Buncombe County Round Table July 2012

 High country commerce

Buncombe County leverages its quality of life and picture-perfect surroundings to attract manufacturers, entrepreneurs and long-term investment.

Buncombe County has been getting a lot of press lately, and the reviews are good. The hub of Western North Carolina’s economy, Buncombe and Asheville, its county seat, are racking up accolades, including being named one of Forbes’s Best Places for Business and Careers and AmericanStyle Magazine’s No. 2 Small City for the Arts. To spur recovery after the recession, the Asheville Area Chamber of Commerce and the Economic Development Coalition of Asheville-Buncombe County launched the Asheville 5x5 Campaign a year ago to raise $3 million to create 5,000 jobs and help existing businesses expand. The money will go to promote five job sectors: advanced manufacturing, health care, arts and culture, science and technology and knowledge-based entrepreneurship. The chamber projects the jobs created by the campaign will generate $192 million in wages, $137 million in consumer spending and $5.5 million in annual sales-tax revenue for the region, with an overall economic impact of $672.2 million per year at the end of the five-year initiative. Gathering to discuss this campaign and Buncombe’s business and economic future were Jack Cecil, president of Biltmore Farms LLC; Chuck Cloninger, a construction-law attorney at Ward and Smith P.A.; Kit Cramer, president and CEO of the Asheville Area Chamber of Commerce; Rick Manske, managing partner of Parsec Financial Management Inc.; Dr. Ronald Paulus, president and CEO of Mission Health System Inc.; Anne Ponder, chancellor of UNC Asheville; Troy Tolle, co-founder and chief technology officer of DigitalChalk; and Oscar Wong, president of Highland Brewing Co. The round-table discussion, held at UNC Asheville’s Wilma M. Sherrill Center, was moderated by Business North Carolina Publisher Ben Kinney and sponsored by Parsec Financial, Ward and Smith and UNC Asheville. Following is a transcript, edited for brevity and clarity.

How’s business in Buncombe County?

Cramer: We’re having a good year. We’ve got another $208 million in our pipeline for economic development projects that represent over 1,700 jobs.

Have patient visits at Mission Health increased lately?

Paulus: Our volumes are up in many areas. We recently have taken a look at a strategic-planning model that forecasts future demand. Based on aging of the population alone, we’re going to see an explosion of need for physician and inpatient services. The average person under 45 uses less than one hospital day per year. You get up to 65, and you’re using two to three days per year. At 85, you’re using almost 15 days per year. So there’s a big, big explosion in demand.

Is development activity picking up for Biltmore Farms?

Cecil: I’m glad we made it through the Great Recession. We’re starting to see an uptick. The apartment business is going very well. The hotel and hospitality business has turned around nicely in the last 12 to 18 months. We’ve leased 95% of our office space. We’re still a little soft in residential homesites, but they are starting to come back. We’ve seen more business and more volume in The Ramble and Biltmore Lake developments in the last six to eight months than we’ve seen in the last three or four years.

UNC Asheville has received a lot of positive recognition lately.

Ponder: Making the Kiplinger’s and Princeton Review and U.S. News & World Report quality and value rankings is very, very exciting. We also made the top 20 universities located in cool college towns and the top 20 nationally for students who graduate with the least amount of debt. Those two pieces of data really give you a full range of what’s going on at UNC Asheville.

How well is the legal community recovering from the recession?

Cloninger: We’re seeing more small-business owners, family-business owners and entrepreneurs come in feeling better about things, ready to make some investments. And we’re finding that, particularly for a community of our size, they’re wanting some very sophisticated legal work done — a lot of intellectual-property things such as patents, trademarks and copyrights. We’re seeing some people with some great ideas who are finally feeling confident enough to move forward. Are we back all the way? Of course not. But we’re very encouraged by what we see.

How is the entrepreneurial community in Buncombe faring?

Tolle: A lot of people start companies during a recession, but a lot of those fail because of the lack of people buying those products. We’re a small company, only 16 people, but we’ve hired three people in the past two months. We have an open position right now, so that’s really good. I talk to a lot of people who are asking about starting technology companies in the area. I’m seeing a lot of people wanting to move here as well, contacting me from outside the state wanting to move to Asheville and start their software companies. So that’s very encouraging. And raising money is a lot easier now than it was in 2010.

Has business improved recently at Highland Brewing?

