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He’s all talk

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He’s All Talk

But that’s creating a lot of action for radio’s Mark Packer, who’s syndicating his sports gabfest across the Carolinas.
by Arthur O. Murray

It’s 2:55 p.m. Mark Packer rises from a cluttered desk in a tiny office crammed with T-shirts, Cornbread Maxwell bobble-head dolls and sports-team coffee mugs, then hustles down a hallway to the studios of WFNZ-AM, a 5,000-watt radio station in Charlotte’s South End. He nods to fellow talk-show hosts Chris McClain and Sandy Penner as they leave, settles into a chair around a five-sided table, slips on a pair of earphones and waits for his cue. “It is Primetime,” he yells into the microphone. “I’m The Packman.”

From the start, he’s loud, assaulting his audience with a rapid-fire delivery that belies his beloved Southern heritage. But people listen. At least, a lot of men ages 25 to 54 do. Among that demographic, his show is usually first or second in its time slot in the Charlotte market and is expanding its reach across the Carolinas. He’s heard on 10 stations from the wetlands of Little Washington to the foothills of Greenville, S.C., and he has two more deals in the works. Packer, 43, will spend the next four hours making lots of money for doing what many guys do for nothing — talking about sports. Well, men’s sports.

Most days he comes armed with a folder of notes he has prepared on five or 10 topics. Not today. He introduces his co-hosts, sportswriters Stan Olson of The Charlotte Observer and John Delong of the Winston-Salem Journal. They banter briefly about UNC Charlotte’s most-recent basketball loss, then about Wake Forest’s win over N.C. State. He congratulates Davidson and Winthrop for winning their conference tournament championships.

Ten minutes into the show, he mentions what he knows will become today’s hot topic — Carolina beating Duke in Cameron Indoor Stadium the previous Saturday night. It’s standard sports-talk radio: All three praise Carolina’s freshmen for ruining Duke’s Senior Night and compliment the officials. Packer believes Duke star J.J. Redick is tired; Delong doesn’t. Packer waves his hand to get control back, then leans into the mike: “The last thing I need to do is preach to Mike Krzyzewski. He’s the absolute best. But he’s done a lousy job developing his bench.”

With those words, he goes into the first commercial break. The rest of the show will be filled taking telephone calls, mostly from gloating Carolina fans, many of them regulars. There is Robert from Kings Mountain, who has adopted professional wrestler Stone Cold Steve Austin’s habit of ending every sentence by saying “What?” And Mike from Gastonia, a recruiting geek who usually wants to drone on and on about next year’s team and how it will dominate. Even many Tar Heel fans have asked Packer to ban Mike from the air. Then there is the Get-Some Guy, who also calls after hours — sometimes as he’s watching the games and, presumably, drinking heavily — and screams recorded messages at Carolina’s opponents: “Get some.”

But you don’t get to be The Packman just by knowing a lot about sports, yapping up a storm and soliciting goofy callers. You get there by being in the right place at the right time and somehow catching the attention of a harried radio executive. You stay there by acting like one of the guys, griping about your boss, complaining about the sports television network ESPN (Packer calls it H-Y-P-E), spinning yarns about outwitting your wife and taking shots at some of the biggest targets in town, including Carolina Panthers owner Jerry Richardson and his son Mark, the team president, whom Packer believes cost Charlotte the Atlantic Coast Conference football title game by charging too much rent for Bank of America Stadium.

It helps to come in at a time, the late 1990s, when sports-talk radio was exploding across the country. Most large radio markets in the country have local shows. ESPN, The Sporting News and Fox Sports have created national networks to fill holes in the schedules. But Packer is one of the few to see the value of a regional show that would play well across the two Carolinas.

You also need to be able to sell things. Packer isn’t so much the host of a sports talk show as he is a salesman. That’s how he started his career, and that’s what he does best on air. He pitches diamonds, barbecue, car repairs — whatever people will pay him to push — with that just-one-of-the-guys attitude. Mostly he sells himself.

Life is good.” Packer says it on the air nearly every day, and it’s easy to believe he means it. He laughs easily and has a standard response to criticism: “Screw it.” That goes for callers, reviewers, bosses — anyone who wants to change him.

He has been around critics all his life. His father, Billy, played basketball at Wake Forest University but is better known for his caustic comments as an analyst on college-basketball games. While Mark, the oldest of his three children, was growing up in Winston-Salem, Billy Packer was gaining fame, first teaming with Jim Thacker for regional telecasts of Atlantic Coast Conference games and then with Dick Enberg and Al McGuire on NBC. These days, he works for CBS. “I never realized he was famous,” Packer says. “I thought it was kind of goofy.”

Packer grew up an N.C. State fan and took issue when his dad criticized the team. “I always thought he was out to get N.C. State. The next morning at breakfast, I’d be all over him. ‘What are you talking about with Hawkeye Whitney or Kenny Carr? That was a terrible call. What were you watching?’” He quickly found out that other fans also hated his father’s opinions. “You go to Chapel Hill, everybody thought he was out to get Carolina. I kept sitting back thinking, ‘They don’t even realize: He hates N.C. State.’ It was really kind of funny.”

In high school, Packer played golf. He wasn’t a model student, but he wasn’t a slacker. He was torn between attending the University of Georgia and Clemson University. Sports — watching them, not playing them — wound up being the deciding factor. He went to Clemson for a football game and was hooked by its traditions and the passion of its fans. He made the golf team without an athletic scholarship and earned a bachelor’s in economics in 1985. But he didn’t know what he wanted to do. First, he went to New York, where he worked for a year on the production end of broadcasting at TEN Sports, which syndicated television rights to Notre Dame, Boston College, West Virginia and Syracuse football and Notre Dame basketball.

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Then it was back to his alma mater as general manager of the Clemson Broadcast Group. In addition to getting sponsors and signing affiliates, he hired announcers and oversaw production, but selling was his strong suit. By the time he left four years later, he had expanded the school’s radio network from 35 stations for football to 94, increasing its presence in North Carolina by offering stations Clemson for free.

It helped that the Tigers were far better than the Tar Heels in the late ’80s. The larger network meant Clemson could increase ad rates, more than making up for lost syndication fees. On the side, he was consulting for the Louisiana State University and University of Maryland radio networks.

In late 1990, he moved to Charlotte to work for Jefferson-Pilot Communications, the broadcasting arm of the Greensboro-based insurer. Hired to work in sports-radio production, he was put to work setting up TV broadcasts for Olympic events such as track and field. He hated the sports and the job, and he feuded with his bosses for about a year before departing.

He tried two more jobs over the next few months, then started a marketing company, Time Out Sports, in 1992. Among its clients was Glen Allen, Va.-based S&K Menswear, for which it created an ad campaign with former baseball star Johnny Bench. In 1995, he got married, and he and his wife, Amie, had their first child two years later. But he was frustrated by the ups and downs of the business. “Then I got a phone call from a guy named Terry Hanson.” Things were about to change.

Mike Kellogg is the former general manager of WFNZ and WSOC-FM. Both were part of Boston-based American Radio Systems when it was acquired in 1997 by what is now CBS Radio. The stations lived in different universes: WSOC was a country-music power, dominating the market, while WFNZ struggled with a sports-talk format and a weak signal.

