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Regional Report Eastern Janaury 2011

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REGIONALREPORT Eastern

GOP landslide could roll out the (pork) barrel from region 

As the magnitude of the Republicans’ victory became apparent Nov. 2, Marc Basnight looked neither surprised nor angry. He had been watching the election-night returns in his Legislative Building office. For 18 years, the man with the Outer Banks brogue had reigned as president pro tempore of the state Senate, one of the most powerful politicians in North Carolina. Now, the reign was over, his Democratic majority gone. Republicans would control 31 of the 50 seats in the Senate. Basnight spoke calmly about going out of office as a rank-and-file legislator. “It’s the way I started. It’s not a bad way to end.”

If Democrats’ Election Night losses were bad for Basnight, they may have been worse for Eastern North Carolina. To understand his mark on the East, all you have to do is travel down that nice, wide stretch of U.S. 64, from Raleigh to his home county, Dare. Like legislative leaders before him, Basnight brought home the pork. Unlike the others, he had 18 years to do so in a sprawling Senate district that includes most of the northeastern part of the state and much of the coastal barrier islands.

Pork, as applied to politics, may be a dirty word in the minds of many, but it usually means infrastructure — including roads, school buildings, natural-gas lines and industrial parks. That infrastructure helps drive economic development. Other examples of Basnight bringing home the bacon include a $200 million natural-gas pipeline through 22 previously unserved eastern counties and a $25 million state-owned pier and aquarium set to open later this year in Nags Head. “Infrastructure, that’s the best example of what clout means,” says Ran Coble, executive director of the North Carolina Center for Public Policy Research. “I think the East loses a lot of people who have been in powerful positions and able to help it.”

Even before the Democrats lost control of the state House and Senate, the No. 2 power in the Senate, Fayetteville resident Tony Rand, had given up his seat. Most of the new powers in the legislature will come from the western half of the state. Republican lawyer Phil Berger of Rockingham County likely will be elected to Basnight’s old post, while sidekick Tom Apodaca of Hendersonville is the chairman-elect of the powerful Senate Rules Committee. Republicans are backing Thom Tillis, a former IBM executive from the Charlotte suburb of Cornelius, as the next House speaker.

Eastern North Carolinians aren’t totally bereft of friends in high places. Gov. Beverly Perdue, a Democrat, still calls New Bern home. Republicans Harry Brown of Jacksonville and Jean Preston of Carteret County also are expected to emerge as powerful figures in the new Republican Senate. But it’s unlikely to get as much pork as in Basnight’s day. Then again, given North Carolina’s current financial state, there will be less to go around — for at least a few years.

 

WASHINGTONLiberty Associates plans to consolidate production of the four fishing- and speedboat brands it owns at the Fountain Powerboats plant here. That could add 411 jobs within five years, boosting the total to nearly 500. Boca Raton, Fla.-based Liberty acquired Fountain earlier this year.

BEULAVILLE — Wilmington-based Precision Hydraulic Cylinders plans to add 89 jobs within three years at its factory here, bringing employment to about 200. Its cylinders are used in forklifts and other large equipment.


CASTLE-HAYNE
Titan America rejected $4.5 million in state and local incentives to build a cement plant and stone quarry that will employ 160. The incentives had triggered a state law mandating a comprehensive review that could have delayed construction two years. Norfolk, Va.-based Titan wants to finish construction in 2015.
 
RAEFORDButterball, based in Garner, agreed to buy Tarheel Turkey Hatchery. Terms of the deal, scheduled to close in December, were not disclosed. No layoffs are expected among Tarheel’s 165 employees.

FAYETTEVILLE — Through the first three quarters of 2010, passenger traffic at Fayetteville Regional Airport increased 13.6%, compared with the same period last year. The airport is on pace to surpass its record of about 231,000 passengers, set in 1987, partly because of the addition of two daily flights to Dallas.

KINSTONSanderson Farms will begin operations of its poultry plant here this month. The Laurel, Miss.-based company already has opened a local feed mill and hatchery. The $121 million operation employs about 400. It will employ more than 1,500 at peak capacity.

The cost of construction projects in 2010 at Camp Lejeune and the New River air station in Jacksonville and at Cherry Point air station in Havelock topped $810 million, nearly $200 million more than in 2009 and the most since the installations were built. More will be spent in the fiscal year that began Oct. 1, according to officials. The growth spurt is due to the arrival of 20,000 additional troops and dependents at the Marine Corps bases.
 

Regional Report Eastern February 2011

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REGIONALREPORT Eastern

New owner will reinforce Xe 

For more than two years, Moyock-based Xe Services Inc. has been rattling government officials and economic developers in northeastern North Carolina. In late 2008, it sacked 52 workers and closed a newly built plant after it failed to land a key government contract. In March, it sold its 225-employee aviation division, and, in December, the new owner announced that the division would move to Florida. A week later, a New York-based holding company bought Xe, formerly Blackwater USA.

But contrary to speculation that the company was heading down the drain, it appears Xe’s new owners might beef up operations not only in its home county, Currituck, but also in neighboring Camden. USTC Holdings LLC “plans to invest further in the company primarily on the training side,” says a spokeswoman who asked not to be named — Xe is no less secretive than Blackwater (Cover story, June 2007). Such a shift could distance Xe from the volatile private-security business that plunged it into hot water in Iraq and elsewhere. A federal judge in 2009 dismissed manslaughter charges against six employees in connection with the deaths of 17 Iraqi civilians in 2007, but a wrongful-death lawsuit is still pending.

Though controversial on the international scene, Xe is a valued corporate citizen in the job-hungry northeast. “They’ve been our largest taxpayer and employer for years,” says Camden County Manager Randell Woodruff, who also serves as economic-development director. “We’re a rural county, and mainly a farming area. We work closely with them.”

Local officials are scrambling to cement relations with the new owners, two Manhattan private-equity firms that joined forces for the sole purpose of buying Xe. “We want to let them know we’ll do everything we can to keep them strong,” says Peter Bishop, economic-development director in Currituck County. A company spokeswoman declined to say how many Xe employs. “I think it was up to about 1,200 at one time,” Bishop says. Now the number is about 600, he says, after the loss of the aviation division.

