Eastern North Carolina Round Table April 2013

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 Diversified assets

Collaborations between the industries that make North Carolina’s Eastern Region home will help compound their success.

Shaping the economy of North Carolina’s Eastern Region is a dynamic combination of businesses, schools and economic developers. How can they work together to spur growth in Carteret, Craven, Duplin, Edgecombe, Greene, Jones, Lenoir, Nash, Onslow, Pamlico, Pitt, Wayne and Wilson counties? A panel of experts recently gathered to answer that question. Participating were Don Blake, director of quality and site-support services at Wichita, Kan.-based Spirit AeroSystems Inc.’s plant in Kinston; Don Butler, director of government relations and public affairs for Warsaw-based livestock producer Murphy-Brown LLC; John Chaffee, president and CEO of North Carolina’s Eastern Region Development Commission in Kinston; H.L. Stephenson III, lawyer at Ward and Smith PA’s Greenville office; Dr. David Herman, president and CEO of Greenville-based Vidant Health; Phyllis Horns, vice chancellor for health sciences at East Carolina University in Greenville; Carol Lohr, executive director of Morehead City-based Crystal Coast Tourism Authority; G. Dennis Massey, president of Pitt Community College in Greenville; and Rick Niswander, vice chancellor for administration and finance at ECU. The round table, organized with help from Eastern Region Development Commission, was hosted and sponsored by ECU, with additional support from Ward and Smith. The following transcript has been edited for brevity and clarity.

What are some ways the industries and businesses in the region are collaborating?

Chaffee: There’s a breadth of activities that are important to the region. An attribute of that diversity is synergy — bringing current strengths together with an emerging sector to create jobs and wealth. The combination of agribusiness, defense and life science, with help from the Southeast Regional Development Commission and the Biofuels Center of North Carolina, is opening the door to advanced biofuels. Italy-based Chemtex International Inc. has proposed a $170 million biofuel-processing plant in Sampson County. Crops grown here could be used at the plant. The region’s experience filling biotechnology roles will help train a workforce for the plant, which would produce fuel for the military. It may not create many farm jobs, but if you create wealth for farmers, that’s money that will filter through the entire economy.

Lohr: The economy has affected tourism, but people are still traveling. They want to spend quality time with friends and families at our traditional attractions, such as the Cape Lookout National Seashore, but are also now searching for more hands-on activities. We’ve partnered with the local Agricultural Extension Office this past year to meet that demand by designing brochures and wall charts for farmers and produce stands that detail for visitors what produce is available in which seasons. Each farm and stand is recognized with what they grow, directions to get there and hours of operation.

Blake: Spirit’s headquarters is in Wichita, Kan., which is called the Air Capital. It’s also an agricultural community, just like much of the Eastern Region. Farm families and workers at agriculture-related companies excel in the advanced-manufacturing environment of aircraft factories: people who know how to innovate, know how to do a variety of things, can learn new technologies — the people who go beyond measure twice, cut once. Where do the raw materials for carbon fiber come from? Much of it comes from agricultural byproducts,
so there is a definite connection.

How is the health-care industry caring for the region’s economy and residents?

Herman: Health access is a big concern. Vidant has submitted a certificate of need for a $181 million cancer center, which is proposed as a mirror tower of the East Carolina Heart Institute in Greenville. Hopefully, we’ll get approval for that in June. Our largest area of growth and access has been in our emergency rooms. We have two ER expansions going on — one in Tarboro and one in Kenansville. For many years, we’ve tried to invest in primary care to keep people out of ERs, but people are still going there for it. So we’re rethinking that model and exploring providing more primary care in our ERs, rather than diverting patients to places that they’re probably not going to go. With the expansion at the Children’s Hospital and adding 48 beds to Vidant Medical Center, there are about $100 million in current projects. The shortcoming of health care in the region is not high-end services such as cardiac surgery; it’s how to provide services to keep people healthy. That needs ongoing partnerships with the communities because health is not determined just by available services. More and better paying jobs that allow people to afford their health care are important too.

