For all its commitment to facts and truthfulness, the writing of history always proves to be more art than science. Whatever version of past events you read today may be superseded by, and dramatically differ from, another version tomorrow. There’s an obvious reason for that, of course. Every dawn brings the possibility of new information that changes our understanding of the past. When British cavalry made a death-defying charge into Russian guns during the Crimean War — an event immortalized in ”The Charge of the Light Brigade” — the troopers were hailed for their courage and daring. Only later did it become clear that the charge was inadvertent, the result of a botched battlefield communication. What was first seen as a brave act was subsequently viewed as a stupid mistake.

And thus we come to Ken Lewis, former chief executive officer of Bank of America Corp. and a man whose reputation we’ll put through a similar revision here. There’s a twist, though. Unlike the case of the Light Brigade, the first drafts of history have gotten Lewis wrong in the other direction: His actions during the Great Recession, initially judged to be bad, will surely be seen someday much more favorably. In fact, we’ll skip ahead to someday right now and offer this bold bit of revisionist history sooner rather than later: Not only is Lewis not a symbol of all that’s wrong about capitalism, he’s the man who saved it in one stroke. That’s why, during a period in which he was stripped of his title of chairman of the board, piled upon relentlessly by shareholders, regulators and politicians and which he ended by, in effect, quitting his job, he is Business North Carolina’s Mover and Shaker of the Year.

It should be said right away that Lewis is no Lord Cardigan, who led the Lights on their charge. The flash and dash of a cavalry leader was never his style at BofA. That was left to Lewis’ predecessor, Hugh McColl, the South Carolina-born ex-Marine whose assault on the banking establishment had a Light Brigade feel to it (but with a much more successful result). McColl spent most of the 1990s acquiring other banks at a clip of almost one a year, expanding BofA’s geographic reach and deposit base so dramatically that the company came close to bumping against a federal regulation limiting any single bank’s slice of the national deposit pie to 10%. When Lewis took over from McColl in 2001, industry observers expected a caretaker. Surprisingly, BofA found itself in the hands of someone whose style may have been much different from McColl’s but whose results were not. In 2003, Lewis engineered the $48 billion acquisition of FleetBoston Financial Corp. and in 2005 the $35 billion purchase of credit-card issuer MBNA Corp. By mid-2008, after acquiring mortgage originator Countrywide Financial Corp. in a $2.5 billion deal, the only thing missing from Lewis’ trophy collection was the same thing missing from McColl’s: a brand-name investment bank with global reach.

Enter Merrill Lynch Inc. In September 2008, the Wall Street icon was on the brink of becoming the third major investment bank to disappear that year. Bear Stearns, days away from collapse, had been absorbed into JP Morgan Chase in March. Six months later, after Lehman Brothers had been refused a federal bailout, it filed for bankruptcy and saw its remains later scooped up by the British bank Barclays. Morgan Stanley and Goldman Sachs, the last firms standing, themselves were rocked by the rapidly shrinking economy. Even as Lehman Brothers was preparing its bankruptcy paperwork, Lewis — over the course of a single, frenetic weekend — engineered BofA’s purchase of Merrill Lynch, putting the resources of the country’s largest bank behind the ailing investment firm. The deal came at virtually the same moment the country’s money market was close to a meltdown (a critically important fact, on which we’ll say more in a moment).

Huge mistake, right? Most of the world thought so. The conventional wisdom was that BofA had paid too much for a failing company (especially when it might have been picked up for pennies on the dollar out of bankruptcy, a la Lehman Brothers) and that no rational entity commits to a $45 billion deal after only two days or so of duly diligent examination of Merrill’s books. The market voted against BofA, sending its share price dramatically downward, and a second investment of federal Troubled Asset Relief Program money — larger than the first — was needed to shore up the bank’s capital position. But one year later, things look very different. BofA’s stock price has recovered some ground, Merrill’s operations have given the bank’s bottom line a huge boost, and all the TARP money (which totaled, not coincidentally, the original price for Merrill) has been paid back. More to the point, the deal is often described these days in the same close-call terms people might speak of an asteroid that had brushed by Earth. ”If Merrill Lynch had come apart, it would have destabilized capitalism,” says Tony Plath, associate professor of finance at UNC Charlotte. “It would have been a much more difficult repair job [on the economy].”

Warren Buffett, the éminence grise of investing, made the same point about Lewis and BofA four months ago at a conference sponsored by Fortune magazine — albeit in terms that qualified as damning with faint praise. Calling Lewis an “ironic hero” who “inadvertently saved” the economy, Buffett credited him for playing a key role in avoiding a collapse. “If you think Lehman Brothers was bad, imagine Lehman compounded by Merrill Lynch,” Buffett told conference attendees. “I don’t know what [the authorities] would have done.”

It’s worth recalling just how bad the situation was in September 2008. Stock indexes were in free fall, Treasury officials were haranguing financial CEOs several times a day (read Andrew Ross Sorkin’s book Too Big to Fail for details), Republican presidential candidate John McCain suspended his campaign to help (ineffectually) with the mess, retirement portfolios were being vaporized, the credit system was locked up, and, most ominous, the money market was flirting with “breaking the buck” — which is to say, money-market funds, considered the safest, most stable investments, were close to having their share prices fall below $1. That’s akin to having some of the money under your mattress mysteriously disappear or having it vanish from your safe-deposit box. It’s just not supposed to happen. In fact, shares of one fund — Reserve Primary Fund — dipped to 97 cents, forcing it to suspend redemptions as investors scrambled to pull their money out. It was only the second time in history that a money-market fund had broken the buck.

Money-market funds are critical to the economy because they are buyers of short-term debt: government securities, certificates of deposit, commercial paper, repurchase agreements, short-term corporate bonds, etc. Companies use this market essentially as a payday lender. It’s the place where quick cash is available to bridge the occasional gap between fixed obligations (meeting payroll, for instance) and an inconsistent revenue stream. Money-market funds are grease to the financial system, helping the machinery purr rather than grind. They perform so vital a function that after Reserve Primary Fund came close to collapse, the U.S. Treasury stepped in to make $50 billion available to guarantee money-market funds against losses — thus helping to stem the tide of withdrawals by nervous investors.

Against that backdrop, imagine what might have happened if in that same week Merrill Lynch had collapsed and taken the investment-banking system down with it. Investment banks, of course, perform a long-term version of the same service provided by money-market funds in the short term. They finance stock offerings, bond issues, mergers and acquisitions, etc. If money markets are the financial system’s daily lubrication, investment banks are its engine, providing the horsepower needed to keep the economy revved up and growing. In December, business writer and commentator Ben Stein described a conversation he had over dinner with Buffett, during which the subject of Lewis and Merrill came up. As Stein wrote: “The man who saved [the system], he said, was Ken Lewis, beleaguered head of Bank of America. By buying Merrill Lynch just as everything at Lehman was falling apart, he put some confidence back into the system and stopped — or helped mightily to stop — a ‘run on the bank,’ which would have laid waste all of Wall Street. If Merrill had failed, said Buffett, it would have been followed swiftly by Morgan and then by Goldman. By overpaying wildly for Merrill, Lewis essentially saved the nation from financial collapse. Without that buy, commercial paper would have simply stopped dead and the banks’ slender capital would have been swamped by debt as that commercial paper could not be rolled over.”

What’s consistent between Buffett’s remarks about Lewis in September and then again in December is the sense that he considers the banker to be something akin to Inspector Clouseau — a clueless bumbler who flounders around but somehow still manages to come up with a solution. What’s different, though, is that Buffett’s sense of bemusement seems to have disappeared in those intervening months. What was said first as a punch line was later uttered as a recollection of a close call — and not a funny one.

Buffett is right about one thing: Whatever role Lewis may have played in preventing the American economy from sliding into the abyss, and taking the rest of the world with it, that role was inadvertent. But when history is written, the difference between intent and result is but a footnote. The only important thing is what happened — or in this case, what didn’t. You, like Buffett, may consider Lewis a bumbler. You may hold wholesale resentment for all bank CEOs and their pay-checks, be justifiably unhappy with BofA’s pact with the government devil that followed the Merrill deal and be appalled by the sight of the crisis makers turned into bailout takers. But give Lewis his due: Thanks to him, you are better off now than you would have been otherwise.