Currituck and Camden have other interests in Xe’s health. Its 70,000-square-foot industrial building where armored vehicles were to be assembled remains vacant. And the departure of Xe’s aviation arm could leave the company’s 5,200-foot runway and new hangar lightly used. Camden doesn’t have a local airport, important for economic recruiting, though striking a deal with Xe could be touchy. “What makes their compound so attractive to them is that it is so private,” Bishop says. ”But we want to let them know we will work with them. We’re coming in with open arms.”

 

HAVELOCK — When Cherry Point air station near Havelock adds eight squadrons of Marine Corps F-35 Joint Strike Fighters by 2020, it will boost troop levels by about 1,194. Construction to prepare for the squadrons will cost about $507 million. The fighters will replace two older aircraft.

WASHINGTONPAS USA plans to expand its factory here and add 239 jobs within five years, which would bring employment to 376. The German appliance-panel maker will spend $3.2 million.


NAGS HEAD
— The U.S. Department of Interior approved plans to replace the Herbert C. Bonner Bridge, which spans Oregon Inlet, after more than 30 years of lobbying by Outer Banks residents. The 3.3-mile bridge will cost $300 million and take three years to build. Bids will be taken this summer.
 
AHOSKIEEnviva started construction of a wood-pellet plant that will employ 53. The Richmond, Va.-based company makes biomass-fuel products. The $52 million plant is scheduled to open by the end of the year.

KINSTON — The city will lose its minor-league baseball team after this season. Steve Grant bought the Kinston Indians and will move the team to Zebulon. He sold the Zebulon-based Carolina Mudcats to Florida businessman Quint Studer, who will move the ball club to Pensacola. Teams in the Indians’ league are closer to each other, which will reduce travel costs.

FAYETTEVILLE — Ben Hancock Jr., 58, takes over as president of Methodist University March 1. He succeeds Elton Hendricks, 75, who is retiring. Hancock is vice president for university advancement at Ball State University in Muncie, Ind.

Cumberland County ranked second behind Arlington County, Va., in total income growth among counties with at least $10 billion in income during the fiscal year ended Sept. 30, according to the U.S. Bureau of Economic Analysis. Pay increases at Fort Bragg helped boost income 4.7% to nearly $11.9 billion. Similar factors helped Onslow County, home to Camp Lejeune, rank first nationally among counties with income ranging from $1 billion to $10 billion.

Regional Report Eastern April 2011

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REGIONALREPORT Eastern

Cities: Switch off our debt for power plants 

It’s tough to recruit and retain businesses when your electricity costs are a third higher than the state average, so it’s no wonder that some leaders of 32 Eastern North Carolina municipalities are willing to try what amounts to a Hail Mary pass to reduce them. But many, even within their own camp, say they don’t have a prayer of getting Duke Energy Corp. and Progress Energy Inc. to swallow $2.4 billion in debt their cities and towns incurred 30 years ago, when they bought shares of power plants in an effort to obtain cheap electricity.

The initial reaction from Charlotte-based Duke, which is seeking regulatory approval for its acquisition of Raleigh-based Progress, wasn’t favorable. “When we purchased Progress, it was a $26 billion transaction that included assuming about $12 billion of Progress debt,” spokesman Tom Williams says. “It did not include acquiring debt that Duke or Progress didn’t incur from the municipalities.”

Their problem goes back to 1981, when the 32 cities and towns, acting as the North Carolina Eastern Municipal Power Agency, bought shares in three nuclear and two coal-burning plants from Progress’ forerunner. But the deal backfired when their share of the plants’ costs soared in the decade following the 1979 accident at the Three Mile Island nuclear plant in Pennsylvania. The bonds won’t be paid off till 2026. “I’ve seen citizens paying as high as $750 a month,” says Roger McLean, mayor of Elizabeth City, which owes about $93 million. “It affects our ability to grow as a town and to maintain jobs.”

He’s one of about 20 mayors lobbying Duke and Progress to take on the debt as part of the merger. But they face an uphill fight. “The Municipal Power Agency serves 500,000 people, and the merged Duke and Progress will serve 7 million,” says a city manager who asked not to be named because his mayor is involved in the lobbying effort. “You’re not going to tell me the legislature or the State Utilities Commission is going to say, ‘You 7 million people have got to bail out the 500,000 others.’”

Plus, he adds, Duke and Progress can’t just forgive the debt, because they don’t hold it. Institutional bond agencies do. He also says that some of the municipalities dug their debt holes deeper by shunting proceeds from electricity sales to their general funds. That was a politically popular means of holding down property taxes, but it has slowed payback of the bonds.

If the mayors fail to persuade Duke Energy and lawmakers to bail out their towns, what’s next? Some municipal administrators say they want to get out of the power business by getting Duke to buy their infrastructure. Otherwise, they’ll be paying off bonds for 15 more year

 

ROCKY MOUNTQVC shopping channel plans to spend $71 million to expand its distribution center here by fall 2012. The West Chester, Pa.-based company plans to add 200 full-time jobs, giving it more than 740, and 300 part-time ones, giving it nearly 1,300.

WILMINGTONPharmaceutical Product Development is looking for a CEO to replace David Grange, who retires May 18. Grange, 63, will act as a consultant for the contract-research organization for the rest of the year.

CLINTONDodger planned to close two small apparel plants here by the end of March, eliminating more than 83 jobs. The Eldora, Iowa-based company cited operating losses.

FAYETTEVILLE — Bookings are down and revenue has been flat, but the cost of salaries and benefits for employees of the Crown Center entertainment complex has increased 71% since 2002. Cumberland County commissioners say they plan to study the complex’s finances.

WILMINGTON — A study commissioned by the N.C. State Ports Authority says ports here and in Morehead City contribute $7.5 billion to the state’s economy, affecting 65,000 jobs in North Carolina. It also found that the ports generate nearly $500 million for state and local tax coffers.

 

GREENVILLEDSM, the Dutch parent of DSM Pharmaceuticals, says it plans to change its focus from chemicals to life and material sciences. Local executives say the approach will help the company grow here — where it employs 1,250 making drugs and high-performance materials — and internationally.

