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Regional Report Triangle April 2010


Tight budget pinches state pay 

Recession’s gloom might be lifting for some private-sector workers, but the downturn’s doldrums likely will linger at least another year for state employees. In March, Gov. Beverly Perdue told a reporter there’s no money for raises in the fiscal year that will begin in July. The nearly 200,000 government employees didn’t get one this year, either. In fact, they effectively took a ½% pay cut due to unpaid furloughs they were forced to take.

In a typical year, state employees can expect at least a 2% increase, closely tied to the federal consumer price index, says Dana Cope, executive director of the State Employees Association of North Carolina. That translates to about $1 billion in economic impact. With the CPI rising 2.6% in 2009, state workers lost purchasing power. “That means there’s less goods and services in demand by these employees,” Cope says.

Nowhere will the impact be felt more keenly than in the Triangle, which accounts for nearly 40% of all state-government workers. They make up 8.8% of the workforce in the Raleigh-Cary metro area and 11.8% in the Durham-Chapel Hill metro. By comparison, 8.5% of workforce in the Charlotte metro is engaged in financial jobs.

The General Assembly often tacks on money for employee pay as the budget moves through the legislative process. State workers got a 4% raise in fiscal 2007-08 after Gov. Mike Easley proposed 2.5%. In 2008-09, lawmakers bumped the increase from 1.5% to 2.75%. They didn’t come to the rescue last year, and Cope doesn’t expect them to this time. The state needs to modernize its tax structure, including taxing services instead of just goods, to reflect changes in the North Carolina economy and stabilize its revenue base, he says. “This is an election year. It’s an important election year because of redistricting, and I don’t think the legislature is willing to tackle any of the difficult decisions.”

The impact of no raises will be even greater — in the Triangle and across North Carolina — because it also affects about 130,000 public-school teachers, administrators and staff. Though stagnant state wages affect the Triangle disproportionately, there are two reasons the region will fare better than most places, says Mike Walden, economics professor at N.C. State University. “One, employment here has not been as adversely affected by the recession due to the preponderance of state employees here. We have not had the kind of layoffs in the public sector that you’ve had in the private sector. Secondly, even with the prospects for slow economic growth, the Triangle, because of its economic fundamentals, will still be one of the fastest-growing metropolitan areas in the country.”

Slim Jim snaps ties To Garner

For about 40 years, Slim Jim meat snacks have been made in Garner. But ConAgra Foods Inc. plans to close the plant by the end of next year, laying off 450. An explosion caused by a natural-gas leak damaged the factory last summer, killing four workers and injuring dozens more. Since then, Omaha, Neb.-based ConAgra has been considering whether to pump more money into repairing the plant or move production. Garner officials tried to put together a package of state and local incentives to keep the plant, but Wake County declined, saying the circumstances didn’t fit the requirements of its incentives policy (Regional Report, March). Production will shift to a ConAgra plant in Troy, Ohio. The company plans to give Garner the 106-acre Slim Jim site, which is near an Interstate 40 interchange.


CHAPEL HILL — Erskine Bowles, 64, will retire as president of the 16-campus University of North Carolina system at the end of the year. He has been president since Jan. 1, 2006. No replacement was named. During his last year at the helm, he also will co-chair a committee studying how to reduce the federal deficit.

PINEBLUFFBRS Aerospace started hiring 110 workers at its local plant, doubling its workforce. The South St. Paul, Minn.-based company won an $8 million Army contract for cargo parachutes.

RALEIGH — The Raleigh-Cary housing market is the nation’s healthiest, according to California-based Hanley Wood Market Intelligence. The Durham-Chapel Hill market came in sixth. Rankings are based on home prices, employment and potential for income growth.

DURHAMInspire Pharmaceuticals hired Adrian Adams as CEO. He replaced Christy Shaffer, 52, who announced her retirement last year. Adams, 59, had been CEO of Marlborough, Mass.-based Sepracor.

RALEIGH — Royal Bank of Canada Chief Financial Officer Janice Fukakusa told analysts that RBC Bank, the Toronto company’s U.S. banking arm, must improve its performance before it can expand. It employs about 500 locally and was reorganized last year.

CHAPEL HILLPiedmont Community Bank Holdings received federal approval to become a bank holding company. Chief executive Scott Custer, 51, was CEO of RBC Bank until last fall. Piedmont plans to buy banks in North Carolina and Virginia.

CLAYTONNortheast Foods will spend $25.4 million to build a bakery that will open in spring 2011. The Baltimore-based company, which makes buns for McDonald’s, will employ 84 here.

MORRISVILLEHarris Stratex Networks, which makes wireless-communication equipment, changed its name to Aviat Networks to distance itself from Melbourne, Fla.-based Harris, which spun off its interest in the company last year. Aviat employs about 250 locally.

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