Saturday, April 1, 2023

Ted Abernathy’s take on North Carolina’s winning ways

Most everyone wants to attract new businesses to town, more good-paying jobs. And some may think this happens because local and state industry recruiters do a lot of calling, traveling and wining and dining prospects.

That may have happened in the old days. Not really any more. Today, every company has access to a mountain of data about places everywhere. With a few keystrokes, they can create short lists that meet their needs for a new branch office or factory. The goal for communities is to get on those short lists.

Ted Abernathy

I talked about this with Ted Abernathy, who has spent four decades in economic and workforce development. Folks in the Research Triangle remember when he managed economic development first in Orange County and then in Durham. Then he was executive vice president of the Research Triangle Regional Partnership and then executive director of the Southern Growth Policies Board in Durham.  Since the board shut down in 2013, he has run an economic development and strategic planning consulting firm, with clients all over.  A couple of years ago, pre-pandemic, he was spending 120 days a year on planes. Now he is giving speeches on Zoom three to four times a week, sometimes multiple times a day. He is in demand by local, regional and state economic development organizations.

His company, Economic Leadership LLC, works with communities to help them understand what the data is saying about them, their strengths and weaknesses. What gets them on lists and what keeps them off, because site selection is about eliminating places. There are nearly 400 metropolitan and more than 500 smaller “micropolitan” areas to start eliminating. North Carolina has around two dozen micropolitans.

“Places have to be aware of the type of data that’s out there,” says Abernathy.  “And that’s everything from your workforce data to your tax comparisons to your regulatory stuff . . . ”

“You create filters. The filter might be is the area attracting new 25-45 year olds? Or if you’re not within an hour of an airport. You get all the way down to, do they have a 100,000-square-foot building on an interstate?”

Workforce is important. Companies can filter according to graduation rates, career and technical education programs in high schools, community college programs, and the number of four-year graduates in math and science.

Some of his most sophisticated clients are looking at hundreds of data points all the time. They are trying to figure out what to shore up to make some of those data points better.

That’s the hard work of economic developers. They spend their days trying to get water and sewer lines extended. Creating industrial parks that have all the necessary utilities, road access, zoning, maybe even a building or two. Economic developers also spend their days working with community colleges, because companies want specialized training.

The economic developers have to be quick learners. “I can remember getting tutorials from N.C. State professors on advanced materials, because I’d never dealt with advanced materials much, but you had to be able to understand what the questions were,” says Abernathy.

He has particularly deep experience with communities trying to reinvent themselves. A 1980 UNC Chapel Hill graduate, he started his career in Baltimore, which lost much of its industrial base, and by the time he arrived in Durham, textiles and tobacco had gone.

Economic disruption has been a fact of life in the U.S. economy forever.  Before North Carolina lost its textile mills, Massachusetts lost them to the South. West Virginia’s coal jobs fell victim to automation starting in the 1950s. Regions have had to confront downturns in the past and will continue to face them. Nothing lasts.

“In North Carolina, a great story is Gaston County, which is my home county,” says Abernathy. “The economic developer that’s working [there], he’s getting close to 30 years now, and he’s seen the entire economy go away and be rebuilt in manufacturing jobs.

“Same type of work, but new companies in different fields, with about double the wages as the old jobs,” says Abernathy. “You’re having to retool your whole workforce, but we’re all in that position.”

The easiest prediction to make is constant disruption. “Industries, companies and occupations are disrupted continuously,” says Abernathy.  “And, unfortunately, the cycles are shorter and shorter and shorter.  So, we’re having to retrain people faster.  We’re having to replace jobs faster in communities.”

“It makes it more important for communities to keep their finger on the pulse of what’s going on in their community. What are their opportunities going forward?  Strategy is just where opportunity meets resources.”

Lots of communities in North Carolina have overcome disruption. He cited Johnston County, southeast of Raleigh. Johnston had a lot of textile and apparel mills, the last of them shutting down when my family arrived in the mid-1990s. “Now you’re sitting there looking at biopharma as a major employer in Johnston County,” says Abernathy. Insulin giant Novo Nordisk will open its $2 billion expansion later this year in Clayton, on the county’s western side.

“Johnston, Alamance and Gaston counties . . . were all really seriously blue-collar manufacturers, and successful ones. And look what’s happened in the last 20 years in those three counties. They’re all successful again,” says Abernathy.  “But they’re all completely successful differently. They’re not the same companies. They’re not the same opportunities, but they had to reinvent.”

There are also counties that had the good fortune to be just one county beyond the big counties surrounding North Carolina’s largest cities. When I arrived at The News & Observer in Raleigh, I used to get kidded in the newsroom about living way, way out in rural Johnston.

In the last 30 years is the population of Johnston has nearly tripled. It is one of the fast-growing counties in the country.

The pandemic and the rise of remote work may extend that growth another one or two counties out, says Abernathy.  The core metros still matter, he says, because they have the airports and the universities, and “some of the high-flying young companies, especially in the Triangle with technology companies and in Charlotte with finance.”

But the “next county out” concept may favor counties like Wilson and Nash, on the eastern edge of the Triangle.

When I talked to Abernathy he had just talked to a Leadership North Carolina class. He asked what pandemic trends they thought would be permanent. “They think online shopping is permanent.  They think remote work is permanent. I agree with them in both cases.

“But some of this is not. Everybody who moved out of New York isn’t going to stay moved out of New York. When they open the bars and the restaurants and the theaters, they’ve going to have to have workers back in.”

One problem facing all economic developers is the workforce. Companies making site selection decisions want to locate whether they can hire skilled workers. It’s not enough to have low tax rates, easy-going regulators and land next to a highway interchange. You need a robust pool of workers, which, in an era of Baby Boomer retirements, declining fertility rates, and the debate over immigration, isn’t easy.

“North Carolina’s done better than most states,” says Abernathy. “We’ve been attracting a lot of people coming in. Two-thirds of the states are expecting to see their working-age labor force drop over the next 10 years. We’re not one of those.

“The idea that North Carolina, because of our quality of life and our relatively good cost of living, can continue to attract people to the state is a critical competitive advantage for us,” says Abernathy. “And it is a huge disadvantage for much of the Midwest and the Northeast, because they are shrinking.”

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