Breaking up is hard to do

 In 2015-07

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After driving through the farms of northern Randolph County, flanked by fields dotted with round bales of hay, visitors on Troy Smith Road bump across railroad tracks where the pavement turns into a dusty country lane. From here north to the Guilford County line, a coalition of business leaders, local governments and economic developers is assembling a 2,000-acre, $30 million tract intended to lure an automobile manufacturer that could create thousands of jobs and billions in economic impact.
Within a 45-minute drive of Winston-­Salem, Greensboro and High Point, the countryside near the small town of Liberty scantly resembles the trio of cities that give the region its name. This is the Piedmont Triad, where the principle of regionalism was born more than 40 years ago and has since dominated North Carolina’s industry-recruiting strategies. It’s the theory that rural communities, small towns and cities with skyscraper skylines can join hands, wallets and marketing programs for mutual benefit. “We started it in the Triad,” says Winston-Salem Chamber of Commerce CEO Gayle Anderson, referring to the 1968 formation of the 11-county Piedmont Triad Council of Governments. It’s now called the Piedmont Triad Regional Council and serves 12 counties. “The state copied us” in the 1990s, she says, with the Triad becoming a model for seven state-designated and state-funded regional partnerships.
Now, in the Triad and other regions of North Carolina, the benefits of regionalism are deemed suspect by politicians, who have reduced state spending for economic development, and civic leaders more focused on their own communities. The debate is pronounced in the Triad, where developing a regional spirit has proven difficult. “When I came here in 2008, I’d certainly never heard of the Piedmont Triad,” says John McConnell, CEO of Wake Forest Baptist Medical Center, the region’s largest employer. He’s a urologist who had been a senior executive at the University of Texas Southwestern Medical Center in Dallas. “When we were trying to recruit businesses and grow businesses within [since-renamed] Piedmont Triad Research Park, it was clear we had an identity issue. We found 200 organizations in America with the term Piedmont in their names.”

The difficulty of selling regionalism isn’t surprising, considering the different cultures and histories of the area’s three major cities. Greensboro, settled by Quakers, is known for an openness that welcomed the Cones, founders of the former Cone Mills Corp., once one of the world’s largest textile companies, and other Jewish families, who helped develop a strong textile-manufacturing base. Winston-Salem, settled by German-speaking Moravians, was for much of the 20th century a company town heavily dependent on R.J. Reynolds Tobacco Co. High Point, proud to be distinct from neighboring Greensboro, was the state’s furniture-manufacturing hub. But fast forward to the 21st century, and the region’s growth trajectory is confounding. To be sure, the Triad’s economy is robust by national standards, with an April unemployment rate of 5.1%, and a stellar lineup of colleges, universities and prominent companies including apparel giant VF Corp., Honda Aircraft Co.’s new jet-making business and Qorvo Inc., the successor to RF Micro Devices Inc. Yet population in the Charlotte and Raleigh metro areas grew more than twice as fast as the Triad between 2001 and 2015. Average wages, unadjusted for inflation, climbed about 10% faster in Charlotte, and 20% faster in the tech-heavy Triangle. Perhaps most important, the number of people employed in the Triad has declined by 44,000 since 2001, or 6%, compared with gains of 9% in Charlotte and 28% in the Raleigh-Durham area.
Something is amiss — but it’s nothing that can’t be solved with a big new auto plant, says the region’s biggest booster. Requests to discuss economic development with many Triad business leaders produces the same response: Call Jim Melvin. “I’ve been here 40 years and I’ve never seen cooperation better,” says Melvin, 80, president of the $90 million Joseph M. Bryan Foundation. “I’ve never been more optimistic.”
A former Greensboro mayor who once ran the city’s biggest savings and loan, Melvin leads a separate foundation to raise money for the Liberty site. He trumpets regionalism, terming the Triad a “town” of 1.2 million people, and he recently cajoled the Greensboro City Council to spend more than $2 million on water and sewer design for the Liberty site. Randolph County has committed $10 million for the site. “Some 20,000 people drive out of Randolph to Guilford every day to a job. About 18,000 leave Forsyth for Guilford, and 10,000 come from Rockingham. We want to erase county and city lines.”
