spot_img
Wednesday, February 28, 2024

Chung: North Carolina not seeing slowdown in interest from industry

Christopher Chung is North Carolina’s chief industry recruiter, the CEO of the Economic Development Partnership of North Carolina, and he spoke last week at MFGCON, the two-day manufacturing conference in Winston-Salem.

His talk was a window into the competitive world of industry-hunting and also into the state of the economy.

Chung came here from Missouri in 2015 shortly after industry recruiting and other economic development functions were split off from the NC Department of Commerce into EDPNC, a private-public partnership.

Christopher Chung

The last few years have been busy for EDPNC. At first, when the pandemic hit in the spring of 2020, “the phones went pretty quiet,” says Chung.

“Companies were pausing their search activities. They were holding up any plans for new growth, new investment, new job creation, because it was so uncertain what this pandemic would ultimately mean,” Chung recalls.

“Fast forward a couple of months beyond the start of the pandemic. Since the summer of 2020, it was a pace I do not recall from having served in this industry for 25-plus years.”

In the past three years, nearly 500 companies have announced new locations in North Carolina or expansions of existing operations. That has meant 73,000-plus announced new jobs and more than $33 billion in announced new capital investment.

They included such high-profile wins as  Apple in Research Triangle Park (3,000 jobs, $1 billion investment); Toyota in Randolph County, (2,100 jobs, $3.8 billion);  Pratt & Whitney in Asheville, (800 jobs, $650 million); and Fujifilm Diosynth in Holly Springs (725 jobs, $2 billion). More than two-thirds of the announcements have been in so-called Tier 1 and 2 counties, outside the most prosperous urban areas.

North Carolina is competing now for 240 more projects with the potential for 89,000 new jobs and capital investment of $103 billion, Chung says. And, of course, so are many other states, particularly our very competitive neighbors, South Carolina and Virginia.

“In spite of talk about a recession, in spite of inflationary headwinds, in spite of who knows what’s going to happen with the debt-ceiling stuff going on in DC right now, activity remains very strong,” says Chung.

“We continue to get calls and inquiries from a lot of companies that are basically saying, ‘Look, we are planning new capacity for a new product offering, we’re planning to relocate, we’re planning to expand.’ Whatever the situation is, they’re contacting us and saying North Carolina is one key option that [they’d] like to explore. To the tune of 240 different conversations with companies at some point in that process of thinking through where they’re going to expand,” says Chung.

One out of every six of the projects is automotive-related, says Chung. The automotive industry is moving into electric vehicles, which is driving site-selection searches by domestic and global companies scouting locations for assembly and battery production.

“To make a battery, to assemble an electric vehicle takes a huge investment of capital and it’s oftentimes a significant commitment of jobs. Much more than a thousand, usually two or three thousand, on average,” says Chung.

“Lots of big projects,” he says, “at a pace that is unfamiliar to me, despite having spent a good amount of time in this [economic development] industry, in three different states, Ohio, Missouri and North Carolina.”

It used to be that a state like North Carolina would be competing with other states for one or two projects a year that might spend a billion dollars in capital investment or had the potential to create a thousand or more jobs. For the past two and a half years, says Chung, EDPNC has been competing for between one and two dozen projects that had billion-dollar potential and 1,000 or more employees, often manufacturing projects. 

But it’s not just automotive. The push to rebuild our semiconductor industrial base has also created big projects. We have gotten some of this already with Wolfspeed in Chatham County (1,800 jobs, $5 billion investment).

“Unfortunately, we let a lot of this industry go overseas 20 and 30 years ago,” says Chung. “And the reality is right now that most of the advanced semiconductor technology that we depend on every day, industry and our personal life, is made somewhere outside the United States. Ninety percent of it is made in Taiwan.”

And given the possibility that China may invade Taiwan, a lot of federal money has been allocated to spur investment in U.S. semiconductor manufacturing, and these are very large plants.

“They’re not just spending a billion or two,” says Chung. “The average size of that kind of investment is often $5 [billion] or $10 billion or more, and it’s often three [thousand] to 5,000 new jobs at six figures or more [salaries] because of the very skilled nature of what takes place in semiconductor production.”

Here were some other insights from Chung last week:

  • One of EDPNC’s roles is to help North Carolina’s businesses export. “Why is that economic development? Pretty straightforward. If you’re successful entering new markets and generating new customers and demand, hopefully that new demand and new revenue is going to trigger you to expand your capacity here in North Carolina, and to add more jobs and make more investment to meet that demand.”
  • One out of every three economic development projects EDPNC works on involves a foreign parent company. “We got one late last week that’s $2 billion in investment, something like 2,000 jobs. Super-secret code name. Advanced manufacturing facility. They’ve started the process for a new location and North Carolina’s in the mix.”
  • He cited a survey of CEOs and business owners by Area Development magazine that said that what mattered most in site selection were labor costs, quality of life, availability of skilled labor, energy availability and construction costs. Increasingly, what he is hearing from companies is the importance of a diverse workforce and availability of renewable energy. “I don’t know about your company, but a lot of these firms that we deal with, they’ve got very serious, very committed ESG goals – environmental, social, governance goals – that they’re adhering to.”
  •  He hasn’t seen evidence of a significant slowdown yet. “The way we would see a recession show up in our world, at least in terms of business recruitment, is a couple of ways. One is the phone would be ringing a lot less. We haven’t seen that yet.” Or companies would be slowing down projects significantly or canceling them. Chung says in some cases companies are taking longer to make decisions because “they want to know what’s coming around the curve,” but in terms of a drop in active projects or cancellations, “we haven’t seen enough to tell us” we’re headed for a serious recession.

Related Articles

TRENDING NOW

Newsletters