You’ve surely noticed that everything discussed so far relates to a single event in September 2008. It’s the context for what followed in 2009 — the year for which Lewis is our Mover and Shaker. Over the course of that most recent year, shareholders stripped him of his title of chairman of the board. Every branch of the federal government — executive, legislative and judicial — at different times decided to make BofA, and Lewis personally, their whipping boy. The Securities and Exchange Commission, for instance, sued BofA for allegedly misleading investors about the Merrill acquisition — a purchase that was nurtured (and eventually coerced) by officials of the Treasury Department and the Federal Reserve. All three institutions are, of course, overseen by presidential appointees. There’s the executive branch. The judicial branch chimed in when the federal judge hearing the case threw out the proposed $33 million settlement of the SEC charges, harshly criticizing the agency for being “cynical” and BofA for proposing to pay the settlement with bank money (meaning shareholder cash). Thanks to that ruling, the result was that the SEC subsequently announced its intent to pursue the case with a vigor that the judge thought it initially lacked. The agency intends to make every effort this time to ensure that the deal that saved the economy does not go unpunished.

Not to be outdone in matters of cynicism, the legislative branch — in the form of a committee of the House of Representatives — summoned Lewis to Washington in June to explore a, shall we say, novel theory: Far from being at the mercy of regulators (not to mention subject to the full power and majesty of the whole federal government), wasn’t BofA in fact the dominant party able to bend the government to its will? As Rep. Edolphus Towns, a New York Democrat, later put it, ”Based on the facts we have before us, it sure looks like it was Bank of America that was holding the shotgun at this wedding between BofA and Merrill.” (That this line of thinking fit neatly into the greedy-bankers-almost-ruined-us narrative surely was coincidental.) President Barack Obama, seeking to regain the balance of power of opprobrium, addressed bankers directly during an interview with CBS’ 60 Minutes to say “you guys” caused the whole economic mess and “I did not run for office to be helping out a bunch of fat-cat bankers on Wall Street.”

Fact is, Obama and the government explicitly and overtly did seek to help out fat-cat bankers. When Treasury Secretary Timothy Geithner was asked last month by Newsweek magazine whether the government bailout of the economy was ”too friendly to Wall Street,” he answered: ”The idea that the strategy was unfair and has principally benefited a small number of institutions in New York is a mischaracterization of the design and result of the strategy. I thought people would have understood this after the failure of Lehman Brothers.” Some people do understand that — which is why it’s appropriate for the revision of Ken Lewis’ history to start now.

BofA settles for an insider

With the clock running out on 2009 and Ken Lewis’ retirement date rapidly approaching, Bank of America’s board of directors gave the nod to Brian Moynihan. He became chief executive Jan. 1. It came down to a contest between two insiders — Moynihan, who since August had been head of consumer banking, and Greg Curl, chief risk officer — much to the consternation of critics and shareholders who wanted a CEO from outside the bank’s ranks. Both men had played key roles in the controversial acquisition of Merrill Lynch. But the board’s courtship of outsiders — including Bank of New York Mellon Chairman and CEO Bob Kelly, a former Wachovia chief financial officer — never made it to the altar.

Unlike Lewis and his predecessor, Hugh McColl, who spent their entire careers with the Charlotte-based bank, Curl and Moynihan came with two of the deals McColl and Lewis used to build the nation’s biggest bank by assets. Curl, 61, arrived in 1996 in the merger with St. Louis-based Boatmen’s Bancshares, and Moynihan, 50, with FleetBoston Financial, which BofA bought in 2004.

In announcing Moynihan’s selection, the board said headquarters would remain in the Queen City. But its new CEO lives in Boston and, as of mid-January, had not said when — or even if — he plans to move.

Just when the western part of the state had nearly recovered from the recession of 2001, along came the second downturn of the decade. This time, though, the jobs losses weren’t concentrated in manufacturing and are more likely to come back when the economy rebounds, says Todd Cherry, director of the Center for Economic Research & Policy Analysis at Appalachian State University. Meanwhile, he says, the region needs to build on its strengths — tourism, arts and crafts, health care — and nurture opportunities in less traditional fields such as computer and mathematical sciences.

BNC: Economic activity in the region has continued to slip, even though economists say the nation hit bottom last summer.

Cherry: Western North Carolina lags the state and nation in a lot of these economic swings. In the last recession, I think it took us four years to recover our lost jobs. The rest of North Carolina and the country recovered jobs much more quickly.

The region lost more than 40,000 jobs the last two years.

It’s following the national trends. That this is a rural region hits us particularly hard and makes it tougher to recover. Another reason might be tourism. Our occupancy rates didn’t fall as much as some parts of the state, but it’s such a big component of our economy that we feel it a lot more. We had a big hit on retail sales. We’re starting to see some of that come back over this last year, but we’re still down quite a bit from before the recession.

How did the decade’s two recessions differ up here?

I don’t think it’s going to take as long to recover this time. That one in 2001 was more targeted in manufacturing. We didn’t really expect to get those jobs back. This time around, it’s broader-based, and there’s a bit more in the service sectors. I think it’s more likely to come back to what it was before. In the last recession, we lost a little over 3% of the workforce, and this time we’ve lost almost 10% — three times the negative impact on jobs — so I hope it doesn’t take as long as it did before.

Economic activity in the west actually grew during the first part of the recession, not falling off until late ’08. Has the region seen the worst yet?

I think so. It’s hard to say. And especially with the data the way it is now. When you’re at the bottom of the business cycle, the data is kind of mixed. But I think the worst is behind us.

What course do you expect the region’s unemployment rate to take this year?

I would like to be an optimist, but I think it’s going to remain high: above 10%. We’re near the peak, but it will take some time to come off that peak.

Will tourism continue to be key to the regional economy?

It will continue to play a big role, and there’s good and bad with that. It’s seasonal, but it’s a clean business and offers a lot of amenities for the locals like nice restaurants and shopping. So it’s a good thing, but we need to try to use that as a base and diversify our economy.

How can you diversify without hurting tourism and those quality-of-life factors?

You have to have good planning and good infrastructure and look for long-term goals. Set some long-term goals, and develop a plan to get there.

What kind of long-term goals are you talking about?

Workforce development is a big issue up here, and we do a great job with the secondary-school system. Our kids do well. We’re better than average in terms of the end-of-grade tests. Our graduation rates are high. Where we lose our edge is at the college level. Our workforces don’t have the college attainment that the rest of the state and the nation have. We have had some good growth in computer and mathematical sciences. Health care is big up here. So we have strengths to build on, but I think workforce development is something that we have to pay attention to.

Anything else?

The arts industry up here is big. There are a good number of schools that serve the region. Even people from outside the region come to some of those schools. So that “creative class” environment is something that is already here. It’s big in Asheville, and it’s big in the north. Even West Jefferson has an art area in its small downtown.

How would you describe the region’s housing market?

It’s spotty. In Asheville, they recently reported a huge jump in sales, and that was kind of surprising. But I think that was more of an outlier. In the high country in the same period, it was down 11%. So you see some differences within the region, but if you combine all the reports, you’re seeing it improving. I know that in Blowing Rock, which is a huge second-home area, it’s been picking up lately. When you start seeing second-home purchases pick up, people are feeling a little bit more confident about the real-estate market in general.

Isn’t some of that dependent on recovery in Florida and elsewhere?

Right. A lot of the second homes here are owned by people in Florida. That market was hit pretty hard during this recession, so seeing some activity in that second-home market is a good sign for the overall health of the region.

When do you expect the local construction market to improve?

Middle to late 2010, we’ll start seeing it getting back to normal. So it’s going to lag the rest of the recovery.

How would restrictions on building on steep slopes affect development?

That gets back to your question about how do you grow without undermining your base industry, which is tourism. The steep slopes attract people here, but buildable land is very scarce in some parts. To grow, you almost have to go up sides of hills. So there are trade-offs facing those people making those decisions. How the rules are written and implemented can help or hurt development in the future. If they’re too restrictive, of course, they could make land prices more expensive, and that prohibits some development. But you have to protect the viewsheds and the things that make this place special.

What’s the outlook for manufacturing? Can it coexist with tourism?

I’m less optimistic about manufacturing than most. It’s a tough place to have manufacturing. It’s not very accessible, and until we have better rail service or something that might make transportation a little bit easier, it will be tough to develop manufacturing or bring that back like it was in the past. That’s not to say it can’t be done. There might be some special clusters that would benefit from locating in this region. And if you’re next to an interstate, that’s a different story. But for the most part, this region is rural and pretty isolated.

What else might outlying counties do to catch up?

