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Success is relative

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Success is relative

With 46 of the state’s top 100 private companies family-owned, what should be a seamless transition in leadership can get split by the generation gap.
By Steve Row

In the television series Father Knows Best, patriarch Jim Anderson often served up the wisdom of his experience to solve some problem caused by the inexperienced youth of his three children. Lawson Williams must know how the kids felt. He had a moment like that this past summer with his father. He had become president of M.R. Williams Inc., a Henderson-based food and merchandise supplier for convenience stores, in spring 2009. His dad, Mike, retired from day-to-day management but remained chairman of the company he had founded in 1976.

Last year, it started a construction project, one stage of which involved moving tobacco products into a mezzanine in the main distribution center. “One day, my dad said to me, ‘Remind me again why we are moving the tobacco products into the mezzanine.’” Williams replied that he thought it would reduce labor costs and speed up the process, but he needed to quantify it. “Give me a day or two,” he told his father. After mulling the move, Williams concluded it wouldn’t produce the efficiency gains he originally thought it would. “And by not doing it, we probably saved a total of $100,000 in equipment and labor costs.”

But even Jim Anderson didn’t always know best. In the same project, Williams suggested changes in how products are loaded off a conveyor system in the warehouse. His father balked but eventually went along. “My way,” Williams says, “proved correct.”

M.R. Williams Inc. is going through a process common in family businesses, and that makes it a frequent occurrence among the companies on the annual ranking of the state’s 100 largest closely held companies that Grant Thornton LLP compiles for Business North Carolina. This year, 46 are family-owned, and though not all of them are undergoing a generational change in leadership, many have or will. M.R. Williams apparently is handling it well; it moved up five places on the list, based on the latest fiscal year’s revenue, to 33rd. The company at the top, Charlotte-based Belk Inc., is run by the grandsons of its founder.

To be successful, such transitions should clearly delineate the responsibilities each person has for the company’s future. The older executive, in particular, must figure out how quickly he will relinquish power. “One of the first things that must be decided is what he wants to do, what role he wants to play in the family business, especially when the next generation comes in and wants to make the business more modern, more competitive,” says Kathy Baker, director of the Family Business Center at Wake Forest University.

One company still trying to sort that out is Barnhill Contracting Co., a 60-year-old construction company based in Tarboro that has built, among many other things, the Raleigh Convention Center and, a few blocks away, the Progress Energy Center for the Performing Arts. It ranks 20th on the list, down from 11th in a tough year for its sector. Robert E. Barnhill Jr., the 63-year-old son of the company founder, named Robert E. Barnhill III president this past summer. The elder Barnhill, who remains chairman and CEO, heads the division that supervises construction of buildings, but he has transferred most of the company’s day-to-day responsibilities to his son. As president, the younger Barnhill, 39, will be chiefly responsible for grading, paving and highways. “We’re still working our way through who’s going to be determining what about the future,” the new president says. “It’s not something we ignore, because the worst thing you could have is two folks in the business both giving directions.”

Like many who ascend to the top in a family company, the younger Barnhill got a taste of it before he graduated from high school. “I had worked here as young as 15 in our equipment and maintenance shop in Tarboro. I was sort of a mechanic’s helper, sweeping floors.” His father did his best to make sure he wasn’t given special treatment. “I can remember one day the foreman asked my dad what to pay me, and my dad said, ‘What is your lowest-paying position?’” After graduating from UNC Chapel Hill in 1994 with an economics degree, the younger Barnhill went into BB&T Corp.’s management-development program and worked in Virginia Beach. He saw it as a natural step, given his degree, and he thought he could be successful in banking.

Besides, he couldn’t go back home to the family business — at least not if he wanted to claim his full birthright. Company policy prohibits the children of officers from moving into an executive position without working outside the company at least two years. “It’s important to us as a family business to go and work in a management position somewhere else before we come back, as much for the individual family member as for the family business. It does a whole lot of good to learn from within another company and pursue something else.”

He finally rejoined Barnhill Contracting in 1998. His first job was in Raleigh as a grading foreman, and he later became a divisional vice president before moving back to Rocky Mount and becoming a regional president. In Raleigh, he had often had to act independently, because that’s what’s expected of a divisional vice president. “We provide the accounting, insurance, equipment and things like that, but they manage their operations,” the elder Barnhill says.

Though the transition from older to younger Barnhill is far from complete, it hasn’t been as difficult as the company’s previous leadership change. The elder Barnhill says he and his father, Robert E. Barnhill Sr., had a more difficult time getting along. “We were both headstrong, and we would disagree on a lot of little things.” The result: The first- and second-generation Barnhills stayed close to the operations they were most familiar with — Barnhill Sr. with highways and paving and Barnhill Jr. with buildings and contracting.

In the three years since the younger Barnhill has been in company headquarters, there have been few, if any, father-son disputes. “I can’t really think of any conflicts. Over time, you have information-technology things that the younger generation might push for and the older generation might be a bit reluctant to take on. I think the younger generation is naturally more open-minded to technological solutions,” the younger Barnhill says.

How and when to adapt to changing technology is an issue that frequently divides the old and new generations. The use of social-networking technology is a specific example, the Family Business Center’s Baker says. The older generation might ask why, and the younger generation will say, “Why not?” And the younger folks often can show that adding social-networking technology increases a company’s visibility and reach. Intergenerational differences of opinion about how to do things are a common problem in family-owned businesses, she says. Depending on the structure of the transition, “they can be at odds over what their objectives are.”

The older generation of leadership might be taking some money out of the company to fund retirement, for instance, while the younger wants to continue investing. The next generation might have ideas about how the business can fit career goals, and sometimes a new strategy is proposed that takes investment and commitment different from what the older generation is accustomed to. Often it’s hard to let go of the reins, Baker says. “If a company has a succession plan in effect, and the son or daughter is going to take charge, then the previous generation has to step aside and let the next generation make a mistake — and without saying, ‘I told you so.’” While dealing with potential internal frictions, both generations must deal with external challenges, including customers, competitors, conditions in its sector and the overall economy.