Sanderson Farms will wait till next year before deciding whether to build a second chicken-processing plant in North Carolina. It wants to further evaluate chicken-feed prices and the poultry market. The Laurel, Miss.-based company is considering sites in Wayne and Nash counties for a plant that would employ about 1,100. A Nash County site has met fierce resistance from nearby residents. The company opened a plant, feed mill and hatchery last year in Kinston. It employs about 500, and that number will rise to 1,500 next year.

Regional Report Charlotte May 2011

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REGIONALREPORT Charlotte

Spotlight on: Nexxus Lighting 

Why: Reached an agreement to sell its light-emitting-diode bulbs through Lowe’s, the nation’s second-largest hardware chain.

Incorporated: In Florida in 1991 as Super Vision International Inc., which went public in 1994.

How it got here: “Our mission is to grow rapidly. Charlotte, North Carolina, provides a more strategic and geographically central location on the east coast, in a state where LED technology and the technical talent is being embraced.” — 2007 press release announcing new name and headquarters.

Full-time employees: 33

Financials: Net loss of $8 million in 2010 on $5.4 million revenue, up 9% from ’09.

Patents: 33, with 29 more pending.

Manufacturing: Most is outsourced, including all of its Array brand, to plants in Mexico, China and Minnesota.

Price range of products on Lowe’s website: $8.98-$69.98

Chief competitors: Cree, General Electric, Osram Sylvania, Royal Philips Electronics, Acuity Brands Lighting, Cooper Lighting, Hubbell Lighting and Lithonia Lighting.

Positive current: The Energy Independence and Security Act of 2007, recently debated anew in Congress, sets higher energy-efficiency requirements on all bulbs, which is seen as a benefit to LED manufacturers and a problem for makers of incandescent bulbs.

 

The Park gets in gear

 

Downtown Charlotte might be rid of an eyesore just in time for the Democratic National Convention in August 2012. Construction resumed in March on The Park condo tower. The project was announced in 2000, but construction stalled, leaving a rusting shell. Developer Pete Verna filed for bankruptcy protection (cover story, December 2009). Small Brothers LLC, a Florida developer, took over in late 2009 and has been busy redesigning it and getting necessary permits. In addition to condos, the 22-story tower will now include a rooftop restaurant, a 172-room Hyatt Place Hotel and retail space on the ground floor.

 

CHARLOTTEPark Sterling agreed to pay $32.4 million for Greenwood, S.C.-based Community Capital. It will be Park Sterling’s first acquisition after raising $150 million last year to buy struggling banks in the Southeast. The combined company will have more than $1.2 billion in assets.

CHARLOTTEHVM, which manages Extended Stay Hotels, plans to move its headquarters here from Spartanburg, S.C., this year and create 170 jobs within three years. It employs 488 in North Carolina.

CHARLOTTE — A Superior Court judge ruled that the developer of The Vue condominium tower can’t force buyers it has under contract to close their deals, but it can keep their deposits if they don’t. Chicago-based MCL has closed on only 16 of the more than 400 units in the 51-story tower.

KINGS MOUNTAIN — Westchester, Ill.-based Bay Valley Foods plans to open a distribution center this month that could employ as many as 75. The company makes a variety of private-label food products, including pickles and coffee creamer.

CONCORDCelgard plans to expand the plant it is building here and add an unspecified number of jobs. The $65 million expansion will increase its ability to produce separators for lithium-ion batteries used in electric cars. The first section of the plant will open by year-end. It will employ 204.   

GASTONIA — Two European companies plan to open factories next year. Germany-based Lanxess will employ about 55 to produce high-tech plastic used in cars and trucks. Italy-based Repi plans to employ about 30 by 2012 to make dyes and additives for plastic and polyurethane products.

Charlotte-based Horizon Lines says in regulatory filings it could face bankruptcy reorganization because of its $500 million debt and a $45 million fine it paid to settle a price-fixing scheme. It expects to default on some of its loans, which could prompt lenders to seek accelerated repayment. The shipper lost $60 million last year on revenue of $1.2 billion.

Regional Report Charlotte March 2011

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REGIONALREPORT Charlotte

Defying conventional wisdom

It didn’t take long for the glow of Charlotte winning the 2012 Democratic National Convention to give way to sweat over exactly how the city would pull it off. “The spotlight quickly turned into a heat lamp,” jokes Will Miller, acting executive director of Charlotte in 2012.

Now, the committee must raise the private money — about $50 million, Miller says — needed to put on a good show. Unlike many fundraisers in the Queen City, where much of the money often comes from a few wealthy donors, party caps on individual donations will force it to cast a wider net in the region and beyond.

What the city will get, organizers say, is an economic infusion of at least $150 million and increased visibility. “We’re already having some positive impact from meeting planners who are taking a new look at us — now that we’ve landed this one — for other conventions they might bring to town,” says Tim Newman, CEO of Charlotte Regional Visitors Authority.

The city also is counting on publicity and goodwill from the convention to inspire business relocations and bring jobs. “Inquiry activity has picked up in our chamber [of commerce],” says Charlotte Mayor Anthony Foxx, “and I think that will only continue as people learn more and more about our city.”

Not everyone believes the rosy predictions. Victor Matheson, associate professor of economics at College of the Holy Cross in Massachusetts, co-wrote a 2008 study of conventions and their economic impacts. He says models do a good job of calculating event-related spending but don’t account for disruptions of routine spending as locals stay home to avoid the crush of visitors. Attendance at Broadway shows, for example, dropped 20% year-over-year during the week New York City hosted the 2004 Republican National Convention, he says. “If these things really are $150 million, when you look at things like employment and income and retail sales, you should expect these big spikes, and we typically don’t see them.”

There’s also no proof businesses and jobs follow in the wake of conventions, he says. “There may be some residual advertising effect associated with that. The fact that no one has been able to capture it and measure it particularly well suggests that it’s probably not very big.”