Skeptics say few lines are getting erased, and the hunt for an elephant industry is a sign of desperation in a region staggered by a loss of manufacturing jobs dating back to the 1980s. “We’re trying to hit the mother lode to get people back to work,” says Rob Bencini, Guilford County’s economic-development director from 2001 until 2008. “We’re putting all our eggs in one basket again.” The Triad should concentrate more on promoting startups and expansions of existing companies, akin to Asheville’s focus on local business, he says.
The region hasn’t even coalesced on the “megasite.” About 15 miles southeast of the Liberty project, Chat­ham and Randolph officials are assembling an 1,800-acre site. It sounds confusing, but it’s all good, Melvin says, because two options doubles hopes of landing a plant that can transform the region. Davidson and Alamance counties, also under the Piedmont Triad regional umbrella, have smaller sites that many economic-development officials say aren’t competitive.
Melvin’s outlook doesn’t match results of a Triad Regional Council report issued last year. Economic developers and local politicians inevitably do what’s in their own communities’ best interest, because no one shares tax-revenue benefits if they attract a new industry, according to the report, which had a powerhouse advisory board including auto dealer Don Flow and BB&T Corp. CEO Kelly King, both of Winston-Salem, and David Congdon, CEO of Thomasville-based Old Dominion Freight Line Inc. “It doesn’t matter if the competition is two continents away, eight states or 12 miles away, local jobs are at stake. There is little sense of regionalism, trust or cooperation,” according to the report. Echoing McConnell, it adds, after nearly 25 years of marketing, “the brand Piedmont Triad means little to those outside of North Carolina.”
A former economic recruiter who was involved in battles between Greensboro and High Point seeking projects puts the report’s analysis in bolder terms. “The jobs might have been 50 feet from each other’s city limits,” says the recruiter, who asked to remain anonymous for fear of reprisals. “They’d cut each other’s throats for a project.”
Thomas Built Buses Inc., based in High Point since 1916, in 2002 told local newspapers that it might move its 1,400 jobs to South Carolina, which it said was dangling $34 million. Several Triad locations quietly launched bids to bait High Point’s largest manufacturer, people familiar with the deal say. High Point, the town of Archdale, which shares the Thomas Built site, and Guilford and Randolph counties collectively forked over more than $14 million to keep it. Earlier this year, Thomas Built, which is owned by Germany’s Daimler AG, received about $370,000 in local incentives as part of an expansion.
But the poster child representing the complexities of regionalism remains Round Rock, Texas-based Dell Inc.’s site-selection process. In 2004, the computer maker circulated feelers in North Carolina, Virginia and elsewhere to see who’d pay top dollar for a plant. Internecine warfare broke out in the Triad. High Point made an $8.8 million offer, Guilford County and Greensboro offered more than $15 million and Davidson County pledged $23.1 million. But Forsyth and Winston-Salem won by offering more than $37 million cash and about 190 acres for the plant. The state promised more than $240 million in tax breaks. Dell’s commitment? A $100 million plant that would employ 1,500 by the year 2020.
A decade later – and five years after Dell shut down, leaving more than 900 jobless – Triad leaders say they knew CEO Michael Dell was playing them. They may even have gamed the computer maker. “People think there was more competition than there really was,” says Allen Joines, mayor of Winston-Salem since 2002. He met with Melvin and several others during the thick of the hunt, effectively rigging their bids. “We reviewed what each other was doing. We know that companies try to play communities off of each other and tried not to let that happen,” Joines says. Winston-Salem cut its offer to Dell by about $3 million and won the plant, the mayor adds.
Earlier, veteran Greensboro economic developer Dan Lynch and Bob Leak, president of Winston-Salem Business Inc., had discussed ways to work together rather than play patsies to Dell. “They set the rules, and those that wanted to be considered had to play by them,” says Lynch. “But midway through the process, Bob and I – we’ve been friends for 30 years – had a candid conversation on how we could work together.” Nothing came of that meeting. “We were overruled higher up.”
