Morning shadows shorten as the sun dries the dewy lawn. Scott Cohn fidgets with his tie and cocks his eyebrows, glancing over his shoulder at the Biltmore Estate mansion behind him, familiar to millions who visit the Blue Ridge Mountains here in Asheville every year.
He’s no casual visitor, though. “Two-hundred-fifty bathrooms,” he marvels, as his camera crew
zooms in on his gray, chopped hair. “Would you look at that!”
Cohn, CNBC’s senior business reporter, is not here for the sights. For a moment, he segues into a boring recitation. “We put states through their paces,” he intones. “Eighty-six metrics in
10 categories of competitiveness.” That’s followed by throw-away celebrity remarks from Roy Williams and Mike Krzyzewski, former UNC and Duke basketball coaches.
In less than 30 seconds, Cohn zeroes in on his point. “We’re here to reveal which state is the nation’s best for business,” he says. “It’s North Carolina, the Tar Heel state, for the second year in a row.”
Some don’t put much stock in his pronouncement. “We prefer to do our own homework,” says Mark Williams, president of Strategic Development Group in Greenville, South Carolina, a site consultant whose clients have included the $180 million Bridgestone America tire plant in Wilson, among others in North Carolina. “We’ve got our own staff and if we’re going to do a billion-dollar project, it’s going to be our recommendation.”
Adds Adam Bruns, managing editor of Site Selection magazine, “Consultants have developed amazingly deep analytical databases and earn their money doing a job for their clients.” The Georgia-based magazine shares with CNBC the reputation as the most highly regarded source of rankings. “What the Bible is to a
preacher, Site Selection is to a site consultant,” one industry expert told him recently.
In the realm of economic recruiting, however, Williams’ skepticism of rankings is rarely shared by boastful politicians, industry hunters or the ones who matter most — decision makers at the nation’s large corporations.
Sources like CNBC, Site Selection, Forbes, Business Facilities, the nonprofit Tax Foundation and dozens of others make up a mini-industry within economic development and their rankings. They can indeed decide whether a top state such as North Carolina or at the other extreme, New Mexico, Alaska, Mississippi,and Hawaii — which often rate at the bottom of many lists — prosper or languish in the mega-billion-dollar business recruitment sweepstakes.
“If you’re the decision maker for your company and you’re standing in front of your board of directors, are you going to try to justify putting your half-a-billion dollar project in a state that’s ranked 25th for business when CNBC has North Carolina ranked
No. 1?” asks Chris Chung, CEO of the N.C. Economic Development Partnership. It’s the state’s chief industry recruiter.
Digging deeper into the realm of rankings reveals the expected and unexpected.
For one thing, collectively, it’s a largely unseen but massive undertaking that employs hundreds of researchers, editors and others, throughout the nation, many for sources that non-business people have never heard of. North Carolina’s an example.
State industry recruiters rattle off more than two-dozen
top-10 Tar Heel rankings from 15 or more publications and other sources. They cover a surprising spectrum. Best state for women business owners? Wells Fargo does its own research and ranks North Carolina first. Tops for aerospace and defense industries? Business Facilities magazine makes that pick. It also determines the best states for food processing, solar power and other sectors. The U.S. Census Bureau is the source of more mundane data, noting the state ranks as the third-fastest growing. Various others include life sciences, semiconductor manufacturing and the best state in which to start a business.
One category was a walk off. Business Facilities chose Toyota’s $8 billion battery-plant expansion in Randolph Country as the deal of the year. The total investment will be $13.9 billion and more than 5,000 jobs are expected.
North Carolina’s workforce ranks tops among many rankings. “Our talented, educated workers are really the secret of our success and educated workers are flocking to our area,” says Gov. Roy Cooper, though lamenting that political partisanship threatens the state’s reputation. While he’s attacked some social-issue actions by the state’s GOP legislative majority, he’s also praised strong bipartisan cooperation in economic development.
CNBC and Site Selection are case studies in how rankings are compiled. Cohn’s reference to CNBC’s use of 86 different metrics that gauge various categories of competitiveness doesn’t include the fact that each might also use dozens of individual factors such as state-tax rates. As a result, some 7,000 factors influence a state’s standing. Similarly, Bruns says Site Selection has a proprietary database that evaluates a state’s ranking based on three overarching criteria: projects must have a minimum capital investment of
$1 million, create at least 20 jobs or 20,000 square feet of floor space.
Then its researchers dissect projects in each of those broad areas for matters such as worker availability and training, which is an area in which North Carolina is often praised. The result is potentially thousands of individual markers.
Chung, North Carolina’s chief industry hunter, says the studies produce remarkably accurate depictions of how a state treats business and industry. North Carolina and other states never hear from the ranking sources or know their standings until revealed publicly.
“They have no reason to contact the state,” he says. “The state can’t lobby them. They are pulling data from objective third-party sources and besides if you want to seem credible you don’t want to be seen as influencing them. Most use things like federal databases and it would probably be illegal to try to break into them to make your ranking better. That’s why we figure CNBC is about the best, the highest profile.”
Though Chung and list compilers insist states can’t game the ratings, that doesn’t mean they won’t change because they were awarded dunce caps instead of laurel wreaths. To the contrary, Chung is among those who say many states take their rankings to heart because the data on which they are based is better thantheir own.
“If the state wants to move up over the long term,” he says, “rankings can be a roadmap to where there is room for improvement.”
He doesn’t gloat but he might. “There are a tremendous lot of rankings, and I’d like to be first in every one. That’s not going to happen but on average, in most rankings, even if we’re not first, we’re in the upper quintile. We never find ourselves in categories with states that are in the bottom half.”
To do that, he adds, “You have to have a good reputation as a place to do business.” ■