One of Kellogg’s first moves to rejuvenate WFNZ was to hire Hanson, a Charlotte broadcasting consultant who had been an executive with Atlanta-based Turner Broadcasting. “He needed an influx of personalities and talent throughout the station,” Hanson says. “I thought of Mark as a marketing executive. I knew of his knowledge of sports and his connections and his upbeat personality.”

Packer agreed to meet Kellogg at the station, thinking the discussion would be about a marketing job and figuring he might pick up a client if nothing else. “It lasted about two minutes,” Packer says of the meeting. “He was late and a typical fast-paced Bostonian. He didn’t have time for anybody. He walked in and said, ‘So, who are you?’” Then Kellogg had another question: “Do you know Matt Pinto?” About all Packer knew of Pinto was that he had an afternoon show on the station. “Mark, I want to hear you do one hour on the radio. I’ve got to go.”

His only on-air experience had come about 10 years before. As a lark, he had done commentary on Clemson’s network for a handful of National Collegiate Athletic Association baseball playoff games. This was different. “I walked in — nobody said hello to me — sat down, put headphones on and did an hour with Matt Pinto. It felt like it lasted about a minute. And Matt looked at me and said, ‘The hour’s up.’ I took the headset off — I thought I did a pretty good job — and walked out, and not a soul said a word. And I thought, ‘This is ridiculous. This is garbage.’”

When Hanson called that night, Packer cursed him and told him he wanted nothing to do with WFNZ. But it turns out Kellogg had heard enough to find him “entertaining,” a trait he says he can’t define but is critical. “True entertainers are entertaining first. I thought Mark fit that bill perfectly. Being entertaining doesn’t mean you have to have experience.” Then he pauses. “Plus at that time, WFNZ had nothing to lose.”

Oddly enough, given the way the show would dismiss women’s opinions, it was Amie Packer who changed her husband’s mind three or four days later. “You went on the radio for one hour and said it lasted one minute. It sounds like you found something you like to do.” When Hanson called again, Packer was more receptive. “I looked at my wife, and she said, ‘Do it.’”

The next month, August 1997, he started doing a show with Penner from noon to 3 p.m. weekdays, working for $25,000 a year while keeping Time Out active. A few weeks later, Pinto left to become the play-by-play announcer for the Dallas Mavericks basketball team. After a brief search, Kellogg put Packer in the late-afternoon drive-time slot and doubled his salary. Packer dissolved his company, and the station launched Primetime with The Packman.

The format has changed little. Packer is host, with co-hosts — who sit in for an entire four-hour show — that include Charlotte-area sportswriters, broadcasters and retired athletes such as basketball player Cornbread Maxwell and professional wrestler Ric Flair. Co-hosts change each day, which helps the show stay fresh. Guests appear mostly by phone for one 15-minute segment. Packer also started a daily feature called the Whiner Line. Listeners call and record complaints, harangues, offbeat songs or jokes. The best are played on the air. That’s where the Get-Some Guy started. Other regulars include Bradley from Pickens, S.C., whose diatribes mostly get bleeped out with the exception of telling everyone to “Go to hell,” and Cold Pizza — named after the ESPN2 morning show that Packer calls the worst television program ever. He got the moniker after his incoherent ramblings led Packer to declare him the worst Whiner ever.

Even with Kellogg and other station employees seeding the Whiner Line at first, it took about nine months for the show to find its way. Since then, it has gained strength — both in listeners and, importantly for the station, with advertisers. “He was the first thing on the station that started making money,” says D.J. Stout, operations manager and program director for CBS Radio in Charlotte. He’s still the station’s biggest moneymaker, though Stout declines to reveal either revenue or the percentage of it that comes from Packer’s show.

Packer has cashed in, too. By late 2002, he was making “six figures,” he says, when his contract came up for negotiation. He wanted more money, but he also wanted to syndicate the show to stations in other Carolinas markets and keep the lucrative fees. At the time, the show was heard only in Charlotte and in Greenville, S.C. Packer usually takes most of December off to spend time with his family during the holidays, but when he left this time he said he wasn’t coming back without a new contract.

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Talks stretched through December and most of January, even after they agreed on money, he says. “They were in essence saying, ‘Listen, if Howard Stern doesn’t have syndication rights, who does Mark Packer think he is?’ It got to the point where I told them point-blank, ‘I will not sign a contract unless I have the syndication rights,’ and they gave in.”

In February 2003, he signed a new contract — five years at $250,000 a year. (Life is good.) He also got syndication rights. Last fall, he signed an extension that gave him a “little more” money and keeps him under contract, with syndication rights, until 2010. He says he is close to cutting deals with stations in Asheville and Columbia, S.C.

He also does two 60-second weekly commentaries on the Charlotte UPN affiliate. And he has been working on a television talk show that could begin this fall and a television and book deal revolving around another favorite project: the Southern Fried Football Tour.

That’s an idea he got in 1998. First, he thought up the name, which he says encompasses what makes college football in the South special — tailgating, bands, big crowds and passion. Soon Packer was persuading Kellogg to buy a recreational vehicle that he could use to promote the station. Packer would fill it with food, beer and fans and take it to college football games across the South.

The catch is that anyone who wants to go with him has to have four tickets for that game — “two for him and a buddy and two for me.” He started a company called Southern Fried Football Inc. to handle the tours. Sundrop soft drink was the title sponsor last year and will be again in 2006. Packer uses the extra tickets to reward sponsors and coworkers. Last year’s tour, he says, generated more than $100,000 in revenue. “I’ve created a way to make money for going to watch college football games.”

Not everyone loves Packer, of course. Women complain about a lack of coverage of women’s sports. Even some guys think he’s crude and find the Whiners homophobic. Women who call into the show are frequently told by other callers to “get back into the kitchen and bake some cookies.” And diehard sports fans sometimes find the humor sophomoric: Packer usually refers to the Charlotte Sting, which plays in the Women’s National Basketball Association, as the Stink.

He doesn’t care — as long as he’s reaching his target audience. “When you look at the demographic of who listens to sports-talk radio, it would shock people. It’s normally a guy incredibly affluent and with a lot of disposable income. That is where we throw the dart.” To the others, he says, “Screw it.” When you can do that, life is good.

He has developed an edifice complex

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People – May 2006

He has developed an edifice complex
By Chris Richter

From his sixth-floor office in the Masonic Temple Building, Greg Hatem has a front-row seat for downtown Raleigh’s makeover. It’s a change that Hatem, 46, helped start 11 years ago when his Empire Properties LLC bought and renovated an empty warehouse nearby. Empire now owns 36 buildings, with about 600,000 square feet of floor space, and is among downtown’s largest landlords. By year-end, it will have invested more than $50 million. Hatem’s only title is manager, but he’s the guiding force behind the 120-employee company.

He grew up in Roanoke Rapids and got a bachelor’s in chemical engineering from N.C. State in 1985. Afterward, he went to China to visit his uncle, George Hatem, who had been Mao Zedong’s personal physician and had become a public-health official. Once back in the U.S., Hatem spent a year helping close his family’s clothing store before becoming a financial adviser at American Express. Back in China after his uncle died in 1988, he set up a foundation to continue the public-health work, then split the next seven years between Raleigh, where he ran a friend’s advertising agency, and China, where he started a software company and built a 21-story building in Shenyang.