Community pride shows up in other venues, too. A retired former executive of a large Triad company relates efforts to merge the money-strapped Winston-Salem and Greensboro symphony orchestras. “Somewhere in the neighborhood of 70% of the musicians overlapped,” he says. In a merger, “the only thing you’d lose was the extra overhead and two different music directors. Boy, that went over like a fart in church. My God, it was awful. ‘Oh my God, we can’t lose our identities.’”
Now, political actions are taking the steam out of regionalism. The Republican-led General Assembly slashed state support for the seven groups by 75% in 2013, with a total phase-out last year, a strategy favored by Gov. Pat McCrory. A new law created eight “prosperity zones” and the new public-private Economic Development Partnership of North Carolina, but left local economic developers to fish for money from private companies and local governments. “Economic development has been and will always be a team sport that includes state, regional, county and municipal partners,” says Josh Ellis, the governor’s spokesman.
In early June, AdvantageWest, the partnership serving 23 western counties, said it would close by the end of this year after its funding was cut from $1.1 million in 2013 to $337,000 last year. While other booster groups can step up, regions in North Carolina struggling to attract jobs may not benefit from the new approach, say some local officials and elected representatives. Department of Commerce spokeswoman Kim Genardo says the state contributed $1.3 million to partnerships in the 2013-14 fiscal year, when state funds ended.
The Piedmont Triad Regional Partnership, the sole agency exclusively devoted to boosting the entire region, saw its budget drop from $2.2 million in 2011-12 to $1.6 million in 2012-13. State funding was $144,000 last year. The partnership now looks very different. Stan Kelly, a former Winston-Salem-based executive at Wells Fargo & Co., became interim president in January after the resignation of David Powell, who’d held the job since 2011. In April, the partnership reported “financial irregularities” by Powell to the Greensboro Police Department, which is investigating the matter, his lawyer says. Powell was paid $330,000 in 2013. Kelly, now president, declines to discuss the agency’s budget, which an N.C. Department of Commerce report says is $1.6 million this year. The group employs three people, compared with nine in 2013. “Like any business, when there are strategic changes, we have to be real to reality,” he says.
“The cities were doing regional economic development before the state enacted the legislation creating the seven partnerships, so we’ve gone back to that,” says Lynch, who retired as director of the Greensboro Economic Development Alliance in December. A 30-year veteran of industry recruiting, including a stint in High Point, he was instrumental in attracting projects including Memphis-based FedEx Corp.’s $500 million mid-Atlantic hub in 2009. “We communicate, we work together, but there’s always that specter of competition to land the deal, because the deal’s only going to one location.”
How economic developers get paid also works against cooperation. “It almost sounds petty to say, ‘I want credit for this or that,’ but your compensation is based on the number of jobs you can put down for a particular project,” Lynch says. He once led a recruitment that resulted in a company selecting neighboring Alamance County. “We were given no credit for the work we put in. The elected leadership in Greensboro and Guilford didn’t consider that a win for us.”
Subtle signs also point to a declining faith in regionalism. In Winston-Salem, Wake Forest Innovation Quarter, the city’s economic-development jewel, dropped the name Piedmont Triad Research Park to better identify with its creator, Wake Forest Baptist. When Winston-Salem in 2011 attracted an Association of Tennis Professionals tournament that annually draws some of the sport’s biggest names, it dubbed it the Winston-Salem Open. In Guilford, what was first the Southern Furniture Market and later International Home Furnishings Market is now called the High Point Market. It attracts thousands of buyers annually. In at least one case, Greensboro has taken a different strategy, with the former Greater Greensboro Open golf tournament rebranded as the Wyndham Championship, after its sponsor. The city promotes the tournament’s location as the Piedmont Triad.
“Greensboro’s trying to play nice,” says Bencini, now a private consultant. “Regionalism is neither good nor bad, right or wrong. But regions only matter when the cities and towns that comprise them don’t matter.” In the Triad, they clearly do.