Asked for an example of a convention bringing new businesses and jobs, several Charlotte leaders mentioned United Parcel Service Inc. moving its headquarters to Atlanta in 1991, three years after that city hosted the Democratic National Convention. But UPS spokeswoman Susan Rosenberg says the move was motivated primarily by a lower cost of living for employees and better transportation. “Never once did I hear anything about [Atlanta] having held the convention.”

 

For conventioneers, The Charlotte Observer website posted a list of 10 “can’t-miss spots that will make you feel at home in the Queen City.” They’re fine fare for visitors as well as home folk. But must-see marvels?

Freedom Park: You probably have a park near you. Visit it when you get home.
Crowder’s Mountain: The worn-down stub of an ancient mountain range, it’s neighboring Gaston County’s second-highest peak, towering 800 feet over the surrounding landscape.
Charlotte Symphony Summer Pops concerts: Did you leave the last pops concert you attended thinking you must see another?
Carowinds amusement park: Not usually mentioned in the same breath as Disney World.
Lake Norman: Unless this is your first time outside New Mexico, you’ve probably seen a lake before.
Fourth Ward: Condos, businesses, a park and old renovated houses. Nice, but no Charleston.
Minor-league baseball parks: Nothing screams “major-league city” like minor-league stadiums.
U.S. National Whitewater Center: Easier than schlepping to a real whitewater river but not nearly as scenic.
NASCAR Hall of Fame: Since it’s getting far fewer visitors than projected, a good place to avoid the crowds.
Museums on South Tryon Street: Like the Hall of Fame, they’re shiny and new, with some things you’d see nowhere else. But the Louvre, they ain’t.

CHARLOTTE — Accounting firms Dixon Hughes, based in Asheville and Winston-Salem, and Goodman & Co., based in Virgina Beach, planned to merge March 1. Dixon Hughes Goodman will be based here. With about 1,700 employees, it will be the largest accounting firm based in the South and No. 13 in the nation.

CHARLOTTE — French technology and consulting company Capgemini plans to open an office here in the second quarter and hire 550 workers within three years. It will support the company’s banking, insurance and capital-markets clients.

CHARLOTTEFairPoint Communications emerged from 15 months in Chapter 11 bankruptcy. The telecom, which operates in 18 states, shed $1.7 billion in debt, leaving it with about $1 billion.

CHARLOTTENucor promoted John Ferriola, 58, who had been chief operating officer of steelmaking operations, to president and chief operating officer. Dan DiMicco, 60, CEO and chairman, relinquished the title of president.

CHARLOTTE —  Morgan Stanley plans to eliminate 60 jobs here as it consolidates the headquarters of its private bank in Purchase, N.Y. No timetable was given. About 140 will continue to work at the company’s wealth-management operations here.

SALISBURY — N.C. Business Court Judge Ben Tennille upheld $4.4 million in additional taxes and $1.3 million in interest for Delhaize America, the parent of Food Lion. However, he ruled that the state Revenue Department’s $1.2 million penalty against the company is unconstitutional. The state says Delhaize hid earnings by establishing “abusive tax shelters.”

A consortium led by Charlotte-based Chanticleer Holdings bought Atlanta-based Hooters of America from the estate of its founder. Terms weren’t disclosed. Hooters of America is franchisor and operator of more than 450 Hooters restaurants in 44 states and 29 foreign countries. The deal includes 120 company-owned Hooters and 41 Texas Wings restaurants.

Regional Report Charlotte January 2011

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REGIONALREPORT Charlotte

Execs eschew core’s value

Business in North Carolina doesn’t get any bigger than in downtown Charlotte. It has the tallest buildings and the largest company: Bank of America Corp. But downtown isn’t where all the action is. Of the 13 Fortune 1000 companies based in the Charlotte region, just three — BofA, Duke Energy Corp. and Ruddick Corp. — have their corporate offices downtown. Two are near the airport, two are in tony South Park, and two more are in Ballantyne, a massive mixed-use development on the far south side. Ballantyne is home to two recent additions — Carlisle Cos., which moved to the Queen City from Syracuse, N.Y., in 2001 and SPX Corp., which relocated from Muskegon, Mich., in 2002 and is growing. In November, it announced plans to add 180 jobs, starting in 2012, that will pay an average of $83,000 a year and boost the headquarters head count to 430. The manufacturing conglomerate could receive more than $9 million in state and local incentives if it meets and maintains job targets.

CHARLOTTENewDominion Bank hired John Hipp as CEO to help it comply with a regulatory consent order. The bank lost $5.3 million in 2009 and says it must raise capital and establish new credit procedures. Former CEO Bradley Thompson will concentrate on business development. Hipp helped turn around Rock Hill National Bank in South Carolina in the 1990s.

SHELBYFAS Controls, which makes switches and sensors for the automotive industry, plans to add 50 jobs within a year, bringing employment here to more than 200. The company also will spend $1.5 million on plant improvements.

HICKORYBraddington-Young will close its furniture factory and headquarters in Cherryville this month, eliminating 26 jobs and sending 90 to its factory here. That will boost the total to 165. The company, part of Martinsville, Va.-based Hooker Furniture, says its lenders told it to consolidate operations.

CHARLOTTE — Tan Francisco-based Wells Fargo & Co. agreed to pay $100 million to New York-based Citigroup to end a legal battle over its 2008 purchase of Wachovia. Citigroup, which reached an agreement to buy Wachovia first, originally sought more than $60 billion in damages.

CHARLOTTE —  The Central Intercollegiate Athletic Association agreed to a three-year extension that will keep the conference’s basketball tournament here through 2014. The move is a break from the CIAA tradition of moving the event every six years. Queen City officials estimate that the tournament generates $20 million in economic benefits for the city.

CHARLOTTESwisher Hygiene, which provides cleaning services, acquired seven companies for a total of $11.8 million in the second half of 2010, expanding in Florida, the Midwest and other markets. The company went public this summer through a merger with Canada-based CoolBrands International.

SALISBURYPiedmont Community Bank Holdings, a Chapel Hill-based company formed by Scott Custer, former CEO of RBC Bank, plans to buy Community Bank of Rowan from Lansing, Mich.-based Capitol Bancorp. Terms of the deal weren’t disclosed. As of Sept. 30, the bank had $149.5 million in assets.