After he founded Empire with his brother and another investor in 1995, they turned an old warehouse into a Jillian’s restaurant and bar. He then spent two years in China winding down his involvement with the software company and two in Raleigh working for the state in economic development.

He joined Empire full time in 1999. Some renovated buildings became restaurants, but he wants to build a hotel and condominiums near Memorial Auditorium.

For tenants who want an office in a steel-and-glass tower, Empire can’t compete. But for those looking for something more retro, Hatem says, “it’s an easy choice.”

Down Mexico way

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Down Mexico way

Illegal immigration is suppressing Tar Heel wages, but this boon to business also is creating a new underclass.
by Edward Martin

Blood spatters the man’s face, his lips taut in death. The manager of the Mazatlan glances up from the Sanford restaurant’s cash register at a customer looking at a faded photograph on the wall. “Emiliano Zapata,” he says cheerily. The Mexican rebel, who promised peasants liberty and land, was assassinated in 1919. In other pictures, revolutionaries wearing bandoleers sit on the cowcatcher of a captured locomotive.

The restaurant, in a worn motel on the outskirts of town, is frequented by local Latinos and low-budget travelers. Over supper, Oscar Torres, as he had introduced himself, had told in strained English of the promises that led him here. Five years ago, rumors reached his village in the Mexican state of Coahuila that Tar Heel farmers paid high wages for easy work. At 19, he wound up in the sweet-potato fields of Spring Hope, in Nash County. Two years ago, he heard of easier work here, indoors.

One study says 75% of Hispanics who’ve come to the state in the last 10 years are here illegally.

Torres says he is an ilegal. This morning, he awoke at the trailer he shares with four others and drove his 10-year-old Ford pickup to a Sanford poultry plant. All day, he dangled chickens on the hooks of a production line where workers ripped out their entrails. His $8.25 an hour is almost half again what sweet potatoes paid, and the plant doesn’t short his wages the way the farmer did. He is one of about 1,000 workers, and by management’s count, 97% are Hispanic. Torres estimates 80% are illegal, with forged immigration documents and fake Social Security numbers. A plant spokesman insists it has no illegal workers.

Torres is part of an economic and social revolution. Barely 25 years ago, Hispanics were a rarity in North Carolina. By some estimates, their numbers are approaching one in 10, and in a few occupations — construction, for example — they hold more than a third of the jobs. Without Hispanics, some economists say, the state economy would come to a near standstill. People would pay more for goods. Houses would go unbuilt.

Despite such positives, there is evidence that Hispanic immigrants, who often work for half the wages of legal residents, are dragging down the pay of other North Carolinians while benefiting the bottom lines of their employers. It’s a phenomenon experts call wage depression, one impact of a shadow economy where tens of thousands in North Carolina illegally toil in swine and poultry plants, on farms and in other jobs.

Few are happy with the economy that has been created. Illegal immigrants say they’re exploited, employers still complain of labor shortages, and many native North Carolinians feel threatened by what they perceive as a swarm of newcomers who broke the law to get here. “Whether you’re right, left or center, the system is broken,” says Bill McFadden, a Sanford legal aide specializing in immigration law.

The effect of Hispanics on North Carolina’s economy is difficult to quantify. But a recent study by professors John Kasarda and James Johnson Jr. at the Frank Hawkins Kenan Institute of Private Enterprise at UNC Chapel Hill has found that:

 

  • About 600,000 Hispanic immigrants live in the state, 270,000 of them illegally. (New York securities firm Bear Stearns estimates the number of illegals is double that.)
  • Wages paid to Hispanics in North Carolina, even after they sent $1.7 billion to their families in other countries, had an impact of more than $9 billion in 2004.
  • Three-quarters of the Hispanics who have come to North Carolina in the last 10 years have done so illegally.

 

Although the Kenan analysis describes immigration largely as a positive for the state, buried in its numbers are the details of wage depression. Three-quarters of North Carolina’s Hispanics work in four industries — construction, wholesale and retail trade, manufacturing and agriculture. Native construction workers have felt the impact the most. In 2004, their wages were 7.4% — $980 million — less than they would have been without the impact of Hispanic labor. Farm wages were 6.6% lower.

Overall, wages across the state were depressed 1.4% — $1.9 billion — because of the impact of Hispanic workers. All unskilled native workers, such as the 270,000 who’ve lost jobs in textile mills and apparel plants since the 1970s, have been hit hard. “It’s basic supply and demand,” says Jacob Vigdor, a professor of public policy and economics at Duke University. “The more unskilled workers available, the lower the price — the wages — will be.”

Another of illegal immigration’s economic tolls may ultimately be measured in human terms. Lower wages threaten to create a permanent segment of Hispanic workers in which poor housing, substandard education and exploitation are the rule. In Sanford, where food-processing plants made it one of the state’s earliest magnets for Hispanics, a middle-age Mexican couple that came to America illegally but gained citizenship worry about the increasing numbers of illegal immigrants and the potential for a new underclass.

“They are different,” says Jose, 42, a stout man who wears a “Mexico” T-shirt and talks through a translator. He came in the 1980s. Mojado — wet — he says, laughing as he imitates a swimmer with his arms. But he and wife Maria, 41, own a house and are supervisors in a plant. “There are gangs, alcoholism. They sell drugs,” he says. He and his wife have been able to get ahead in life, but the next generations of immigrants may not be so fortunate.

The history of Hispanic immigration in North Carolina and how its economic impact has become so widespread are well understood by Leticia Zavala, the daughter of migrant laborers. She lives in Dudley, south of Goldsboro in the flat farmlands of Wayne County, where ground-hugging cucumber vines, prickly as a cat’s tongue, stretch to the horizon. Zavala, 26, is a farm-labor recruiter who travels to Mexico each year to sign up workers in villages such as Rosamorada, on the country’s west coast. There she sees tobacco-field laborers who earn 80 pesos a day, less than $8. “The same worker can come to North Carolina and be paid $8.54 an hour,” she says.

That differential makes it easy for her to attract legal guest workers for the North Carolina Growers Association, a labor co-op. But in 1980, when she was born as her parents traveled the Eastern U.S., the census counted fewer than 60,000 Hispanics in the state, most of them legal migrant workers. By the early ’90s, McFadden began seeing the trickle of immigrants grow in Sanford, Siler City, Pittsboro and other communities in central North Carolina.

“A phony green card and Social Security number would cost you $1,000,” the legal aide says. “The counterfeiter would demand $500 up front. When he had enough orders, he’d fly to Los Angeles to get them done.” He would collect the other $500 when he returned. Now, with the Hispanic population more than 1,000% greater than in 1980, a fake green card — actually a pinkish card that looks like a driver’s license and certifies the holder is a permanent legal resident —goes for $30. “One of the other hot items is counterfeit immunization records,” says Charlotte-based Jeff Jordan, assistant special agent in charge of Immigration and Customs Enforcement — ICE — in North Carolina. “Illegal aliens need them to get kids into public schools.”

