Western North Carolina Round Table June 2013

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 Prepared for ascent

Western North Carolina is building its economic future on the qualities that have made its residents and businesses successful in the past.

Western North Carolina is home to some of the state’s most unique businesses and economic opportunities, many built around its quality of life and spirit of its residents. A panel of experts recently gathered to discuss why the region is attractive to businesses and how it can leverage its attributes for future growth. Participating were David Belcher, chancellor of Western Carolina University in Cullowhee; Stan Cooper, co-manager of Chico, Calif.-based Sierra Nevada Brewing Co.’s Mills River brewery; Scott Hamilton, president and CEO of Fletcher-based AdvantageWest Economic Development Group; W. James Johnson, a lawyer with Asheville-based The Van Winkle Law Firm; Darrell Parker, dean of Western Carolina University’s College of Business; Emmy Parker, senior marketing and brand manager for Asheville-based Moog Music Inc.; Brooks Robinson, senior vice president and general manager of Las Vegas-based Caesars Entertainment Corp.’s Harrah’s Cherokee Casino Resort; and David Wiggins, managing partner of Charlotte-based Dixon Hughes Goodman LLP’s Asheville office. Western Carolina University’s College of Business hosted and sponsored the discussion with support from Dixon Hughes Goodman and The Van Winkle Law Firm. The following transcript has been edited for brevity and clarity.

Why do businesses want to locate in western North Carolina?

Hamilton: Businesses are attracted because of its location. If you put your finger on Asheville — the region’s center — and go north on a map you’ll cross Columbus, Ohio. Many people don’t realize how far west the state extends. Between 50% and 70% of the U.S. population is accessible from the region within a day’s trucking time, which is important for distribution. The integrated system of universities and community colleges helps, as does the entrepreneurial and spirited workforce.

E. Parker: Moog Music is the last company to handcraft electronic musical instruments. That is a big part of its brand and what separates it from the Casios of the world. All the boxes that ship to musicians around the world carry the line “Handcrafted in Asheville, N.C.” People don’t associate that type of work, or the culture that goes along with it, with places such as New York, Chicago or Los Angeles. It’s inherent to these mountains. There is a reason that professionals in Atlanta and Greenville, S.C., work with people from Asheville. The underlying customer service attitude is an important part of the region. We couldn’t be anywhere else.

Cooper: I helped select Mills River after visiting possible brewery sites up and down the East Coast. Its location does make distribution easier, but that is just one of its benefits. We’re a family-owned business, and it’s important that the company stays that way. The residents’ closeness and hospitality — and their acceptance of beer, of course — was what tipped our decision. We wanted happy employees and talented people who we could hire. Companies spend a lot of money to start operations — without any revenue coming in. The key is allowing a company to get going and putting people to work with-
out spending six months discussing which way a vote will go. We searched for that because it tells us how fast we’re going to open and start paying down debt. It happened here, and I have to applaud that. It was important that the state supported us financially but also that it supports how we do business. Many of Sierra Nevada’s environmental decisions are not bottom-line decisions. Businesses have a responsibility to give back to the communities that support them. If we’re going to ask communities to step up so we can conduct business, then we also need to step up. Many times I’ll shut off the lights, and my wife will ask, “What are you doing?” It’s a habit. At Sierra Nevada, you don’t leave the light on — period. That’s a small thing, but it’s just the right thing to do, and businesses have the obligation to do that. You don’t have to build a 1-megawatt solar farm to make a statement.

What is the role of higher education in the region?

Belcher: Higher education’s largest role is workforce training, which helps meet the needs of businesses and industries. Training is not something that can be set up in advance because their needs evolve. The university, in conjunction with hospitals in the region, such as Mission Health in Asheville, offers health-care programs that, for example, train nurses. It just received approval from the UNC Board of Governors for the doctor of nursing practice degree program, which will start in collaboration with UNC Charlotte this fall. We’re also working with Mission on a graduate-certificate program for innovative management that it requested. Another example is the MBA classrooms at Harrah’s, which are about 30 minutes from campus and offer some working professionals a closer alternative. The university recognizes the rapid change in our society and is working to meet current workforce demands while also preparing people for jobs that don’t yet exist. We have to make sure students can adapt, think critically, solve problems and make decisions, so they can meet future workforce needs.

