Transportation and logistics round table: On the move
There has been a need to move goods to market since commerce’s first transaction. While transportation has been there every mile, the industry’s role has grown beyond simple delivery. It has become a vital cog in economic development. Its availability, for example, can determine where companies relocate and how workers get to their jobs. Business North Carolina magazine recently gathered a panel of transportation insiders to discuss why the industry is important to the state’s economy and what it needs to keep chugging along.
The discussion was moderated by Ben Kinney, Business North Carolina publisher, and held at the Amtrak Station in Durham. The North Carolina Railroad and Piedmont Triad International Airport provided support. The transcript was edited for brevity and clarity.
How big is the transportation industry’s economic role?
KELLY: Transportation is essential for job creation. The Piedmont Triad region added about 25,000 jobs in 2015. That success was dependent on transportation. Our system of roads allows about 83,000 people to travel to Guilford County from surrounding counties every weekday. When you look at the industry through a different lens, airports can be seen as large industrial parks. There are about 5,000 employees who work at Piedmont Triad International Airport and 8,000 more in the region who are connected to aviation in some way. The industry brings business from many directions, whether it’s the modes of transportation themselves or manufacturing and supporting them.
BAKER: PTI is the third largest airport in the state based on the number of passengers. It handled more than 80,000 in October. It has more aviation-industry employees than any airport in the state. That’s thanks to companies, such as [Greensboro-based] Honda Aircraft Co. and [Memphis, Tenn.-based] FedEx Corp. that have operations at the airport.
WALSTON: Aviation has changed greatly since the Wright Brothers made their historic flight at Kitty Hawk more than 100 years ago. There’s more awareness of its value. Airports support jobs and attract businesses. A 2013 study found that the state’s 72 airports — from the largest, Charlotte Douglas International Airport, to the smallest rural county airport — annually add $26 billion to the state’s economy. They are relatively low-cost investments when compared to their returns. Kevin and I sit on Gov. McCrory’s Aviation Development Task Force. It was assembled in May 2014 and recommends aviation program enhancements to the N.C. Secretary of Transportation.
How does transportation add to the state’s economy?
KELLY: Five interstates — 40, 73, 74, 77, 85 — converge in the Triad. Our forefathers created these interstates to build our economy, and we can continue to use them that way. They help manufacturers move products. [Altoona, Pa.-based] convenience-store chain Sheetz Inc. built a $50 million distribution center in Burlington and [Bentonville, Ark.-based] Wal-Mart Stores Inc. will open an $85 million distribution center at North Carolina Commerce Park in Alamance County this year. They will add about 700 jobs to the region. [Proposed] megasites, such as the ones in Chatham and Randolph counties, offer more opportunities for job creation. None of them would be possible without the investments in highways, railroad tracks and airports that legislators made 10, 20, 30 years ago. Recent investments, such as PTI building a $176 million taxiway to open 1,000 acres for development and a four-lane portion of Interstate 73, will create jobs, too.
SAYLOR: That foresight includes the creation of the North Carolina Railroad about 170 years ago. You can’t build a road for one client and have it ready next week. It takes a lot of foresight and capital. We have traditionally focused on the original North Carolina Railroad corridor. Our tracks and our roads are equally important to North Carolina. We’re looking at broader investments that will make the railroad as economically helpful as originally intended.
BAKER: An airport is more than just aviation. It’s intertwined with other transportation modes. A company recently asked us how many trucking companies were nearby, for example. The average annual salary of all PTI employees is about $65,000. The state’s piece of that is about $20 million. Airports are huge net donors to the state. Companies realize they help them grow.
How can transportation spur economic development?
WALSTON: Many airport visitors are seeing North Carolina for the first time. They are a captive audience for economic-development promotion. So we ran with that premise, pushing the need to present them with the reasons why it’s great to locate businesses in these communities. Most weekday passengers are executives, and many have airplanes that they use on the weekends, landing at general aviation airports, which are not served by commercial airlines. They offer the accessibility that many companies need to efficiently move employees. That use has a secondary benefit. The president of a Davidson County-based food business, for example, owns an airplane worth about $1.5 million. The property tax on that airplane is equivalent to about 10 $150,000 homes there. The plane doesn’t require the utilities, roads and schools that one house does. And that airplane, or in many cases several airplanes, is part of bigger business in the community. The property tax on a corporate jet could match 50 homes. There are seven such jets in Davidson County.
WORLEY: The $520 million Piedmont Improvement Program calls for safety improvements, additional track to speed up freight delivery and more passenger trains between Raleigh and Charlotte. It may be the largest rail project the state has seen in 150 years. The program includes building 12 bridges that will help close about 25 road crossings. That makes the railroad safer for motorists and pedestrians. Those improvements will grow rail transportation in the state, making North Carolina more competitive. Raleigh and Charlotte are part of a bigger Southeast [project] that’s planned between Atlanta and Washington, D.C. Right now there’s more planning to the south, from Charlotte to Atlanta. We just finished the state rail plan, part of the governor’s 25-year vision. It puts projects front and center, so we don’t fall behind. There’s an emphasis on passenger service, developing it over time. We want rail for passengers and freight because they can share the maintenance expense.
How is technology improving transportation?