Much of that is beyond the control of company leaders, but they exert plenty of influence on what happens inside the company. John K. Snider has been chairman, president and chief executive of Greensboro-based Snider Tire Inc. — No. 48 on the list — since 2000. He says his father, John H., offered a piece of advice that can help minimize the internal tensions that can arise in multigenerational family businesses. In 1976, his dad bought a tire business, and the following year, Snider started work as a service manager in the retail department the Monday after graduating from UNC Chapel Hill. “He told me our business was our business, and our family was our family, and those were two different things. Even after my brother-in-law came into the business, we never discussed business whenever we got together socially.”

He and his father had some differences of opinion, “but he knew what he did well, and I knew what I did well, and we did different things well. … I could count on less than the fingers of one hand the number of times we had any kind of disagreement, and it wasn’t anything major.” Even though the elder Snider has retired, he calls his son about once a month. “We’ll have lunch and talk a little about the business. He is interested in the business but not involved in it.” And the younger Snider still seeks his advice on occasion. “We made a very big decision to change our major supplier, and I sought his counsel during the deliberations — more than bringing new light to our decision-making process, he was able to affirm what we had decided.”

Bill Crowder, executive vice president and chief operating officer of Crowder Construction Co. of Charlotte, likens multigenerational leadership of a family business to a marriage. In the case of his company, intergenerational leadership has been followed by intragenerational leadership: His cousin Otis Crowder is president and chief executive officer. The two Crowders, both 62, don’t always see eye-to-eye, but they’ve learned to avoid insisting that each’s ideas are the only ones worth trying.

Even with distinct responsibilities, “no significant decision is made without at least mentioning it to each other. This has to be a very collaborative, cooperative thing. It’s really important that we get along and that we not take any criticism like someone is stepping on our toes.” He may instinctively want to do something his way, but he and his cousin still talk out the big issues. Flexibility is crucial. “I can see the other way, and vice versa. We don’t take a dogmatic stand on things.”

Differences in opinion between generations inevitably occur, but serious conflicts don’t have to. “I don’t think there were great differences in the way we saw things and the way our dads saw things,” Crowder says. His father, W.T., and uncle, O.P., started the business in 1947. This year, it ranks 45th on the list, down from 41st last year. “You admire a person who starts something from an entrepreneurial spirit, like our daddies did, bringing different talents, different skills that are required to start and maintain a business. Maybe it was their risk-taking, maybe because their generation went around the world and won a war, but we had a wonderful experience studying at our daddy’s knee.”

But the lessons weren’t always easily learned. “Back when I was young and stupid — I guess when I was 16 or 18 years old — I thought I knew everything, and I thought I was a hell of a lot smarter than my daddy. I’m pretty sure I was indicating that I was hot stuff, sort of like any older teenager would do. My dad took me aside one day and told me, ‘I don’t do anything around here by myself, and I can’t do anything around here by myself. But when we are working together, we can do anything.’”

Crowder didn’t fully understand the message at first, but eventually it sunk in and has stuck with him for more than 40 years. “We have decals on our hard hats that say, ‘Not I But We.’ ”

Steve Row is a Greenville freelance writer.

Retail reigns

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Retail reigns

Belk puts its peddle to the medal and claims the top spot in this year’s ranking of the state’s largest private companies.
By Frank Maley
 

It started out as the New York Racket, a bargain store at the corner of Main and Morgan in Monroe, about 20 miles southeast of Charlotte. The year was 1888, and though the name likely would be laughed out of focus groups today, it worked well enough then. “Racket” was a common term for the dry-goods trade among merchants in small Southern towns, and William Henry Belk added “New York” to give it panache. But when brother John left his medical practice and joined the business three years later, the store became W.H. Belk and Bro.

The Belks took a different approach to retailing than most other small-town Southern merchants: Sales were strictly in cash, with no haggling over prices, and customers could return goods for a full refund if not satisfied. Their store did well enough that they began investing in others. In 1894, the first one outside Monroe to carry the Belk name opened in Union, S.C. But when envious townspeople gloated over the bankruptcy of a cotton mill in which the Belks had invested, Henry decided to leave Monroe. He returned from a scouting trip to Houston ready to sell everything and move to Texas, but his mother urged him to stay. So he settled on Charlotte, just up the new railroad line, opening his first store there in 1895.

From its base in the Queen City, the retailer grew and prospered through the 20th century into the 21st. Though long one of the state’s largest and best-known companies, Belk Inc. didn’t show up on the annual ranking of top private companies that Business North Carolina has published since 1984. That’s because the survey that produces it is voluntary and the company chose not to participate. And until this year, the Carolinas practice of Grant Thornton LLP — which compiles and vets the list — excluded companies with public debt. Both barriers have fallen, and Belk, now a chain of more than 300 department stories in 16 Southern states, makes its debut at No. 1.

“They basically operate like a private company, anyway,” says Billy Moore, leader of the accounting firm’s Carolinas consumer and industrial products practice. “Public debt is just another way of financing it.” The ranking is based on company revenue in its latest fiscal year. Surveys started going out in late May. “This year, we took another look at the criteria and decided we really wanted to make it simpler,” says Mar Dee Baker, director of marketing for the Carolinas practice.

Belk’s emergence pushed General Parts International Inc., a Raleigh-based auto-parts distributor, from the top spot it has held on the list since 1997. Though Belk sales slipped some from the year before, they were still enough — $3.3 billion, according to regulatory filings — to account for about 10% of the $30.8 billion grossed by all the companies on the list.

Despite the addition of Belk and other newcomers, overall revenue increased just 7% from the year before, suggesting that continuing economic woes were still dragging down sales. Construction, in particular, suffered: Raleigh-based Clancy & Theys Construction Co. was the largest general contractor in the ranking last year but slipped from eighth to 14th, and no company dropped more than Charlotte-based Blythe Development Co., which fell from 49th to 79th. “That has a lot to do with the continued tightness in the credit market for construction and real-estate type projects,” Moore says. “I think as soon as the credit markets free up a little bit, you’ll see that turn around.”