D. Parker: The university educates the creative class, the entrepreneurs, who will shape future jobs. If you look at where business is going, higher education is shifting from a traditional curriculum to one that focuses on innovation, engagement and evaluation of impact. It is important that students work with businesses in the region so they are exposed to dealing with change.

Robinson: We have many programs with the university, and we partner with the community colleges. We find our employees want to grow and develop as new jobs open up, and those programs help them. It’s made our employees happier.

Wiggins: The region has Western Carolina University and several other four-year institutions as well as the technical colleges. You don’t always need a four-year degree or a master’s degree: We need all levels of education.

Cooper: It’s phenomenal how the community colleges and universities step up to help. The region will find a way to train its residents because it wants the jobs that a skilled workforce brings. It was important that the brewery be near a variety of educational opportunities. We put a lot of money into employees when we hire them, and the last thing we want to do is retrain them, so the company supports them with personal-development programs. We have to find ways to communicate, be productive and work together, and that ties in with the need for a strong educational system. Not everyone needs a four-year degree to get that. There is a need for skills training through community colleges, such as teaching someone how to operate a forklift. We’re short on forklift drivers, and that’s scary because we need to move product.

How is entrepreneurship encouraged here?

E. Parker: Bob Moog, the founder of Moog Music, is one of the most accomplished contemporary inventors and entrepreneurs, earning a spot in the National Inventors Hall of Fame in Alexandria, Va. He’s credited with pioneering the synthesizer, which is now used by almost every major artist and in many genres of music. His spirit focused the company’s culture on innovation, quality and brand rather than squeezing every penny for profit. That’s one reason why we manufacture in downtown Asheville instead of South Carolina or China. We altered Moogfest, our electronic-music festival, because it wasn’t capturing Moog’s culture, which is tied to Asheville’s culture. Bob felt his wacky ideas about creating music were supported by the community, so Moog supports entrepreneurs in Asheville, the region and beyond who have leading-edge ideas that other communities might not stand behind. When you have a company that’s focused on ideas, you need people who will support them. That takes skill and talent, and that’s something people in the region bring to the job. We work closely with UNC Asheville and its music-technology program, along with art and design programs at other schools. We focus on people in multimedia creation because for us to continue manufacturing in Asheville we need to produce the most innovative tools of the highest sound quality in the marketplace. We do everything in-house — packaging design, advertising copy, photography, filming, social-media presence and event scheduling.

D. Parker: It’s important to recognize that the things that draw people to the region are the same things that make it great for tourism and the same things that make it ideal for entrepreneurs. We’re building that into student recruitment, and hopefully that’s the type of workforce we’re providing.

Johnson: There are many objective reasons that justify calling this region a great place for businesses and entrepreneurs, but there are subjective ones too. Many people, myself included, have had the chance to go elsewhere but didn’t. The draw of the mountains and culture makes the region stand out. Once you get here, you fall in love with it. Then you’ve got to find a way to make staying work. There’s a tradition in the mountains of resourcefulness, ingenuity, can-do attitude and elbow grease — the stuff that residents have needed to survive. It still takes that spirit to start a business. People’s commitment to being here leads them to solutions they might not otherwise find.

Cooper: Sierra Nevada is sensitive to new entrepreneurs in the brewing industry, and the reason is Ken Grossman, who still owns the company that he founded more than 30 years ago. He is probably the last craft entrepreneur in the industry who also helped start it. Everybody else has sold out. That was our No. 1 thing. If we weren’t accepted, we weren’t coming. Everyone has been welcoming of our innovative spirit. That makes you want to invest here and contribute to the region’s success.