Why the rising tide? The growth of service-oriented jobs created more opportunities for Hispanics in urban areas, which many prefer. By 2004, about 70% of Hispanics in North Carolina were in metropolitan areas. Also, critical mass set in. Maribel Diaz, director of Lee County’s Hispanic Task Force in Sanford, estimates her county population of nearly 50,000 is more than 10% Hispanic, up from 2% in 1990. Word spreads. Families follow. More people come, creating opportunities for small Hispanic businesses to sell ethnic food, videos from home and the like. Each creates the need for workers, clerks, suppliers. Even more people come.

Another change since those early days is the route they take to North Carolina. Immigrants such as Jose and Maria, the couple now living legally in Sanford, rarely came straight from Latin America. Jose, whose home was Tacambaro in the Mexican state of Michoacan, was typical. After fording the Rio Grande, he worked in the Florida tomato fields, then on onion farms in Georgia. Next, he harvested peppers in Michigan, where a friend enticed him to move to Durham. There he heard of work in a Pittsboro chicken plant. Between 1995 and 2004, about 40% of Hispanics came from other states — California, New York, Florida and Texas primarily. About 38% came directly from another country. The rest were born here. Now, North Carolina is the original destination for most of them, about 80% coming from Mexico.

At the Hispanic Task Force office in a Sanford shopping center, volunteer Mayra Garza types a letter for a young man. Marcus is ilegal, 30 and from Honduras. He has been in Sanford less than a year. He works in a manufactured-housing plant and says he was drawn by North Carolina’s reputation among immigrants as a place willing to overlook illegal status in exchange for cheap labor.

He already has a North Carolina driver’s license. Officials say that since 1997 the state has issued more than 260,000 to immigrants who lacked Social Security numbers and other identification required in most states. “The ease in getting a driver’s license has been one of the biggest magnets for illegal immigrants,” says U.S. Rep. Virginia Foxx, a Republican lawmaker from Banner Elk. One of several North Carolina members of Congress who threatened last year to block billions of dollars in federal highway funds if the state didn’t crack down on licenses for illegals, she accuses the state of bowing to business interests concerned about the supply of the low-wage labor provided by Hispanics. “We certainly aren’t doing all we could to make it difficult for them.”

Ron Woodard agrees with her perspective. He’s head of NC Listen, a 300-member, Raleigh-based immigration-reform group. The state recruits low-wage employers by quietly touting cheap labor, he says, citing a N.C. Department of Commerce advertisement promoting “affordable” nonunion workers.

Hispanics, on average, make less money per year than other Tar Heel workers because they’re less educated, have less seniority and, in many cases, are here illegally.

The surge of Hispanic workers might be another nail in organized labor’s coffin in North Carolina. It is already the least-organized state with only 2% of all workers represented by unions. The state encourages illegal immigrants to come because their fear of deportation makes them unlikely to buck authority through union drives, says James Andrews, president of the Raleigh-based North Carolina AFL-CIO. That’s not so, N.C. Secretary of Commerce Jim Fain says. “It’s clear North Carolina has a more affordable work force than other parts of the country, but that doesn’t mean we’re recruiting low-wage jobs.”

Politically, Hispanic immigration has divided even the ranks of conservative Republican voters and officials, with national-security advocates arguing for tighter controls and businesses lobbying for cheap labor. Tar Heel politicians often try to avoid the issue altogether. For example, Gov. Mike Easley’s office handed off questions about immigration to Fain, whose spokesman repeatedly attempted to refer them to the N.C. Department of Labor. “At the end of the day, this is an important set of issues,” Fain says, “but they’re federal issues that need federal attention.”

The topic is a hot potato in part because it affects hundreds of thousands of voters’ paychecks. Wage depression is one reason incomes for the state’s lowest-paid workers — immigrants and those competing with them — have risen only an inflation-adjusted 12%, 88 cents an hour, since 1979, says researcher John Quinterno of the nonprofit N.C. Budget & Tax Center in Raleigh. That compares with 21% for middle-income workers and a 40% increase at the top.

Wage depression puts at risk not only low-income jobs but the state’s blue-collar middle class, once its economic backbone. “What we’ve got is an hourglass economy,” Quinterno says. “We’ve created jobs at the high end, but they require high skills and education. We’ve created many jobs at the low end, but they don’t pay wages that support a family.”

The boss of bosses, he called himself. Jefe de jefes. And the role he played documents both the powerful lure of cheap labor and how illegal immigration in North Carolina is growing at the eighth-fastest rate of any state. Though he seemed a model citizen — a former Tyson Foods Inc. poultry worker who had opened a Mexican grocery in a small town in central Tennessee — Amador Anchondo-Rascon led a secret life.

He was the arranger. “He’d call contacts in Mexico and tell them how many workers we needed for a plant,” says John MacCoon, a federal prosecutor in Chattanooga, Tenn. “Then he’d say, ‘Yeah, we’ll have 25 at such a location tonight.’” An undercover agent says Anchondo-Rascon would find the spot, on the Texas side of the border, and blink his headlights. “They’d come running out of the bushes.” Forty-eight hours later, they would be gutting chickens at Tyson plants in Monroe, Wilkesboro and elsewhere.

Immigration agents charged Anchondo-Rascon of Shelbyville, Tenn., Tyson Foods and six managers with 36 counts of smuggling illegal immigrants and other crimes. Anchondo-Rascon was convicted. Two managers pleaded guilty, another killed himself before trial, and two were acquitted; charges were dropped against the other one. Tyson, which was cleared, argued that its managers had acted on their own — despite payments made to Anchondo-Rascon with company checks. That was in 2003, but it’s not over.

Four Tyson workers are suing the company, alleging that it employs illegal immigrants to depress wages for all workers. They’ve asked the court to certify their suit as a class action, which could apply to all Tyson employees. Gary Mickelson, spokesman for the Springdale, Ark.-based company, denies that Tyson knowingly hires illegal workers. But it can’t, he adds, root out identity fraud. “We believe companies should not be placed in the role of policing who has proper work documentation.”

However, Tyson, which has 11 plants, feed mills and other operations in North Carolina, has lobbied for looser laws on employing immigrant workers. During a national day of Hispanic demonstrations April 10, Tyson excused workers at Tar Heel plants who wanted to attend the rallies. Though employers are required to verify applicants, enforcement is increasingly difficult. “There is such a thing as willful blindness,” says Jordan, the ICE agent, who points out that no North Carolina company ever has been charged with hiring illegals. A spokesman for the Government Accountability Office in Washington says only four employers nationwide were charged with hiring undocumented workers in 2004. That’s compared with more than 400 in 1999.

Once in factories or farm fields, illegal immigrants are essentially home free, which Jordan concedes. “It’s not as simple as putting them on the big green bus, carrying them back to Laredo and kicking them off.” They receive the same protections as legal residents, including due process, and are getting bolder. “Now it’s a matter of hiding in plain sight. They figure, with the sheer volume, ‘you can’t get us all.’”

