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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.”

Objecting to trial lawyers

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Capital Goods – April 2011

Objecting to trial lawyers
By Scott Mooneyham

More than any other profession, trial lawyers have been identified with Democrats. More than 90% of their political fundraising goes to that party, and the percentage might be higher in North Carolina. Last year, a political action committee controlled by North Carolina Advocates for Justice — a trial-lawyer group — doled out $204,000 to Democratic legislative caucuses. The state Republican Party got $1,000. The link is understandable. In civil suits, trial lawyers usually go up against business interests traditionally allied with the GOP.

But despite the riches such litigation has gained some of them, trial lawyers may have been among the biggest losers when Republicans won control of the state legislature in the last election. Members of the new majority in both houses quickly served notice they would wade into one of the trial lawyers’ biggest markets — medical malpractice. Legislation work-ing its way through the General Assembly would limit noneconomic damages, for things such as pain and suffering or disfigurement, and create higher negligence standards to sue emergency-room doctors. In addition to the bill, new Speaker Thom Tillis has set up a special House committee to do nothing but focus on tort reform.

Hospitals and doctors, not surprisingly, are more than happy to see the Republican majority take on the trial lawyers. They’ve argued for years that North Carolina policymakers needed to do more to hold down liability-insurance rates, particularly for such specialists as obstetricians and neurosurgeons, who face the greatest exposure to lawsuits. Supporters says the damage caps will help bring down medical costs by reducing the practice of defensive medicine — physicians trying to protect themselves from possible legal action by ordering more tests than needed — and by attracting more doctors to what will be a more doctor-friendly state. “I think this will help bring stability to the insurance market,” says Sen. Tom Apodaca of Hendersonville. One of the sponsors of the damage-cap bill, he and his Republican colleagues like to point to Texas as an example of the good that can come from damage caps.

Voters there approved an amendment to their state constitution in 2003 to limit the amounts of medical-malpractice awards. Eighteen months later, the number of malpractice cases filed had dropped by half, the number of doctors practicing and insurers doing business in the state had increased, and insurance rates had fallen. Republicans here say the same can happen in North Carolina. They’ve particularly been pushing the notion that more doctors will mean more competition in the health-care marketplace. That competition, along with less defensive medicine, will lead to lower medical costs, they say.

A recent study puts the annual cost related to medical liability at $55.6 billion, 2.4% of the nation’s total spending on health care. But supporters of damage caps may have missed comments by the study’s authors about the defensive-medicine genie already being out of the bottle. The Harvard researchers concluded that, although the cost of defensive medicine is substantial, it’s unlikely to be a source of significant savings. Cap or no cap, doctors and hospitals aren’t going to curb the number of tests or any other costly lawyer-advised practices intended to save them in the event of a lawsuit. Not now, not after they’ve become standard practice.

Dick Taylor, CEO of North Carolina Advocates for Justice, says he doesn’t hear any hue and cry for medical-malpractice reform. He notes that the number of malpractice lawsuits in North Carolina declined in 2009 and that premiums for malpractice insurance are no longer rising. He and his group have been trying to sell the position that a damage cap might run afoul of the state constitution, which implies that juries — not legislators — should decide damages. They’ve even enlisted the help of I. Beverly Lake Jr., a former Republican chief justice of the state Supreme Court, to write letters to legislators making that case. “We hope, at the end of the day, that whatever happens is not devastating to people’s rights for just compensation,” Taylor says.

But if he missed hearing the outcry, Taylor certainly saw the implications of November’s election. Republicans pushed for medical-malpractice reform long before they gained control of the General Assembly. Here and elsewhere, it’s been a pet issue for the GOP. The two sides like to portray the debate as about policy, not politics. Sometimes separating the two isn’t so easy. Putting limits on medical malpractice will damage a longtime Republican nemesis. It could also make that nemesis fighting mad come the next election. As always, to the victor go the spoils.

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

New cash crops from old seed

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New cash crops from old seed

A look at where Golden LEAF has invested $450 million from the tobacco settlement to grow the state economy

With a multibillion-dollar budget hole to fill, it’s no wonder that state lawmakers have looked past traditional sources of income. Some have hatched plans to siphon money from The Golden LEAF Inc., the Rocky Mount nonprofit set up by legislators to disburse half the state’s proceeds from a 1998 settlement between tobacco companies and 46 states. Its assets of roughly $600 million, fueled by payments of about $70 million a year, lend muscle to its mission: help economically distressed or tobacco-dependent counties. Between December 2000 and early March, it awarded 972 grants totaling $450 million. Lenoir got more money than any other county, much of it from a $100 million grant to build an airplane-parts factory. Wake County, home of N.C. State University, came in second. Some grants have been controversial. But Golden LEAF President Dan Gerlach says that’s bound to happen when funding so many projects and that now is no time to divert money for short-term fixes. “The only way to solve our fiscal problem is to grow the economy because you can’t cut or tax your way out of this.”

Click here for a PDF of the Golden Leaf graphic spread.

Let there be lights

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Let there be lights

Plugging Progress Energy into Duke Energy will create the nation’s largest utility. Here’s what it will look like

 

 

Jim Rogers will hand over Duke Energy’s CEO job to Progress Energy CEO Bill Johnson and become executive chairman of the combined company, which will be based in Charlotte.