It’s a case-by-case development. Amenity-led development is something that the region’s done well with. Of course, you have the Cherokee casino, and that’s affecting Jackson and Swain counties really well. And they just started selling alcohol on the casino floor. You have to make decisions that build some of the assets that are in place. There is no one magic bullet that’s going to work at every place, but everywhere has something that they’re good at and that they can develop.

Employment in the region is down more than 28,000 since 2000. Has it really done that well with amenity-led development?

Well, that industry has done well. But obviously, there have been some big shifts in the overall economy. We have to figure out how to fill in the gaps with some other industries and some other strengths. And that’s going to take some time. The 2001 recession hit us really hard, and a lot of the area never recovered. Just a couple of years before this recession, we were just getting back to where we were in 2000. So it’s been a tough, tough decade.

Has the Google data center in Lenoir moved the meter much in the region?

No. It’s nice that they are there. It was a big investment, and it did provide a boost temporarily in construction and other activity. But I don’t think it’s going to have a significant impact over time.

Do you think an inland port is a viable economic project for the west?

No. I would think there are better alternatives. With the region’s topography, it seems like that would be a huge undertaking.

What part will the green economy play?

There’s a lot of talk about that. There’s talk of developing our wind resources and using some of our manufacturing capacity to move toward advanced materials that would be used for wind turbines or solar panels. There are some resources here. Appalachian has strong programs in green energy. Biofuel is an area that’s being pushed and has a lot of potential for the region.

What about the role of higher education?

During this slowdown, we’re seeing what we see during most slowdowns: people returning to school and staying in school longer. A lot of college graduates aren’t getting jobs, so they go to graduate school. That’s one area where the state is lagging — the region, too, in terms of professional and graduate degrees. So that could be one of the positive things that comes out of this slowdown. When the economy comes back, we will have a better workforce to support it.

Is there an economic sector that has bigger impact up here than most people suspect?

Maybe the arts-and-crafts industry. People would be surprised at the strength and breadth of that here and how important it is to the region. Something like two-thirds of our visitors are from outside the state. So you’re talking about people coming in and providing external injections into our regional economy. And, of course, they come to the places like the Penland School of Crafts. And a lot of the community colleges have associated craft centers and craft programs.

Which sectors will grow — and which will contract — this year?

Manufacturing is showing signs of stabilizing. I’m not sure I would call it a growth sector. Then again, when you’ve lost so much, there is a point where there’s not much more damage that can be done. Health care is going to be a strong sector, and the technical sectors like computer and math sciences are going to be strong. Tourism is going to come back, and that’s going to be one of our big drivers.

What about high-tech?

A big part of that is Asheville and the National Oceanic and Atmospheric Administration. There’s a new center they just opened up, collaborating with the UNC system. They’re bringing in a lot of highly skilled technical jobs that should have a good impact on Asheville and the surrounding area. That’s one of those things we need to start building on.

Eastern North Carolina has long been a political colossus and an economic runt. Its politicians typically fill the governor’s mansion and key leadership positions in the General Assembly, but the state’s economic might is concentrated farther west in the Piedmont. On the bright side, the region was on track to lose a smaller percentage of its jobs last year than other parts of the state. There are other reasons for optimism. Traffic has picked up at the state ports, the Global TransPark air-cargo complex in Kinston finally has gained some momentum, and a buildup of military personnel should provide opportunities. James Kleckley is director of the Bureau of Business Research at East Carolina University.

BNC: Why hasn’t Eastern North Carolina been able to transform political strength into an economic advantage?

Kleckley: In a lot of ways, it’s not political strength that dominates but the character of the economy. We don’t have major metropolitan centers. We don’t have something the size of Raleigh or Charlotte. We have an abundance of rural communities, and those rural communities tend to be some of the hardest-hit economically — not just from recession but over the years.

How will the move of aircraft-parts maker Spirit AeroSystems to the Global TransPark affect the region’s economy?

One, it’s a lot of jobs. And you get the bigger bang for the buck with the bigger manufacturers. Now that the TransPark has landed a large client, maybe more will come. ‘Well, Spirit decided to go there; maybe we ought to look a little harder there, too.’ When you land a big prize like that, hopefully you can develop some momentum and push the region forward. The major benefit probably will be in Lenoir and contiguous counties — Pitt, Wayne and Craven. They will supply most of the labor.

Traffic at state ports in 2009 was on track for an increase over 2008, though not 2007. Will that growth continue this year?

The prospect of Spirit using the Morehead City port is certainly going to increase traffic. Part of any increase may be due to the marketing efforts of the ports. When you look at the downturn in the economy, you would expect a similar downturn at the ports. So if the activity is staying pretty constant, I would say that they are doing a good job of increasing market share.

What’s the economic impact of East Carolina University and its medical school?

It’s extremely important to the region. You have an extremely developed telemedicine program. University Health Systems owns not just Pitt County Hospital but four or five of the smaller hospitals in the area. If you are in a rural area and you need more extensive health-care services, you will probably come to Pitt. The fact that we have wonderful health care here helps the entire region recruit and retain businesses.

Does health-care reform threaten the growth stimulated by the med school and hospital?

I don’t think so. I’ve long believed that we really needed to address the health-care issue — that it was as much an issue for individuals and businesses, in terms of controlling cost, as it was for hospitals. In a lot of ways, there are more implications for businesses and individuals that have to pay for health care than there will be for the health-care providers.

The military is in the process of transferring thousands of people to the region. When will the benefits begin to show?

We are already seeing benefits. Throughout the region and the state, people are looking at the military as an economic-development tool. Not just the fact that military personnel will increase, but whether we will get industries related to the military and grow those, too. You’re going to see benefits in Onslow, Craven, Carteret and Pamlico counties.

A recent survey of employers suggests that only two major U.S. job markets have a better outlook for 2010 than Fayetteville. Is that just because of the military transfers or something else?

A lot of it has to do with the military. When you have that large military impact that’s going to stay there, it makes it more of a stable community. People in Fayetteville can play that stability to their advantage to bring in other industries. The thought behind the military task force is to bring not just military jobs but jobs that can serve the military. The region around Fayetteville is obviously a place that could take advantage of that.

How should government bodies balance the interests of fishermen, developers and the hospitality industry along the coast?

It’s a dilemma they’ve faced for a long time. The issue is how much development do you want on the coast, and how much can you feasibly support? Should you develop the barrier islands? In some of the counties — Dare comes to mind — its main economic activity is tourism. It’s taking advantage of those beaches. That’s an issue that they deal with every day. Commercial fishing doesn’t have nearly the economic impact that it used to. In the northern part of the North Carolina coast, you have to go through the Oregon Inlet, which is a chore. I don’t think a lot of the big fishing boats are able to get through there anymore. An area like Wanchese that used to be pretty dependent upon fishing isn’t nearly as dependent on that industry. There’s kind of a parallel to traditional agriculture. In agriculture, there’s difficulty with the small farms. We’re seeing more of the large corporate farming. You’re seeing the same kind of thing in the fishing industry. It’s harder for that individual fisherman to make ends meet. We don’t see as many fishing boats as we used to.

Should drilling for oil and gas be allowed off the coast?

Well, the fear is that if you drill off the coast you’re going to have oil spills. And if you have oil spills, it will keep the tourists away and devastate the local economy. But if the technology has advanced to the point where you can minimize the probability of the spills, there might be a situation where Eastern North Carolina could benefit financially from drilling. My guess is the drill rigs would be far enough out that you couldn’t see them if you were lying on the beach, so that wouldn’t be an issue.

What’s the potential for wind-energy farms in the east?

A recent study looked at the places along the coast that could support wind energy. My understanding is that Duke Energy is going to put windmills in Pamlico Sound near Hatteras Island. Could it support the energy needs of Hatteras Island? If so, you could really turn that around as something positive in terms of being environmentally safe or sustainable. Business is picking up on this green aspect — that you can make money out of it. What I’m seeing along the coast, from a tourism standpoint, is a sense that maybe we should look at that as a way to keep our economy alive, keep the environment clean and maybe help our local tourism industry.

What about manufacturing?

We don’t have a lot of manufacturing in Eastern North Carolina. Lenoir County is an exception, and it’s going to be picking up Spirit AeroSystems, so that’s certainly positive. I think nationally we’re going to start seeing manufacturing coming back over the next few years. Over the last 15 years, of course, we’ve sent jobs overseas, but I think there is a recognition by a lot of people that we need to do things to keep those jobs. If we could start turning around the tide of manufacturing going elsewhere, that’s going to benefit Eastern North Carolina and the rest of the state.