CHARLOTTE — Hugh McColl III, son of the retired Bank of America CEO, and a business partner have launched Cantilever Capital, which will invest in hedge funds. McColl, an investment manager, was most recently employed by the hedge fund Round Table Investment Management.

CHARLOTTE — Upscale grocer Whole Foods Market plans to open its first Queen City store in 2012. The Austin, Texas-based company made a similar announcement in 2004, but plans for that store fell through. The Charlotte store is one of nine Whole Foods plans to open in 2012, including its first Greensboro location.

CHARLOTTE — Federal regulators approved Blue Ridge Holdings’ “shelf charter,” meaning the company can begin bidding for banks. It has raised $500 million.

At least four shareholders sued to block the $3.9 billion sale of Hickory-based CommScope to Carlyle Group. One suit filed in late November alleges that the company’s executives and board failed to seek the best price for the cable maker and will benefit from the sale at the expense of shareholders. Carlyle Group, a Washington-based private-equity company, agreed to pay $31.50 per share, about 36% more than the closing price before sales talks were confirmed.

Regional Report Charlotte February 2011

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REGIONALREPORT Charlotte

Those who smelt it now get dealt with

Alcoa Inc. is learning the hard way that e-mails never go away. They just resurface during legal proceedings. Late last year, state environmental officials yanked the aluminum maker’s clean-water certificate to operate four hydroelectric dams on the Yadkin River, saying that internal e-mails released at an administrative trial showed Alcoa had misled regulators about the effectiveness of its actions to improve water quality.

Without that certificate, New York-based Alcoa can’t finalize its application to renew its license to operate the dams another 50 years. The dams used to power Alcoa’s smelter complex in Badin, which opened in 1917 and closed in 2007, and the power is now sold into the wholesale electricity market. Gov. Beverly Perdue wants the state to take over the dams. She says Alcoa no longer deserves the license, because the manufacturing operations that were the company’s reason for building them have closed. Alcoa argues that the e-mails just show what one official calls “a healthy debate” about technical issues and that the company is committed to water quality. It plans to appeal the revocation, but it also is adopting a more conciliatory tone toward locals in Stanly County and politicians in Raleigh.

With Alcoa had long sought to separate the smelter from the dams, arguing that closing the first shouldn’t have any bearing on relicensing the second. Now, it’s putting the search for a new tenant for the smelter property front and center. “We know it’s really a separate issue,” says Kevin Anton, Alcoa’s chief sustainability officer. “But the former smelter site is being linked to the hydro project. We’ll accept that — that the community looks at Alcoa as one — so we are committed to redeveloping that site.” The company will spend $10 million this year tearing down 25 buildings at the Badin Works.

With The company hopes that bringing industrial jobs back to recession-ravaged North Carolina might break the standoff between it and Perdue’s team. Others involved aren’t so sure. Carter Wrenn, a longtime political consultant, has been working with the North Carolina Water Rights Committee, which supports the state’s efforts to take over the dams. “There’s a question of ‘Can we trust you?’ Alcoa’s deception right much eliminates that middle ground. The question becomes whether the Federal Energy Regulatory Commission opens up the license process and lets others apply for it.”

With While there is a process for federal regulators to take back, or “recapture” a license from an existing operator, it has never been done. Three years ago, FERC said recapture wasn’t an option for the Yadkin project. Alcoa still says it is best suited to run the dams, but experts following the controversy say to look for more litigation — and negotiation — in the year to come.

Lance

Charlotte-based snack maker Lance Inc. and Pennsylvania-based Snyder’s of Hanover Inc. combined to form Snyder’s-Lance Inc. Based in Charlotte, it’s the nation’s No. 2 salty-snack company, behind Dallas-based Frito-Lay, and has the top ranking in pretzels and sandwich crackers. Executives say the heftier company will have more clout with retailers. Lance CEO David Singer kept that job with the combined company. Snyder CEO Carl Lee Jr. became chief operating officer.

Duke and Progress agree to plug into one other

Charlotte-based Duke Energy Corp. is buying Raleigh-based Progress Energy Inc. in a $26 billion deal that will create the nation’s largest electric utility when it closes at the end of the year. The combined company will provide power to most of North Carolina and have 7.1 million customers in six states. Duke CEO Jim Rogers will become executive chairman; Progress CEO Bill Johnson will be president and CEO. The deal boosts Charlotte’s bid to become an energy hub.

CHARLOTTEBank of America took steps to contain looming legal costs. It will pay Fannie Mae and Freddie Mac nearly $3 billion to cover bad mortgages the agencies bought from the bank’s Countrywide Financial unit. Critics called the agreement a gift to the bank and a “backdoor bailout.” BofA also agreed to pay $137 million to settle regulators’ complaints about a bond bid-rigging scheme.

SALISBURYPGT Industries plans to close its window factory by the end of June, idling about 490. Production will be consolidated at its headquarters in Venice, Fla. It might reopen the plant when housing rebounds.

CHARLOTTEShaw Power Group will add 225 workers, mostly engineers, bringing its local workforce to about 1,325. Part of The Shaw Group, based in Baton Rouge, La., it provides engineering and construction services for the energy sector.

CHARLOTTEBAE Systems plans to spend $3 million to open an office that will employ 176, starting in the second quarter. They will do human-resources and financial work for the London-based military contractor.

CHARLOTTE —  United Way of Central Carolinas reached a $700,000 settlement with former chief executive Gloria Pace King (cover story, April 2009). She was fired in 2008 after public outcry over her compensation, which exceeded $1 million her last year. The settlement ended a discrimination and wrongful-termination lawsuit she filed against the nonprofit.

CHARLOTTE — Advertising agency Red F Marketing will add 60 jobs within three years, for a total of about 100. Annual wages will average $47,167 a year; the Mecklenburg County average is $48,776.

MOORESVILLENGK Ceramics USA, which makes material for automobile catalytic converters, plans to spend $43 million and add 60 jobs, for a total of about 490, by year-end. It is part of Japan-based NGK Insulators.

DENVERHydac Technology, a German maker of cooling systems, will open a factory next year and employ 54. Wages will average $43,220 a year. The Lincoln County average is $29,224.

