Charlotte Round Table October 2012

 Queen City collaboration

Charlotte’s business, education and community leaders are building a foundation to ensure North Carolina’s largest city stays on top.

Charlotte took its fair share of hits during the Great Recession. The nation’s second-largest financial center lost one of its two banking giants, Wachovia Corp., and tens of thousands of jobs, helping send the unemployment rate to 12.8% in January 2010. But the city had plenty in reserves. San Francisco-based Wells Fargo & Co., which had acquired Wachovia, made Charlotte its East Coast headquarters, and other financial-services companies moved in to snap up experienced bankers. Today, the 26 banks based there hold more than $2.3 trillion in assets, according to the Charlotte Chamber. Eight Fortune 500 companies call the region home, including Mooresville-based Lowe’s Cos. and Nucor Corp. and Duke Energy Corp., both of which are based in Charlotte. Unemployment was still 10% in July, but a rapidly growing energy sector is helping recharge the economy. Gathering recently to discuss the city’s business environment were Christie Amato, associate dean for graduate programs at UNC Charlotte’s Belk College of Business; Brett Carter, president of Duke Energy North Carolina; Jim Hazel, managing shareholder of Greenville, S.C.-based accounting firm Elliott Davis PLLC’s Charlotte office; Tom Heiks, Carolinas president for Cincinnati-based Fifth Third Bancorp; Bob Morgan, president of the Charlotte Chamber; Pat Rodgers, president and CEO of Charlotte-based Rodgers Builders Inc.; and Richard Vinroot, former mayor of Charlotte and a lawyer at Robinson, Bradshaw & Hinson PA in Charlotte. The round-table discussion was sponsored by Elliott Davis and UNC Charlotte’s Belk College of Business, which hosted the talk at its downtown campus. The following transcript has been edited for brevity and clarity.

How is business in Charlotte?

Morgan: We’ve seen through the recession of the last three to four years that Charlotte has remained a destination, with companies still moving here and bringing jobs. We have seen positive population growth. We are still the second-largest banking center in the country. The energy sector has created several thousand new jobs over the last three to four years. We remain a transportation and distribution center and will become even more so after the intermodal yard that’s being built at Charlotte-Douglas International Airport is completed. The region’s health-care industry employs more than 80,000 people.

How is the banking business?

Heiks: The banking business is very good and exceeding our expectations. Our staff has grown by more than 20% throughout North and South Carolina. We are seeing good activity across all lines and have added workers across our wholesale and consumer lines as well as others.

What can you report about the energy business in Charlotte?

Carter: I believe that the energy opportunities in this region are huge. Having the largest utility in the nation and second-largest investor-owned gas and electric utility in the world in Charlotte following Duke’s merger with [Raleigh-based Progress Energy Inc.] is a huge plus for the state and city.

How about the state of the region’s construction industry?

Rodgers: It’s still not for the faint of heart, but it’s better this year than it was last year. On the commercial side, we actually are seeing more nongovernment construction in the past six months and in the future than we’ve seen in a long time. I think that can be attributed to folks like those at Duke and Fifth Third Bank and other companies. They have found a way — like most of Charlotte has always found a way — to be very innovative, creative and efficient. As the energy sector grows, construction will continue to grow.

What are you seeing with Elliott Davis clients?

 Hazel: It’s a mixed bag, but by and large it’s a much better situation than it was a couple of years ago. Sector by sector, our manufacturing clients are the ones that are probably doing the best across the board. I think a lot of that is attributable to some pent-up demand, to some international influx of business and to making the business more right-sized three years ago when they had to. Now they’ve learned some lessons, and they’re running their businesses better. But it has contributed to great business for us, too. Our office has been up about 50% in revenue the last two years.

Are law firms seeing the same?

Vinroot: In hard times litigators are busy. People fight more. There is a great need for bankruptcy lawyers. We suffered some two years ago, but business has been up during the last two years. You ask a real-estate lawyer, he or she would say it’s still pretty bad. But if you ask someone in commercial litigation, he says, “What recession? What are you talking about?” But I think the attitude of our clients and the atmosphere in which we are doing business is much better now.

How did Charlotte’s financial industry respond to the hit it took from the Great Recession?

Morgan: We had a meeting with the banking industry and the energy sector, and two things came out of it. One, we’re not dead as a financial center. As the two large banks were going through what they were going through, and as we saw unemployment jump from 4% to 5% to 11% or 12%, financial leaders reminded us it would represent an opportunity for other financial institutions around the country. The other thing that came out of that conversation was Duke Energy CEO Jim Rogers saying Charlotte has an opportunity to become one of the emerging energy centers. And with leadership from Jim Rogers, who pulled that sector together, here we sit today recognized as an emerging energy center in the country.

 Heiks: From the perspective of a company that’s a relative newcomer to the region, what has really accelerated our growth beyond our expectations is the talent in the marketplace. And that’s in part due to the educational system and the educational opportunities that are here. But it’s also because obviously this has been a financial center. As part of our talent-management process, we ask our officers if they’re willing to relocate and, if so, where. North Carolina is always at the top of the list.

Amato: Just looking at Belk College of Business, I think about two-thirds of our alums stay in the region. We’ve got about 14,000 alumni in this region.

Hazel: When things slowed down, it created a lot of intellectual capacity, and that capacity kind of trickles down to smaller businesses. That was exactly the growth spurt that a lot of businesses needed. I know during that time we were able to attract talent that we probably would not have been able to attract had everybody been going gangbusters like they were three or four years ago.

Tell us more about that meeting at the beginning of the recession.