Many farm and factory jobs are held by immigrants. Does that help or hurt?

The benefit is it keeps part of the economy going. But do the immigrants come and displace local people from jobs, or do they come in and fill jobs local people don’t want? There’s probably a little bit of both. Over the last few years, we’ve seen the development of some small businesses that cater directly to immigrants, including grocery stores and restaurants. The jobs are created because people are coming in. The language barrier is certainly a drawback. Health care is one example. To effectively treat a patient who doesn’t speak English, you’re going to have to have somebody in the room to interpret. I suspect you are going to see the immigrants changing to a permanent population. We are seeing more of them making Eastern North Carolina their home and starting businesses and so forth.

What’s the outlook for agriculture?

As I mentioned, we’re seeing a transition to larger corporate farms. You used to have the small farms that provided income to the family. But we’re seeing, in some cases, you can’t make ends meet doing that. Or there’s a lack of interest in the next generation. I was in one place last week where the farm had been in the family for years and years, but the man doesn’t have any grandkids who want to stay in farming. Meanwhile, other parts of the economy have grown up around farming. That’s true with tobacco in Pitt County. Pitt is still a large producer, but there are other things going on: the university, some of the major private employers in town. There are other opportunities for people.

What are Eastern North Carolina’s top infrastructure needs?

Transportation. Limited-access highways. To be able to drive from Raleigh to the port at Morehead City without hitting a stoplight. A similar thought is behind the expansion of U.S. 17, which will be an alternative north-south artery between the coast and I-95. If it’s easier to move goods or people from place to place, you open up opportunity for others.

Overall, will the region’s economy fare better or worse than it did last year?

Hopefully, it will be better. Our health and vitality is dependent upon what goes on nationally, so if the national economy recovers, we will see recovery in Eastern North Carolina. I believe we are on the right track. We’re not there yet, but we are going to see recovery in 2010. If we go back to the way it was, it still means the region’s unemployment rate is probably going to be higher than the state’s. There are eastern counties where it is extremely high. So the task gets back to how to help those economies overcome the real poverty problems they have.

Do you have a prediction for the region’s unemployment rate in 2010?

Right now, the unemployment rate in the Southeast regional partnership is less than the state’s. The central Eastern Region’s is less. The Northeast Commission’s is a little higher. But you have pockets in each that are certainly higher. I would like to think that in North Carolina we’re about as high as we’re going to get. We are at about 11% now. I really don’t think we’re going to get higher than 11.5%. I would like to think we’re starting to turn around that unemployment rate. If that’s the case for Eastern North Carolina, we’ll be about the same as the state average. Some counties will be a little better, but unfortunately there are too many counties that will be a lot worse. That’s the big thing that we have to overcome here.

Few places in the U.S. suffered as much as Charlotte during the near meltdown of the nation’s financial sector in late 2008. It gimped along in 2009, having lost its second-largest megabank, Wachovia, to an out-of-state buyer and struggling with an unemployment rate higher than any other region of the state. Its economy won’t get much better this year, says Mark Vitner, a Charlotte-based senior economist at Wells Fargo & Co., the San Francisco-based bank that bought Wachovia. Many of the federal stimulus programs started last year will be winding down, and the private sector might not be ready to stand on its own.

BNC: Is the region’s financial sector on the mend?

Vitner: The rate of decline has clearly moderated, but the industry is focused on containing losses more than growing. A good bit of the growth in financial services during the past decade in Charlotte has been in the investment-banking world — specifically tied to the structured-products industry. That industry is really at the center of the storm right now, and it has seen very little recovery.

Recovery will be slow this year?

It is likely to be slow for the next several years. We should see some improvement in 2010 if nothing else goes wrong, and there is always the potential for something to go wrong. The credit cycle seems to be elongated in this go-round. There have been extraordinary efforts put in place by the government to hold off mortgage foreclosures and to allow banks to keep struggling loans on their books. That means problems are hanging around longer.

What would happen to the region’s economy if Bank of America moves its headquarters?

The immediate impact may not be bad. But longer term, as more decision makers are outside Charlotte, the region would suffer. The loss of any headquarters means that you no longer have the same commitment to the community.

Duke Energy CEO Jim Rogers says the region needs to diversify its economy.

It needs to diversify its economy, and it is diversified. The energy sector is becoming more important, but it is still small relative to banking. It is hard for a person or an entity to restructure an economy. But we are moving in that direction. The North Carolina Research Campus in Kannapolis holds great promise.

Why?

Because of how well it is funded and its tie-ins with universities. It will bring a lot more research-and-development jobs to Charlotte, and this will be a key growth industry in the 21st century. Every food company is going to have to identify the risks associated with its products and how its food interacts with different people. And that is going to involve a whole new body of research, which is at the heart of the biotech campus in Kannapolis.

How long will it take for the research campus to gain traction?

It’s probably going to take at least 10 years to gain significant momentum, where you have a large nucleus of companies that help attract even more companies.

What can the region expect from the energy sector?

Virtually everyone involved in designing and building power plants has a presence here. The Shaw Group was one of the first. Those are wonderful jobs. Not only are they high-paying, but they are not necessarily tied to the local or U.S. economy because these folks are designing power plants all over the world. Those design services are among our biggest exports. The outlook for the energy sector is a notable bright spot.

Are there others?

There is one that gets overlooked — advanced manufacturing. Most people see the textile industry as a dying industry, and it is not. It has emerged into a real high-tech sector. A lot of products made in the textile industry go into some of the most sophisticated products made in the United States.

But textiles employment is shrinking in North Carolina.

That’s because we have lost a lot of jobs in the most labor-intensive parts of the industry. But they are making things like fire-protection gear, military uniforms woven with Kevlar and parts of commercial airliners. We have a lot of manufacturing that continues to build in the region.

What about tourism and hospitality?

It’s a growth industry. It has hit a soft spot because of the problems with NASCAR, but NASCAR will ramp back up. The new arena has allowed us to go after more concerts and shows and basketball tournaments. We’ve got the ACC football championship coming this year. That is an important new element in the Charlotte economy.

What are the prospects for counties outside of Mecklenburg?

Unemployment rates are 15% in places such as Gastonia or Lincolnton, where manufacturing makes up 30% or 40% of employment. Industry continues to move into these areas but not fast enough to offset the losses. This year is going to be a tough one all around, just like 2009 was. But the unemployment rate will probably top out, if it hasn’t already, in the early part of the year.

What about places where manufacturing accounts for much of the workforce?

We may actually see a speedier recovery — at least in the unemployment rate — because many of these areas have not had strong labor-force growth. As workers get recalled, the unemployment rate will fall relatively quickly.

Will the Apple data center in Catawba County spawn other jobs?

It is hard to say. The economic-development folks in Hickory are certainly targeting more industries like Apple and Google to set up data centers in the area. But there is no real advantage to locating next to a data center. You are not going to get faster connections. But the infrastructure put in to attract these centers should be fairly easy to upgrade to attract similar industries. The brand is a nice selling point for the region.

What’s the outlook for retailers?

Very difficult. They grew too rapidly during the boom years. Consumers were trading the equity out of their homes and running up their credit cards. Now that the bill has come due and access to credit has been curtailed, folks have to find a way to live within their means. Discount retailer Family Dollar is actually benefiting from this.

What about residential construction?

The housing market here was not as overbuilt as many other parts of the country throughout most of the housing boom. But builders recognized that, and they flocked here as housing was beginning to slow in other parts of the country. As a result, the region’s housing became overbuilt later in the cycle. So we have made less progress clearing out excess inventories of homes and buildable lots than many other communities. Our population is still growing, but many folks moving here are unwilling to buy a home because they can’t sell their old home.

The region’s foreclosure rate was about 25% through the first 10 months of 2009. Why so high?

The dramatic increase in unemployment, particularly in the outlying areas. Another reason is that so much of the boom in housing occurred so late in the cycle that many of the folks who were foreclosed on didn’t have any equity. If you bought the home in 2006 or 2007 and the values have come down and you didn’t have any equity in the home, the loss from foreclosure is far less.

Will construction recover soon?

The single-family market has probably bottomed out. There could be a small increase over the next year. The commercial market is likely to be slow for some time. We have a lot of vacant space downtown. But demand has been reasonably strong. The Ballantyne area of south Charlotte continues to see very strong demand for space. I think there will be some opportunities for office and industrial construction within the market. Not a whole lot of opportunity for retail development.