The biggest risk facing most companies — according to 58% of respondents to a Grant Thornton survey of those on the list — is loss of key customers. “There’s a lot of people with excess capacity, and there’s a lot of competition for key customers,” Moore says. “That translates into lower margins that people are experiencing from their sales.” But many see the economy slowly improving, and it’s beginning to show up in the numbers. Things have certainly improved at Belk, still in just its third generation of leadership after more than 120 years in business. In the first half of the current fiscal year, sales were running slightly ahead of last year.

“Most people I work with today are fairly optimistic about where we’re heading,” Moore says. “They’re spending more money. They’re looking at how to continue to invest in their businesses. A year and a half ago, that wasn’t the case. A lot of them had dug in, and they were trying to withstand the downturn in the economy. Now, they’re looking to the future.”

Regional Report Western October 2010

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Western

Foes want region to stay out of the road

It has been a pet project of Georgia congressmen for years, but the idea of an interstate highway linking Knoxville, Tenn., and Savannah, Ga., rubs many in North Carolina the wrong way. At least seven Tar Heel counties that would be directly affected have turned thumbs down. So have a number of small towns that dot the region. But the federal government is going ahead with a $1.3 million study of possible routes, costs and environmental consequences. “All it would take is one prominent backer, one powerful champion,” says Asheville resident Jim Grode, executive director of WaysSouth, an advocacy group that opposes the project.

The final route of what’s commonly called Interstate 3 would likely use existing roads where feasible, and Grode expects it to run along or near U.S. 441 west of Cherokee through some of the state’s most rugged and pristine terrain, including the Cherokee and Nantahala national forests. Supporters include commercial interests such as developers and logistics companies and manufacturers in Georgia and eastern Tennessee, which say it would give them better access to ports. But in North Carolina, even some business groups have reservations. Fletcher-based AdvantageWest Economic Development Group has not taken a position, but CEO Scott Hamilton says he is concerned I-3 might divert highway funds from other projects, such as widening U.S. 19/23 from Madison through Mitchell and Yancey counties, upgrading I-26 near Asheville and completing Corridor K, primarily U.S. 74 from Asheville to Chattanooga. “Those are a lot of projects already under way, and some have already been delayed.”

Grode’s group warns that I-3 would be expensive. He says it cost $21 million a mile to build I-26 through the mountains north of Asheville — it was completed in 2006 — compared with about $5 million a mile for stretches of I-73/74 in the gentler Piedmont. For his group, other concerns trump cost. For example, the region is known for pyritic rock, which leaches acid into streams and rivers when disturbed. The mountain economy, he says, is heavily based on tourism, which includes such drawing cards as trout fishing. An interstate, he adds, would bypass small towns, spawning interchange and access-road commerce. That would have both business and cultural impacts. “They tend to draw business away from historic downtowns,” he says. “And a lot of people are in western North Carolina and eastern Tennessee precisely because they don’t want to be in Atlanta or Charlotte.”

Duke Energy withdrew plans to build an electrical substation near a site sacred to the Cherokee tribe (Regional report, July). The Charlotte-based utility has two alternatives in Swain County and will pick one by the end of the year. The tribe considers the Kituwah mound its birthplace.

FLETCHERContinental Teves plans to add 100 workers at its local brake-caliper plant, increasing employment to about 430. The German auto-parts maker has begun hiring about 10 to 15 workers a month.

OLD FORT — The Ethan Allen factory began adding 90 jobs. They will pay an average of $26,645; the McDowell County average is $27,768. The Danbury, Conn.-based furniture maker will employ nearly 1,400 here and in Maiden.

LENOIR — Attracted by a Google data center, Dacentec will open one that will employ 20 within three years. The company’s parent is India-based Zenith Infotech, which has a U.S. headquarters in Pittsburgh. The jobs will pay $35,000 to $55,000 a year.

WATERVILLE — Work on westbound Interstate 40 near the Tennessee line will wrap up this month, about a year after a massive rock slide closed the highway. Both eastbound lanes and one westbound lane opened in late April.

ASHEVILLE — The Buncombe County Tourism Development Authority agreed to pay $2 million toward improvements at the Asheville Civic Center. The city had promised $5.5 million in improvements to attract the Southern Conference basketball tournament for three years beginning in 2012.

BOONE — With a 62% majority, Watauga County residents voted down a proposed quarter-cent sales tax increase. It would have generated $1.9 million a year for a recreation center and other projects.

Regional Report Triangle October 2010

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Triangle

At 51, RTP plans for its future

Research Triangle Park marked its 50th anniversary in 2009, and the foundation that supervises and manages the 7,000-acre development announced recently that it is working on a new master plan — the first since 1959. It hired New York-based Cooper, Robertson & Partners Architects LLP to lead the effort. The park, in Durham and Wake counties, now has 170 companies employing 42,000 people. Richard L. “Dick” Daugherty, who was the top executive at the RTP campus of computer giant IBM and retired in 1995, is a foundation board member and heads the task force overseeing development of the plan. It should be finished by the end of next year.

RTP is one of the nation’s most successful office parks. Why adopt a new plan now?
An awful lot of things have changed in 50 years. The park has been tremendously successful, an economic engine for this part of North Carolina and for North Carolina as a whole. However, with changes in how companies operate, how people interact with companies, it seemed to us that, when dealing from a position of strength and success, there’s no better time to take a look at where you’re going to be in the future.

Will it prevent problems from developing?
We want to make some changes that will ensure the success that we have already experienced. If you were to just look at one aspect — the difference between 50 years ago and today — the park was developed with the idea of attracting major companies that would come in and buy land. Today, there are many more entrepreneurial and startup activities, and fewer major companies are moving around. So the key question: Are we ready for that change? And if not, what do we do to get ready?

