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His borders break boundaries in decor

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People – March 2005

His borders break boundaries in decor
By Chris Richter

John Ham is trying to relax. But he has been busy since his company, Huntersville-based Cultural Hangups Inc., hit the big time. In November, home-improvement giant Lowe’s began carrying two of its ethnic-themed wallpaper borders in 304 stores nationwide.

One border features a black ballerina against a pink background; the other, a group of girls of different races sitting together. Lowe’s plans to add other designs this year.

Ham, 38, is formally president of the company but calls himself chief operating officer. The concept was the idea of his wife, Cynthia, so he calls her president. He handles most business decisions, and she’s more involved with design.

They never intended to get into the decorating business. His wife was pregnant in 1997 when she decided to turn a room in their house into a nursery. They couldn’t find products with black-themed images.

Cynthia had an artist paint a border and mural featuring images such as black angels and African symbols. “People came by to see how the baby was doing. And, of course, women always want to see what the nursery looks like,” he says. He didn’t give much weight to compliments — they weren’t going to say the room was ugly, he adds. Then Cynthia saw a TV talk show in which another woman had a similar problem. That convinced her there might be a market. They had their first products by 2002 and sold through the Internet, trade shows, churches and about 200 small stores.

The Hams come up with concepts for the borders. Artists draw sketches, which are tested with focus groups before being sent to a manufacturer in Canada. The company has four full-time employees. Ham won’t reveal revenue but says the Lowe’s contract will be worth $3 million to $5 million over two years.

A Greensboro native, he earned a bachelor’s in business in 1989 from N.C. A&T State University. He and his wife started a temporary-staffing company in Greensboro in 1991 and sold it in 1997. He joined Dudley Products, a Kernersville-based hair-care and cosmetics company as a marketing manager. She worked as a recruiter for Wachovia in Winston-Salem. They moved to Huntersville in 2000 when she was transferred to Charlotte. He worked in Dudley Products’ Charlotte office, then got a marketing job with the American Red Cross. He began working full time on Cultural Hangups in late 2003.

Ham says the company hopes to start a line of bedding-and-bath accessories that would be sold under the brand name Cultural Accents. “We need to go more toward the things people need to have. Everybody’s got to have a comforter. Everybody’s got to have a sheet. Everybody’s got to have a towel.”

He wore it well

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Up Front: March 2005

He wore it well

Frank Jr. called to tell me Derick had died. He thought I’d want to know. The obituary that ran in The Miami Herald the next day began: “Derick Daniels, a distinguished newspaper editor and executive whose penchant for fine living and even finer women boded him well as president of Playboy Enterprises during the late 1970s … ” Lung cancer. He was 76.

Frank’s daddy and Derick’s were sons of Josephus Daniels, who bought The News & Observer in 1894. Derick, who grew up in D.C., never worked in Raleigh. After graduating from Carolina, he was a reporter in St. Pete and Atlanta, then won fame at the Herald and Detroit Free Press, which won a Pulitzer when he was executive editor for its coverage of the ’67 riots. The Knight chain, which owned both papers, made him its first corporate vice president for news in 1973.

Three years later, Hugh Hefner hired Derick to save his foundering empire. “He was attracted to Playboy because it had the three things in the world he enjoyed the most: drinking, gambling and women,” Frank told the N&O, which the family sold in 1995. Married five times, making and spending several fortunes, Derick January Daniels lived large — flamboyant was a word that stuck to him like ink to newsprint. Charming was another.

I first met him in ’86, after he left Playboy. He was doing some consulting for Frank, evaluating some of the News and Observer Publishing Co.’s other properties. One was Business North Carolina, which it had bought the previous year, shortly before I started here. I had returned to North Carolina after five years at the Herald to work for a rival publishing venture that was going to make me rich. Instead, it made me unemployed. I landed, if not on my feet then at least on my knees, at the magazine. To my mind, those were dark days. As a city editor at the Herald, I had managed dozens of reporters and editors. Here I managed myself — No. 2 man on a three-person editorial staff.

Then Derick breezed into town, “an aging wunderkind and hired hand” — in the words of Wayne King, the former New York Timesman who chronicled BNC’s first 15 years (www.businessnc.com) — who impressed the staff by “showing up at the office sporting fitted black leather trousers, a silk shirt and an ascot.” He invited me out for a drink. We spent a few hours sipping whisky, talking about the Herald and a world of other things and — in my case, like many before me — being charmed. They say he had a great eye for talent; I’d like to think that. I do know his opinion, and what others thought of it, had a lot to do with me being where I am now.

The story by Wayne, who runs Wake Forest’s journalism program and worked for the Free Press in the late ’60s, was not all flattering to his old boss. But Derick had only one complaint — and this from a man who wore a gold lamé jumpsuit to the party he threw to celebrate the Playboy gig: “I have never worn an ascot.” That made me, source of the slander, wince when I read another obit describe his post-newspaper attire: “most notably leather suits, silk shirts and ascots.”

I’m sorry, Derick. I recall now. It wasn’t an ascot. It was a white silk neckerchief.

• • •

As this month’s cover story shows, business plays an important role in state government. After 27 years of covering Raleigh, it’s no secret to Jack Betts. That’s one reason The Charlotte Observer’s Raleigh-based associate editor was willing to become our new Capital columnist, adding that task to his already formidable workload. “Understanding how business and government relate to one another in Raleigh,” he says, “is basic to understanding what North Carolina is all about.”

Ex-judge wants state to break with incentives

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People – March 2005

Ex-judge wants state to break with incentives
By Edward Martin

Bob Orr laughed recently when he found a cat collar with a bell in his office. It was a gag gift from a group he had addressed. In his speech, he recited the fable about a colony of mice that cheered when one suggested they bell their nemesis to keep the feline from sneaking up on them. But when the call went out for a volunteer, they scurried back in their holes.

Orr’s cat is economic incentives, baiting businesses with cash, tax breaks and other inducements. North Carolina recently agreed to give nearly $243 million to Round Rock, Texas-based Dell to get it to build a $100 million computer-assembly plant in the Triad. Winston-Salem and Forsyth County chipped in an additional $37.2 million.

Corporations are able to play states and localities against one another to receive extraordinarily large sums of money, says Orr, executive director of the Raleigh-based North Carolina Institute for Constitutional Law. “Where does it stop?”

He hopes the answer will start with the institute he heads. Started in 2003 by a group that includes Art Pope, a former Republican state representative and president of Raleigh-based discount-store chain Variety Wholesalers, its agenda includes campaign-finance reform and other issues.

