into regional partnerships is because companies typically look regionally before honing down.

Weiss: What happened with Dell is actually more common than it may seem. The company's looking for a convergence of factors, whether it's logistics or otherwise, but it's being motivated by something related to its business or something it's trying to achieve. The answer may lie in a specific site, but that's not where the decision is yet. It's looking for access to markets. It's trying to get out of a market or into a market. It's trying to achieve a certain cost structure, and then it's looking for a region where that might occur and then more and more narrow to a building or a site or a combination of those where it might occur. The site part comes much later.

How important is entrepreneurship in economic development?

Weiss: It creates more jobs by far than other parts of the economy - jobs that tend to stay put. That's not to say every single job is going to always be in North Carolina, but entrepreneurs tend to remember their upbringing, so to speak. So anything a state can do to promote entrepreneurship is good business in the long run. They're slow jobs - patient investment, as Ronnie says - but they're probably going to stay.

So what can be done to help entrepreneurs?

Weiss: I have a perspective that's different than a lot of people in my field. I've been an entrepreneur, and I've taught the subject at the university level. I've written on it. Entrepreneurs tend to like being around other entrepreneurs. There's a culture of it almost. Charlotte, whether deliberately or by happenstance, has done a good job of creating a culture of entrepreneurship.

Hunter: One of the strong attributes of the RTP area is the amount of venture capital there. That cluster of venture capital and the cluster of a number of incubators affiliated with the various universities around Raleigh allowed it to really take off, and it created this burgeoning culture of entrepreneurship. Charlotte is doing a better job of that now, especially with the proactiveness of UNC Charlotte.

Weiss: We need to create an environment where you make it easy for people to try out ideas. That's not to say everybody will succeed, but it would make it easier for them to try with maybe a little less consequence. Create business incubators, shared office space. You do whatever you can to make it easier to try out their ideas.

Bryant: There's a disconnect sometimes among those who are responsible for creating laws and regulations and the true needs and desires of the private sector. That's one of the roles we as economic developers try to play as kind of an ombudsman in an effort to make sure that our elected officials get that message, but sometimes that message does not resonate.

What must entrepreneurs do?

Weiss: They have to accept that they're not headline opportunities. It's one job at a time, one copier at a time, one computer at a time. These are baby-step sort of moves for a company, and people aren't really incentivized by bragging about that.

How involved should the state get in the venture-capital process?

Copeland: North Carolina, in particular, has been consciously reluctant to enter the realm of actually providing venture capital. On the other hand, state government has been very involved with helping with technology transfer from the universities, which have created some huge companies like Cree and others that have invested hundreds of millions of dollars and hundreds of jobs. So in that way we're encouraging entrepreneurial development based on other attributes that aren't necessarily cash.

Speaking of incentives, what's to be made of the town of Holly Springs, which may have overcommitted itself to recruit a Novartis vaccine plant? Will we see more of that?

Hunter: Elected officials usually make sure that incentives are part of a performance-based agreement. Company X does this. We, the town or county, do Y. I don't know what happened with this particular company, but my experience has been that job is being performed adequately on the local level.

Copeland: The state incentives, especially the Job Development Investment Grant, are performance-based. There is some strict modeling to make sure there's a return on that investment.

Millar: The Local Government Commission is watching out for the responsibilities or commitments of these entities. So there are adequate safeguards. And while a lot of people would argue that incentives in general are bad expenses, that's not looking at reality anymore. I don't know that any one of us that have bought a car in the last couple of years haven't gone out on the Internet and shopped price. The responsibility of local governments is to enter into an arm's-length transaction with an entity under contractual safeguards and make good commitments based on a substantial return on investment over time.

Weiss: If the project makes sense, it needs to make sense for both the community and the company, otherwise it really shouldn't happen. Nine times out of 10, everybody has modeled this and decided this makes sense. That one time out of 10 maybe somebody made a mistake.

Bryant: The use of incentives is a culture that we within the economic-development and the public sector created, and companies will aggressively take advantage of opportunities. We also have to understand that incentives will not make a bad deal good. Incentives will only make a good deal better, and therefore, communities have to not rely totally on the availability of incentives but also have the assets that are necessary for an environment where a company can be successful.

Every deal isn't a good deal, is it?

Bryant: We have elected officials that really have very short-term appreciation for our role. There's a belief that a win at any cost is still a good win. I don't believe that, but that's part of the thinking when you have communities that cross the line of the statutory requirements and really don't pay attention to the true economic return. Another argument comes when incentives lead to a win for a distressed community. Although the financial benefit might have been compromised, the positive feeling that that community receives is worth the price. That's a valid argument. You have to look at each project individually and also understand the dynamics of the community that's in the competitive process.