How should the region prepare for the future?

Belcher: One thing the university has done, partially in response to the economic downturn that crunched budgets, is focus its resources. As part of that planning, we toured Asheville, Hendersonville, Murphy, Cherokee and Franklin to hear what was important to residents. From those discussions, we focused on several curriculums. Some include historic strengths, such as teacher education, but all address current issues, initiatives and opportunities such as health care, environment and environmental policy, innovation and technology, arts and culture and tourism and recreation. The biggest push is behind engineering. My former university in Arkansas was searching for ways to attract business and industry. A consultant was brought in and said industries typically have a list of 10 or so items, and if one isn’t in a community they go elsewhere. One of those items is proximity to an engineering-degree program. Western Carolina University’s stand-alone engineering-degree program was approved about a year ago, and it’s the first program of its kind west of Charlotte in North Carolina. It’s a game changer for this region. It had 75 students in 2012 and 148 this year. We’re expecting 360 in the fall and looking to grow it further by moving it to the new instructional site at Biltmore Park in Asheville. It will focus on people working full-time jobs in and around Asheville and Hendersonville who will stay here, so it won’t compete with UNC Asheville’s Two-Plus-Two mechatronics program, which includes training in several engineering disciplines, with N.C. State University.

Hamilton: I still have my 1980s bag phone, and I showed it to my daughters and their friends, who at the time were busy using their iPhones. I put it on the table and asked, “What is that?” They guessed a purse or a briefcase. I opened it and said, “That was a cellphone.” They wanted to know how it fit in my pocket. We want to train a workforce that’s capable of taking a product to the next level, like the bag phone becoming the iPhone. That’s done by developing a culture of innovation, risk and entrepreneurship. The region is moving quickly on that opportunity, both inside and outside the classroom. Western Carolina has a degree program in entrepreneurship. AdvantageWest Economic Development Group started the Certified Entrepreneurial Community program, which helps communities succeed through understanding innovation, regulations, entrepreneurs and risk taking. We’re not training a workforce for a specific item that will be built in 10 years. That’s because we don’t know what it will be. We’re making sure they have the imagination, education and innovation to figure out what it will be when the time comes and how to build it.

Gov. Pat McCrory and state Commerce Secretary Sharon Decker have proposed many changes for the Department of Commerce. What changes would you ask them to consider?

Wiggins: Local development groups can identify what is best for a region and deal with local challenges. From the western part of the state, it is an easy drive over the mountain to Tennessee where there isn’t a personal income tax. Development groups need lawmakers to develop consistent and lively policies. The proper tax incentives and job training will grow opportunities. If we can’t build large manufacturing plants in the region, then what fits? Engineering and bioengineering does, as does entrepreneurship. For example, Asheville Area Chamber of Commerce and its economic-development group have a program that grows jobs in those industries. Local groups can drive dollars in the best direction.

Johnson: Reports say millions of dollars of infrastructure will be needed over the next 30 years: Where does that money come from? There’s incentive in public-private partnerships to bring dollars to those needs. As we go forward, solving those problems is vital for the region.

Hamilton: The administration is moving forward with public-private partnerships, but we don’t know exactly what they are going to look like. We do know the governor is going to lead it, and the secretary of commerce will take part. I understand the plan is going to be developed
by the end of May and presented to the General Assembly for any other legislation that needs to be enacted. So this is the time for us to talk about what it will look like because I think from this region’s perspective there is an opportunity for advanced manufacturing. The popular perception is that manufacturing is dying and not a viable career choice. That’s a misperception. In the AdvantageWest region’s 23 counties, about 50,000 people work in manufacturing. That annual payroll is $2 billion. Manufacturing continues to be a vital part
of the regional economy, though it might not be as noticeable because
of that misperception. It might be fermentation science, plastics, or automotive or aerospace components. The regional unemployment rate is about 10% right now, and Graham County has the highest in the state at almost 18% in March. Both are too high and need to come down. A diversified approach will play a pivotal role in moving the region forward. We’ve talked about quality of life and outdoor recreation. Outdoor-equipment manufacturers are a target market for us because there is no better proving ground than these mountains. We know the nuances of our region, and that connection is important. We need to diversify the economy, but we need to work with existing industry and help them grow too.