Orr, 58, has the easy affability of a career politician, which isn’t surprising since he’s a veteran of four statewide races. A lawyer — UNC Chapel Hill law school, class of 1975 — he seemed positioned to end his career as a justice on the N.C. Supreme Court, where he had served since 1995. Before that, he spent 8 1/2 years on the state Court of Appeals.

Then, a year ago, he retired barely a year into his second term. The decision wasn’t as sudden as it seemed. He had watched as judicial races became more rancorous. He had lost heart in the judiciary, but he had found a cause — incentives.

A Norfolk, Va., native, he grew up in Hendersonville. After law school, he practiced in Asheville before edging into politics in 1981 as an aide there to former U.S. Rep. Bill Hendon, a Republican. Gov. Jim Martin appointed him to the Court of Appeals in 1986. He was re-elected twice, then won eight-year Supreme Court terms in 1994 and 2002.

Orr has strong feelings about incentives, having opposed a ruling in 1996 that may have opened the door to Dell-like deals. Winston-Salem lawyer Bill Maready argued that incentives violated the public-purpose principle of the state constitution. Maready eventually lost — the state high court voted 5-2 to uphold incentives. Orr dissented. But the lawsuit temporarily halted them, and Orr was fired up.

He believes the Dell deal might provide the spark needed to ignite another assault on incentives. A federal court, he notes, ruled in September that an Ohio package to attract a DaimlerChrysler Jeep plant — similar to those offered Tar Heel prospects — violated the U.S. Constitution’s interstate-commerce clause. While the institute isn’t likely to sue, he says it probably will seek out and support a business owner willing to challenge the state.

Success, he says, would unshackle elected officials who privately say they oppose incentives but are afraid they’ll be accused of costing jobs if they oppose them publicly. That, he says, would make them less reluctant to bell the cat.

Event cinches deal with belt he made

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Event cinches deal with belt he made
By Arthur O. Murray

Grant Dial took a gamble in 1976. The Maxton native, a Lumbee Indian, quit college about a semester before graduation. At 24, he believed his future was in making and selling jewelry. He started Grant Dial Silversmith in Red Springs that year. Now his work is benefiting a pro gambler — the winner of the 2004 World Poker Tour championship, held in November at the Foxwoods Resort Casino in Mashantucket, Conn. In addition to $1.5 million and a Rolex watch, winner Tuan Le got a silver-and-wampum concho belt handmade by Dial. It’s worth $10,000, according to Foxwoods officials. The Travel Channel broadcast the tournament in January.

The son of Robeson County sharecroppers, Dial moved with his family to Columbus, Ga., while he was in high school. Friends invited him to participate in a Mormon youth program. Dial, now 53, joined the church and majored in physical education at Brigham Young University in Provo, Utah. There was a problem, though. “I went to school totally broke, so I needed a part-time job.” He got one working in a silversmith shop.

He started making his own jewelry, an adaptation of Navajo-style pieces that included turquoise, onyx and coral. He continued to work in the shop, selling his pieces for about 18 months before quitting school to go into business in Red Springs.

About eight years ago, he found a supplier of wampum, which comes from the shell of the quahog, a New England clam. A friend cuts and polishes the wampum, giving it a purplish hue. Dial makes jewelry from January through March and sells it primarily by traveling the East Coast the rest of the year, setting up booths at art shows and Indian powwows. He also sells jewelry on his Web site. Prices range from about $50 for some rings to $10,000 for concho belts similar to the one awarded to Le. He won’t disclose revenue for the business, which includes his wife, Gina, and three sons.

It was at a powwow near Foxwoods, which is on an Indian reservation, that he was introduced to the resort’s marketing director. “The minute this guy saw the belt, he wanted to purchase it for the contest.” The prize belt is made of 180 pieces of wampum and took two months to make.

Still, Le, a 26-year-old Los Angeles native, didn’t seem overly impressed with the belt after winning the final hand with a straight, Dial says. “This guy had a million dollars laying on the table, too.”

Dell pickle

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Dell Pickle

Though it has left a sour taste in some people’s mouths, officials insist the jobs it’ll bring make this a sweet deal.
By Irwin Speizer

Maybe the outcome was inevitable. On one side stood Mike Easley, governor of a state battered by the loss of tens of thousands of manufacturing jobs. On the other was Dell Inc., the world’s leading computer maker, famous for tightfisted cost control. Dell needed a new East Coast assembly plant to meet demand for its desktop computers. North Carolina was desperate to land it.

The result was a lopsided negotiation in which the Round Rock, Texas-based company dictated what the state would have to do to get the plant and the jobs it would bring. Industrial recruitment tends to be a subtle dance, with companies hinting at incentives and quietly trying to play communities against one another. Dell came right out and said what it wanted: exemption from state income taxes and about 150 acres of land, free of charge and ready to build on.

By pitting North Carolina against Virginia, then Triad communities against their neighbors, Dell got a package worth nearly $280 million. The state’s portion totals $242.5 million, including $225 million in income-tax credits over 15 years. Winston-Salem and Forsyth County anted up $37.2 million. The deal was rammed through the legislature and local government bodies in a matter of weeks after the November election, giving Dell a neatly wrapped Christmas present worth more than a quarter of a billion dollars.

State Rep. Paul Luebke is still steamed, first for having so little time to review the deal — about a day — and then being muzzled on amending it. “What none of us knew was that the governor was promising years of no corporate income tax,” the Durham Democrat says. “Those are huge subsidies. Those kinds of things should not be approved in a handful of hours.”

But that’s what happened, with proposed amendments summarily voted down on fears, voiced by the governor’s office, that any change would send Dell scurrying away. The state part of the package was introduced and adopted in the General Assembly on the same day. Local incentives followed, cobbled together in haste.

Not many years ago, North Carolina prided itself on being a state whose business climate, work force, education system and job training were so strong it didn’t need incentives. But its confidence faltered as neighboring states used multimillion-dollar packages to land new plants. With the Dell deal and other recent ones negotiated under Easley, North Carolina has transformed itself from one of the stingiest states for incentives into, critics contend, one of the easiest marks.

They complain that the state has gone too far, that the incentive system must be reformed — possibly at the national level — or challenged in court. But proponents point out that politicians have little choice if the state is to compete for new jobs. Depending on how you view it, Mike Easley is either one of the biggest patsies or the shrewdest visionaries ever to occupy the governor’s office. If he is right, the high price to get those relatively low-paying jobs — averaging about $28,000 a year — will look like a bargain years from now.