How much of a concern is the park’s vacancy rate, and will the plan look at the possible need to redevelop older parts of the park?
It will certainly address the aging of buildings. Remember, though, that somebody else owns those buildings and land. It would be of great concern to us if people were moving out because they didn’t want to be in the park, for whatever reason they might have. But if a company has [financial] difficulty, such as Nortel, and vacates its buildings as part of a down- sizing, then we would like to help find people to utilize the space.

Does the foundation envision developing a “Research Triangle Park II” nearby — maybe on a university campus?
That is not part of the current master-plan idea. There is a large park called Centennial Campus at N.C. State University, and that has really blossomed and is doing all the things that the university wants. In Chapel Hill, a recently announced project is Carolina North. Rather than RTP developing something like that, we would work in cooperation with existing entities.

Among RTP’s biggest catches in recent years were Fidelity Investments and Credit Suisse, both financial-services companies. That seems like a shift from the traditional emphasis on research. Will that continue?
Everything is open to consideration. And while Credit Suisse and Fidelity came in, there have been a lot of smaller high-tech companies that came in at the same time. We’ve seen constant growth over the last 40 years, and we added people this year.

RTP is nearly all office and research space. Other parks also have residential, retail and recreational space. Is that in RTP’s future?
It all depends on what the consultants come back with. Nothing is off-limits. We will look at transportation, for instance. There are traffic issues. People are talking about light rail.

Since RTP was developed, what ideas for amenities, landscaping, etc., have become standard in planning office parks?
One difference would be having more capability to handle entrepreneurial-type companies and startups, some of which might spin out of universities. Today’s professional is different from the professional of 50 years ago. There is more need for areas to meet with each other, and communication is vital. In RTP, there is a great deal of open space, while in newer office parks, and in some older ones, too, the buildings are in closer proximity to each other.

RTP might become more densely developed?
That’s certainly something we would look at.

CHAPEL HILL — Thomas W. Ross will take over in January as president of the 17-campus University of North Carolina system. Ross, 60, has been president of Davidson College, his alma mater, since 2007. A graduate of UNC Chapel Hill’s law school, he spent 17 years as a superior-court judge and seven as executive director of the Z. Smith Reynolds Foundation in Winston-Salem. He will succeed Erskine Bowles, 65, who announced his retirement in February.

SANFORD — Heavy-equipment maker Caterpillar will spend $28.3 million to expand its factory here, adding 325 jobs within four years. That will bring employment to 620 at the local plant, which makes loaders. The average annual wage for the new jobs will be $35,602. A company supplier also is expected to locate 160 jobs in the state.

DURHAMAviat Networks, which earlier this year changed its name from Harris Stratex and moved its headquarters from here to Santa Clara, Calif., will shut down its Triangle operations by February. The maker of communications equipment says the move will eliminate about 190 jobs.

DURHAMBlue Cross and Blue Shield of North Carolina, the state’s largest health insurer, plans to lay off 90 data-entry workers as part of its effort to trim operating costs 20% by 2014. It will still have more than 4,000 employees. It also announced that it will raise premiums for individual coverage by 7% next year, lower than this year’s 12% increase.

RALEIGHWakeMed Health & Hospitals plans to boost its net operating income $87 million this fiscal year — up from about $25 million in the year that ended Sept. 30 — through revenue gains and budget reductions. The cuts will include eliminating jobs in some departments and paring services where the Raleigh hospital isn’t the market leader. It employs about 6,200.

RESEARCH TRIANGLE PARKMedicago plans to build a factory that will employ 85 here within three years. The Quebec-based drug developer uses tobacco leaves to produce flu vaccines. The annual average salary will be $50,229, less than the Durham County average of $57,772. A $21 million Defense Department grant will pay for the factory, due to be finished by October 2011.

RALEIGH — New York-based private-equity firm Avista Capital Partners and Canada-based Ontario Teachers’ Pension Plan agreed to buy INC Research, a contract research organization. Terms weren’t disclosed. INC says the deal, expected to close by year-end, won’t affect its 575 North Carolina employees.

RALEIGH — Mid-America Apartment Communities paid $33.6 million for Hue, a downtown Raleigh condominium development. Memphis, Tenn.-based Mid-America plans to convert Hue’s 208 units to apartments. A Los Angeles company borrowed $36 million to build Hue before turning it over to its lender without ever selling a unit.

RALEIGHRed Hat, which sells and services the Linux computer-operating system, appointed retired Gen. Hugh Shelton, 68, its chairman. He replaced Matt Szulik, 53, who had resigned. Shelton, former chairman of the Joint Chiefs of Staff, has been on the board since 2003 and lead director since 2008.

RALEIGHJones & Frank, which sells petroleum equipment and services, moved its headquarters here from Norfolk, Va. It will employ about 25 at the corporate office and about 50 who work at a branch office and warehouse. CEO Sterling R. Baker is from here.

MORRISVILLETrident Marketing hired 45 employees for a call center it opened here last month. The Southern Pines-based company, whose clients include DirectTV and ADT, employs about 350 in its hometown.

CARYRed Storm Entertainment laid off 38, leaving it with 129 employees. The video-game company’s parent is France-based Ubisoft. The industry has been hit by a slump, with sales falling 8% last year.

DURHAMPocketGear, which employs about 20 locally making software for smart phones, raised $15 million in a funding round led by Palo Alto, Calif.-based Trident Capital. It wants to improve its technology and expand its sales force.

Regional Report Triad October 2010

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Triad

Partnership tries “C” for two

Their first meeting came in 2007 as part of what would turn out to be one of the Triad’s darker moments. David Powell met Don Kirkman when the Piedmont Triad Partnership, the 12-county economic-development partnership that Kirkman headed, was recruiting Columbus, Ohio-based Skybus Airlines Inc. to the regional airport outside Greensboro.

Powell was representing NetJets Inc., which like Skybus operated out of Port Columbus International Airport. The thinking was that whatever affected the discount airline would affect NetJets, the seller of fractional ownership of business aircraft owned by Berkshire Hathaway, uber-investor Warren Buffett’s holding company. Powell, NetJets vice president of corporate and public affairs, and other Columbus executives wanted to evaluate Skybus’ potential hub. “That was my first interaction with Don,” says the man who recently replaced him as the partnership’s CEO. “He was professional and provided all the information we needed.”