Horns: The North Carolina Justice Center’s 2012 report identified 10 North Carolina counties that are in persistent poverty — defined as more than 20% of the population in poverty between 1979 and 2000 — and we serve all of them. ECU’s Health Science Division, which includes the Brody School of Medicine, the College of Nursing, the College of Allied Health Sciences and the School of Dental Medicine, is determined to create a system of care that makes it possible for rural and underserved residents of the region to access health care. The school of medicine has graduated more than 2,000 physicians, many of whom are practicing in the region. Fourth-year dental students are required to spend time in service-learning centers in rural parts of the state, which is a model for the rest of the schools in the division. The first center opened in Ahoskie, which is in one of the 10 counties we serve, and one is set to open in Elizabeth City soon. It’s hoped other services will be provided through the clinics. Each is a $3 million project, so just their construction adds to the economy of those rural areas. The next big initiative is the development of a school of public health to augment the master’s degree in public health as well as programs in environmental health.

How is technology changing the region’s economy?

Blake: What Spirit has found since bringing its advanced composite manufacturing to the North Carolina Global TransPark in Kinston is an opportunity to grow. There’s already aerospace history here and not just the Wright brothers. There are fantastic locations that are connected to the military — Havelock, Cherry Point, Goldsboro and Fayetteville — and skilled people who are retiring and mustering out of the services to hire and help build an aerospace cluster.

Stephenson: Ward and Smith’s intellectual-property practice, which didn’t exist seven or eight years ago, has exploded to include four patent lawyers, three of whom have Ph.D. degrees, two trademark lawyers and several others who focus on technology transfer. It’s a reflection of what’s going on in the economy.

Chaffee: Des Moines, Iowa-based Pioneer Hi-Bred International Inc. is developing drought-tolerant plants that will flourish in the Southeast at its location in Kinston. Biotechnology involves exploring our marine resources. UNC Chapel Hill’s Institute of Marine Sciences in Morehead City is a training lab, and it’s attracting people from all over the U.S. who, for example, learn new techniques for measuring water quality.

How can the region’s educational institutions help it grow?

Niswander: Education matters when it comes to reducing unemployment and increasing lifetime earnings. ECU creates productive members of society, even if they take just a course or two and never get a degree. If you look at the jobs that are growing, 75% of them require education beyond high school, while of the jobs that are shrinking, 92% require only high school. Success continues to be measured by the
old model of education, but that doesn’t fly with current students. The amount of time in the classroom or in an online class is the same — it just might be spread over different durations. Society has to embrace the fact that people now get their education over a lifetime.

Massey: Pitt Community College’s flexible programs allow people to progress at different points in their lives. The college is working with companies to do more off-site and online customized training. In fact, there’s more demand for online instruction than can be filled. The college recently completed its Southern Association Accreditation Review, and its new quality-enhancement plan has spawned a conscious effort to provide the training people need and then move them to their next challenge.

Chaffee: Most new jobs in the region are tied to STEM — science, technology, engineering and math. Students need to hear that message so they can take a career path to a job here. The region leads the state in percentage of its workforce that possesses a career-readiness certificate — more than 35,000 — which attests they have fundamental workplace skills. The region’s workforce can meet the needs of employers such as Vidant or Spirit or any others going forward. Spirit is one of about 100 employers that either prefer or require workers have the certificate. The community colleges have led that charge, but now some counties can administer the certificate test to high-school students. It’s a requirement for anyone who’s pursuing technical education in public schools.  Part of the reason the regional economic-development agency invested more than $1 million working with our community colleges to build up certifications is there’s a perception of a lack of talent and well-educated people in the Eastern Region. We haven’t created enough jobs to keep that talent. When a company such as Spirit comes here, it’s an opportunity for those people to move back because there are more high-wage jobs.

Where can the region’s agribusinesses find future growth?

Butler: The good news is that the next 25 years looks to be agriculture’s golden age. There are opportunities in the short term for agribusinesses here not directly engaged in pork production. Murphy-Brown buys all the feed grain it can locally and encourages farmers to grow more because the entire pork industry is suffering from historically high input costs, especially feed-corn prices that are rising because of federal policies that encourage ethanol use. It’s introducing new technology and varieties of sorghum grains to reduce dependence on grain from the Midwest. Use has already shrunk by 50% in the last five years. Chemtex’s biofuel plant will need 30,000 acres to grow biofuel grasses. Those are crops that don’t exist in North Carolina now, so it’s a new economic opportunity for people with available land, which doesn’t need the fertility that corn production requires.

Stephenson: People don’t realize the quality of the region’s agribusiness companies. There are companies such as Mt. Olive Pickle Co., which is the second-largest processor of pickles in the world, and Black Gold Farms, the largest supplier of potatoes to the potato-chip industry. You have an agribusiness family in Kinston, the Harveys, that started a private-equity fund to invest in farmland. Lawrence Davenport, who owns Davenport Farms Inc. in Pitt County, said agribusiness would lead the state out of the recession. I think that’s been the case.