“It took him awhile,” Raleigh economic-development consultant Robert Leak says. “But all of a sudden he began to realize that we have got to really be aggressive replacing the jobs lost with the best jobs we can find. He has caught the fever.”

If the cost seems awfully steep, it’s a reflection of how badly North Carolina needs the jobs, says Dan Gerlach, the governor’s budget director and one of the chief negotiators of the deal. “Our objective was to recruit 2,000 jobs and a major investment and an outstanding name to the Triad and to do so in a way that makes economic sense to the state. We accomplished that objective.”

Winston-Salem Mayor Allen Joines, whose city beat out neighbors Greensboro and High Point for the plant, says the project is well worth the investment because of the jobs it creates, not just those at the plant but thousands of others at companies providing goods and services to Dell and to its workers. “You don’t get an opportunity to do this except maybe once in a couple of decades.”

No one understood that better than Dell.

The first thing that stands out is how mismatched the two sides were. A prolonged manufacturing slump had staggered North Carolina, home of the domestic textile and furniture industries, which are in the midst of an exodus overseas. The telecommunications shakeout also hurt the state badly. This wholesale loss of manufacturing jobs left Easley, who faced a budget crisis when he came into office in 2001, struggling to cut enough spending and raise enough revenue to keep the state afloat.

“No state has been hit harder than North Carolina in recent years,” Gerlach says. “You have a segment of the public in their 40s and 50s, many of whom have not completed high school, who are out of jobs. We can retrain them. But it takes time. In addition to a long-term economic strategy, you need to help those people where they are today. The Dell deal allows people in the Triad to replace lost income.”

For Dell — which did not respond to requests for interviews with company officials for this story — things could hardly get any better. The company spent the last two years raking in profits, snatching market share from competitors and plotting how to extend its dominance. Michael Dell, 39, started the company two decades ago in his college dorm room. He figured how to outsmart the rest of the fiercely competitive computer industry by bypassing middlemen and selling custom-built computers directly to buyers.

Dell builds computers to order in its own plants using a highly refined just-in-time manufacturing system, then ships them to customers’ homes and businesses. The system works so well that today Dell is the last major computer maker with U.S. production. Hewlett-Packard outsources its computer assembly, primarily to Asia. So did IBM until late last year, when it sold its PC business to Lenovo, a Chinese computer company.

Dell, on the other hand, is expanding domestic production. In 2000, it added a new plant in Lebanon, Tenn., to its existing operations in Texas.

In April 2002, the company announced an ambitious plan to double annual sales to $60 billion in five years. Analysts were skeptical, but the goal seems to have been modest. Sales soared to $41.4 billion the next year, putting Dell ahead of schedule. Through the first three quarters of its last fiscal year, Dell reported $35.8 billion in revenue, up 19% from the previous year. Net income hit $2.4 billion, up 25%. Sales are growing not just in the United States but also in Europe, the Middle East, Africa, Asia and the Pacific Rim. Cash keeps piling up — $12.4 billion as of the end of the third quarter.

Dell needed more manufacturing capacity, particularly near the heavily populated East Coast, where its gets about 70% of its U.S. sales. One option was to expand in Tennessee. The other was to build from scratch, preferably in a strategically located Mid-Atlantic state. North Carolina, with a long manufacturing history and tens of thousands of laid-off factory workers hungry for jobs, was a natural candidate. So was Virginia, for many of the same reasons. Discreet inquiries went out from the company in late 2003 to both states. The race was on.

The project began in typical fashion. Dell contacted the N.C. Department of Commerce, asking for information on possible sites. The company identified itself to state officials but asked that its name be kept confidential. At first, Dell referred to the project as a sales and support center, later revealing that it was an assembly plant.

Regional industry hunters, including those in the Triad, heard that a company was shopping for a site that same month. All they knew was that a company had made a fairly standard request for information on regional demographics and makeup of the labor force, including availability of workers, average wages and how far they were willing to drive to work.

Penny Whiteheart, senior vice president of the Piedmont Triad Partnership, says the unidentified client began describing itself in January 2004 as a Fortune 100 company. More details emerged the next month, including the tantalizing tidbit that the project would employ more than 1,000. Economic developers realized that they were chasing a major project by a top tech company. Some even speculated it might be high-flying Dell.

They found out in March, when nondisclosure agreements arrived, barring those who signed them from revealing the company’s name or any details of the project. Dell moved quickly, dispatching four- to eight-member scouting teams on tours of potential sites. They visited the Triad three times in March and April, sending local officials scrambling to accommodate them and put together presentations.

One particularly intense visit in April started with a series of presentations by regional economic developers in a meeting room at Piedmont Triad International Airport, followed by a helicopter tour of sites arranged by Commerce. Making presentations were industry hunters from Davidson and Rockingham counties, along with representatives from Greensboro, High Point and Winston-Salem. All the attention left Triad officials convinced that they were among the front-runners for the project.

“Feedback we got from company officials was very exciting,” Whiteheart recalls. “We had been given to understand that there was not competition inside the state. We believed they were comparing operating costs of the Piedmont Triad with the two existing U.S. manufacturing facilities and other Southeastern options.”

The primary other option was Virginia, which was going through a similar process and was equally jazzed about the chance to land Dell. Both sides wondered what the other was doing, but the nondisclosure agreements required secrecy. “The big problem is, you are playing poker,” Virginia Secretary of Commerce and Trade Michael Schewel says. “Like any poker game, you are not seeing the other players’ cards.”

Any state trying to land a manufacturing plant today, Schewel adds, has to assume that Asia figures into the formula, the wage differential making it difficult for companies to select a U.S. site. Indeed, officials in both states say that a key reason they showered Dell with incentive proposals was fear that the company might find it cheaper to build overseas. But because of the way its business works, Dell is a special case. Selling custom-built computers means it needs to have plants close to customers for quick turnaround and shipping. It can’t load a boat with standardized models, and it’s too expensive to ship individual orders from Asia to customers in, say, New York. “I believe Dell is committed to American production,” Schewel says. “They want to be close to their customers.”

Still, by the start of summer, officials in North Carolina and Virginia had learned that Dell would not come cheap. Though both states have industrial-development grant programs that can be worth millions to companies, Dell wanted more. Schewel says the company was upfront about what it expected at the state level: a free ride on corporate income taxes. That was necessary, Dell told officials, because of the tight margins and highly competitive nature of the computer business, which required it to cut costs wherever it could. Schewel says Dell put it to him like this: “We don’t want to pay corporate income tax at the state level, and we want to know that it is a certain situation as far as we can see.”