Is there a sector that gets more attention than it deserves?

Given the size of Carolinas Medical Center and Presbyterian Hospital, people might think the health-care industry provides a bigger lift to Charlotte’s economy than it actually does. But that sector is no larger in Charlotte than it is in other cities its size. And we don’t have a medical research facility here because we don’t have a medical school here.

What role do you see for the so-called creative economy?

One of the things that helps attract industries is a vibrant arts community. Charlotte has always had that. But we are on the verge of significantly increasing the size of our arts community with the African-American Cultural Center, the new Mint Museum and the Bechtler Museum of Modern Art. Those museums are really going to catapult Charlotte into another league, and the attention the city will get with the nearly simultaneous opening of them is really going to be spectacular. I can imagine The New York Times and The Washington Post coming down to do stories about the new arts community in Charlotte.

The region’s unemployment rate was in double digits through most of 2009. Besides the increase in foreclosures, what are some of the effects?

The rate only captures the unemployment situation at a point in time. Over the course of the year, you could essentially double the rate to get the share of the population that experienced unemployment during the period. Many have been unemployed for long periods. Their incomes have taken a huge hit, and many have fallen behind in their mortgages or car payments or credit-card loans. Many have dipped into savings or their 401(k)s. There will be lasting damage throughout the region. Workers are going to have to reduce their expectations for how much wealth they are likely to accumulate. The net result is that they are likely to spend less over their lifetime.

Can they at least hope that prices will go down or not rise very quickly?

We are more likely to get the worst of all worlds: We are going to have less income growth and higher inflation. But the higher inflation is likely to occur years out — 2013, ’14, ’15.

Will the unemployment rate come down by then?

It should. But I’m not sure that we are going to get out of double digits until 2011 or 2012.

They moved to Clayton from Indiana two years ago, attracted by, among other things, the region’s strong economy and how the Johnston County town of about 14,000 maintained its village character — a downtown of quaint shops, a drug store established in 1918 — despite growing cul-de-sac developments populated by commuters to Raleigh and Research Triangle Park. But Paula and Richard Schwarze quickly saw changes among their neighbors. “There were quite a few layoffs, and it seems they were long-term, higher-salaried employees — people who had been with companies 20 or 30 years,” she says.

Then her husband lost his management job with a grocery chain. She had worked in real-estate sales and for nonprofits, including a chamber of commerce, in Indiana, so she began looking for part-time work. Last February, she drove to a three-story building just north of downtown Raleigh. The notice had said there would be a job fair — Manpower Temporary Services was recruiting 370 people for a national mortgage company — but what she saw surprised her. More than 1,000 job seekers stood in line that day, clutching their résumés. “We’ve got a pretty good-size building, so we were able to accommodate them,” says Michael Doyle, Manpower regional director. “But we had to call in the police to direct traffic.”

Among the applicants were some of Schwarze’s neighbors. “We’ve seen some who’ve lost jobs become employed again but at lesser salaries,” says Schwarze, 54, who since has signed up for temp work. “Wives have gone back to work because their husbands’ salaries have been cut significantly. People are settling for less than they’ve been making, and some are doing things they don’t want to because that’s all that’s available.” They may be part of the new norm: an ephemeral, on-demand labor market of lower wages and lowered expectations.

Economists say the nation has started rebounding from the recession that began in December 2007, but recovery hasn’t returned the jobs that were lost. North Carolina’s unemployment rate has stubbornly hovered at about 11% for nearly a year. Through November, the state had a net loss of 250,000 jobs since the recession began — a 6% drop. Even those on Business North Carolina’s annual list of the 100 largest private-sector employers have been affected. Six of the top 10 cut jobs in the state during the past year. The three that increased employment were health-care providers, at least in part.

Jobless recoveries aren’t new, says economist John Coleman, a professor at Duke University’s Fuqua School of Business. The two previous recessions, starting in 1990 and 2001, were like that, with hiring not resuming in earnest until about 18 months after the gross domestic product began rebounding. “That indicates that by no means is what we’re experiencing now a permanent rise in the unemployment rate.”

But that also doesn’t preclude dramatic changes for the state’s more than 4 million workers. Turnover is likely to be higher, because of increased use of contract employees and temps. Benefits, now not so necessary to attract the best, are shrinking like cheap jeans. Per-unit labor cost is likely to go down as automation and technology — grocery stores’ computerized self-service checkouts linked to automated inventory management are one example — reduce demand for workers. North Carolina might already be seeing the results.

After Dell Inc. announced in October that it would shut down its computer-assembly plant in Forsyth County, idling 905 employees, Ben Barnwell, manager of the Employment Security Commission office in adjoining Guilford County, began grappling with the fallout: Former textile and furniture workers, who four years earlier had thought tech was their ticket to a bright future, realized those jobs might be more transitory than their old ones and began signing up for retraining. Though Dell declines to discuss its Triad operation, officials at its Round Rock, Texas, headquarters confirm that the company has a strategy to cut costs by replacing permanent employees with temporary workers.

Barnwell says the state’s limit of 26 weeks of unemployment insurance once sufficed in slumps. Employment gradually would bottom out and pick up again. Few expect to see that in the current recovery — Dell blamed weak demand for computers but also shifted some production overseas — and the results could be unsettling for workers. “It’s a buyers’ market for labor now,” says Barnwell, a 30-year ESC veteran. “Employers don’t have to pay as much because so many people are looking for jobs.”

Employers who have had to make do with fewer full-time, permanent workers may be getting comfortable with smaller staffs. “Though at many companies conditions are more stable than they were a year ago, there’s not anything out there right now to suggest they’re going to start ramping up employment by much,” says John Quinterno, a principal in South by North Strategies Ltd., a Chapel Hill research consultancy. “At the same time, they’ve got a lot more flexibility — contract hiring, part-time employment, temps — and a lot of firms that haven’t necessarily let people go have cut back on hours, so they have a lot more internal flexibility.” Many are like Schwarze’s neighbors in Clayton. “They’re working a lot less than 40-hour weeks,” she says.

The immediate effect can be found in Manpower’s Raleigh office. “Flexibility is what we do,” Doyle says. “We use the term ‘plug and play.’ We have a lot of companies that want to plug in the talent, get something done, then take the cost out.” But in the longer view, the new labor norm — the amenable, short-term, jack-of-all-trades worker — could have broader implications.

Coleman says technology advances might hurt narrow segments of the labor force — automation was as much to blame for the decline of the Tar Heel textile industry as loss of jobs to foreign producers — but not the broader labor market. “When a firm has a more productive workforce, thereby generating more profit, as long as it can expand production without leading to a drop in prices for its goods and services, it’s profitable for the firm to do so. If the entire economy is more productive, the demand for workers is going to rise.”

Demand for workers, however, depends on rising demand for the products and services they provide. Quinterno says that’s why the new norm could have a dark side — one that might make future recoveries even longer. “There are a variety of consequences for employees. It injects a lot more uncertainty into their lives — and financial instability. Income swings more wildly. If the spouse has to go to work, there’s the compound issue of child care. Even in a relatively skilled field now, you don’t have much employment or financial security, so that can put a strain on the economy and growth in demand.”

Fear becomes a factor. “If people are afraid, they’re not going to eat out once a week or go to the movies or write that check to the United Way,” Quinterno says. “It ripples out to the larger economy. If you’re talking about jobless recovery, firms are going to want to add labor when they have the opportunity to sell more goods and services, but they can’t if there’s not much demand for them.”

BNC: Employment in the Triad is about 95% of what it was in the year 2000. Why?

Jud: Just in the Greensboro metropolitan statistical area, we’ve lost about 24,000 jobs since January 2000. The main reason is the loss of manufacturing jobs. Because of that, our economy had to grow faster in other areas just to stay abreast, and we haven’t done that. Our manufacturing involvement is still right at about 15%. That compares to a national rate of about 10%, so we may have more to bleed.

Could anything have cushioned the losses?

It would have helped if we had been more involved in things like health care and education. The Winston-Salem MSA has a heavy concentration in health care and education, but Greensboro and Burlington do not. It would have helped if more people had advanced degrees. Economies in places that have more people with advanced degrees grow faster. And North Carolina’s high marginal tax rate has some responsibility. I just completed a study of MSAs across the country between 2000 and June 2009. It asked why some grew faster than others. That high marginal tax rate is one factor that stood out.

What can be done?