Regional Report Charlotte April 2011

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REGIONALREPORT Charlotte

Startups want a jump-start 

Nabeel Hyatt had an idea for a new company — two of them, in fact. It was summer 2001, and he was vice president of strategic partnerships at Internetsoccer.com, a Charlotte startup that provided soccer news and merchandise. He had stayed on after its acquisition but was itching to try something different. As he mulled the possibilities, one thing he knew for sure: Whatever he started wouldn’t be in the Queen City. “It just seemed very obvious to me that Charlotte wasn’t a city that valued startups,” Hyatt, now 34, says. “There was very little support.”

So he focused on Boston and San Francisco, both of which had a strong community of angel investors, engineers and project managers wanting to work with startups. After landing in Cambridge, Mass., he started a couple of businesses before launching Conduit Labs Inc., a game developer for social-networking websites, in 2007. In August, he sold it to San Francisco-based Zynga Inc., which has developed FarmVille and other online games. He’s now head of the Boston unit of a company valued at $5 billion. “It’s unfortunate that I had to leave [Charlotte] because I met some really good people.” Hyatt isn’t the only one frustrated with a lack of support in Charlotte, says Mac Lackey, his boss at Internetsoccer.com (Making Goals, March 2000) and now managing partner of Charlotte-based BlackHawk Capital Management LLC, which focuses on early-stage companies. “We lose really good entrepreneurs to other cities that are better aligned, or we have people sitting in a financial-services job uptown who just don’t know how to stick the shovel in the ground and get started.”

He says there should be a public-private entity that holds networking events and information sessions and can serve as a conduit for legal and other help entrepreneurs need — something like the Council for Entrepreneurial Development. The Durham-based nonprofit’s mission statement pledges support for entrepreneurship statewide, but most of its programs are in the Triangle. “Our funders are here, and we’re supported by the local community,” President Joan Siefert Rose says. “As much as I agree that there is a need and demand for the services, getting the funding in place has prevented CED from expanding.” David Moore is the founder and CEO of Direct Response Concepts Inc., a Charlotte-based developer of mobile-phone software. Help for entrepreneurs exists in the Queen City, he says, if they know where to look. He points to the Ben Craig Center, a business incubator at UNC Charlotte, and says the chamber of commerce and Charlotte Regional Technology Council hold networking and educational sessions. But even he thinks more must be done.

It’s not happening fast enough for Lackey, so BlackHawk is taking matters into its own hands. It recently provided office space to a new technology company in exchange for expertise. And he plans to push city leaders — public and private — to do more. If things don’t change, he says, the region could suffer. “The biggest consequence is the smartest talent may go elsewhere. You get tired of fighting the fight.”

 

MOUNT HOLLYDaimler Trucks North America will add 628 jobs by May at factories here and in Gastonia. The 474 new positions here will boost employment to 875. In Gastonia, 154 hires will increase employment to 1,000. The company, based in Portland, Ore., cited increased demand.

CHARLOTTEBluestone Silicones, a Chinese maker of products for automotive, health-care and other industries, plans to consolidate manufacturing here by 2013. About half the 125 jobs, as well as some equipment, will come from a plant the company is closing in Rock Hill, S.C. The rest will come from Ventura, Calif. Salaries will average $62,040.

CHARLOTTEBank of America created a unit to handle its 1.3 million bad mortgages. It will take care of tens of billions of dollars in troubled assets, most acquired when the bank bought Countrywide Financial in 2008. BofA also sold Balboa Insurance, acquired in the Countrywide deal, to Australia-based QBE Insurance Group for about $700 million.

MONROEApex Tool Group plans to close its plant by the end of August, putting 129 out of work. The Sparks, Md.-based company is moving tool production to its other factories.

STATESVILLEArmstrong World Industries plans to shut down production at its wood-flooring plant by the end of the month and lay off 115. The Lancaster, Pa.-based company cited the bad economy. 

MONROE — The U.S. Commodity Futures Trading Commission sued PMC Strategy, which it says is operating a foreign-currency Ponzi scheme. The company had attracted $669,000 from more than 22 people since June 2008.

Horizon Lines pleaded guilty to fixing prices on freight transportation to Puerto Rico and agreed to pay a $45 million criminal fine. That ends a lengthy federal investigation of the Charlotte-based shipper that sent three executives to prison in 2008. Charles Raymond, 67, retired as CEO and chairman. Board member Alex Mandl, 67, is now chairman, and board member Stephen Fraser, 53, is interim CEO.

Pulling strings

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Pulling strings

Using software and hard cash, a young entrepreneur plucks himself a tidy profit flipping vintage guitars on the Internet.
By David Bailey

 

Dustin Miller met his man in a cramped bathroom inside the El Paso, Texas, airport — two guys and a big guitar in one tiny stall. He didn’t care what people in adjacent stalls thought as he oohed and ahhed while examining the man’s 1957 Fender Stratocaster. This was business. Finally, his inspection complete, Miller fished $9,500 in crisp bills from his jeans’ pocket and closed the deal. “I went out one side of the bathroom. He went out the other.”

The guitar had been listed for $15,000 on Craigslist only the day before, and Miller called the owner the minute he saw it. Estimating the instrument was worth as much as $25,000, Miller offered $8,500. “He says, ‘How about 11?’ I say, ‘How about nine-five?’ He says, ‘No, I’m not going down below 11.’ I say, ‘All right, call me if you change your mind.’” Miller, determined not to let $1,500 spoil the deal, jumped in his car and headed to the bank. “I’m in line at the bank when the phone in my pocket rings, and he says, ‘Yeah, let’s do it for nine-five.’ So I book a plane for El Paso.” He later sold the vintage Strat for $17,500.

You could say the guitar has always led Miller down a unique path. Long before the Texas rendezvous, Miller would skip school to hang out at Don’s Music City in his hometown of Burlington and “borrow” his mom’s pickup — though he wasn’t old enough to have a driver license — to hear local bar bands play until the wee hours of the morning. Miller describes his first vintage guitar purchase, back in high school, with the affection others reserve for first dates: “It was a 1978 Fender Precision Bass, canary yellow with a black pick guard and a maple neck. I realized I was holding a time machine in my hands. Where had it been? How many girlfriends had it helped to lose? How many bars had it played in?”