Both states tax corporate income, but Virginia’s rate is lower — 6% versus 6.9%. Exempting all or most of those taxes in either state jacked the total value of any incentive deal from tens of millions of dollars to hundreds of millions.

Virginia could try to accommodate Dell by putting the plant in in a special enterprise zone within which it could avoid paying most, but not all, state corporate-income taxes for a number of years. If Dell didn’t like the state’s existing enterprise zones, the governor could create a new one, Schewel figured. But even within a zone, Schewel couldn’t erase the tax burden completely, and he couldn’t guarantee that the enterprise-zone tax breaks would last for 15 years. He could probably match what North Carolina offered in cash incentives dollar for dollar, Schewel says. “But on tax incentives, within the limits of what we could do, we couldn’t get where we needed to be.” That left him wondering how far Easley would go toward meeting Dell’s demand.

In North Carolina, the tax break became the key stumbling block. Easley had pushed other incentive packages through the General Assembly and probably figured that by dangling the prize of 2,000 jobs he could get legislators to go along once again.

The question was: How high did he need to go to beat Virginia? Dell pressed him for a quick decision, saying it wanted to start construction in early 2005. Whiteheart says she got word from company officials that Dell expected to choose a location by the end of last April. When that deadline passed, she heard that the decision would come by the end of June.

The drawn-out secret negotiations finally sprang a leak. The Winston-Salem Journal broke the story June 15, reporting that Dell and the state were talking about a plant site and that the Triad was a prime candidate. One unnamed official gave the first hint of what was to come, telling the newspaper that the project would cost the state “an arm and a leg.”

Just how tough the negotiations became is clear from 4,000 pages of documents related to the deal that the state released in January. Among them are notes and memos from June indicating that the state had offered to cut Dell’s corporate taxes in half.

Dell flatly rejected the offer, insisting that it wanted an exemption from all state income taxes. Knowing that Texas has no corporate income tax, Commerce Secretary Jim Fain feared Dell might decide simply to build another plant in its home state. He wrote a memo to his staff that posed the question: “What are the impediments to getting to zero?”

Summer arrived without a deal. Triad officials, who had sensed they were close to winning the project, began to worry that it was slipping away. “There were a couple of times where we understood negotiations with the state had reached an impasse and Dell was considering that it wouldn’t work,” Joines, the Winston-Salem mayor, recalls. The company gained new allies when he and other nervous officials began pressing the governor’s negotiators to close the deal. But it was still not clear just how much Easley was being asked for — or what local communities would have to pitch in.

August came and went. Then September. Still no deal. By now, the election campaign was in its final sprint. Senate President Pro Tem Marc Basnight says Easley had the deal pretty much wrapped up but figured it was too close to election day to call the legislature back into session. Announcing he had bagged Dell would have given him quite a trophy to show voters, but Easley was so far ahead of Republican challenger Patrick Ballantine that he didn’t need the extra juice.

Dell apparently felt secure enough about the agreement that it didn’t mind talking about it. In mid-October, President and CEO Kevin Rollins told CNET News.com that the company would announce a new plant within the next two months — and that it would likely be built in the Triad.

On Oct. 27, Easley announced that he wanted the General Assembly to meet to consider a new incentive package. He called the special session for the following week, two days after the election. Though President Bush carried the state, as did Republican U.S. Senate candidate Richard Burr, Easley won handily, capturing 56% of the vote.

He planned to lay out the deal to lawmakers the morning of Nov. 4 and get them to vote on it the same day. Frustrated by the lack of information about the package, Luebke, who as chairman of the House Finance Committee would be one of the first to review the measure, asked for and got a meeting with Gerlach Nov. 3. Luebke gathered several of his Democratic allies in his office at 8 a.m. Gerlach passed out copies of the bill. Luebke says he and other lawmakers were stunned by how much the gover-nor had given up.

While most of the incentives were in the $225 million income-tax credits, about $18 million came from existing sources such as the Job Development Investment Grant program and William S. Lee act. But those grants would be especially generous as a result of changes to boost the amounts Dell could get.

One change exempted it from a rule requiring recipients pay prevailing wage rates. In the Triad, that would have meant Dell needed to pay $31,000 a year per job to qualify, Luebke figured, rather than the $28,000 the company estimated. Even the $28,000 figure appeared to be inflated, the legislator says, because it includes some supervisory jobs. Another rule doles out higher cash incentives for companies that locate in poorer, rural counties. The Triad contains some of the state’s wealthiest, most urbanized counties. The bill exempts Dell so it can claim the higher amounts.

Existing grant rules also require companies to pay a minimum of 50% of the cost of health insurance. That’s well below the 70% to 80% that most large companies pay, and some lawmakers wanted to boost the requirement for Dell. Luebke and other members of his group wanted to roll back some of the concessions and add requirements such as the higher health-care minimum. Would the governor’s office be willing to consider amendments? Gerlach said he would ask. The answer came the next day when hearings got under way. Each proposed amendment was met with the same response: Any change to the bill would scuttle the project and had to be rejected.

Gerlach wasn’t alone in urging the bill’s passage. The Piedmont Triad Partnership set up shop in a borrowed legislative office, coordinating an estimated 200 business and government officials who converged on Raleigh to lobby for the deal. The Triad had about 10 people speak for the package at each key committee meeting throughout the day as the bill moved toward approval. At the end of the day, the bill the General Assembly handed Easley to sign was exactly as he had submitted it.

Basnight says the legislation represents a solid economic-development victory for North Carolina because it snagged Dell. And while the incentive cost is high, the payback will be much higher according to projections that suggest that the project will result in more than a billion dollars of new revenue to the state — a net gain of more than $700 million over costs of the incentives. Those projections have been challenged by critics as overly optimistic.

But aside from questions about how much benefit the state will get out of the deal is the procedural issue of how it was accomplished. Inside the General Assembly, there is lingering resentment over being bullied by the governor into a rushed decision. “It came too quick,” Basnight says. “I don’t believe that would happen again.”

Dell executives joined state and local officials in Raleigh at a news conference Nov. 9 to announce that the computer maker had agreed to come to North Carolina. Then came a twist: The company said it had not decided exactly where.