Rodgers: Charlotte has always had the courage to collaborate. Everyone had a common goal, and that was to see that we came out of the recession stronger than we went into it. Sometimes it takes a great deal of courage to collaborate, especially with your competitors. But we have never shied away from that.

Carter: We made a very conscious effort to step up contributions to the community when the downturn occurred. We saw gaps in areas like the building out of the museums and obvious gaps where we could help. And so I think making that conscious decision to not let the recession thwart our efforts to contribute to the community made a big difference.

What changes have taken place or are under way at UNC Charlotte?

Amato: If you went back five years ago, you really wouldn’t recognize the campus. It has grown by leaps and bounds. As a matter of fact, I think we’re going to be close to 26,000 students next year. In the Belk College of Business, we are looking at ways to partner with the university’s Energy Production and Infrastructure Center, which we call EPIC. They are in the process of adding a master’s of energy degree, and we are looking at the possibility of doing a dual MBA and master’s of energy degree.

How do you leverage the business and higher education relationship?

Morgan: There are resources at UNC Charlotte that we’re able to add to the package that we’re selling to Charlotte business leaders. It’s not always on the front end that the university is an asset. I wouldn’t say that UNC Charlotte played a particular role, for example, in the recruitment of [Chiquita Brands International Inc.], which will move its headquarters here from Cincinnati this year. But very soon after Chiquita announced the move, all kinds of light bulbs started going off on opportunities for research that could be relevant and beneficial to a business like Chiquita.

Vinroot: Central Piedmont Community College is the largest school in terms of student enrollment between Maine and Miami. There is a heck of a lot of retraining going on here of very, very talented people who all of a sudden are looking at other careers and other opportunities. As long as the city has really good, talented people around, we’re going to make a go of it.

How important is higher education to energy companies in terms of workforce training?

Carter: It’s huge for us. If you think about our aging workforce and the intellectual capital that’s retiring from our company, we need a pipeline of creative thinkers. And when Christie talks about EPIC, which we have invested in, one of the biggest pieces is the fact that technology is continuing to change the way we look at our industry. It’s very easy to become a dinosaur in today’s business environment with new inventions and new ideas. So our investment in EPIC was critical to us getting a pipeline of new energy thinkers and tapping into engineering talent. We also have partnered very closely with community colleges and offered scholarships for technically skilled students to go back to school. The number of those technically skilled individuals in our nuclear facilities is dwindling.

What role did higher education play in navigating the recession?

Rodgers: We saw collaboration certainly between Central Piedmont Community College and UNC Charlotte. We asked ourselves: What could we do to help on the front end to move folks into the university system? We also saw collaboration between the culinary programs at Central Piedmont and Johnson & Wales [University]. You saw it between the health-care programs at Central Piedmont and Queens University. In a time when everybody needed to make sure the community succeeded, everybody did.

We’re not out of the woods yet. What challenges does Charlotte still face?

Vinroot: We clearly are a successful city on most counts. But there are some challenges on the horizon that have sunk cities. One of them is a poor public-education system. Ours is still good, but it’s not great. We’re going to have to reinvent our public-education system to make it competitive. They may not be attractive decisions, but we have to go about remaking our public-education system and making it work.

Morgan: I agree. Some kids are well-served within the public schools, but others are not. That’s an ongoing challenge. It’s a big system. How do you manage it?

What other challenges do you see?

Amato: Charlotte needs to work on its entrepreneurial community. We’ve got large organizations in Charlotte, but we also need to begin directing some attention toward entrepreneurs and small businesses. UNC Charlotte is doing a lot with that by attempting to commercialize technology for many small companies. Vibrant growth comes from small business.

Morgan: We are going to double our population over the next two decades. How do we pay for our transportation infrastructure, and what are our transportation priorities? I would add another issue that I think brings in a whole host of others: annexation. Charlotte has been very well served by the ability to annex growth in the suburbs. With that annexation, we’ve had cohesiveness. What do we look like going forward? There is nothing left to annex, so that’s no longer the answer.

Carter: We don’t quite know what we want to be when we grow up. We’re trying to figure out what infrastructure we need to accommodate the growth and whether that infrastructure is closer into the city or out toward the suburbs. So once we get that crystallized, and we get a common platform of what this city looks like in 2030, and we are aligned around how we are going to invest in that infrastructure, I think that’s going to present something for everyone to rally around. I don’t think it’s a money thing. I think it’s a decision thing.

How do you reach those decisions?

Rodgers: There are more voices now. I think we have to be very cautious and conscious of the fact that we need to listen to all of the voices. It’s a wonderful strength for the city of Charlotte. However, we have to be very careful that we don’t allow it to become
a weakness. That could happen if we don’t pay attention to our diversity or don’t acknowledge that there are many more voices than there have been in the past.

Vinroot: The things that happened here aren’t just accidental. I remember coming out of college a long time ago and sitting in the office of a prominent lawyer up in Greensboro who said, “Son, why are you going to even consider Charlotte? That’s a salesman town. It’s a wannabe city. The corporate enterprise in this state is in the Triad. This is where you really ought to come if you want to be a corporate lawyer in North Carolina.” And he was right at the time. But the wannabes were some little banks who wanted to be big banks. They were willing to take risks and do things. The wannabes were part of a city that built an airport without a hub airline — a risky project cities like Birmingham and Richmond did not tackle. They made bold decisions before there was an assurance that these big things could pay off here. We’ve got to figure out some way to make some of the big decisions that make folks 40 years from now look back and say, “I’m glad those folks didn’t just rest on their laurels and take things for granted.”

This article originally appeared in the October 2012 issue of Business North Carolina magazine.