No, it didn’t take long for Dustin Miller to find his passion. “At 14 or 15, I remember walking into this bar and seeing this stage and lights and soundboard and saying, ‘Oh my gosh, this is awesome. This is what I want to do.’” After dropping out of high school to learn how to build and repair string instruments, Miller, now 25, realized his dream. He not only made a living repairing guitars and then selling them on the Internet, but he earned decent money — enough to buy 5 acres and a cabin in the woods near Chapel Hill.

Miller would have you believe he’s an accidental entrepreneur — that his success comes from a series of uncanny coincidences beginning with his being born a lefty. But don’t believe him. Skills culled from a tumultuous childhood and a business acumen whetted by academia — abetted by eBay, Craigslist and cool tools of the e-entrepreneur — gave him what he needed to turn his passion into some serious money.

 

Impetuous as the El Paso deal sounds, it was underpinned by methodology derived from Miller’s degree from the Bryan School of Business and Economics at UNC Greensboro. “One of my teachers pulled me aside and started talking to me about investment theory,” he says. The prof explained that if someone pays $300 for something and flips it for 30% and does it 39 more times, preserving principal and interest, that person ends up with a compounded sum of $10.8 million. Miller decided he needed at least a 17% profit margin. “If I couldn’t buy it at a certain price, I just wouldn’t do it.”

Miller loved the guitar long before he thought of turning it into a profession. His passion was ignited by a Junior Brown appearance on Country Music Television, featuring the cowboy-hatted virtuoso playing his signature “guit-steel” — a double-neck steel guitar. Afterward, he told his mom, Cindy Riley, that he had to learn to play the guitar. His instructor immediately noticed that Miller held the neck with his right hand — a natural lefty’s grip. Instead of telling him to switch hands, his teacher restrung the guitar. “There was this obstacle I had to overcome, and that made me want to play even more.”

Because he was left-handed, he had to learn to take guitars apart and restring them backward. “I started swapping parts, experimenting, refinishing guitars and sometimes breaking them. And then when I found out that Paul McCartney is left-handed, Jimi Hendrix is left-handed, Kurt Cobain is left-handed — all these guys — then you start to align yourself with this I’m-meant-to-do-this, destiny sort of thing.”

His obsession with tinkering was championed by his dad, Donald Miller, a former Navy sailor who had battled drugs and alcohol for years. His father’s substance abuse added to an already tumultuous childhood. His parents were twice married and twice divorced — both times to and from each other. “I had a pretty bad family situation, back and forth,” Miller says. He recalls his father’s occasional “yearlong stints of sobriety” with fondness and understands his frustration at being underemployed. “Overnight, he went from being this guy who had pay-grade status as a Navy petty officer to flipping burgers in my grandmother’s restaurant.”

But it was one of these underemployed jobs that cemented Miller and his father’s relationship — and indirectly pushed the son toward his future vocation. The work included disassembling old signs in the Millers’ backyard. “So I’m maybe 10 or 11, and he bought me a chisel and blowtorch and taught me how to take the batteries and metal and lights off of them. It was awesome, and we got to spend some good time together.”

Not enough time. His dad lost his war against drugs and alcohol, dying in 2009. “He had this expectation that he should be further along in life, and he was not. I definitely put that pressure on myself to constantly push myself and be better and better and better.”

 

Miller became so obsessed with fiddling and playing with guitars that he quit high school at 17, finished his junior and senior years in four months online and moved to Phoenix to learn the demanding craft of building and repairing string instruments at the Roberto-Venn School of Luthiery. After completing his degree there he returned to Burlington, opened a guitar shop in nearby Gibsonville, turned a modest profit and then closed it to go to college alongside his former classmates. “I never missed a beat. It was like I was able to jump through time.”

Miller had continued collecting antique guitars in Arizona. Though he sold a few in his Gibsonville shop, it was college that taught him the discipline and methodology to turn his passion into a real business. After Alamance Community College, he enrolled at UNC-G and began working on a bachelor’s in marketing, a subject he loved. “It was analytical. It was borderline scientific. It was experimental. If I could figure out who someone was at their core, I could sell them things.” For the first time, school related to life.

That was in 2007, about the same time he was realizing that vintage guitars were becoming a hot commodity. Starting with only $300, he bought and sold one guitar after another, each at a marginal profit. He turned his newly sharpened marketing eye on baby boomers — bored, affluent and ready to recapture a little of their glory days by strumming the same kind of guitar Clapton plays. Then Craigslist came along, providing Miller the forum for picking up guitars cheaply and, after repairing and marketing them, flipping them for a profit. He quickly learned that it took hot pursuit and cold cash to win the prize online.

“Everybody wanted to trade, and no one had cash,” he says. A guitar would be posted, and “someone would come to them and say, ‘I have a vacuum cleaner and a bag of old toenails.’ But here I was willing to come up with cash. It might not have been what they wanted, but it was cash.” He also invested in a “Web-crawler” application called Notifier. Scanning any website as often as he specified, the program notified Miller as soon as certain keywords popped up — Fender, Martin or Gibson, for instance. “I’d be the first to call, and they would always go, ‘Wow, I just listed it.’ It cost me $18, and that $18 has made me thousands.” He grossed $4,000 to $6,000 in a good month.

But that was then. “The ride is over,” he says. A combination of factors — inflation, market saturation and competition, not to mention the economic downturn — persuaded him earlier this year to unload his inventory and put the proceeds into real estate. “I started all of this out as a $300 pipe [dream]. Now, I’m buying a house with it. To me, it’s just a perfect way to end a chapter and move on to the next thing.”

What that is remains to be seen. Another business, for sure, maybe real estate. One thing is certain: “Speculating on what two pieces of board and six strings are worth? I don’t want to do that anymore.” But he’s never far from a guitar, still keeping his “body and soul” together in a Motown cover band that plays at corporate events.