On Nov. 16, the company sent its chief site-selection representative and the project’s architect to Grandover Resort in Greensboro to spell out to local officials what it would need. The request for proposals — RFP — was heavy on details of what Dell intended to build: a 500,000-square-foot factory on about 150 acres with numerous transportation and utility requirements. And it again made clear exactly what it expected to get.

“One of the things Dell wanted was a free, graded construction site,” says Andy Burke, president of the Greensboro Economic Development Partnership. “At no cost. I would say that is very bold.” The RFP was about 150 pages long, and there were questions to answer on each one. Responding to such a detailed document, Burke says, could take 30 to 60 days. Dell’s deadline: two weeks, which included the Thanksgiving holiday.

Local officials scrambled against the clock and against one another, squeezing local budgets to try to outspend their neighbors and make Dell happy. High Point bid $8.8 million, including $5 million in land costs. Greensboro and Guilford County came up with $12.6 million, then took the unusual step of tapping local businesses to pledge $3 million more toward land costs. Davidson County came up with $23.1 million of cash incentives and land costs.

But Winston-Salem and Forsyth County topped them all with a package worth $37 million, including 189 acres valued at about $7 million. Dell selected the sweetest deal, announcing Dec. 22 that it would build in the Twin City. “We tried to hit their minimum requirements,” Joines says. “We may have embellished the offer a little — but not much.”

Earthmovers arrived at the site in January and began flattening the ground for construction. About the same time, Joines and other local officials hopped a flight to Texas for a meeting with Dell executives to talk over the final deal. By all indications, they got home without further damage to the city’s bank account.

Despite what some say it lost, the state came out the winner in this deal, Fain insists. “The Dell jobs are going to be in North Carolina, not Virginia.” And the Easley administration, he adds, is prepared to do it all again for the right company with the right jobs.

Colleges win when fans wear out their welcome

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Sports – March 2005

Colleges win when fans wear out their welcome
By Chris Roush

In a couple of weeks, UNC Chapel Hill, Duke, N.C. State and Wake Forest, among others, will square off at the Atlantic Coast Conference basketball tournament. Television announcers will blather on about what’s at stake: better seeding in the National Collegiate Athletic Association tournament for the Heels, Devils and Deacons, an invitation to postseason play and similar riches for the Pack.

That’s all true. But there will be more on the line. The next Chris Paul assist or Rashad McCants three-pointer or Shelden Williams rebound or Julius Hodge pout could trigger a different source of university income — royalties from items sold with college logos.

These contests take place not on the court but in places like the Deacon Shop, nestled between Belk and Kay Jewelers in Hanes Mall in Winston-Salem. A joint venture between Wake Forest University’s bookstore and its athletic department, the 2,400-square-foot store opened in June 2004.

Thanks to the team’s fast start, which included a brief No. 1 ranking and the defeat of high-flying UNC, the store’s performance has exceeded expectations. Sales of black-and-gold T-shirts, sweatshirts, hats and even rocking chairs have been double the university’s projections. “It is just killing our expectations,” says Craig Keilitz, associate athletic director for marketing. “The nongraduates aren’t going to come on campus to get gear, and a lot of the alumni won’t either.”

The store is one of the strategies employed by colleges to boost revenue from royalties. Proceeds are used for academic and athletic purposes. Licensing dozens of products is one way these schools are finding additional funding. N.C. State’s net royalties were $583,000 in the 2003-04 academic year, up 42% from the year before. Wake Forest’s royalties were $138,000, a 23% gain. Duke’s royalties for the same year were about $1 million, up from $850,000 a year earlier.

But all three, and maybe every other school in the country, are in Carolina’s rearview mirror. The school pulled in about $3.7 million in royalties on about $90 million in sales in 2003-04. Though the royalties were down about $140,000 from the previous year, they were enough to make it No. 1 for the fourth straight year, according to Atlanta-based Collegiate Licensing Co., which handles licensing for more than 180 colleges and universities. A few schools, including the University of Southern California, handle their own licensing. UNC’s general fund gets 75% of the money, with the rest going to the athletic department.

All told, sports licensing is a $12.7 billion-a-year industry, according to The Licensing Letter, an industry publication, with collegiate-licensed products totaling $2.6 billion. That market has been fueled in recent years by an expansion into collectibles such as Christmas ornaments and other nonapparel lines.

N.C. State, for example, licensed two children’s books this past year: Hello Mr. Wolf and Running with the Wolfpack. In April, a licensee will introduce an animated Mr. Wolf doll that can walk and play the school’s fight song. “The younger we can get them, the better getting them to know about the school,” says Cindy Sears, director of trademark licensing at State.

UNC’s sales have been helped by a new line of women’s apparel, including shirts and sweatshirts that use pink and chocolate brown as the primary colors rather than the school’s trademark light blue. Derek Lochbaum, the school’s licensing director, believes that Carolina’s strength in selling items with its name or logo lies in the development of the university as a brand, much like Coca-Cola or Starbucks. “It’s able to reach all areas of the country, all socioeconomic backgrounds, suburban markets, urban markets, East Coast, West Coast.”

UNC also has been helped, Collegiate Licensing’s Tammy Purves says, by high-visibility professional athletes who attended the school such as Michael Jordan and Julius Peppers. And while university officials may not embrace the connection, rapper Nelly occasionally wears Tar Heel gear. All those keep the spotlight on the school despite poor seasons in football and basketball (by its standards) during the 2003-04 academic year.

The only other North Carolina school in Collegiate Licensing’s top 50 is Duke, which ranked No. 27 in 2003-04. Despite a hugely successful basketball season in which the Blue Devils made it to the Final Four and increased licensing revenue, the school actually dropped nine spots from the previous year.

Oddly enough, royalty revenue is one thing that can bring rivals UNC and Duke together. They are partners with Collegiate Licensing in a program called “Choose Your Blue,” which includes a Web site — www.chooseyourblue.com — that hawks items from both schools. Nike offers apparel for both on the site and at stores throughout the state to allow the schools to promote their rivalry and boost sales.

The Collegiate Licensing rankings don’t include all North Carolina universities. The Licensing Resource Group Inc., which has an office in Winston-Salem, has State, Wake Forest, East Carolina, High Point, Campbell, UNC Asheville, UNC Wilmington and Western Carolina as clients. State switched from Collegiate Licensing two years ago, Sears says, “to get a better presence in the local market.”