Wong: Well, as you know, when you have a tough time you need the beer. When the times are good, you celebrate with beer. We were up 30% last year in volume. We forecasted about 15%, but that’s part of the tough times — they need the beer. Last month we were running at about 35%, and we expect to finish the year at a mid-20% increase over 2011. Now that may seem to be all terrific, but some of our competitors are growing even faster. We feel it’s a little bit rough to go much faster than that and still be in control of your quality and your growth and your personnel. So we’re limiting it to some degree.

How are Parsec Financial’s clients reacting to the economy?

Manske: We see the demand for our services absolutely exploding, as most people are very underprepared for retire- ment and for college planning. We’ve seen our competitive landscape completely turned on its head with the banks as well as some insurance companies kind of swirling in a changing of the guard, and we feel we’ve picked up considerable market share. So we’re pleased, but at the same time we won’t be satisfied until our clients are feeling as good.

What is the chamber doing to improve economic development?

Cramer: One of the things that we’ve done as an organization is to really embrace planning. We looked at which industry clusters and assets from this community we needed to focus on. Our plan, Asheville 5x5, is focused on those assets, and hopefully we can capitalize on them as time goes by. So far it’s working, so we’re excited about the growth that we’re seeing in capital investment and jobs. We still have a ways to go, but the jobs are going to bring us back to where we were prior to the recession.

Anyone have any examples of forward-looking investment?

Ponder: I have a really concrete example, and you’re in it. This is the Wilma M. Sherrill Center, which includes Kimmel Arena. We were able to invest in the future of the university with the creation of this 133,000-square-foot building, which has allowed us to bring lots of Asheville and Buncombe County to campus, whether you are attending a concert or a class or a professional-development opportunity. We took $35 million from the state legislature, an appropriation from the middle of the last decade, and raised $8 million more. So we had, in the trough of the recession, a fully funded construction project.

What examples can you cite of organizations changing to survive the most recent recession?

Cecil: Real estate and banking have probably been the most affected by the Great Recession. At one time we were building 115 homes a year and shrunk to building no homes for two years. The flip side of it is we probably made the largest privately owned single investment in Western North Carolina, and that’s Town Square. We unfortunately bid it in 2007 before the crash, and you have to live with [construction debt] twice as long, but we managed it through tighter financial controls and watching all of the operating divisions. Right now we’re picking up the difference in the hospitality and apartment [divisions]. What really helped us through the rough times was the diversification of our company.

How has Mission Health responded to changes in health care?

Paulus: You know, people used to describe health care as a recession-proof industry because people are sick and they’re going to need care no matter how you slice it. It’s not totally true. We’ve seen a significant falloff nationally and regionally and locally in utilization during the Great Recession where people are putting off care much longer than they would have otherwise. And we see that in ways that are very emotionally troubling in terms of late-stage diagnoses versus early stage diagnoses and so forth. What we know is we have to make our quality substantially better, and we have to keep our prices down. How we do that is a challenge, but what we’ve been trying to develop at Mission is really a cultural shift from business as usual. We have to fundamentally change how and what we’re doing. We know that nationally and regionally the availability of specialty physicians is a challenge, so we’ve implemented a telemedicine program. We currently have telestroke, telepsychiatry and a couple of programs in schools. What that means, for example, is that patients in their own regional hospitals can get a within-minutes consultation from a neurologist.

Health care obviously is a huge industry in this area. What other industry clusters are in the spotlight right now?

Wong: Manufacturing. I think manufacturing got lost over the last couple of decades, but it’s started to come back because of the quality of life that we offer here.

Cramer: Linamar Corp. and New Belgium Brewing Co. together were among the largest manufacturing projects announced in the state in the past year.

What else?

Manske: The quality-of-life industry, as I like to think of it, is really in a great cycle, whether it’s the farm-to-table movement, organic products, art or galleries, music or alternative health. All these things are not by themselves very powerful, but when combined I think it is what’s putting Asheville on the map for a lot of people.

Cloninger: Many of the businesses in the new economy now can basically locate wherever they want to, so one of the first things they look at is quality of life. That’s why I’ve been encouraged that in the last few years our community leaders have really emphasized quality-of-life issues. We’re working hard to preserve what makes us attractive in the first place.

It sounds like you have a great product, but what do you do to promote that?