The proponents of looser immigration laws argue that they are necessary because Americans won’t do difficult and dirty jobs. But every weekday at 6 a.m, garbage collectors warm up their trucks and pull out of the Charlotte Sanitation Department’s headquarters, within a mile of downtown’s bank towers. The city has more than 260 sanitation workers, nearly all of them native-born blacks. They are paid $20,000 to $30,000 a year, plus insurance, vacations and other benefits. City officials say they sometimes have a waiting list of applicants.

Scenes like that take place all across the state. “Nobody can look you in the face and honestly tell you we have a shortage of workers,” says Woodard, the NC Listen director. “What we’ve got is a shortage of workers willing to work for $6 an hour, because at the end of the day you can’t raise a family on that.” Few jobs, he contends, would go unfilled if normal economic forces set wage levels without the artificial downdraft of poorly paid illegal immigrants.

The differences between what Hispanics and other workers are paid in some fields are startling. The Kenan Institute study shows non-Hispanics in information technology average more than $47,000 a year, compared with $17,000 for Hispanics. In construction, Latinos average $19,216 a year; others earn $37,518. Though Hispanics, on average, have less education and experience than other workers, that alone does not account for the gap.

“We’ve created many jobs at the low end, but they don’t pay wages that support a family.”

Nevertheless, what immigrants earn here is substantially more than they would in Mexico, so they are willing to put up with a lot on the job. Maria, the immigrant who is now a citizen, says illegal workers are treated differently in the Sanford poultry plant where she works. “They are supposed to take care of four chickens a minute, but when there is pressure, they speed up the line. If [illegals] complain, they say, ‘We’ve got three or four applicants waiting for your job. We’ve got a stack of applications this tall.’” She holds her hands a foot apart. “But if I complain, they listen.”

Such circumstances may make it hard to turn the tide of wage depression. Membership in the Vass-based North Carolina Growers Association has declined to about 500 from 1,000, partly because fewer farmers are raising tobacco but also because many more are hiring illegals for less than the association’s minimum of $8.54 an hour. Co-op workers have visas and are guaranteed sanitary housing and other benefits illegal workers often lack.

On a late winter day, Zavala sits in her office in Monterrey, a sunny city of white buildings at the base of the Sierra Madre Oriental Mountains. She spends several months a year there, seeking Mexican workers for the Farm Labor Organizing Committee. It is a rich city, like Charlotte or Raleigh. Her office is a block from the U.S. consulate, which issues the guest-worker papers for the laborers she finds for the Growers Association.

Outside Monterrey, a change has come to the villages. “People live on the mountainsides,” she explains. “They’re farm workers. They’re poor. They harvest tobacco or tomatoes. But from May through October — harvest time in North Carolina — there are few there.” She calls the villages los ciudads del fantasma. The ghost towns.

Are you experienced?

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Up Front: May 2006

Are you experienced?
As managing editor of The Charlotte Observer, a job he held 13 years, Frank Barrows ran a newsroom 250 people strong. As Business North Carolina’s new executive editor, he supervises three editors — four, once we fill a vacancy — and tries to keep an editor in chief at least somewhat focused and on task. Small in number we might be, but we’ve spent a combined 161 years in journalism, probably one of the most experienced staffs of ink-stained wretches you’ll find working anywhere.

Among the assets Frank, 59, brings is not just the length but the breadth of his experience. During his 33 years with the newspaper, he worked as sports columnist, basketball writer, projects reporter, assis-tant metro editor, executive sports editor, deputy metro editor, assistant managing editor/local news and deputy managing editor. He was one of two editors who directed coverage of Jim Bakker and the PTL scandal, which won the Pulitzer Prize for public service in 1988. While he was managing editor, The Observer was twice a Pulitzer finalist. Oh, and during a long-ago two-year respite from the paper, he freelanced for The Atlantic Monthly, Southern Living and Golf Magazine, among other publications.

His take on why he took this job: “When I left the newspaper, I found myself wanting to try my hand at something different. I turned down some job possibilities that presented themselves to me because they didn’t feel quite right or didn’t really excite me. But Business North Carolina did excite me — it was an opportunity to be involved with excellent journalism and learn about what is for me a whole new kind of print publication. I’ve read the magazine for years and always admired its quality, so I was pleased when David called me to talk about working here.”

I consider it a coup worth crowing about. Veterans though we all are, we’ll gain a lot from working with one of the state’s best, brightest and most respected newsmen. But who will benefit most will be our readers, as Business North Carolina moves to the next level under his leadership.

School forum can’t put a price on performance.

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Economic Outlook – April 2006

School forum can’t put a price on performance.

All public school systems aren’t created equal, nor are they endowed by their creator with enough money to provide a sound education for all students, according to the Public School Forum of North Carolina, a Raleigh-based think tank. The gap in per-student spending between the 10 richest counties and the 10 poorest has grown 62% since 1997. About 65% of funding for kindergarten through 12th grade comes from the state, about 25% from the counties through property taxes and the rest from the feds. John Dornan is the forum’s executive director.

BNC: Why is the gap growing?

Dornan: It really comes down to the difference between those counties that are adding jobs and growing their economies and those that are stagnant or slipping. It’s gotten exaggerated recently because in our smaller counties, we’ve had so many plant closings, job losses and reductions in real-estate value.

Declining property values are shrinking county tax bases?

The property-tax rates in our poorer counties are considerably higher than the rates in our wealthier counties. The irony is that even when they tax themselves at a high rate, there simply isn’t much to tax. A county like Wake can have a low tax rate, but it can generate a huge amount of money because it has so much real-estate wealth.

Why should a big-city businessman worry that rural counties spend so little on students?

Those children in poor counties in eastern and western North Carolina are tomorrow’s work force. Many of those counties are losing population because people are moving to urban areas for jobs and opportunities. Will they have the basic skills they need, or are businesses going to have to invest in training them?

What evidence do we have that less money equals worse performance?

It isn’t that cut-and-dried. The factors that appear to make a huge difference, though, include teacher-turnover rates. Can counties attract and keep people who are qualified to teach? There are a lot of studies that show if a student is unlucky enough to get a poorly qualified teacher two years in a row while they’re in elementary school, they will be scarred for the rest of their life. And it’s our poorest counties that are hav- ing the toughest time hiring and keeping qualified teachers.

Why?

We’ve done surveys on this with teachers. What is really huge are quality-of-life issues, availability of housing, shopping, colleges to get graduate degrees, social life on weekends. The counties that have among the highest turnover rates are those where people typically have to drive 50 or 60 miles to a city to find those things.

Most school funding comes from the state, not the counties.

But we’re still a low-spending state. In 2004-05, when you look at all sources, we spent $7,350 per child. The average state spends $8,618. So we’re spending about $1,300 less per child than the average.

How much money does it takes to provide a good education?

I wish I had an easy answer to that. That’s part of the Leandro suit, in which the state Supreme Court found that the state isn’t meeting its obligation but didn’t go on to say what it would take to meet the obligation. Just as all counties aren’t created equal in wealth, neither are they created equal in the kinds of students they have to educate.

The court said county funding disparities are permissible, so what’s the point of harping on them?

The state is going to have to intervene. That same court ruling found that the state is responsible for the quality of education, that the state can’t blame it on local school officials, that if there’s a problem, it’s the state’s responsibility to do something about it.

Don’t some counties receive supplements from the state?