The No. 1 thing is to have a strong recovery nationally, because the Triad economy is going to follow the national economy. We are in a recovery nationally, and we are in a recovery in the Triad.

Can anything be done locally?

Not quickly. But there are things that need to be done. We need to provide the highest-quality public services at the lowest possible price and have the most efficient government that we can, because we compete with local governments all over the world. Businesses shop around. Individuals shop around. They want high-quality public services, they want roads, sewer and good schools, and they want them with low tax rates.

What else?

We can do more with special initiatives to attract people with advanced degrees. We do it, but we need to do more, with a biotech emphasis in Winston and nanotechnology in Greensboro. We should continue the push for a pharmacy school in Greensboro with the same kind of initiative that brought the law school. Basically, we need to make our region attractive, where educated people who are highly productive will want to live. The state could help by lowering the marginal tax rate.

What are the prospects for manufacturing in the Triad?

We will continue to produce goods, but we are going to do it with fewer and fewer people. Those manufacturing jobs that had been here for decades are never coming back. Textiles, apparel, furniture and tobacco are gone for good.

What do you see happening for the region’s tobacco companies — Reynolds in Winston-Salem and Lorillard in Greensboro?

We had hoped that they would consider product expansions in the Triad. We have a labor force that, if not producing cigarettes and tobacco products, can produce other things those companies may want to be involved in. Having said that, we were a center of tobacco manufacturing. It’s not clear that we will be a center of food production or other things.

How will the region’s bid to become a hub for aviation and logistics play out?

We don’t have a big passenger hub at the Greensboro airport. So companies like FedEx want to use it to bring in freight, and other companies want to use it as a place to locate and produce airplanes. That’s a positive thing. I don’t think it’s in the cards for us to become a center of aircraft production like, say, Wichita, Kan. But we could attract similar industries and their suppliers.

How much have FedEx’s delays in ramping up operations at the new sorting hub stunted development of the aerotropolis envisioned by local leaders?

The delays are significant, but there is no question that FedEx is going to be important to our future. We can link our airport to our interstate highway system, and we’re on a juncture of four major interstate highways. That’s more than any MSA in the Southeast — more than Atlanta. Couple that with an airfreight hub, and we become a very good place to do business. You can ship parts in from anywhere in the world overnight, then ship them out the next day or put them on trucks and have them anywhere in the Southeast. Because of that FedEx hub, we become a competitive location for any company that wants to do business with the world and in the Southeast. So any delay in that is to our detriment. Another thing that is to our detriment is that we have delayed building our loop, which would make it easier to move from one interstate highway to another. If we had it built, our job base would be much larger.

Some of the growth in logistics has been in warehousing jobs. Do those jobs pay well enough to pursue?

They may, because we have people that need employment at lower wage levels. But you’re not going to have a lot of people employed there. We have lost jobs in that area related to manufacturing. If you’re not selling goods, you’re not producing the goods and you’re not shipping the goods. Transportation employment is down about 9.3% over the past year.

Will that number go back up when the economy recovers?

When that happens, manufacturing production here will beef up and transportation employment will increase.

What does the Triad have to do to build its life-sciences sector?

Life-sciences companies are developed as spinoffs from research and development, mainly at local universities and colleges. We need to support the Wake Forest medical school and Wake Forest, UNC Greensboro and other universities doing frontier-level research. That will generate ideas and products and companies. You make sure they have the facilities so they can take an idea from the lab into a business incubator and get it going at the first level. There are things you can do, and we are doing them. That’s something we don’t want to lose sight of. That’s going to be important.

Can Gateway University Research Park in Greensboro and Piedmont Triad Research Park in Winston-Salem coexist?

I don’t know why not. It is good to have a lot of research parks. It is good to have competition. It’s good to have space available. Let the flowers bloom where they can.

Could they build more critical mass by working together?

That’s always a possibility. The problem is that it’s like getting universities to work together — it’s hard. They are natural competitors. You have to have some outside force that’s going to give them an incentive to cooperate.

That’s true for cities and counties, too, especially with the Triad’s rivalries.

Exactly. That kind of thing has to come either from the state or the federal government, or perhaps it comes from a foundation like Z. Smith Reynolds. If any of them would make it in the interest of local institutions in Winston-Salem and Greensboro to cooperate, then undoubtedly there would be much more cooperation. The region has the communication in place now for cities to work together. But I’m not sure the competition is bad. Maybe the competition between Winston and Greensboro makes us both better. We all need something to spur us to greater efforts.

Speaking of competition, how can Gateway and Piedmont Triad Research Park compete with Research Triangle Park?

Clearly, as RTP gets congested, real-estate values go up. People can look down the road and say: ‘Gosh, I may not lose so much if I move 50 miles down the interstate and I’m in Greensboro.’ To be competitive, we’ve got to have a price advantage in rents and property value and even wages. I wouldn’t think you lose a whole lot by moving down the interstate. The key is making sure the people that you compete for in a national market don’t see living in Greensboro as a disadvantage relative to living in Raleigh. That means Greensboro needs to have good schools and reasonable taxes and all of those things attractive to companies.

Why haven’t there been more homegrown high-tech successes like RF Micro Devices?

We probably are not doing enough high-quality research at our local educational institutions. The more research you do at local universities, the more of that kind of thing you are going to get.

What lesson did the region learn from Dell?

The major one is that it is difficult to predict what kind of industry you are going to need in the future. So you need to be careful about putting too much faith in industrial policy and trying to steer the economy. Because we are in such a dynamic economy, the needs can change quickly. Even big winners like Dell have seen their business model become antiquated. Right now, everybody wants to be in biotechnology because it pays well and is growing rapidly. But that could change. You don’t want to put all your chips on a single bet.

What can be done to improve access to capital for Triad businesses?

It’s not a big issue here, nor is it much of an issue anywhere. There are lots of people around with money to lend to people who have good ideas. Not everybody agrees, but that’s my view. Over the past year, we have been through a big trauma in the capital markets, but they have come back and are functioning reasonably well now.

Unlike much of the state, foreclosures in the region were down in 2009 compared with the previous year. Why?

My numbers show that home sales were up. That’s part of the recovery process in the Triad. They also show that housing values across the region have flattened out. They are no longer declining nearly at the pace they were the previous six months. Sales are up 3% year-over-year and 18% for the third quarter. Some of that was due to the homebuyer tax credit, but it’s also because an economic recovery is under way.

What is your outlook for 2010?

Positive. The recovery is not going to be as fast as past recoveries, but we aren’t going to have a double dip. By the middle of the year, we even should see our unemployment rate start to come down.

The recession wasn’t as brutal to the Triangle as it was to other parts of the state, but the blows it dealt weren’t all love taps. The unemployment rate stayed below double digits — barely — though jobs haven’t been nearly as plentiful as they were a few years ago, when the unemployment rate frequently dipped under 4%. The region’s economy this year will be just a little better than the last two, N.C. State University economist Michael Walden says, but there will not be a dramatic rebound. Still, he says, the Triangle is on a path to grow faster than most metropolitan regions in the country.

BNC: How is the life-sciences sector holding up?

Walden: We haven’t had the bloodbath that we had during the 2001 recession. People are cautiously optimistic about the future of life sciences and high-tech. We have too much going for us to think that we are going to backslide much. That is not to say that we won’t have some companies move out or downsize. But there has been a subtle shift in how people position this region. Clearly technology and biotechnology will continue to be important, but we have been able to attract some major financial-firm investments, with more likely to come.

What’s the significance?

We’re maturing into a settled metropolitan area that is going to derive more of its income from serving as a regional focus for retail and service activities. Meanwhile, in the Charlotte region, I detect a major shift from financial services into technology with the North Carolina Research Campus in Kannapolis. When you think of North Carolina, you think of the Charlotte region and Research Triangle Park. Each is in some sense infringing upon the economic base of the other. That’s natural because both understand the importance of having a more diversified base.

How will the emergence of other research campuses affect the region?

We aren’t going to see anything that will replace the dominance of RTP, at least not in North Carolina. Even in the nation, it is hard to duplicate it, other than Boston or Silicon Valley. One way to stimulate economic development in the state, particularly in areas that have been lagging, is to marry economic-development activities with a research component tied to a campus of the university system. But that’s more collaborative with RTP than competitive.

The region’s high-tech sector seems to have held up well.

Investors and companies were much more cautious about expansion after 2001, so we haven’t seen that kind of debacle here in terms of job loss. On the other hand, the sector is changing. It is becoming a mature tech sector — one of research, development, innovation and service rather than manufacturing. That is the long-term trend.