Skybus chose Piedmont Triad International Airport for its hub, a great recruiting coup for the region. A year later, the airline folded, and the airport has struggled to recruit another discount carrier, leading to steep reductions in passengers. Though that project didn’t turn out as planned, the Piedmont Triad Partnership is counting on a new collaboration of Powell and Kirkman to take the region to new heights.

Effective Aug. 23, Powell became chief executive of the partnership, the nonprofit that markets the region. Reporting to him is Kirkman, now chief operating officer after 10 years in the top job. The change resulted from a merger earlier this year of the partnership’s board of directors and the executive committee of Piedmont Triad Leadership Group, a group of executives that included BB&T CEO Kelly King (cover story, June). King, who led a drive to raise more than $7 million for recruiting, became chairman of the new board.

Soon afterward, the organization announced it was seeking a new chief executive — while retaining Kirkman to run day-to-day operations — and hired a headhunter to find someone with both corporate and economic-development experience. “Our idea was that the CEO would need to spend 40% of his time traveling around the country and world, promoting the region and attracting companies considering this area for relocation, another 40% in this region spending time with donors and sponsors, being a fundraiser, and about 20% in transaction matters running the organization,” says High Point University President Nido Qubein, who chaired the search committee.

Before taking the NetJets job, Powell, 46, had been the chief business recruiter for the Columbus Chamber of Commerce, which works on behalf of a seven-county metro with about 1.8 million residents. He also was an economic developer in Durham.

He’s a Winston-Salem native, son of former City Manager Orville Powell, though they moved when he was 14. (His dad became city manager of Gainesville, Fla., then held that job in Durham from 1983 to 1996.) Powell got a bachelor’s from Elon in 1985 and master’s from N.C. State in ’96, both in public policy. But Triad roots didn’t help his candidacy, Qubein says. “In fact, if any thought crossed our mind, it was that we would not be as excited about someone who was connected with any one city. We wanted a neutral person.”

Powell, who observed the intraregional rivalries during his days in Durham, says he won’t ignore them. “The Triad hasn’t leveraged its regional assets as it needs to. They haven’t progressed as much as their neighbors in the Triangle and Charlotte. Regionalism is something that you work on day in and day out. That’s true in any region of the country. The challenge is developing a strategy with widely shared visions.”

Meanwhile, he doesn’t expect an interoffice rivalry with Kirkman, 55, a High Point native and lawyer who spent a decade as executive director of the Carteret County Economic Development Council before taking the Triad job. “Obviously, it’s an unusual situation,” Powell says, noting that board members assured him Kirkman would work with him. “It was brought to me as, ‘This has been worked out.’ My interactions with the board and with Don have demonstrated that to be true.”

Kirkman didn’t take a salary cut — his pay for the fiscal year ended June 30, 2009, the latest for which the nonprofit has filed an IRS Form 990, was $231,848. Qubein declined to reveal Powell’s salary but says the $7 million funding commitment allows the organization to keep both men. “It doesn’t matter how much it costs if, at the end of the day, everybody’s happy with the results.”

He expects Powell and Kirkman to work out the division of duties. “When you hire a CEO, you say to him, ‘We expect you to be the boss. And we expect you to produce.’ We didn’t tie his hands. We said, ‘We prefer you come in and there’s collaboration and cooperation.’” But he adds, “David Powell is the man we hold responsible for the growth and support of the Piedmont Triad Partnership.”

The U.S. Department of Veterans Affairs plans to open an outpatient clinic in Forsyth or Guilford county in the summer of 2013. It will employ at least 1,000, according to local officials. The agency plans to select a site soon.

WINSTON-SALEM — Heavy-equipment maker Caterpillarwill build a $426 million factory to make parts for mining machines. It is expected to employ 392 here within five years and likely will need about 120 contract workers.

HIGH POINT — Daimler Trucks North America laid off 90 workers at its Thomas Built Buses factory here, leaving about 1,050. It had planned to cut 216 jobs but changed course because of an uptick in orders.

GREENSBORO — Martin Orlowsky, 68, retired as CEO of tobacco maker Lorillard and will be a consultant for two years. His successor, Murray Kessler, 51, was CEO of smokeless-tobacco maker UST, part of Richmond, Va.-based Altria Group.

HIGH POINT NLnovalink plans to open a U.S. headquarters and factory here within about a year. The Canadian maker of office work stations will begin production with about 30 employees and expand to about 75.

MOCKSVILLE — A bankruptcy judge named Peter Tourtellot, managing director of Greensboro-based turnaround company Anderson Bauman Tourtellot Vos & Co., as trustee for Renegade Holdings. Tourtellot rehired four executives that Calvin Phelps, owner of the tobacco company, had fired, but he didn’t reinstate CEO Mike Mebane.

GREENSBORO — Hotel chain Wyndham Worldwide, based in Parsippany, N.J., will continue to sponsor the city’s PGA Tour golf tournament through 2012. The tournament is negotiating for a new date on the Tour schedule.

GREENSBORO — Ted Johnson, 70, announced that he will retire Sept. 30 as executive director of Piedmont Triad International Airport. Assistant Director Kevin Baker, 44, wants the top job.

Regional Report Eastern October 2010

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Eastern

Will metro slip into double dip?

The economy looks a little better than it did a year ago, and most metro areas in North Carolina are on the road to recovery. Jacksonville, home of the Camp Lejeune Marine base, is even in expansion mode, according to Moody’s Economy.com, part of New York-based Moody’s Corp. But the outlook isn’t so sunny in the Wilmington metro, which includes New Hanover, Brunswick and Pender counties.

Moody’s says it’s one of just 22 U.S. metros at risk of double-dipping back into recession — and the only one in North Carolina. What makes it vulnerable is overreliance on construction, tourism and service-based jobs, according to Moody’s economist Jimmy Jean. “So much of the area’s job market is dependent on construction and the second-home market. The [national] first-home market is not doing well, so the second-home market is definitely not doing well.”