COLLINS: Truck drivers use technology such as GPS for navigation. The association is involved in a project that is developing technology to help drivers find safe, legal parking places along Interstate 95. Security cameras are being installed in and on trucks. They make communicating with dispatch easier, and they relay information from emergencies, telling the tale of what is happening as the driver rolls down the road.
SAYLOR: As recent as 12 years ago, the railroad line through Greensboro didn’t have electronic control systems. Through a partnership with the state DOT and a $25 million investment, signals were added from Greensboro to Johnston County. That means more trains are operating faster and safer on the same track.
WALSTON: The FAA is developing next-generation satellite-based technology for airspace management. It will allow more aircraft to be in it simultaneously. Everybody was talking about unmanned aerial vehicles — drones — being this past Christmas’ No. 1 present. [Mountain View, Calif.-based] Google Inc. and [Seattle-based] Amazon.com Inc. want to use them for package delivery. Drones have a tremendous upside but a tremendous downside, too. They put people with no aviation experience, other than playing on a simulator or video game, in charge of an actual aircraft. That’s a safety concern for everyone on the ground, not to mention those in the air. Pilots of two commercial jets, preparing to land at New York’s John F. Kennedy International Airport, reported missing a drone by no more than 100 feet in August 2015. The FAA is addressing drone-safety concerns. We’re being asked to ensure state legislators deal with those, too, along with privacy issues. Many drones are equipped with cameras.
How can the industry help develop rural regions?
SAYLOR: The state’s transportation infrastructure allows manufacturers to locate in suburban or rural regions while connecting with larger cities. We’ll see the first rural to urban commuter rail system in the next 10 years. It will probably be in the Triangle and use a portion of the North Carolina Railroad. It might run from Johnston County through Hillsborough and down to Alamance County. It has to be convenient for commuters, regardless of where it goes. I think serious investments in it will be made in the next few years. It’s a recent demand that I have heard from the community. The average commute times in the state’s two largest counties — Mecklenburg and Wake — are about 25 minutes, which is close to the national average. But the state’s population is growing. It was the 10th largest state in 2013 but grew to the ninth largest in 2014. The economic-development community is asking for transportation alternatives to driving. We would like to be an answer to that question.
WORLEY: There’s a trend toward solving transportation problems with a multifaceted approach. For example, railroads were heavily involved in moving coal for many years. There came a time when trucking companies and drivers joined railroads to figure out how to move things together to maximize investment returns. We look at connecting people and jobs, such as those living in the suburbs and working in a city. We envision Raleigh-to-Charlotte service, such as Amtrak’s Piedmont or Carolinian, which continues on to New York City, taking commuters between Raleigh, Greensboro and Charlotte a few days each week. I work in Charlotte two days and Raleigh two days every week. Amenities, such as Wi-Fi, allow people to work while traveling on the train. You’re going to see more of that because each city offers unique assets. That diversity, along with the ability to access it via road or rail, makes our state attractive to businesses. I recently saw an article that reported when the Carolina Panthers were originally proposed, fans were expected to travel up to 150 miles to attend a home game. The railroad can make that happen. Fans can ride the Piedmont to Charlotte for games. We need more of those solutions.
What does the future hold for the state’s ports?
WORLEY: We’re working closely with the state’s two ports — Wilmington and Morehead City. They’re under the state DOT umbrella and a big part of its current planning process. We are looking at ways to serve them better by rail and road. Services at both have been expanded, including shipping wood pellets through Morehead City to power plants in Europe, which helps the state’s timber industry, and Wilmington adding cold storage, which will help North Carolina food growers and processors. We see more growth ahead. The Panama Canal expansion is scheduled to open this spring. It will allow large container ships to pass, offering more direct access to East Coast ports. That increase will drive development and congestion at other ports, making ours attractive alternatives.
How does the state’s community-college system develop a transportation workforce?
COLLINS: The U.S. trucking industry currently needs 40,000 drivers, according to [Arlington, Va.-based] American Trucking Associations. We’re working with Fort Bragg, Johnston County Community College and Fayetteville Technical Community College to train soldiers to be drivers and technicians when they transfer out of the service. The N.C. Community College System board recently approved a two-year associate degree in trucking operations management, which will be offered starting this fall. Currently, an 18-year-old can earn a commercial driver’s license and drive a truck within the state. Federal law says you have to be 21 to drive that same truck across state lines. This past summer, a bill was introduced in the U.S. Senate calling for that age requirement to be changed to 18. That change would affect quite a few North Carolina drivers. One roadblock to the bill’s passage is safety concerns that come with young drivers who have less experience. We actually had a 19-year-old place in our association’s driving rodeo, which tests skills, last year.
BAKER: I call Guilford Technical Community College the system’s crown jewel. Its T.H. Davis Aviation Center is on PTI’s grounds. The 120,000-square-foot building, which has engine, composites and electrical systems shops, is where the next generation of aviation technicians and mechanics is trained. After graduation, many of them simply walk across the tarmac to find a job. Some of them will probably work for Greensboro-based HAECO Americas, which is adding an 180,000-square-foot hangar and 400 workers to the 1,600 it employs at the airport, maintaining, repairing and overhauling commercial jets. We wouldn’t be where we are without that support. The No. 1 thing companies look for when relocating is a workforce. All of the state’s community colleges offer customized training. They create programs that train workers for each company’s exact needs. It’s perfect.