How would you evaluate the Triangle’s financial sector?

It makes eminent sense that financial services will expand because the Triangle is still looked upon as one of the top metros for growth. With the expectation that this is going to be a long recovery — taking two, three or more years — national companies will want to find the growth markets. The Triangle will stand out even more then, particularly when you look at growth markets that have been knocked down during the recession.

Such as?

The Southwest, Nevada, California, Florida, Washington, D.C. We have certainly suffered, but we have not had the cataclysmic declines that our competitors have. People are going to look at the Triangle and say, ‘Gee, that’s an area that’s got stability in bad times. It’s got great potential in good times. It’s got a great base for turning out a steady stream of college-educated workers. It’s got room to grow. It’s got a great climate and pro-business leadership.’ That would include financial-services firms of all types.

What can be done to improve access to capital?

That has to come with a revival of the economy. We don’t need major new efforts, particularly public-private partnerships or public provision of capital. Banks and other lenders are simply sitting on capital. That’s natural given the anxiety over the economy. Access will come back.

The region’s unemployment rate was lower than the state’s in 2009. Does that merely reflect the stabilizing influence of state-government jobs?

Unemployment rates are always lower among the more highly educated. We have a much-above-average rate of highly educated workers here, not only compared with other counties or regions but also with the nation. Government employment has helped, and the universities have helped. We have not had mass layoffs among faculty at N.C. State, for example.

But university administrators and staff have suffered some.

That’s right, although some of that has been shifting people around rather than sending them out the door. So, yes, having institutions of higher learning here has helped. Our health complex has helped. Health care actually has added jobs. All those have helped cushion the blow. The regional unemployment rate of 8% is nothing to sneeze at. I have been here 32 years, and that’s the highest rate over that time. But compared with the nation and the rest of the state, the Triangle has done very well.

What’s the status of the housing and real-estate market?

In terms of percentage declines, the Triangle has been either a little worse or right at the average of the state’s metropolitan regions. That tells me the market here has been influenced by what has been going on elsewhere. The Triangle didn’t develop a real-estate bubble, with the big spurts in rates of appreciation. But because the housing market really is a national market, we have suffered through the downturn at about the same rate as the nation.

What’s to come?

Starting last summer, we have seen improvement in real-estate indicators not only here but also statewide and nationally. To what degree has that been dependent upon the federal tax credit? Will house-appreciation rates start to come back? It looks like the worst is probably over in terms of the declines of the residential real-estate market in the Triangle.

What about nonresidential construction?

Like many metropolitan regions, the Triangle experienced a sharp spike. But now vacancy rates in commercial and office space have led to projects either being halted or postponed. Nonresidential real estate is going to continue to move rather poorly for about another year. But I don’t see it as something ready to burst that is going to send us into a double-dip drop.

How can the region’s outlying rural counties improve their economies?

Every governor since I have been here has talked about balanced growth. It is just hard to engineer from a public-policy standpoint. International forces over the last 20 or 30 years have really favored regions with high levels of highly educated workers. They also have favored the globalization of many sectors, including those upon which our outlying regions depended such as textiles and apparel.

Is there any hope?

Economic disparities will continue. The ring of rural counties surrounding the growing metro counties will be the first to, at some point, experience more rapid growth — as long as energy prices don’t derail that. Some people project that we are not just going to be facing $3- or $4-a-gallon gasoline within a decade but maybe $10-, $15- or $20-a-gallon gas. That may reshuffle the deck dramatically in how much international trade occurs.

How?

If it becomes very expensive to transport products internationally, then you might see people turn back to buying more of what they use locally. So you might see a big revival in agriculture in North Carolina. You might see products such as clothing and furniture manufactured here. It illustrates how dependent economic development is on large international forces over which states have almost zero control.

What impact will federal stimulus spending have on the region?

As it does just about everywhere, minor. I don’t know how much of the infrastructure spending that was allocated to the state is going to Triangle projects. Even if it was a big number, it’s probably a one-time big number. The bigger continuing impact in this region will be the research-and-development money that the universities get.

What is the outlook for manufacturing?

Statewide, we actually saw a gain in manufacturing jobs in October by about 2,000. Manufacturing tends to be one of the first sectors to come out of recession. You need to answer that question two ways: How important is manufacturing in income generated — not just from salaries but also from the sale of products? Secondly, how important will it be in jobs created? What we are seeing not just in the Triangle but worldwide is a disparity between those two. Manufacturing output in North Carolina is much higher today than it was 25 years ago, yet employment is much lower. That’s because people are being paired increasingly with better technology. I see no reason why that trend won’t continue. Manufacturing will evolve similarly to the way agriculture evolved.

Which sectors in the Triangle will grow this year?

There will be continued substantial growth in the health-care/education sector. There will be noticeable improvement in technology. Government will experience growth. The leisure-and-hospitality sector will be a sleeper. We aren’t going to see a big upswing in construction activity or retail or financial services.

Do you expect any major sector to contract?

Manufacturing, in employment, because of structural changes rather than cyclical ones. Workers will be replaced because of technology. Even though we have had a gain last month, manufacturing will continue to register job losses.

What’s the overall outlook?

Our ace in the hole continues to be the confluence of institutions of higher learning. You have people here who are working on cutting-edge projects in virtually every discipline. For an economy to be competitive in the future, it is going to have to be more reliant on innovation and R&D. We aren’t going to see the kind of growth spurt that we had in the late ’90s. Maybe that’s good, because it did cause issues with infrastructure and school construction.

This marks the 23rd time Business North Carolina has named a Mover and Shaker of the Year, and like our current pick, more than a third have been bankers. Their tally grows even greater when you consider that the fifth Mover and Shaker was NationsBank’s four-man merger team. Or that two-time winner Erskine Bowles made his bones — plus millions — as an investment banker, though he was selected for brokering the balanced-budget deal as Bill Clinton’s chief of staff and, eight years later, for becoming president of the UNC system.

But no winner — not even the few true rogues who have made it onto the M&S roster — raised as many eyebrows as our latest likely will, especially for the reason we’re honoring him. But as writer Dan Gearino says, “For every narrative there is a counter-narrative, and BNC is offering an alternative view of America’s favorite whipping boy.”

Dan approached this assignment with tongue tightly tucked in cheek, though I’m not so sure that’s where it was lodged when he finished it. But the dollop of irony with which he seasoned the piece, which begins on page 36, is distilled into the scorn that drips from his regular column, which grew out of the research he did for the Mover and Shaker story. You’ll find it on page 14. And trust me, this is not the kind of civics lesson you learned in school.

Speaking of hard lessons, this special issue of BNC — our annual Business Handbook — could serve as a textbook on tough times. While most economists seem to think we’re coming out of the Great Recession, not all agree on what course recovery will follow and how long it will take for things to return to normal. And as anybody who understands North Carolina knows, each region of the state is unique. That’s why we asked five economists to forecast what 2010 is likely to bring their way.

They left their rose-colored glasses at home. But come what may, this, too, will pass. And this magazine, whose job is to chronicle business in one very special state, will be here to tell you all about it.

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Kevin McDonald moves around the main campus of the nonprofit he founded in Durham with the confidence of someone coaching a championship team. Nearly 6 feet tall and built like a linebacker, the president and CEO of Triangle Residential Options for Substance Abusers Inc. greets everyone by name, discussing their work and chatting them up about how and why they joined his team.

Numbering about 400, TROSA residents surrender much of their freedom for two years hoping to recover from long-term addiction — 15 years on average. Bound into a tightly knit therapeutic community, they try to lead one another to new lives through intense therapy, self-examination and mutual support akin to 12-step programs. But McDonald’s playbook includes something else: a job.

He believes that hard work — and the sense of self-worth that comes with it — is redemptive. “My first job at TROSA was to teach the work ethic to people with little to no successful work experience,” McDonald, 62, says. “To do this, we needed to show residents the importance of dressing neatly, being punctual for work and working hard — traits most never learned before.”

Everybody works, whether it’s preparing thousands of meals a day for residents, repairing its vehicles, maintaining the program’s 30 buildings or pitching in at one of its businesses. Along with grounds maintenance — including cleaning up after the State Fair — catering, Christmas-tree sales and other retail operations, TROSA operates the Triangle’s largest independent moving-and-storage company, all with a team assembled from unlikely recruits. Half of the residents never finished high school. Something like 90% have criminal records.