Charlotte-based Duke Energy Corp.’s $26 billion purchase of Raleigh-based Progress Energy Inc. is expected to close by year-end.

Click here for a PDF of the Duke Energy/Progress Energy chart spread.

Legal Elite – Young Guns 2011

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YOUNG GUNS (BEST UNDER 40)

NEILL G. “MAC” MCBRYDE JR. Robinson, Bradshaw & Hinson PA, Charlotte

I would probably want to live and work in Virginia. I spent four years of college there, lived there for a few years before going to law school and went on my first date with my wife there. No matter where you are in Virginia, you are never very far away from the coast or the mountains, which would provide many easy opportunities to get away from the office with family and friends. The decisions that are made in Washington affect everyone; if I worked closer to Washington, it would be very tempting to find a way to expand my practice to be a bigger part of that decision-making process.

Vita: Born Aug. 25, 1976, in Charlotte; bachelor’s from University of Virginia and law degree from Duke University; wife and two children. Specialty: Corporate. Why he chose this field: I enjoy the partnership dynamic of many corporate transactions. Once a transaction closes, the parties often must work together. This provides incentives for all parties to find creative solutions to differences that arise. What he’d be if not a lawyer: I’d work in or around sports. Memorable case: It involved the completion of Winston-Salem’s new downtown baseball stadium. There were a lot of moving parts — other investors, Minor League Baseball, local government and several banks. It was very satisfying to attend opening day for the 2010 season. Passions: Playing lousy golf and fishing. Favorite place: The Bahamas. Recent Reading: The Girl with the Dragon Tattoo by Stieg Larsson. I can’t turn the pages fast enough. Don’t ask him to: Sing, other than to my daughters.

Young Guns (Best Under 40)

Neill G. “Mac” McBryde Jr. Robinson, Bradshaw & Hinson PA | Charlotte Shelley K. Abel Rayburn Cooper & Durham PA | Charlotte Norris A. Adams II Essex Richards PA | Charlotte Christopher J. Ayers Poyner Spruill LLP | Raleigh Jennifer Ball Hutchison Law Group PLLC | Raleigh Justin D. Bice James, McElroy & Diehl PA | Charlotte Laurie B. Biggs Stubbs & Perdue PA | New Bern Ashley Kamphaus Brathwaite Cranfill Sumner & Hartzog LLP | Raleigh John D. Burns Williams Mullen | Raleigh Charles Coble Brooks, Pierce, McLendon, Humphrey & Leonard LLP | Raleigh Jeffrey M. Davis Higgins Benjamin Eagles & Adams PLLC | Greensboro Tricia Morvan Derr Lincoln Derr PLLC | Charlotte Lex M. Erwin Erwin & Eleazer PA | Charlotte E. Bradley Evans Ward & Smith PA | Greenville Stephanie A. Gaston Cranfill Sumner & Hartzog LLP | Raleigh Jeremy Godwin Moore & Van Allen PLLC | Charlotte Garland Graham Schell Bray Aycock Abel & Livingston PLLC | Greensboro Monica R. Guy, Bell, Davis & Pitt PA | Winston-Salem Grayson S. Hale K&L Gates LLP | Raleigh Jennifer C. Hutchens Robinson, Bradshaw & Hinson PA | Charlotte J. Christopher Jackson Wood Jackson PLLC | Raleigh Jason B. James Poyner Spruill LLP | Charlotte Elizabeth H. Johnson Poyner Spruill LLP | Raleigh Gene A. Jones Jr. Womble Carlyle Sandridge & Rice PLLC | Raleigh Mark N. Kerkhoff MKN Employment Law Solutions | Charlotte Robert D. Kidwell Smith Moore Leatherwood LLP | Greensboro Roberta B. King Bennett & Guthrie PLLC | Winston-Salem Irene P. King James, McElroy & Diehl PA | Charlotte C. Bailey King Jr. Smith Moore Leatherwood LLP | Charlotte Norman F. Klick Jr. Carruthers & Roth PA | Greensboro Tyler Brown Kline Crumpler Freedman Parker & Witt | Winston-Salem Peter B. McGuire Peter B. McGuire Attorney at Law PLLC | Asheville Daniel Merlin, Johnston Allison & Hord PA | Charlotte George Mason Oliver Oliver & Friesen PLLC | New Bern Melody C. Ray-Welborn Graebe Hanna & Welborn PLLC | Raleigh Arlene M. Reardon Wyatt Early Harris Wheeler LLP | High Point J. Neal Robbins Robbins Kreider PLLC | Winston-Salem Erik M. Rosenwood, Hamilton Moon Stephens Steele & Martin PLLC | Charlotte William M. Starr Nelson Mullins Riley & Scarborough LLP | Charlotte Andrew W.J. Tarr Robinson, Bradshaw & Hinson PA | Charlotte Craig A. Taylor Carruthers & Roth PA | Greensboro Samuel G. “Bo” Thompson Jr. Yates, McLamb & Weyher LLP | Raleigh Jason E. Toups Cranfill Sumner & Hartzog LLP | Wilmington David E. Wagner K&L Gates LLP | Raleigh R. Michael Wells Jr. Wells Jenkins Lucas & Jenkins PLLC | Winston-Salem Courtauld McBryde Young Poyner Spruill LLP | Charlotte