There’s a supplemental low-wealth fund and supplemental small-school fund. Both came into being in the mid-’90s and were the result of studies done by the forum. We had been doing these annual finance studies, and the gap kept getting larger. One year, we proposed these supplemental funds to try to equalize the scales. That amounts now to a little over $125 million per year.

Like the court, you suggest that we’re not spending enough but don’t say what is enough.

Everyone is looking for a number. It frustrates policymakers to no end, but it is really difficult to say, ‘Here’s the magic bullet for all systems,’ because they vary so much. The amount needed varies depending on what kind of kids are being taught and how much the county is putting in. We spend a lot of money on driving class sizes down, but in Cary, a suburb, we can have kids doing fine with class sizes of 35 or 40. At an inner-city school in Charlotte, it isn’t necessarily so.

What would make the forum happy? Leading the U.S. in per-student spending?

I’ll tell you what would make us ecstatic: if we merely got to average. The state has to get qualified teachers in all classrooms. And that may take financial incentives.

Rise and shine

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Up Front: April 2006

Rise and shine

Growing up, my only exposure to wine was the empty “short dogs” we’d sometimes find behind the well house at my grand-parents’ place. Grandpa Kinney was known to imbibe a bit — which, since he’d been a cabinetmaker, probably explained why he had just one eye and only seven fingers — and the shed was where he’d retreat to avoid Grandma’s vigilance.

Back then, at least in my milieu, there was nothing sophisticated about wine and those who drank it. Most of what you’d find on store shelves was the fortified kind, packing more punch per penny than beer and lots less expensive than the marked-up whiskey the bootleggers brought in from nearby counties that had liquor stores. The prejudice against wine was widespread, so it was no surprise to read about the flak the Fussell family faced when neighbors caught wind of plans to open a winery in Rose Hill more than 30 years ago.

What’s surprising about this month’s cover story is how frankly David Fussell and his kin talk about his bout with depression and its effect on Duplin Wine Cellars. After all, the prejudice against alcohol — or, for that matter, alcoholism — pales against the one many people have about anything that smacks of mental illness.

“It’s hard for business owners, maybe more so than most people, to admit weakness or what can be perceived as a weakness,” notes Senior Editor Frank Maley, who wrote the article. “They’re supposed to be strong leaders who can hide their fear or at least turn it to their advantage by anticipating the pitfalls that can swallow a company. It’s not often that one opens up about a part of their life so gloomy — even more so, one willing to talk about it to a stranger planning to share it with tens of thousands of the businessman’s peers.”

Fussell didn’t volunteer the information about his depression — after all, this was something that happened nearly 20 years ago — but he didn’t flinch when Frank, whose curiosity had been piqued by a few comments other family members had made, asked him about it. Fussell even put his wife on the phone when Frank wanted to know how she had dealt with his illness and its impact on their lives.

What resulted is a piece that has nothing to do with shame and everything to do with pluck, love and pride — about how people pulled together and persevered. “The story of this business is worth putting on our cover not just for what it has accomplished but for what it has endured,” Frank says. “If not for his family pitching in when he needed help and picking him up when he was down, Fussell would have given up, gone back to teaching and maybe stayed there.

“Duplin’s story illustrates the need for people willing to take chances and buck convention constructively, the need for people to step up when others falter and the idea that sometimes, even when prudence seems to dictate otherwise, if you hang in there long enough, your bad luck will turn.”

New Hanes job fits Sara Lee exec to a T

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People – April 2006

New Hanes job fits Sara Lee Exec to a T
By Kathy Brown

It may not have the cachet of some of the other places he has called home — Paris, Rome and Toronto — but Winston-Salem has quickly grown on Lee Chaden, who came to the Triad with his wife two years ago. “We love it down here.” That move, like the others, happened because of work.

In this case, it’s his job as CEO of Chicago-based Sara Lee Corp.’s Branded Apparel Division, which will be spun off by September into Hanesbrands Inc., a publicly traded Fortune 500 company with headquarters in the Twin City. It has about 44,000 employees and took in $4.7 billion in revenue last year. Sara Lee wants to concentrate on its food and beverage business.

Chaden, 64 this month, will be CEO and executive chairman. He grew up in South Bend, Ind., and graduated from Purdue University in 1964 with a bachelor’s in industrial engineering. He followed that with an MBA from the University of California at Berkeley in 1966. He went to work at Cincinnati-based Procter & Gamble in brand management and joined Rochester, N.Y.-based Playtex’s apparel division in 1970, largely because it promised to send him to Europe as a marketing manager. He lived in Paris and Rome. By the time he left for Toronto in 1974, he was fluent in French and Italian.

In 1979, Chaden joined Westport, Conn.-based Marketing Corporation of America as a partner. He worked for MCA spinoffs and divisions until returning to Playtex in 1991, the year Sara Lee acquired it. He became president and CEO of Sara Lee Intimates in 1994 and was promoted to CEO of Sara Lee Branded Apparel for Europe in 1999. That moved him back to Paris for two years. In 2001, Sara Lee made him senior vice president of human resources. He was appointed to his current position in 2004.

The new name comes from the company’s flagship line — Hanes. Others include Bali, L’eggs and Wonderbra. The division employs about 4,500 in the Triad. That number will go up, but Chaden won’t say by how much. While Winston-Salem is a new home for Chaden, it’s the old homeplace for Hanes. John Wesley Hanes started Shamrock Mills there in 1901 to make socks. The company changed its name to Hanes Hosiery Mills in 1914 and merged in 1965 with underwear maker P.H. Hanes Knitting Co., started by his brother, to form Hanes Corp. What is now Sara Lee acquired it in 1979.

“From a day-to-day point of view, the business won’t change much,” Chaden says. “But there’s a greater sense of ownership and excitement among the employees about this being its own company.”

Like his old boss, he isn’t the retiring type

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People – April 2006

Like his old boss, he isn’t the retiring type
By Kathy Brown

At an age when most executives are retired, Charles Snipes started a new job. But then, being 72 at Granite Falls-based Bank of Granite Corp. is different than being that age at other companies.

That’s because of the standard set by John A. Forlines Jr., 88, who stepped down in January as chairman after more than 50 years as the company’s top executive. The corporation is a holding company for the 100-year-old bank once heralded by billionaire investor War-ren Buffet as the best-run in the United States.

Snipes has been the bank’s president since 1987 and its chief executive since 1994. He became CEO of the holding company in January 2005 after outlasting at least two others whose names had been connected to the jobs. He took over all those positions from Forlines. “I learned a lot of things from John Forlines. The greatest thing was that you’ve got to watch expenses.”

Snipes grew up in Lincolnton. At 19 he tried to volunteer for the Air Force rather than be drafted during the Korean War. A recruiter told him the Air Force quota was filled and referred him to the Army. He served in the U.S. Army Security Agency three years, two of them in Germany, and left the service as a sergeant first class.

He returned to the United States and got a bachelor’s in business administration in 1958 from Lenoir-Rhyne College in Hickory. First National Bank of Catawba County then hired him as a management trainee. When Charlotte-based First Union National Bank merged with First National in 1981, Snipes was a regional executive of First Union with responsibility for Hickory.

