NCtrend: Cranking it up

 In 2015-03

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Christopher Chung’s tenure as CEO of the new Economic Development Partnership of North Carolina, which started on Jan. 12, may be judged pretty simply: Did the state attract an auto-manufacturing plant under his leadership? That’s not a fair test, says John Lassiter, the Charlotte staffing-company owner who chairs the partnership. He wants Chung graded on his execution of a broad agenda of development issues. But attracting Volvo or another automaker is topic No. 1 among state officials because it’s likely to require hundreds of millions of dollars of public incentives. North Carolina has been unwilling to compete for giant plants since the mid-1990s, Lassiter says, but attitudes are changing because of the impact of BMW AG in South Carolina and Mercedes-Benz in Alabama. The partnership picked Chung because of his 17-year track record in industry-hunting work, including starting a similar, public-private group in Missouri that has a budget one-sixth the size of North Carolina’s. Comments were edited for brevity and clarity.

Do you favor incentives to attract an automaker?
We’d be a voice at the table, and we’d be informed by our sense of the competitive outlook. Other Southern states have been extremely aggressive in making sure they were cost-competitive and they had defrayed some of the upfront operating costs. Incentives are one of the multiple, parallel tracks that companies consider when evaluating a new manufacturing plant, along with real estate, a qualified labor force, tax burden and other factors.

What is North Carolina’s perception nationally?
It’s very formidable. One of the big draws for me is that I saw North Carolina having some good success, shown by its population and economic growth. If you look at the studies of business climate and how CEOs perceive different states around the country, North Carolina does very well. Those rankings and perceptions get North Carolina into the mix, more so than Missouri or Ohio, where I previously worked.

If the state has a good reputation, why are incentives still needed?
Texas is a great example of how you can have a strong fundamental product but still need an aggressive toolbox. The state has no corporate or personal income tax and has four of the 25 fastest-growing cities in the U.S. Yet they still have one of the largest war chests for inducing companies such as Apple and Toyota. As attractive as the underlying story, Texas feels they need to use incentives.

What is the partnership’s purpose?
The partnership is mainly a sales and marketing group that works to get companies interested in North Carolina. When it comes to incentives, we will work with the N.C. Commerce Department and suggest what we think is necessary. But Commerce makes that final decision.

Will the new partnership diminish local economic-development groups?
In 17 years in this business, I’ve learned that it’s a team sport. No single group can take all of the credit. There’s a constellation of partners coming together when we all cut a ribbon for a plant opening. But there are roles for the state, cities, counties and the private sector.

Are companies that invest in the partnership favored over others?
I would hope that is not the expectation. Our model in Missouri was very similar, though on a smaller scale, because we focused exclusively on new industry and marketing the state. We had a wide variety of chambers and companies investing in our operation, and none had an expectation of favorable treatment.

How do you stop Tar Heel companies from moving to South Carolina?
Kansas and Missouri looked at calling a cease-fire by not allowing incentives for intraregional moves. But it takes two to tango. Missouri passed the law and Kansas didn’t. Most people in the business community would agree that if a state is paying $5 million for no new jobs in a region, there are probably better uses for that $5 million.

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