Part of his point is conceded by Connie Majure-Rhett, executive director of the Greater Wilmington Chamber of Commerce. “We know we have been very dependent on our real estate in our economy, and when it’s good, it’s very, very good.” Indeed, the annual number of single-family homes sold almost doubled between 2002 and 2005, when it peaked at 9,347, according to the Wilmington Regional Association of Realtors. The average price of $252,646 then was more than $70,000 higher than in 2002. Sales started slipping, then the recession hit with full force in 2008, when the number fell below the 2002 level. Last year was even worse: 4,308, at an average price of $234,000.

Others have a more cheerful outlook than Moody’s. Woody Hall, an economics professor at UNC Wilmington, says the local economy, which leveled off in 2008 and much of 2009, actually grew in the third and fourth quarters of last year. He’s predicting 4% growth this year. “What the data is saying is that we’re having some stability down here.”

Local leaders aren’t standing pat. They’re trying to shift to an economy that has more so-called knowledge workers such as those in the biotechnology sector. The Wilmington chamber recently launched the Cape Fear Future initiative to lure companies and workers, partly by using the metro’s desirable coastal location — its real estate — as bait.

Per capita incomes in Jacksonville and Fayetteville were higher than all other North Carolina metros in 2009, according to the U.S. Bureau of Economic Analysis. Jacksonville, which includes Camp Lejeune Marine base, had per capita income of $44,664, up 11.9% from 2008. The Fayetteville metro, home to the Army’s Fort Bragg, finished second at $40,917, up 4.8%. Per capita income in the Durham-Chapel Hill metro, which includes much of Research Triangle Park, fell 2% to $40,116. In Raleigh-Cary, it fell 4.4% to $37,849, and in Charlotte-Gastonia-Rock Hill, S.C., it dropped 5.7% to $37,372.

ROCKY MOUNTSanderson Farms is searching in southern Nash County for 1,000 acres suitable for one of its factories. The Laurel, Miss.-based poultry processor also is still looking near Goldsboro. Next spring, the company plans to begin construction of a $106 million plant that will employ up to 1,500.

MOYOCK — Private-security company Xe Services, formerly known as Blackwater Worldwide, agreed to pay a $42 million fine to settle allegations that it violated thousands of federal export-control regulations. Among the accusations: It illegally exported weapons to Afghanistan.

FAYETTEVILLE — The BRAC Regional Task Force, which is coordinating civilian response to the move of two military commands to Fort Bragg, hired Alfred J. Papa as economic-development liaison to the 11 counties affected by the move. Papa, a former Warren County economic developer, will try to recruit defense contractors.

SOUTHPORT — The Federal Deposit Insurance Corp. ordered Security Savings Bank to improve its capital ratios, charge off bad loans and undergo a third-party review of its management. A weak real-estate market has helped boost its nonperforming assets.

FAYETTEVILLEAdvanced Internet Technologies, which hosts websites, says in a federal lawsuit scheduled to be heard this month that Round Rock, Texas-based computer maker Dell is hiding evidence that its executives knew they were selling defective computers. AIT sued Dell in 2007, alleging that more than 2,000 computers failed because of a design flaw.

Regional Report Charlotte October 2010

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Charlotte

Wells Fargo stops puttering around with golf tournament 

It takes time to change a name that’s had 131 years to make its marque, especially one so venerated in Tar Heel business. Two years after its acquisition by San Francisco-based Wells Fargo & Co., Wachovia still has its own website and branches, though signs and logos mention that it is “A Wells Fargo Company.” Full conversion of its branches, once stretching coast to coast, isn’t expected until the end of next year. North Carolina is last on the list.

But the new parent is raising its profile in what had been Wachovia Corp.’s headquarters since 2001, when First Union Corp. merged with the Winston-Salem-based company and took its name. In August, Wells Fargo put its name on the golf tournament Wachovia started in 2003 — and which Wells Fargo had held at arm’s length since their merger at the end of 2008. The Charlotte bank’s near failure, which led to it being sold at a bargain price, had rankled many, especially Wachovia shareholders. With regulators tightening scrutiny in the wake of the financial meltdown and taxpayers, stuck with the bill for bailing out troubled banks, bristling at any hint of extravagance, Wells Fargo executives felt the event “could send mixed signals about our priorities to many of our stakeholders.”

In 2009, the Wachovia Championship became the Quail Hollow Championship, after its host country club. Wells Fargo honored Wachovia’s financial commitment but vowed it would not use the tournament for “client entertainment events.” Now, with concerns about such mixed signals quieted, the company is embracing the tournament, recently renamed the Wells Fargo Championship. “That’s a good step in promulgating the brand in this area, probably part of the final stage of rebranding in the Carolinas,” says Tony Plath, an associate professor of finance at UNC Charlotte.

The company is touting itself in the Queen City in other ways, launching a local chapter of Wells Fargo Volunteers, modeled after the old Wachovia program, spokeswoman Christine Shaw says. “We have been looking at the great ‘best practices’ of Wachovia, and this was one that Wells Fargo wanted to adopt.” In early September, it revealed plans for a museum in Charlotte showcasing Wells Fargo history. It has nine others around the country. The transition is taking place slowly so not to confuse customers, Shaw says. And maybe by next year, the wounds of Wachovia’s waning will have healed. “We are the most visible and emotionally sensitive market,” Plath says. “And that’s why they are doing us last.”

 

Union National chooses to eschew the sick banks

Union National Corp., started earlier this year by former Queen City bank executives to buy failed and failing banks from regulators, withdrew its application for a federal charter (Regional Report, August). Instead, it will pursue investments in healthier banks. The move doesn’t surprise Tony Plath, associate professor of finance at UNC Charlotte. With so many banks struggling in the wake of the national financial crisis, bargain hunters are on the prowl. “The market for acquiring banks is becoming saturated with buyers and potential buyers.” Two other Charlotte-based companies are still eyeing distressed banks. Charlotte-based North American Financial Holdings Inc., chartered earlier this year, bought three in Florida and South Carolina. It also has reached an agreement to take control of another Florida bank. The other group, Blue Ridge Holdings Inc., is awaiting its charter.