At Mojo Sportwear in Greenville, East Carolina gear is featured. Best sellers include T-shirts with the school’s football schedule and golf shirts and hats with embroidered Pirate logos. Owner Perry Swain says he sells about $400,000 of ECU merchandise a year, and he pays the school an 8% royalty fee.

For many schools, sales of clothing and other logo items are driven by the success of their teams. Winning national championships can dramatically boost sales. Louisiana State University jumped from No. 21 to No. 5 in Collegiate Licensing’s rankings after its football team won the 2003-04 national championship, and sales of University of Connecticut clothing and memorabilia rose after its men’s and women’s basketball teams won national titles in 2004.

At Carolina, “a national championship would be great, and we would see an increase in revenue,” Lochbaum says. “But when you’re dealing with Michigan, UNC, Notre Dame, Texas, you will not see big swings on wins and losses.”

Back at the Deacon Shop, Buz Moser, director of Wake Forest University stores, works to handle the demand, which has generated expenses as well as revenue. The mall store had to add workers, and they have spent more time than expected restocking. “Those are good problems to have. Next year, our sales objectives will be more realistic.”

Buyer wants bank to charter his course

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Tar Heel Tattler – March 2005

Buyer wants bank to charter his course
By Arthur O. Murray

Steve Johnson started Atlanta-based NetBank, one of the first to do business only online, in 1997. He’s still a director, and it has nearly $6 billion in assets. In 1999, he started Jacksonville, Fla.-based Florida Banks, sold in January for more than $160 million, about 40 times earnings.

So why would he shell out $3.3 million for Gibsonville Community Savings Bank, with its piggy-bank-size $16.6 million of deposits and $20 million of assets? It’s what’s over it, not what’s in it, says Johnson, president and CEO of T. Stephen Johnson and Associates, an Alpharetta, Ga.-based banking consultant.

He wants the bank’s charter for his Atlanta Bancorporation holding company. Johnson has applied to regulators to change it to a federal charter, which he’ll use to open banks in high-growth markets such as Atlanta, the Triangle and the Triad. The sale is expected to close in the second quarter.

Buying a bank for its charter is rare — this is the first case UNC Charlotte finance professor Tony Plath has seen in 18 years of tracking banking in North Carolina. But it makes sense. It typically takes a year and at least $8 million of capital to get a federal charter for a new bank, says Arnie Danielson of Danielson Associates, Rockville, Md., banking consultants. Johnson still needs regulatory approval, but that could take as little as three months.

He plans to raise at least $40 million to recapitalize the bank. “The way you have to do one of these banks is bring on a lot of people pretty quick. I didn’t want to wait for full-fledged bank regulatory approval. That’s what it’s all about, trying to shortcut the amount of time you’re carrying all those people without being open.”

Why this bank? It was small and in the right place, a town of about 4,500 people on the Alamance/Guil-ford county line. It also had been asked by the state banking commission to either recapitalize or produce a new business plan, which meant it would be open to a purchase. Johnson hasn’t decided on a name, but he does have a market in mind: business loans from $3 million to $10 million. “Small community banks are doing a good job of taking care of the small customers, and the big banks are taking care of the big customers.”

Plath isn’t sure this sector is underserved, pointing to Raleigh-based First Citizens BancShares, Rocky Mount-based RBC Centura and others. But he figures Johnson will find out. “He’s entering a competitive market.”

Wring out the old year

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Wring out the old year

G.D. Gearino reviews last year’s news and gives his take on memorable events some folks would just as soon forget.
 

“Uh, Doc? I’m gonna need those birth certificates filled out while she’s still groggy.”
After Google announced that it would rewire, at no cost, an entire city with super-duper high-speed Internet service, Raleigh City Council member Bonner Gaylord made this offer on the city’s video pitch: If Google picked Raleigh, he’d name his soon-to-be born twins Sergey and Larry, after Google founders Sergey Brin and Larry Page. He also acknowledged he hadn’t yet told his wife about the offer.

Let’s hope the portable-toilet industry doesn’t get any ideas.
The Bloom grocery chain, a subsidiary of Salisbury-based Food Lion, developed what The Charlotte Observer described as “the nation’s first scented highway billboard.” The sign, which showed a giant piece of grilled steak held aloft by an equally giant fork, used a fan to emit the smell of grilled meat to nearby motorists.

Acronyms! Get yer fresh, hot acronyms right here!
BB&T signed a deal to become the official bank of the Atlantic Coast Conference, replacing Raleigh-based RBC Bank. A BB&T spokesman pointed out that the deal isn’t the Winston-Salem-based bank’s first foray into sports, as it also sponsors a Sprint Cup stock-car racing team. Thus we offer this headline: BB&T KOs RBC in ACC deal, adds NCAA to NASCAR.

We’re gonna take a stab at it and predict that the research will show that people should eat more Cheerios and Wheaties.
General Mills, the Minneapolis-based maker of iconic breakfast cereals, announced that it would open an operation at the North Carolina Research Campus in Kannapolis, where it expects to study nutrition issues.

Meanwhile, the Central Intelligence Agency suspends its internship program with NCSU.
N.C. State University graduate Gray Powell, an Apple employee, briefly became globally famous after he lost a secret prototype of the next-generation iPhone in a California beer garden where he was celebrating his 27th birthday. The phone ended up in the hands of a tech website, which unveiled its new features and capabilities. The New York Times, Washington Post and Associated Press followed with their own stories — all to Apple’s consternation. Powell’s last act with the phone before losing it was to post an update to his Facebook page saying, “I underestimated how good German beer is.”

“Jim, really, I mean ‘mediocre’ and ‘scruffy’ in the best possible way.”
In a speech to the University of North Carolina Board of Governors, Rosemary DePaolo, chancellor of UNC Wilmington, found herself in hot water after she used “mediocre” and “scruffy” to describe the university’s condition before she took over. DePaolo later apologized to the previous chancellor, Jim Leutze, and said her remarks had been taken out of context.

Thanks for expanding us into bankruptcy. Here’s $15.7 million.
Dex One, the Cary-based publisher of phone directories, nudged CEO David Swanson into retirement after the company (then known as R.H. Donnelley) underwent a disastrous growth campaign that left the company bankrupt. As part of his departure agreement, Swanson was awarded a $6.5 million separation payment, a pension valued at $5.7 million and incentive payments worth as much as $3.5 million.