All of the state’s regions face similar tussles between municipalities. South Carolina’s York County, which adjoins Charlotte, has poached several thousand jobs and hundreds of millions of dollars in industries from Mecklenburg County by offering tax breaks and financial incentives. Gov. Nikki Haley routinely touts her state’s advantages over North Carolina. The 16-county Charlotte Regional Partnership includes York and three other South Carolina counties, sparking angst among group members from North Carolina. The Charlotte partnership, bolstered by the Queen City’s hefty corporate base, hasn’t cut staff despite a loss of state funding, spokesman Sam Boykin says.
But almost from the beginning, the Triad has faced the most difficulty. Unlike regions such as northeast North Carolina, which is largely rural with no dominant cities, or those clustered around Charlotte and Raleigh, with clearly dominant centers, influence in the Triad is more diffuse among nearly 70 municipalities in 12 counties. Within the region, more than 40 economic-development organizations, from local chambers of commerce to city and county economic-development offices and private foundations, compete for business.
“The Triad is the state’s only polycentric region,” says Andrew Brod, a researcher at the Bryan School of Business and Economics at UNC Greensboro. “A region anchored by a core city is going to be pointing in approximately the same direction. In the Triad, there are three cities with varying degrees of inclination to work together. Greensboro has always been fairly interested in joint approaches. High Point, much less. Winston-Salem has been somewhere in the middle.”
While competition for private industry has divided the Triad, local leaders take pride in the region’s successes in public ventures that have spawned private-sector investment. Piedmont Triad International Airport, whose board must have members from each big Triad city, is the closest the region has to a central hub, and it has been the focus of much of its success. A cluster of aviation-related industries includes Honda Aircraft Co., with more than 1,200 employees; HAECO Americas (formerly TIMCO Aviation Services), which maintains airliners; and B/E Aerospace Inc., a Wellington, Fla.-based maker of aircraft interiors and seats, with plants in Winston-Salem and High Point, says Penny Whiteheart, the Piedmont Triad Partnership’s executive vice president. Another example is infrastructure. Greensboro, Guilford County and Randolph County in 2000 teamed on the 3,000-acre Randleman Lake Reservoir, for example, to meet regional needs and alleviate fears of a water shortage.
Then there’s the Triad’s huge education industry, with 23 post-secondary schools, including three research universities, four UNC System campuses and nine community colleges. Some of those universities have become models of teamwork. Rising near downtown Greensboro is the $56 million Joint School of Nanoscience and Nanoengineering, a collaboration of N.C. A&T University and UNC Greensboro, where students and researchers probe one of technology’s most advanced fields, that of incredibly small particles. N.C. A&T also has nursing students in a collaborative program with UNC Greensboro, Guilford Technical Community College and private Cone Health.
McConnell cites health care as another example of regional cooperation, noting that Wake Forest Medical “collaborates with almost everyone. Our emergency department, one of the best in America, provides specially trained physicians for Cone, Alamance, Wilkesboro and others. We have a longstanding program with [Novant Health Inc.’s] Forsyth Medical Center in obstetrics and neonatology.” Health care is now Winston-Salem’s largest employment sector. “If it hadn’t been for that in the last decade, we’d have been in dire straits,” says Anderson, the chamber of commerce head.
But the key for Triad health care’s long-term future is fostering innovative, research-oriented businesses, not just treating ailments. “The data is clear. If you add a hospital bed, or nursing staff, it’s a linear function,” McConnell says. “But research, when translated into commercial property, has an exponential effect. That can lead to the formation of companies that bring additional economic value to the region, far above what health care can do directly.”
Fencing for industries won’t cease, but Lynch sees hope in Winston-Salem’s example. “Look at what they’ve done,” he says. “They’ve gone from a town known for tobacco to one known for biomedical research. The problem is, you don’t just plant those seeds and watch them sprout overnight. In 10 or 15 years, leaders will look back and say, thank God those guys did what they did.”
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