Out of work

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Out of work

Their plight rocked the state’s political establishment. The unemployed are
our Mover and Shaker of the Year.
By Arthur O. Murray

Esther Lentz sighs, hushing the ticking of a clock in her sparsely furnished living room — a couch, two chairs, an ottoman and a 32-inch television on a wooden stand. The walls are cracked throughout her 1,400-square-foot house in Concord, but the paint is clean. The hardwood floors shine, a contrast to the dark mood.

She sighs again. The words don’t come easily. Neither will another job. She is 49, with no high-school diploma and few skills. Truth is, she’s not even looking right now. Her energies go to renewing her unemployment payments, going to school and barely keeping afloat by cutting expenses wherever she can. “We’re still making it,” she says, brushing a strand of faded brown hair out of her face. “I don’t know how.”

She’s one of more than 5,000 North Carolinians who lost their jobs when Kannapolis-based Pillowtex Corp., the state’s 10th-largest manufacturer, closed July 30. Like Lentz, about 40% of them didn’t finish high school.

While employment statewide was 3.8 million in October, roughly the same as it was a year earlier, jobs have churned. Nearly 13,000 textile jobs disappeared in 2003. So did about 3,400 furniture jobs. Some of the state’s largest employers were vulnerable. R.J. Reynolds said in September it would lay off at least 1,600 tobacco workers in Winston-Salem. And the bleeding wasn’t confined to manufacturing jobs in North Carolina’s traditional industries. US Airways laid off 600 Tar Heels. IBM idled 90 in the Triangle.

Still, Pillowtex cried out as the largest single job loss in state history. A month later, a Republican North Carolina con-gresswoman flayed President Bush over textile losses. In October, a national poll by Chapel Hill-based FGI Research showed that, if the election were held then, 60% of voters would not return Bush to office. Their No. 1 issue: his handling of the economy. People across the country had finally noticed the job losses. And they feared being Esther Lentz. That’s why the displaced worker is Business North Carolina’s Mover and Shaker of the Year.

The Pillowtex shutdown shouldn’t have surprised anyone. The company had been struggling, and the state has been bleeding textile jobs for 30 years. Since 1973, 230,000 — more than 60% of the state’s textile and apparel jobs — have vanished. At first, it was because of modernization: machines replacing people. But since 1993, when the North American Free Trade Agreement and other pacts relaxed import restrictions, the job losses have accelerated. Imports — from China, Vietnam, Pakistan and other places where people work cheap and employers can dodge environmental rules and unions — cost less than it takes to make yarn and fabric in the United States.

Textile jobs have always followed the path of least pay. That’s why they came to this country from Europe, why they migrated South, why they moved to Mexico and Honduras and why they’re going to China, where mill workers make 30 cents an hour. In North Carolina, the average textile wage was $13.82 an hour in 2002, not bad for someone without a high-school education. But it’s nothing industrial recruiters can brag about. As the jobs slipped away, politicians and pundits — on the pages of this magazine and elsewhere — did little but mutter about market forces. That changed after Pillowtex. If they failed to feel the pain, they couldn’t help but smell the fear.

Within days of the closing, a steady stream of pols — Mike Easley, John Edwards and Elizabeth Dole among them — descended on Kannapolis to offer comfort, if little else. Then Sue Myrick, a congresswoman from Charlotte, made headlines when she criticized Bush, saying he was out of touch. “There comes a point, if he doesn’t care about us, we won’t care about him when election time comes,” she said in a speech in Gastonia.

She was the first Republican to break ranks with the president over the trade agreements she once voted for. “You don’t want to criticize your president. But they weren’t listening.” Others followed her lead, and the administration issued quotas on knit fabrics, bras, dressing gowns and robes in November. The quotas won’t save U.S. textiles. But Myrick believes the first restrictions will spur movement on other issues. “They’ve finally started talking about it with the Chinese. The Chinese know they have to do something about it, but they’re going to hold off as long as they can.”

China is a long way off to Esther Lentz, who has lived in Concord all her life. She started in 1988 as a spinner at what was then Fieldcrest Cannon, after her second child started school. Her father, Raymond Allman, worked there his entire career. She quit once to work in a sock factory but came back after a month because the money was better. She was laid off for three or four months in 2001, but the job came back. It won’t this time.

Her husband, Aaron, lost his electrician job more than a year earlier and hasn’t worked since. Whereas she’s beaten down, he’s bitter. He blames imports, immigrants, Pillowtex management, the government — practically anyone or anything will do. Right now, they’re living off her $1,100 a month in unemployment benefits. The mortgage takes about $825. That doesn’t leave much for utilities, food, clothing, gasoline and other expenses. Initially reluctant to accept charity, she goes to the food giveaway at First Presbyterian Church every month. When another church gave out bags of Thanksgiving food, the Lentzes got one. “It was good, but we found out when we got to the Food Lion that the gift certificate for the turkey was only good for $5.”

Her hope is school. She started classes in August at the Concord campus of Rowan-Cabarrus Community College to prepare for her General Educational Development test. She goes to class 6 to 9 p.m. Monday through Thursday but struggles with the essay she must write and with math — “fractions, decimals and all that new stuff they’ve got out.” She hoped to pass the final pretest in December and get her GED by February.

But another clock is ticking. The state will pay for only two years of school, and she hopes to get enough training to find another job. She has some ideas. One is to be a game warden, but the community-college program for that is offered only in Winston-Salem or in Spruce Pine, and she refuses to leave Concord. Another idea is to be a real-estate agent. “I like that one,” her husband says. “There’s going to be a lot of real estate on the market here.” But her shyness — she often closes her eyes when she thinks — poses a roadblock. It’s hard to picture her putting together a deal.

She closes her eyes now. “I don’t know. There’s a lot of ideas out there.” When she mentions radiology or criminal justice, it sounds like an 8-year-old’s dreams of being an astronaut or a dirt-bike racer.

Would she go back to the mill if it reopened? In August, the answer was no. Now, as the year is ending, she hedges. “Have you heard anything?” she asks, eyes open — and flashing. “I’d stay in school, but I’d consider going back, financially.” When she realizes that nothing is imminent, she sighs again. “I might go back.”