He also wants the government to stop beaming those impure thoughts about Lindsay Lohan into his brain.
Bill Randall, the Republican candidate for the 13th Congressional District, responded to a reporter’s question about a moratorium on deep-water drilling after the BP oil disaster in the Gulf of Mexico by speculating that the spill was a conspiracy instead of an accident: “Personally I feel there is a possibility that there was some sort of collusion. I don’t know how or why, but in that situation, if you have someone from a company proposing to violate the safety process and the government signing off on it, excuse me, maybe they wanted it to leak.”

In a related story, President Obama called Bank of America to ask if it could recommend a good accountant.
The Wall Street Journal reported that officials of the Federal Reserve Bank of New York discovered the nation’s largest banks, among them BofA, were routinely using accounting techniques to hide their debt levels at the end of every quarter. The process, which the Journal described as “legal,” involved temporarily reducing short-term debt just prior to issuing financial reports to the public, then plunging back into borrowing early the next quarter.

Nobody turns down Julian Assange for a car loan. You got that? Nobody.
Wikileaks founder Julian Assange seems to have a special loathing for Bank of America. In 2009, he declared he had as many as 200,000 pages of internal BofA documents. In November 2010, he told Forbes magazine that documents from “a big U.S.bank” would be released in early 2011, and that “flagrant violations, unethical practices … will be revealed.” One month later, after BofA announced it would no longer process payments to Wikileaks, the organization urged “all people who love freedom” to close their BofA accounts.

However, the 13-week probationary period at Parris Island is a bit tough.
After hiring Pepperdine University to study 397 metropolitan job markets, Forbes magazine declared Jacksonville, home to a giant Marine Corps base at Camp Lejeune, to be the No. 1 city in America to find a job.

We take our tar seriously in the Tar Heel State.
Land for Tomorrow, an environmental/preservation coalition, sponsored a contest to determine ‘North Carolina’s Ten Natural Wonders.’ After 3,000 votes from residents were counted, it was determined that the state’s top natural wonder was a strip of asphalt — the Blue Ridge Parkway.

You’re fired! Oh, and Merry Christmas … or whatever you believe in.
The U.S. Equal Employment Opportunity Commission sued Charlotte-based Belk department-store chain after an employee at a Raleigh store was terminated for refusing to wear a Santa hat and red apron as she wrapped gifts for customers. The EEOC lawsuit said the employee, a Jehovah’s Witness, does not observe Christmas as part of her faith and that Belk should have accommodated her religious convictions.

That’s easy. Just make it the Family Buck-Fifty store.
Billionaire Nelson Peltz, a New York hedge-fund manager, spent $169 million to acquire a nearly 7% stake in the Matthews-based Family Dollar discount chain, declaring that the company is ‘currently undervalued in the marketplace’ and that steps are needed to boost its value.

Much to Tiger Woods’ relief, sexting is OK.
Organizers of the Wyndham Championship golf tournament in Greensboro announced that cell phones, previously banned from the PGA Tour event, would now be allowed — provided users kept them in silent mode and refrained from taking photos or video during play.

A few extra sips here and there, he might have hit 100.
Daniel Fussell, the Rose Hill entrepreneur who founded Duplin Winery and whose sons turned it into a successful operation on the back of a marketing campaign that extolled the health benefits of wine made from muscadine grapes, died one week short of his 97th birthday.

Is that a stock tip in your pocket or are you just glad to see me?
Robert Moffat, a former top executive at IBM’s personal-computer operation in Research Triangle Park, asked for leniency after pleading guilty to participating in an insider-trading scheme uncovered by federal investigators. In papers filed with the court, Moffat said that a female executive at a hedge fund extracted insider information from him by manipulating him into an affair and causing him “to lose sight of the principles that he had lived by.”

Clearly, they’ve taken that healing thing a little too far.
Lenoir Memorial Hospital in Kinston reported a $2 million deficit in July, caused in large part by a 32.5% drop in admissions. A hospital board member explained the dramatic decrease by pointing out that “it could be that people are just healthier this summer.”

Then again, just two years ago, your average investment banker’s bar bill alone would have made NYC No. 1.
Raleigh and Durham both placed among the top 10 in a study measuring household spending by city (exclusive of mortgage and rent). Bundle, a website that tracks consumer trends, said Raleigh households spent $53,398 annually, placing it sixth on the list; Durham earned the No. 10 spot by spending $51,114 per household. New York City households, in contrast, averaged a relatively paltry $37,435, putting it 53rd on the list.

City views! Luxury amenities! Courtesy lawsuit with every unit!
The developers of a high-rise Charlotte condo called The Vue sued four customers who had signed contracts to buy units in the downtown building but walked away from the deal when appraisals for their new homes came in significantly below the contract price. The developers want the court to force the buyers to take custody of the units and pay damages for their “failure to timely perform their obligations.”

But for real fun, go to Youngstown, Ohio. (Really, it’s No. 28.)
Portfolio.com, the online business magazine, named Greensboro as the state’s top Fun City. The list of 100 Fun Cities in America, in which Greensboro finished 47th, also included Charlotte (No. 51) and Raleigh (72). Greensboro also finished ahead of Nashville and Honolulu. The top five were obvious: New York, Chicago, Boston, Miami and Los Angeles.

“Yeah yeah yeah, he’ll get around to fixing it after he burns us all a copy of Avatar.”
After a puzzlingly long delay in overhauling the Employment Security Commission’s computer system — which had chronically overpaid benefits to the unemployed, resulting in a demand from the U.S. Department of Labor that the system be fixed — a state audit of the ESC revealed that a computer analyst had installed DVD-copying software on the agency computer and routinely supplied bootleg movies to his bosses.

And thus the sudden spike in sales of Pepto-Bismol is explained.
The N.C. State Fair, long-renowned for such food oddities as Krispy Kreme cheeseburgers, deep-fried candy bars and turkey legs the size of a caveman’s club, set a new attendance record with nearly 1.1 million visitors to the 11-day event.

“Fined” — a nautical term referring to the mysterious disappearance at sea of an unpopular crew member.
The boat that pulled in the apparent winner in the high-stakes Big Rock Blue Marlin Fishing Tournament forfeited $913,000 in prize money when it was discovered that one of the mates didn’t have a fishing license — which in North Carolina costs $15 a year for residents, $30 for nonresidents. One of the owners of the boat (named The Citation, ironically) told the Jacksonville Daily News, “He’s obviously going to be fined.”