Swisher Internationalagreed to merge with Toronto-based CoolBrands International, creating a publicly traded company that will be based in Charlotte and take Swisher’s name. Under the terms of the deal, expected to close in November, all outstanding common shares of Swisher will be traded for 48% of CoolBrands, an investment company. Swisher provides restroom-hygiene services for businesses; its co-owners Wayne Huizenga and Steve Berrard will be chairman and CEO, respectively.

CHARLOTTE Park Sterling Bank raised about $150 million in its initial public offering of stock. That gives it $600 million in assets and makes it the second-largest bank based here. It plans to buy banks with assets between $300 million and $2 billion in the Carolinas and Virginia.

MONROETyson Foods will add 60 jobs at its chicken-processing complex here within the next year, bringing local employment to more than 1,500. The Springdale, Ark.-based company also plans to spend $9 million on building improvements and equipment.

CHARLOTTEFairPoint Communications asked a U.S. Bankruptcy Court for permission to appoint Paul Sunu CEO, replacing David Hauser, who would become a consultant. FairPoint owns and operates telephone companies in 18 states and sells telecommunications services. Sunu, 54, is former chief financial officer of Hilton Head, S.C.-based Hargray Communications Group.

CHARLOTTE — A Superior Court judge ordered former District Court Judge Bill Belk to repay nearly $131,000 to his 17-year-old daughter’s custodial account, saying he had misused it. Among the violations were a $5,000 contribution in 2000 to the Republican National Committee Presidential Trust and $2,000 for a family vacation in Georgia. Belk is grandson of the founder of the Belk department-store chain.

CHARLOTTE — Regions Bank asked a U.S. Bankruptcy Court to appoint an examiner to study the finances of the EpiCentre entertainment complex. The Birmingham, Ala.-based bank lent developers Pacific Avenue and Pacific Avenue II $90 million to build EpiCentre but says they stopped making payments in December.

KINGS MOUNTAINSolaris Industries opened a factory that will employ 50 within two years. The company, part of Canada-based Delhi-Solac, specializes in steel tubing used in greenhouses, furniture, medical equipment and scaffolding. Salaries will average $32,080 a year, slightly higher than the Cleveland County average.

CHARLOTTEBank of America CEO Brian Moynihan bought 30,000 shares of the bank’s stock for just over $13 a share, signaling that he believed the stock was undervalued. BofA’s price promptly dropped and closed August at $12.46. Moynihan now owns about 450,000 shares.

TAYLORSVILLE — Local gem miner Terry Ledford found a stone that experts say produced the largest cut emerald in North America. Ledford won’t speculate on the value of the 65-carat gem, which he and partner Renn Adams have trademarked as the Carolina Emperor.

CHARLOTTERidgemont Equity Partners, spun off from Bank of America, says it plans to raise an undetermined amount of money next year and invest it in midsized companies. The firm also will manage a $1.5 billion private-equity portfolio for the bank.

CHARLOTTESompo Japan Insurance Company of America began adding 46 jobs, which will increase employment here to about 140. The New York-based subsidiary of Sompo Japan of Tokyo specializes in business and marine insurance.

NC 100 2010

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NC 100 top Private Companies

How the list was done
By Frank Maley

Participation in the annual ranking of private companies is voluntary and has been since the list started in 1984. Grant Thornton LLP compiles it by sending surveys — more than 2,000 this year — to closely held companies based in North Carolina. The contact list is updated annually with the help of the accounting firm’s national research team. Companies are ranked on revenue in the most recent fiscal year. Businesses that aren’t eligible include subsidiaries, nonprofits, financial-service companies, hospitals, and companies with publicly traded stock. Foreign ownership is OK as long as at least 50% is in-state; so is ownership by private equity. To be placed on next year’s contact list, call Mar Dee Baker at 704-632-3530 or e-mail nc100@gt.com.

 

For a copy of the Grant Thornton North Carolina 100 list of the top private companies for 2010, go to www.grantthornton.com/nc100.

Foray for Hollywood

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Capital Goods – October 2010

Foray for Hollywood
By Scott Mooneyham

Perhaps Hollywood could turn it into a movie: A Cinderella-like character, a small-town girl with big dreams, is swept up in the glitz and glam of big city life. She meets dashing men, ball players on their way to the big leagues and dance instructors who can’t seem to stay in their shirts. She hangs out in sparkling mansions built by robber barons and seaside cottages where waves crash at the doorstep. Suddenly her suitors decide she’s not so attractive anymore. A cousin who lives down South has become the talk of the town. A next-door neighbor is more attractive. One by one, the suitors move on. She buys new clothes but still doesn’t turn heads. Then an old acquaintance accuses her of stealing to buy them. The inhabitants of her small town begin to talk, wondering what happened to the girl they used to know.

Our character is North Carolina, her new clothes the series of tax breaks that state lawmakers and governors have heaped on the film industry to try to regain the glory of landing film productions like Bull Durham, Dirty Dancing and Last of the Mohicans. It’s not certain how the script will end. What is clear is that the state’s ramped-up film incentives are becoming more controversial, even as other states continue to best North Carolina with bigger and better giveaways.

In July, Gov. Beverly Perdue put her signature to expanded film incentives. It was the second straight year that she and the legislature had upped the ante. The latest changes mean that individual film productions could qualify for a tax break worth up to $20 million, raising an earlier cap of $7.5 million. Combined with the 2009 changes, producers can write off up to 25% of their in-state spending. The tax credit is refundable, meaning that a film or television production company that qualified for more money than they owe in state taxes would receive the difference, a check from state taxpayers.