Outside of spending by visitors, how does tourism make an impact on the region’s economy?

Lohr: The Morehead-Beaufort Airport just spent $4.5 million on a 5,000-foot lighted runway that will encourage people to fly here for vacations. Corporations can use it
to land their jets, bringing their staff and key people down to enjoy some leisure time while working. The Frank Door Co. could have located anywhere in the world, but owner Terry Frank chose Newport. He was a visitor first. He loves the region and is a huge supporter.

Chaffee: So often the people who become investors in the region started as visitors. They had their first experience visiting the Crystal Coast or attending an ECU football game and liked what they saw, the service they received and the people they encountered. There is a big opportunity in collaborations between the tourism group and economic developers.

Workforce development is key to economic growth. What are the region’s needs, and how can its assets be used?

Massey: At the recent N.C. State University Emerging Issues conference, where the focus was on advanced manufacturing, attendees from Massachusetts were envious of the customized training at our community colleges. That training and skill upgrades, as well as prescreening of workers, makes operations more efficient for companies. The community-college system’s mission is two-fold. First, it wants as many people as possible to take advantage of its services. Pitt Community College has increased its enrollment 7% this year. Second, students should accomplish their goals. Community colleges have had a revolving door to services, but they are addressing that by offering shorter programs that lead to certificates and diplomas because many people need training but have to work too. All community colleges have grown thanks to N.C. Back-to-Work funding, which helped laid-off workers who exhausted their unemployment benefits get back to work. Pitt has focused those funds on retraining workers for two areas: manufacturing and biotechnology, specifically contract pharmaceutical.

Butler: Murphy-Brown is partnering with James Sprunt Community College in Kenansville to develop a program for diesel mechanics. The company has 800 tractor-trailers, and somebody’s got to work on them and drive them because logistics is a large part of the livestock business. Many people think they are just low-wage jobs, and that’s not true. The company is going to be a competitive recruiter, which includes offering the same benefits to an entry-level worker as it does to the company’s president.

Blake: Talent from all over the east is represented at Spirit, with people driving from as far as Wilmington, Tarboro, Wilson and Beulaville to work there. The manufacturing plant has brought development to Lenoir County and Kinston. I sit on a committee — Vision 2020 for Lenoir County — that understands that Spirit can be an aerospace anchor that draws in other complementary companies and talent. It was thought by some that Spirit would have a hard time finding talent here, but we’ve actually drawn people back into the state. Employees from Virginia and South Carolina are actually returning North Carolinians, including many ECU graduates.

What does the region need for future economic growth?

Massey: More collaboration because the state’s center of gravity is shifting west. There has been a division between communities in the region, and commuting to work or training is starting to blur that among residents. The community college has a high percentage of students who come from outside of Pitt County, which is a regional builder.

Butler: The United Nations projects the world’s population to double in the next 50 years, and with limited land available for food production, we must preserve and maximize our resources. In North Carolina, we have been constrained since 1997 by a state-imposed moratorium on new or expanding hog farms. It’s the only state of 44 with hog industries that has one, which puts us at a disadvantage. The moratorium was put in place because there were a few instances of bad management, but it cast all hog farms in a bad light. You haven’t heard about pork production in 10 years being a bad environmental player, because it isn’t. It’s a different industry. For our business to sustain itself and prosper, we need some flexibility, so we’re thinking about what things we can ask the General Assembly to consider to alleviate the disadvantage. 

Herman: Vidant Health is the largest employer in each of the 10 counties where it has a significant presence, and that’s a good- and bad-news situation. A strong health-care system is a common feature of places that are either holding their own or growing. The danger is that about 70% of its revenue comes from the government. That’s not sustainable, so these communities need private industry. Health-care costs are 20% of the U.S. gross domestic product. Working to decrease health-care costs — that includes healthier residents — makes the region more attractive to private companies.

Chaffee: Four-lane highways into and out of the state that connect key assets, such as the ports, are improving, but accessibility is still a challenge. The health-care industry is a plus for the region. Now, the other element is the development of the aerospace industry. Two aerospace companies have put engineering centers here within the last three years. Eastern North Carolinians need to emphasize that there are high-paying jobs with established companies here.

This article originally appeared in the April 2013 issue of Business North Carolina magazine.