In response, students staged a drunken “Dick Brodhead Party” and posted photos online.
After a series of unflattering reports in the media about Duke University — including a mock thesis by a female Duke student graphically describing her sex life, a fraternity’s Halloween party invitation that encouraged women to dress “slutty” and the discovery of a teenager passed out in a portable toilet at a campus tailgate party — President Richard Brodhead sent an e-mail to all students encouraging them to cease doing things that make “the most boorish student conduct seem typical of Duke.”

To report a power outage, press 1. To report a catastrophic drop in your investment holdings, press 2.
Progress Energy stockholders had a bad day when the share price of the Raleigh-based power company mysteriously plunged from $44.57 to $4.57 in a matter of seconds Sept. 27. New York Stock Exchange officials later described it as a “flash” triggered by computerized trading after a trader mistakenly entered erroneous price information.

Ah, that Blagojevich guy’s a piker. This is how you be a governor.
After enduring a federal grand jury investigation, a State Board of Elections investigation, and a steady stream of newspaper reports that uncovered discounts on a coastal property, financial breaks from pricey golf clubs, unreported campaign gifts, a free car for his son and a high-paying state job for his wife, former Gov. Mike Easley pleaded guilty in state court to one count of violating campaign finance laws — specifically, accepting a helicopter ride from a supporter.

Why is this man smiling?
Easley’s punishment was a $1,000 fine.

With hiring on hiatus

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With hiring on hiatus

As our annual ranking of the state’s top employers shows, job growth is still stunted. Will we get a spurt this year?
By Frank Maley

Work, it’s been said, saves us from three great evils: boredom, vice and need. But for nearly two years, the salvation of gainful employment has eluded a large chunk of North Carolina’s labor force. The jobless rate slid into single digits last summer, but not by much, and hasn’t been below 9.5% since January 2009.

The dip, though welcome, didn’t inspire much joy, because it wasn’t caused by a surge in hiring. The number of people employed statewide in November was essentially the same as the previous November — an increase of just 0.1% — but the labor force, which includes people without jobs seeking one, shrank. “The unemployment rate has moved down simply because workers have stopped looking for work and therefore aren’t counted as unemployed,” says Mike Walden, a professor of economics at N.C. State University. “It’s not because we’ve had great job creation — we’ve had anemic job creation.”

The recession and slow recovery have affected the payrolls of companies large and small. Walden says small companies might be suffering more because credit is so tight. Many of them finance expansions with home-equity loans. “With home equity down, that has inhibited small companies. Larger companies have a larger capital base.”

But don’t expect large companies to drive a big jump in employment anytime soon, says Mark Vitner, Charlotte-based senior economist for Wells Fargo & Co. “The larger employers have made more dramatic cuts, and they’ve found they can still do everything they need to do with a smaller work force, so they’re somewhat reluctant to boost employment all that much.”

Some of North Carolina’s largest private-sector employers have scaled back a bit. Retail giant Wal-Mart is still by far the state’s largest, according to Business North Carolina’s annual ranking of the top 100, but it reported a 1% decrease in the number it employs in the state. Three others in the top 10 did, too. Two stayed the same, and four boosted their employment. As a whole, the top 100 companies on this year’s list did better. Total employment was 681,150 — up 2.8% from last year.

Economists say there’s reason to hope for more jobs in 2011. “The whole economic engine in the nation and state is starting to improve,” Walden says. “We’ve had good numbers for factory output. We’ve seen the service sector expand. We’ve seen consumer spending accelerate somewhat. The Federal Reserve is being very aggressive in pumping money into the economy.”

He anticipates a net job gain of at least 50,000 statewide this year but says that’s not much, considering that the recession stole 300,000. The state faces two big headwinds: The housing market is still soft, and consumers, many of whom lost a lot of wealth the past few years, are still trying to pay down debt and only slowly increasing spending.

Vitner, too, is guardedly optimistic about job growth. Corporate profits have been fairly strong, and confidence grows as the recession fades slowly without a double dip. In surveys, employers are showing increased willingness to add workers, but any rise in hiring probably will also reawaken dormant job hunters and increase the labor force, which would prevent dramatic declines in the unemployment rate. It’s even possible that North Carolina’s jobless rate could climb back into double digits in the first half of this year, Vitner says. “The January numbers are going to be very important to look at because they will incorporate some of the new census data, and it’s possible we could see the unemployment rate is much higher than has been reported.”

What’s in a name?

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Up Front: April 2011

What’s in a name?

In Romeo and Juliet, his tale of young lovers caught between feuding families, Shakespeare poses that very question, then tries to answer it. “That which we call a rose,” his heroine argues, “by any other name would smell as sweet.” Well, we all know how that turned out. As any marketer will tell you, name is a major part of the game, branding being how a business defines and describes itself to both customers and competitors. That thought occurred, not long after our March issue came out, when I received this e-mail.

As a woman, a nurse and president and CEO of an independent health system in North Carolina for the past six years, I found the cover story interesting. I suspect that Joann Anderson, a nurse and president and CEO of Southeastern Regional Medical Center (an independent health system) found it equally interesting.


In good humor and with warm regards,
Laura Easton, President/CEO
Caldwell Memorial Hospital Inc.

 

We had set out to do the story about the CEO of Gastonia-based CaroMont Health Inc. because she was unusual — a woman who had started out as a nurse and was now running an independent health-care system — but our reporting led us to believe she was unique. In his usual thorough manner, Ed Martin had checked with the state nurses and hospital associations, and Valinda Rutledge was the only one they were aware of. While the story was being edited, he went back and double-checked for health systems with women CEOs, even going down, name by name, the roll of the hospital association’s more than 130 members. There is no specific designation of what constitutes a health system, other than it’s made up of more than one entity. “And there are very few stand-alone facilities of any kind these days,” says Joann Anderson, the Southeastern Regional chief executive Easton mentioned in her e-mail.

Anchored by a 325-bed hospital in Lumberton, Southeastern Regional has business entities in four counties that employ more than 2,200 people. So why, I ask, does it choose to call itself a medical center rather than a health system? “We have that debate internally,” she says, adding that it’s something, like the decision to remain independent, that may change someday.

But there just might be some branding at work here, too. A medical center has a certain connotation with care, while health system sounds, well, corporate. When you’re facing giant competitors such as Carolinas HealthCare System, a Gaston Memorial Hospital might want — or need — to puff itself up into CaroMont Health. That’s not the case in Southeastern Regional’s market, one of the poorest parts of the state. But this health-care provider, whatever it might call itself, is a big business that drives the local economy. “You’re the jewel in our crown,” she recalls someone saying about its role. “And if something happens to you, we don’t have a crown.”