A year later, Snipes toyed with starting his own community bank. That’s when Forlines offered him a job at Bank of Granite. Snipes started there as executive vice president, chief administrative officer and a board member. At that time, the bank had assets totaling $67 million and five offices. Today, its assets exceed $1 billion, and it has 21 offices. Snipes says the bank will consider acquisitions if they fit the bank’s culture. Otherwise, he doesn’t plan to change much.

After finally getting the top job, Snipes has no plans to step down soon. “Several of our board members have asked for a three-year notice when I decide to retire, and I haven’t given it yet.”

Keeping on track

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Keeping on track

Some Down East businesses fret they’ll pay the freight for bringing competitve rail service to the state ports.
By Edward H. Feege Jr.

When John Pike looks at the railroad tracks that serve his company, he sees more than two ribbons of steel stretching to the west. He sees a lifeline. He is operations director of Goldsboro Milling Co., which produces 500 million pounds of turkey and pork a year, fattened on feed made at its two mills in Wayne County. It buys grain from Tar Heel farmers but can’t get enough. “We still have a big hole that needs to be filled. Sixty to 65% still has to come from the Midwest.”

Every week, 185 Norfolk Southern Railway Co. hopper cars, each carrying about 100 tons of grain, roll onto the siding, almost always on schedule. Otherwise the company would have to increase stockpiles, running up its storage and inventory costs. Given the grain’s bulk and the distance it travels, rail is the cheapest transportation. The savings, Pike says, can mean the difference between red and black ink.

But now his company and others are watching the future with a wary eye. Plans to bolster rail service throughout Eastern North Carolina might make the state’s two ports more attractive to shipping lines, importers and exporters and boost the economy of the entire region — the poorest part of the state. But some users fret that the fast, reliable service they depend on could be derailed in the process. “We’re very concerned about anything that makes for inefficient movement on the railroad,” Pike says.

Twenty-three railroads operate commercial freight lines in North Carolina. Two are giants: Norfolk, Va.-based Norfolk Southern and Jacksonville, Fla.-based CSX Transportation Inc. Called Class I railroads, their networks span the Eastern United States. Their main lines carry freight to destinations throughout their systems, and their secondary lines collect local freight and funnel it to the main lines. CSX carries freight to and from the state port at Wilmington; Norfolk Southern does the same for the one at Morehead City.

In 2001, Norfolk Southern created the East Carolina Business Unit – its "railroad within a railroad."

Other railroads are called short lines. They operate in smaller territories and feed freight to Class I railroads. Many were formed after deregulation in 1980, which occurred as the entire rail industry was on the verge of financial collapse. Class I railroads ditched unprofitable lines. Some were abandoned. Others were leased or sold to short-line operators. There were plenty of these marginal lines in North Carolina, including several east of Interstate 95. “In the 1980s and 1990s, Eastern North Carolina was at risk of losing rail service,” says Scott Saylor, president of the North Carolina Railroad Co., the state-owned real-estate investment trust that owns and manages a 317-mile corridor between Charlotte and Morehead City. Norfolk Southern pays $12 million a year to haul freight traffic over it.

In 2001, Norfolk Southern looked at its business in Eastern North Carolina. The picture was dismal. Then-CEO David Goode characterized it as “having flat revenues, high costs and facing costly reinvestment.” The railroad considered leasing its tracks there to a short line, then decided to create a 485-mile “railroad within a railroad” — the East Carolina Business Unit.

Though still an integral part of the railroad’s larger system, ECBU has its own management, as well as a mandate to cut costs and generate business. Its trains operate over company-owned tracks as well as those of the North Carolina Railroad. CSX didn’t develop anything like it, but elsewhere in the country it struggled with a complex, often congested network. It spun off some marginal lines — 2,000 miles of track nationwide in 2004 and 2005 — to short-line operators, allowing it to concentrate on profitable long-haul routes.

Having only one Class I railway serving each port gives the state a competitive disadvantage.

Overall, Class I railroads in the United States have done well financially the last two years. Demand for rail service has jumped as shippers face shortages of trucks and drivers, growing highway congestion and skyrocketing fuel and insurance costs. Results have been mixed in Eastern North Carolina. “Before 2002 we had significant decreases in traffic,” says Ron Taylor, ECBU director of marketing and sales. “Traffic has flattened since the business unit started up. It’s not up, but it’s not down significantly either.” But the unit has experienced productivity gains, and General Manager Jay Traywick rates it a success. CSX doesn’t release information on its specific lines but seems to have held its own in the region.

Can North Carolina mix rail and water? It must. With only a single Class 1 railroad serving each port, their development is being strangled, some experts argue. “The [shipping lines] that serve the ports prefer competitive transportation options,” says Patrick Simmons, director of the N.C. Department of Transportation’s rail division. Importers and exporters want to move freight as inexpensively as possible. Shipping lines support them by calling on ports where inland transportation costs are held down by competition. The issue has become more pressing as the State Ports Authority pursues its plans to build a $1 billion port south of Wilmington in Brunswick County.

The new port will be devoted to handling containerized freight — cargo traveling in 20- and 40-foot metal boxes that can be transferred easily between ship, truck and rail. International trade is expected to double by about 2010, and with burgeoning imports from China and a growing shortage of port capacity throughout the country to handle it, the North Carolina International Port could quickly become a major gateway for such shipments.

First, however, it has to offer a full range of services. In most gateway ports, shippers can move containers by truck or train or by a combination of the two — referred to as intermodal transportation. Now, though, neither Tar Heel port offers it. Wilmington is the only state port with a container terminal, and virtually all containers there move by truck. The Ports Authority has been pushing for intermodal service from Wilmington for years, according to Glenn Carlson, its managing director of business development. CSX insists that there’s not enough volume. That will change when the International Port opens in six to eight years, but the new port will have to compete with established gateways such as Hampton Roads, Va., Charleston, S.C., and Savannah, Ga. — all of which offer intermodal shippers more than one rail carrier.

Railroad geography in Eastern North Carolina makes it unclear exactly how dual rail service to the ports — intermodal or otherwise — would happen. Stephen Haynes, Ports Authority director of commodity marketing and sales, thinks there are numerous ways, such as persuading CSX and Norfolk Southern to allow each other’s trains to run over their lines.

Simmons suggests establishing an inland port, similar to intermodal terminals in Charlotte and Greensboro, that would host trains from both lines. Earl Brinkley, owner of Wallace-based Accu-Track Logistics and former director of worldwide logistics for John Deere, thinks an inland port could be a key part of a broader transportation network. “The state needs to be covered like a blanket” with terminals, he says. In his suggested network, no manufacturer would be more than 80 miles by road from an intermodal terminal, each receiving freight routed through the International Port.

Norfolk Southern delivers 18,500 tons of grain a week to Goldsboro Milling – almost always on time.

Brinkley believes this integrated system would attract manufacturing and distribution businesses — and the higher-paying jobs they bring — to communities throughout North Carolina. Simmons and Brinkley see Wayne and Johnston counties, where major highways and railroad lines intersect, as potential locations for an inland terminal.

However, Simmons says there’s another piece of the puzzle that must be put into place to achieve rail competition for the ports: CSX and Norfolk Southern would surrender responsibility for hauling freight from Wilmington and Morehead City to a short-line railroad. The short line would still exchange freight with the big railroads but only at the inland port. That could give shippers a choice of carriers.