Cramer: That’s what Asheville 5x5 is all about. We specifically set out to focus on assets that were uniquely Asheville, so that you couldn’t take our strategy, use it for another community and have it work the same way. I also give some credit to our staff. For instance, when they were talking to New Belgium, they knew enough to look into how values-based that organization was. So when they went in to pitch New Belgium, they talked about Asheville’s values and Asheville’s brand, and against tough odds and what was probably a better financial situation in another city that was competing with us, New Belgium chose this community based on the values here, on the brand and how well it fit with their particular corporate values. So that worked really well in that case. We’re also trying to grow entrepreneurs here. We have a history of being a very entrepreneurial community. We’re trying to claim that and brand it and attract talented people who embrace the quality-of-life aspects that we’ve already talked about and want to grow businesses here.

Cloninger: I think the Chamber of Commerce is doing a better job than ever marketing the uniqueness of Asheville and not the typical cookie-cutter marketing that some chambers have done. They understand what Asheville’s about and what businesses will be attracted to us.
Cecil: Another piece that everybody understands is the hospitality and tourism market in this town and how it’s grown over the years. If you take that 25-year push of moving tourists to Asheville, I think we’re now finally leveraging the fact that many of the tourists are actually business owners. Once the owner decides to move here, they find great education and phenomenal health care. So I think tourism over the years has been historically our leader, but it’s transitioned into other opportunities that
we can all capitalize on.

Can you build on that?

Cramer: I think there’s opportunity to grow that partnership even more, and that’s something we’ve been talking about and are really going to focus on: encouraging people to not just visit us but to consider doing business here and help us create jobs.

Cecil: One of the geniuses of the 5x5 program is if you host conferences in Asheville focused on the segments we’re after — health care or science or arts or manufacturing — you’re bringing the people to town that really would enjoy what we have here. That’s the tie between tourism and economic growth.

Tolle: I went to South by Southwest in Austin, Texas, which is kind of a conference for tech entrepreneurs, and it’s also a music and film festival. The chamber and Economic Development Coalition actually sent a contingent out there and really marketed heavily. It’s an easy sell. You’ve just got to get out there and talk about it. You don’t have to be in a specific place to create a technology company. The speed of the Internet has increased. It’s very attractive to the tech entrepreneur to be in an environment like this where they can go running, they can go mountain biking, they can go camping, be anywhere on the trail and then back in the office in 10 to 15 minutes if they need to be.

What do you think is the county’s biggest business challenge?

Cloninger:I think maybe our biggest challenge is not to blow it or spoil what we have. Let’s build on what we have and not be one of those communities that you’ve heard spoken about that used to be the neatest place, but then it got too big or got too sprawled out.

Oscar, what made you choose Asheville for Highland Brewing?

Wong:  I lived in Charlotte for quite a while, and we vacationed up here quite a bit. We’d come up and go hiking and all the rest of it and finally bought a mountain home. At one point on the way home, crawling back on a Sunday, my wife turned to me and said, “You don’t have any business in Charlotte. Why do we do this?” I said, “I don’t know.” She said, “Let’s move up there.” The community has been very responsive to our business, to all the different businesses I see around, whether they be high-tech or, geez, bread. There are 10 bakers I’m aware of.

What else do you think Asheville has to offer?

Ponder:  We brought the national headquarters of the Association for Public Liberal Arts Universities to our campus, to Asheville. So instead of Washington, D.C., or New York City, the headquarters for public liberal arts campuses is right here at UNC Asheville and in Asheville. Mission Health and UNC Asheville have a very high-profile memorandum of understanding where we do research and trying to do better each day for both of us. That’s another example of how we work well together as a community. When we have something hard to figure out or hard times to face, we get a bunch of smart people in a room and work together to see if we can benefit the wider community.

Tolle:  Asheville-Buncombe Technical Community College came and said, “Hey, we’d like to create an entrepreneurial-development foundation, and we’re looking at starting a technology accelerator in Asheville to attract companies from all over the world.” We’re funding that and releasing that out. The chamber and the EDC are doing things like Ignite Asheville that let you do pitch sessions. We’re having a startup weekend and the branding for Adventure Asheville. All of these things are new.

Wong:  All this cooperation we talk about, the mountain tradition is one of independence and self-reliance. I think somehow they come together here. You have a lot of entrepreneurs doing their own thing, but then somehow people work together. Kind of a conundrum in my mind, but it works.

This article originally appeared in the July issue of Business North Carolina magazine.