TROSA is North Carolina’s largest residential therapeutic program, with revenue (including grants, donations and in-kind contributions) of about $10 million a year. Competitors grumble that it wins business with low-ball bids. That’s not the case, insists Michael Keene, vice president of business operations. “We’re not the most expensive, nor are we the cheapest, and we don’t sell our services as a charity.” But there’s no denying that TROSA has a competitive advantage: Though it has a paid staff of 51 and an annual payroll of more than $2.3 million, its workers receive no wages. “Besides providing the basics of life — food, shelter, clothing and health-care services — we offer a safe haven,” McDonald counters. “For many residents, it’s the first time in their adult lives where street violence does not exist.”

One local minister complains that the program functions a lot like an antebellum plantation. But unlike slaves, residents are free to leave any time, Keene points out. A significant number do. Only 30% complete the two-year program. Until recently, TROSA could boast that 100% of its graduates left with a job. “The current job market made it a bit tougher for everyone to find jobs in 2009,” McDonald says, “but nearly all have found work.” Over the years, about 1,000 have joined the workforce.

One thing is certain: Everyone at TROSA has an interesting backstory — college grads work side-by-side with dropouts, convicted felons rub shoulders with former petty thieves, recovering alcoholics drink iced tea with former heroin addicts. Take McDonald. The son of a career Air Force officer, he had lived in five states and Germany by age 15. A heavy drinker in his teens, he was a drug addict before 20 and had several arrests for armed robbery by 32. That’s when he entered Delancey Street Foundation’s program in San Francisco. “They took me on and started teaching me different workplace and lifestyle skills.”

He stayed 12 years, absorbing the strategies that founders John Maher and Mimi Silbert used to rehabilitate addicts. “Delancey Street embraced Maher’s political vision, an agenda that engaged residents in the struggle for workers’ rights in the fields and factories of California,” writes Barbara Lau, who spent three months at TROSA in 2002 collecting an oral history of how and why it works. “Delancey Street residents became bodyguards for labor activist Cesar Chavez and marched in workers’ parades in San Francisco.”

During the ’80s, social-service and law-enforcement officials seeking alternatives to sending addicts to prison explored setting up similar programs in North Carolina. In 1987, concerned Greensboro residents persuaded Silbert to open a satellite site in the Triad. She tapped McDonald, who had moved up to one of the program’s top jobs, to get it going. Riley Butler, then executive director of the Durham Community Penalties Program, noticed his work and began courting him. But after about a year, with the 25-resident Greensboro operation running smoothly, McDonald was called back to San Francisco.

By 1992, he had decided to leave Delancey Street, which, unlike TROSA, had a volunteer staff. “After 12 years,” he recalls, “I was making $65 a month.” He landed a job in Los Angeles working with homeless gang members. “That was my wake-up call,” he told Lau, then a folklorist and ethnographer at Duke University’s Center for Documentary Studies. “This was skid row L.A. … You had a bunch of people who didn’t give a shit.”

Butler had stayed in touch: “Riley was the person who never gave up and called me many times to ask me to come back to North Carolina,” McDonald says. “It just hit me on the right day at the right time,” he told Lau. “The urine smell was coming up through the windows at this place, you know, four stories up. The usefulness of what I was doing of helping people was zero.”

TROSA started in 1994 with $18,000 in the bank. McDonald hired two former Delancey Street residents to help him convert a dilapidated elementary school that the county had given to the program into its first dormitory. “I had this big school with broken windows, water in the basement, all the pipes busted. … It didn’t faze me.” In its first business venture, residents peeled potatoes and grew herbs for a gourmet food market. By 1996, they numbered 100. The following year, McDonald hired Keene from Delancey Street’s moving operation in Greensboro. Consider his résumé: A high-school dropout and longtime substance abuser, he had spent nearly 10 years in jail.

When he came aboard, TROSA, which had entered the business by buying the license of a bankrupt mover, had three trucks and an 18-wheeler. It now has 19 moving trucks and 38 moving-van trailers with five tractors to pull them. “We have gotten ourselves to the point where we now do over 4,500 residential and commercial local and long-distance moves a year,” Keene, 58, says.

TROSA employs a process that resembles a boot camp in its use of peer pressure and intense supervision. The two overriding rules are no violence (or threats of violence) and no booze or dope. Break them, you’re history. For the first 30 days, residents rise at 6:30 a.m. and work until 11 p.m., though that includes orientation, seminars and group therapy. After 30 days, they can receive and send mail. After 90 days, they get a phone call. At six months, those still aboard receive a portable CD player and a watch. At one year, family can visit. After 14 months, residents can visit their homes. At 18 months, they enroll in job-search classes. At 21 months, they start looking for a job, and if they get one, TROSA holds the money until they complete the program three months later.

The goal is not just to break the cycle of addiction but to convince residents that the entrepreneurial, pragmatic and acquisitive traits underpinning the American national character are worth cultivating. In addition to a job, there are other incentives for finishing the program, a car, for instance.

Some who complete the program are hired as salaried employees and stay on in TROSA housing. “I graduated last year,” Robyn Duff, 34, says, “but I decided to live in a TROSA transitional townhouse. Here I can come and go as I please.” Before moving to North Carolina with her then-husband, she had taught hearing-impaired students in Pennsylvania. For six years, she worked as a job coach and ran residential centers in Greensboro and Raleigh, but drugs and alcohol took over. She entered TROSA three years ago. As McDonald’s executive assistant, she orchestrates his workday and handles tours.

Gregg Fenn, 48, is staff-in-training. The son of an Episcopal minister, he graduated from a New England prep school. After getting his bachelor’s and master’s at University of Colorado, he spent 15 years with frozen-food maker Stouffer’s in Ohio, rising to junior vice president of research and development. But his cocaine addiction destroyed his career, along with his marriage to a physician. “In early 2008, I turned myself into TROSA and a few months later was named manager of the in-kind program.”

Fenn’s telephone solicitors employ scrounging techniques that would awe the Max Klinger character on TV’s M*A*S*H series — soliciting $3.5 million worth of goods last year. Whether toilet paper, shrimp for the Christmas dinner, vehicles or copying paper, the goods are used to feed, house and equip residents. Fenn’s seven co-workers learn their computer ABCs, telephone etiquette and how to do research on target companies via the Internet. After two years, they have become skilled solicitors, which leads to sales-related jobs once they leave. That raises another challenge for TROSA. Its managers face turnover of well over 100% every two years.

A larger and more long-term problem looms for TROSA — managing growth. “When I first got personally involved with TROSA 10 years ago, there was no long-range planning or fundraising,” says Jeff Clark, a managing general partner of The Aurora Funds Inc., a Durham-based venture-capital firm. “McDonald in many ways has the same drive as a corporate entrepreneur — along with lots of street smarts.” But like many entrepreneurs, he was slow to relinquish control.

“A few years ago, McDonald would dominate every board and staff meeting and do 80% of the talking,” says Tony Brown, a Duke University public-policy professor who has been chairman since 2008. “Nowadays, others participate, and McDonald speaks out less frequently.”

“It is hard to say what specifically happened when,” McDonald says. “It has been a growing process. I have built a management team that has made it possible for me to shift from doing mostly everything myself to delegating many day-to-day responsibilities.” Some have come from industry and other nonprofits. Keith Artin, 39, is one. With TROSA since 2001, he became chief operating officer in 2003, supervising several functions, including information technology and building maintenance, that once reported to McDonald. A University of Virginia grad with an MBA from Duke’s Fuqua School of Business, Artin had worked for Robinson-Humphrey/Saloman Smith Barney in Atlanta structuring municipal-bond transactions totaling more than $1 billion. He is one of five senior managers who were paid between $55,000 and $90,000 in 2008, according to tax documents. McDonald made $147,000 last year.

Artin says TROSA wants to keep growing and plans to add two dorms to the six already on campus. “We’d also like to increase our revenues so we are less dependent on outside financial resources,” he says. Adds Brown: “Our challenge is to make sure that we get even better in every phase of the operations. There’s no place for mediocrity, particularly when the workers are addicts and felons. We’ve got to continually show our customers that we can do the work better than our competitors.”

“Because of who they were and where they come from,” McDonald says, “our residents hold each other accountable and work in teams. There is significant peer pressure to do the right thing, so theft is not common.” As he told Lau in 2002, “People don’t use our services because we’re drug addicts. They use them because we do a good job.”

Robert K. Otterbourg is a freelance writer who lives in Durham.