Such an arrangement, Simmons says, would fit the big railroads’ desire to concentrate on longer, more profitable hauls on their main lines, leaving local, lower-margin operations — such as hauling freight in and out of state ports — to low-cost short lines. ECBU already functions like a short line, and CSX has spun off routes to short lines in other parts of the country. He points to a study from the late 1980s that envisioned this type of restructuring of rail service in the East, with construction of an inland “Port of Selma,” where the tracks intersect I-95 in Johnston County.

DOT’s rail division will evaluate similar options again this year. Its appropriations bill directed the department to assess by May the need for a deep-channel port in Wilmington, an inland ocean-cargo terminal and a logistics operations center, as well as rail requirements to support them.

Pike, on the other hand, hopes the short-line piece of the plan never gets beyond the study phase. The proposal would end local service by Class I railroads for companies like his that lie between the ports and the big railroads’ main lines. It would force them to use the same short-line railroad as shippers who move freight through the ports, which he says won’t work. Interjecting a short line between his company’s mills and the Class I railroad would add time, handling and costs that the company cannot afford. And Pike has little faith that a short line can provide consistently reliable service.

He also believes forcing companies to rely on short-line service would harm efforts to bring the new businesses Eastern North Carolina desperately needs. “They’ll want to be on a Class I,” he says, “not a short line.” Saylor partially agrees. “Some major industries don’t want to be served by a short line. Others might. It depends on the industry.” He’s also wary of having the ports serviced by a short line.

“[Each port is] about 100 miles from the other Class I railroad. The risk would be in taking away Class I service to those industries now served along these 100-mile stretches.” Building, maintaining, and operating the short line would be a major financial undertaking, though the exact cost isn’t known. “Any short-line intermediary would have to have substantial capital, maintenance and rail-car supply capabilities.”

Given that the port and rail proposals are still in the study stage, neither Class I railroad has weighed in on their merits. CSX spokesman John Dillard says the railroad is willing to discuss possibilities with DOT, which he calls “a great partner.” Norfolk Southern’s Traywick hasn’t heard of the plan, but he disagrees that single-railroad service has hurt the port at Morehead City. “We look at the overall market, and the idea that we’re taking people to the cleaners because we’re the only carrier just doesn’t hold water.”

Another part of overhauling rail service to the ports involves rebuilding 27 miles of track north of Wilmington between Wallace and Castle Hayne. DOT purchased the line from CSX after the railroad abandoned it and removed its track in the 1980s. In July 2005, the department called for the track’s restoration, emphasizing that the re-established line would be a shorter, more direct route for passenger and freight trains to Wilmington. The study also concluded that the move might open shipping options for businesses between Goldsboro and the port.

Such a move also would interfere with customers such as Goldsboro Milling, Pike says. A study for passenger service to Wilmington recommended two alternative routes from Raleigh. Both would use North Carolina Railroad tracks between Raleigh and Selma, while the second also would rely on the railroad’s tracks between Selma and Goldsboro. Either choice would put passenger trains on the NCRR route Norfolk Southern uses east of Goldsboro.

"We’re very concerned about anything that makes for innefficient movement on the railroad."

Pike, who was appointed to the North Carolina Railroad board in 2005, doesn’t believe freight and passenger service can mix on the single track. Norfolk Southern’s ECBU operates 12 “road” trains per day, eight of them dedicated to entering customers’ sidings, pulling out full rail cars and spotting them on the North Carolina Railroad track for pick up and to delivering empty cars. For Goldsboro Milling alone, the process can take several hours, during which time the line can be blocked.

Add passenger trains, which have priority over freights, and the whole dynamic changes. When a train with people is scheduled to overtake one loaded with freight, the freight train must go onto a siding until the passenger train passes. If the passenger train is delayed, so is the freight.

Goldsboro Milling saw what could happen to its delivery schedules in the summer of 2004, when Amtrak passenger trains had problems keeping their schedules. Norfolk Southern trains were stuck on sidings for hours. The legally allowed working time of train crews expired, forcing unscheduled crew changes, which caused even more delays. Locomotives scheduled to move from one train to another were likewise held up. Selma, where freight and passenger services intersect on CSX and North Carolina Railroad lines, became a choke point.

Saylor and Simmons say such conflicts could be avoided with more investment in tracks, signals and other infrastructure. Norfolk Southern isn’t opposed to running passenger trains over its tracks, Traywick says. But before it would agree, it would insist that combined operations be safe and that its passenger partners add “as much infrastructure as necessary to protect the freight franchise.”

Pike, however, is skeptical that current North Carolina Railroad capital-improvement projects would allow smooth flow of both passenger and freight trains. “The addition of passing tracks certainly adds some general flexibility to traffic patterns, but it doesn’t make running freight and passenger service on the same line an efficient operation.” Pike, who has been with Goldsboro Milling almost 25 years, supports the status quo for practical reasons: His company never would have grown as it has without reliable freight service.

Idea of new Twin City flights is a real Hooters

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Tar Heel Tattler – April 2006

Idea of new Twin City flights is a real Hooters
By Irwin Speizer

Smith Reynolds Airport in Winston-Salem hasn’t had passenger air travel since a US Airways commuter airline left in January 2000. It cost residents more than a loss of convenience. Without commercial passengers, Smith Reynolds doesn’t qualify for federal airport-improvement grants.

Hooters girls to the rescue! Hooters Air, the cheeky — as in bold — carrier launched by the Myrtle Beach, S.C.-based restaurant chain, plans to offer flights between Winston-Salem and Newark, N.J., by the end of summer. “This would be a great benefit if we can get it off the ground,” says Christopher Veal, interim airport director. If Hooters Air can attract 10,000 passengers annually for its daily service to Newark, Smith Reynolds would qualify for federal grants worth $1.1 million a year. It could repave runways and expand taxiways to new hangars, which could help attract additional private and corporate clients.

How did Smith Reynolds hitch its future to Hooters Air? And what makes the airline think it will make it when the region’s biggest airport — Piedmont Triad International, about 27 miles away in Greensboro — is struggling, its passenger count down nearly 16% in December 2005 from the year before?

Turns out it’s all a marriage of convenience. The flights will be offered through Pace Airlines, a charter carrier based at Smith Reynolds. Its clients include much of the National Basketball Association. The majority owner is Robert Brooks, chairman of Atlanta-based Hooters of America Inc., parent of the restaurant chain and the airline.

He launched the airline in 2003, adding two Hooters hostesses to the flight crew. Aircraft maintenance takes place at Pace’s Smith Reynolds shop. Hooters Air flies empty planes there for maintenance and then flies them, still empty, to other airports.

Since flying passenger planes without passengers makes little economic sense, Hooters Air and Pace teamed up to try to fill some seats. Surveys suggested the New York metro area as a destination. Hooters Air serves Newark, so that seemed the most logical choice. And even half-empty planes look golden on what has been a dry run.

“There is probably enough traffic for us to break even or maybe make a little bit,” says Jim McPhail, Pace COO. “That‘s reason enough for us to go ahead and do it.”