Perdue hadn’t even signed the legislation into law before she began to complain that it wasn’t enough. Louisiana had no caps and, unlike North Carolina, didn’t prohibit the salaries of big-name stars from counting toward the total. Georgia’s tax breaks were bigger, too. North Carolina officials point to figures showing the film industry bringing more than $326 million in direct spending to the state over the past three years. But a quick look at Louisiana’s film office website shows that state brimming with productions, 12 films and six television shows in 2009 and 2010. A dozen more films were in pre-production mode this year. North Carolina? It could always claim One Tree Hill.

By the end of the summer, the film incentives weren’t looking just ineffective. They suddenly seemed politically dangerous. Business-recruiting incentives have always had their critics on both sides of the political spectrum. Liberals call them corporate welfare; conservatives say they mean government picks winners and losers in the economic marketplace. In August, the film incentives became fodder in the battle for control of the North Carolina legislature. A limited-government-advocacy group called Real Jobs NC — backed by Raleigh businessman/GOP activist Art Pope and drug-research exec Fred Eshelman — began peppering the districts of incumbent Democratic legislators with mailers critical of their support of film incentives. “Welfare for Hollywood has got to stop,” one read. Another claimed that lawmakers had voted to “give Hollywood fatcats [sic] up to $20 million of our tax dollars for each movie they produce in NC.”

Former state Supreme Court Justice Bob Orr, a harsh critic of incentives, says legislators shouldn’t be surprised that their support of film tax breaks is being used against them. His North Carolina Institute for Constitutional Law has sued to try to stop the state from providing business-recruiting incentives, and he says film incentives are beginning to gain traction as a political issue because voters are starting to understand them. “Of all the incentives, film incentives are the single worst. Most of the money flows out of state.”

But if all politics is local, incentives politics is even more so. Politicians poll. They know that voters are happy when a big manufacturing plant opens or stays put after threatening to close. If it’s in their backyard, worries about tax breaks melt away. When legislators debated the film incentives, it came as no surprise that Republican state Rep. Danny McComas led the charge. He’s from Wilmington, the epicenter of the state’s film industry since Dino DeLaurentis opened a studio there in 1983. “This is about jobs. This is about keeping what we have,” he says.

It may not matter what McComas or Orr believe. They probably won’t be writing the final scene of our movie. That task may fall to voters.

Scott Mooneyham is the editor of The Insider, www.ncinsider.com.

Regional Report Western November 2010

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Western

Putting green in your pocket

Asheville-based Waste Reduction Partners uses a statewide team of 65 retired engineers and scientists to provide free assessments of how to reduce utility costs, hit goals for using sustainable energy sources and effectively use renewable energy. For-profit companies make up nearly half of its client base, with the rest coming from government and nonprofits. Since 2000, it has visited about 1,300 sites and saved clients an estimated $23 million. In its latest fiscal year, it worked with 62 businesses. Started in 1992 as part of Land-of-Sky Regional Council, a government planning organization for four counties, WRP has gone statewide in recent years and has an office in Research Triangle Park. Its $470,000 annual budget comes from government and foundation sources. Terry Albrecht is its director.

Are most of your clients still in the west?
It’s pretty evenly spread out. We probably are doing a little bit more in the west. Last year, we did like 250 on-site assessments, and over 100 were out of our RTP office.

What’s the main focus?
There are three major areas — energy, water and solid-waste management — but there might be other special environmental projects. We do work in fleet management and alternative-fuel vehicles. We see less of that in the private sector. We also work in storm-water management. If folks have industrial storm-water requirements, we might help them on those.

What generates the most demand for your services: cost reduction, sustainable-energy projects or renewable energy?
Cost reduction. Our unique approach is that we might have a plant manager or plant engineer that retired from DuPont, and he’s sitting down one-on-one with a smaller manufacturer or a small business and helping them, sharing that expertise on how they can make gains in reducing operating costs.

What kind of results have you gotten?
For every dollar invested in our program, our clients get $4 worth of savings. Half of that or more is through energy cost savings, or it may be solid-waste savings or other utility cost savings.

Have you seen an increase in demand for your services?
We’ve seen about a 30% increase in call volume since we’ve been in a more challenging economy. A lot of work in the energy marketplace, especially energy efficiency, has been driven by federal stimulus dollars.

And hard times get people thinking about cost cutting.
Some of the folks we’ve helped were just trying to span a really tough spot in the economy, and they were looking for our advice on how to reallocate the energy-using resources in their plant because their production volume had been down so low, and their monthly overhead cost to keep these machines running was killing them. So we’ve gotten feedback from some folks saying, ‘Man, you’ve helped us save our business, because we were in such a tight bind a few months back and you helped us figure out how to cut those utility costs.’

VALDESE — Retailer Art Van Furniture and furniture maker Kellex formed Carolina Artisan Group, which will make upholstered furniture. It will hire 50 by year-end and 200 within three years. Art Van is based in Warren, Mich.; Kellex, in North Ridgeville, Ohio.

ASHEVILLEThe Biltmore Co. plans to launch a business next year that will feature food and kitchen products sold at home parties. The products will be associated with the 8,000-acre estate that is one of the state’s most-popular tourist attractions.

ASHEVILLEBank of Asheville wrote off about $14.5 million in bad loans, most related to real estate. The bank, which saw its president and chairman resign in the second quarter, also faces a lawsuit alleging that it mishandled a $4.25 million account.

FAIRVIEW — Two environmental groups dropped a legal challenge that threatened to block construction of a Tiger Woods-designed golf course here. The settlement cuts by half the length of streams affected by The Cliffs at High Carolina course, which is scheduled for completion in 2012.

GRANITE FALLSBank of Granite stock faces delisting from the Nasdaq exchange. It must stay above $1 for 10 straight business days by March 21 to avoid delisting but finished September at 71 cents. The price fell after the bank posted a bigger second-quarter loss, $7.5 million, than last year.

VALDESEKleen Tech, which cleans textiles for hospitals and industrial clients, opened an industrial laundry here that will employ about 30. It employs 80 at its headquarters laundry in Hildebran.