How can public-private partnerships benefit the region?

Johnson: There was a bill that was passed in 2005 or 2006 that outlined the state’s first model for public-private construction projects — where a private developer can come in and take a project, can build on state land, can build and lease back to the state. It’s a way to launch projects more efficiently. Some of the signature projects that are being done around the state are through public-private partnership that combine developer and state money. It’s also an opportunity to move some traditional public-works projects to the private sector.

Belcher: The university purchased 340 acres across N.C. 107 from campus about nine years ago. It was designated as Millennial, which opens public land to private development as long as it is related to the university’s academic mission. The first academic building, a $46 million project for health and human sciences, is open, and the university is working with developers and possible tenants for medical offices. We envision a time when businesses are next to academic buildings there, so students can go straight from first-class laboratories and classrooms to internships with doctor’s offices, clinics or medical-office suppliers. That will make the university not only a great educational center, but also a place where the health-care needs of residents can be met. It’s important to acknowledge that the region is an economically diverse place. The Millennial Campus offers an opportunity to spread the region’s prosperity for stronger economic and community development.

Hamilton: AdvantageWest is a public-private partnership. It receives state funding. It also receives funding from the private sector, and that gives us flexibility to respond to economic needs in ways a strictly state agency can’t. It started out with about $40,000 to loan businesses in 2007 and has grown and leveraged that to a $1.1 million revolving fund that has created more than 100 jobs for entrepreneurs. Promoting industrial sites that are pre-engineered and approved for economic development by multiple entities was started by AdvantageWest. Now that same model is used statewide. As a public-private partnership, private industries saw how we could become more competitive in a very competitive field. Our commercial kitchen, Blue Ridge Food Ventures, is a shared-use kitchen that supports development of food products, opening the door to opportunities in agribusiness.

What role does tourism play in economic development?

Hamilton: It is a multifaceted and strategic part of growing the economy. We try to get people to think of western North Carolina from the tourism angle and then understand that it’s a great place to do business. We have five core job-creation initiatives: advanced manufacturing, entrepreneurship, agribusiness, film and green business. Tourism runs through all of them. We still have people visiting Lake Lure to see where Dirty Dancing was filmed or to Bryson City or Cheoah Dam to see where The Fugitive was filmed. There are recreational and workforce opportunities here. We visit clients outside the region who say, “Oh, I went to camp in western North Carolina.” Now we want them to think about it from a different perspective.

Robinson: Early in our planning process, we understood the region attracted tourists from all over the country, whether they came to hike, boat or enjoy the outdoors in another way. We wanted a plan that would not just focus on that or gaming but also include food, concerts, trade shows and other types of attractions that the resort could host and that could benefit other communities. That plan allowed us to hire an additional 1,000 employees over the last year. Many of them came from outside the region, some as far as Nevada, New York and Florida. Once they’re here and see what we have, they realize it’s something special.

E. Parker: In 2014, Moogfest will still be a music-driven festival during the evening with acts performing at different venues. But during the day, it’ll focus on entrepreneurs and inventors. We’re talking to partners that we work with at Moog, such as Blackberry, Google, GE and Monster Electronics, and inviting them to take part. We’re inviting our customers in London, Paris, Berlin, New York and Los Angeles. It’s important that we bring those artists, end-users and companies to our home. Huge name artists visit the factory, and they love Asheville because they remain anonymous. They also love its vibe. When our friends on Facebook or followers on Twitter visit the factory, they also love and feel it. We’re hoping that festival goers will stay a few days so we can show them the new technologies that we’re working on and what Asheville and the region have to offer.

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