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NC's pandemic economic rebound spurs record jobs, capital investment totals in 2021

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North Carolina-Toyota

Gov. Roy Cooper announced Dec. 6 that Toyota Motor North America Inc. had selected the Greensboro-Randolph Megasite for a $1.29 billion production plant with 1,750 employees initially when production begins in 2025. The project ranked second in terms of job creation and third in capital investment in North Carolina for 2021. The plant will build lithium batteries for hybrid and electric vehicles.

North Carolina’s economic recovery from the COVID-19 pandemic included a significant rebound in corporate recruitment and expansion projects, the Economic Development Partnership of N.C. said in releasing its 2021 report last week.

The partnership represents a rare symbol of bipartisan political support and cooperation in North Carolina, becoming the state’s highest-profile economic development recruiter during the McCrory administration and being expanded during the Cooper administration.

The partnership said it secured 174 corporate relocations and expansions during 2021, producing a record 23,478 jobs pledged and a record $10 billion in capital investments.

The breakdown was 16,833 new jobs and $8.04 billion in capital investment associated with 81 new projects, along with 6,915 new jobs and $1.97 billion in capital investments involving 93 expansions within the state.

By comparison, the previous job-commitment record was 21,654 in 2019, while the record capital investment was $6.3 billion.

Even as much as North Carolina has developed into a financial services powerhouse and pharmaceutical hub, manufacturing and assembly projects dominated in 2021.

About 71% of the 174 projects were manufacturing and/or assembly, along with 59% of new job pledges at 13,952 and 79% of the capital investment at $7.93 billion.

Even though corporate headquarters projects tend to draw the most attention, there were just 11 of those projects representing 1,128 jobs and $83.6 million in capital investments.

“In addition to the state’s business fundamentals, our reputation for working together to recruit companies is both well-known and appreciated by company executives,” Gov. Roy Cooper said in a statement. “I’m proud to recognize the many economic development professionals ― local and state, public and private ― who work together to achieve such results.”

Cooper cited beyond the partnership officials with the N.C. Commerce Department, the Republican-controlled General Assembly and local and regional economic development organizations and private-sector organizations and companies.

“North Carolina is a place of opportunity and growing prosperity,” Cooper said.

“My priority is ensuring that growth continues, and that all North Carolinians are able to share in that prosperity.”

Local impact

Once again, the bulk of the major economic development projects continued to center on Charlotte and the Triangle.

Of the top 25 projects, 15 are in the Charlotte-Gastonia-Concord, Raleigh-Cary and Durham-Chapel Hill metropolitan statistical areas.

Among those highlights were Apple’s decision to invest $1 billion into its first East Coast campus at Research Triangle Park with at least 3,000 new jobs, while Fujifilm Diosynth is building a $2 billion biomanufacturing site in Holly Springs in Wake County.

However, the Triad landed two game-changing projects over the past four months.

In December, Toyota Motor North America Inc. selected the Greensboro-Randolph Megasite for a $1.29 billion production plant with 1,750 employees initially when production begins in 2025. Toyota Battery Manufacturing N.C. will build lithium batteries for hybrid and electric vehicles in what could be the biggest single capital investment in state history if a proposed second phase is completed.

The project ranked second in terms of job creation and third in capital investment for 2021.

Not included in the report: In January, Boom Supersonic committed to invest $500 million in a Triad “superfactory” and create at least 1,761 jobs by 2030 at Piedmont Triad International Airport.

Construction of the aviation facility is slated to begin later this year, with the takeoff of Boom’s first commercial flight projected for 2029. Officials have dedicated about $116.2 million in local and state incentives to the company.

Film production

Corporate recruitment wasn’t the only N.C. economic engine to reach a record-setting level in 2021.

The N.C. Film Office, a division of the partnership, said there were productions in all eight of the state’s prosperity zones that culminated in 71 projects and $416 million on filmmaking related expenses. There were 28,516 jobs attached to those projects.

The previous record was $377 million in spending in 2012 when feature films “Iron Man 3” and “We’re the Millers” and TV shows “Banshee,” “Homeland” and “Revolution” were filmed.

“Our consistent message of a strong workforce, coupled with a stable and reliable film rebate program, has been heard loud and clear by production executives and has resulted in these economic developments wins for North Carolina,” said Guy Gaster, director of the N.C. Film House.

“Winning a film production creates positive economic impacts that ripple across the state. Outside of film-industry jobs, productions support small businesses as production companies turn to local vendors to materialize their films.”

Gaster said the state’s film production industry has recovered from a dry spell that occurred during the McCrory administration when legislators made film grants less attractive compared with Georgia.

The N.C. Film and Entertainment grant, which was included in the 2022-24 budgets, provides a 25% rebate on qualifying expenses and purchases made by productions while in-state as its film incentive.

Of the 71 productions, 25 were approved for grant funding.

Any unused funds in the grant program carry over from fiscal year to fiscal year. There is no longer a sunset provision in the grant, which Film Office officials say “demonstrates North Carolina’s long-term commitment to the film and entertainment industry.”

The grant program has funding caps: $15 million per season for a TV series; $7 million for a feature-length film (including made-for-TV; $250,000 for a commercial).

In return, a TV program must spend in North Carolina an average of at least $500,000 per episode per season, a made-for-TV movie at least $500,000, a feature-length film must spend at least $1.5 million and a commercial at least $250,000.

Qualifying expenses include goods, services, compensation and wages paid while in the state, fringe benefits, per diems, and living expenses and stipends.

Film and entertainment productions that may be qualified for grant funding are: episodic TV series; TV mini-series; movies of the week; feature films; direct to video; reality TV; commercials; documentaries; animation production; and webisodes.

“There is a high demand for content, and our state is proving that we are among the best in helping to bring these stories to life on screens of all sizes,” Gaster said.

Top strategies

In June, the partnership launched its All in NC national advertising, digital and social media economic recruitment initiative.

The $3 million marketing was pitched foremost to business decision-makers considering relocation or expansion, as well as skilled professionals considering a move.

By December, the partnership said it had generated more than 74 million paid media impressions, 128,000 individual clicks and more than 100 business leads, some of which have become active projects.

Before the campaign was launched, the partnership said it looked at “where North Carolina stood among competitors in terms of business marketing spend and existing perceptions of the state” among both business relocation decision-makers and mobile workforce talent.

What was learned was fairly sobering: North Carolina “was not top-of-mind for business decision markers or talent, which was not surprising given historically low business marketing advertising levels.”

“We have a tremendously attractive location for companies and talent, but many haven’t heard that message, especially relative to the states with which we compete most often,” said Denise Desatnick, the partnership’s director of marketing and research.

“All In North Carolina is designed to help remedy that through messaging that brings to life the state’s natural beauty, high quality of life, mix of urban and rural settings, affordability, business-friendly tax climate, strong educational ecosystem, spirit of innovation and inclusiveness.”

Bi-partisan support

The Republican-controlled legislature has reduced the state’s corporate-tax rate from 6.9% in 2013 to 2.5% in 2019 — the lowest in the country for the 44 states that have a corporate tax rate.

The result has led to a $600 million annual reduction in corporate tax dollars paid to North Carolina.

Language in the 2022-24 state budgets that Cooper signed into law on Nov. 18 begins the gradual elimination of the state’s corporate tax rate in 2028, a major victory on a quest Republicans have been pursuing since the early 2000s.

“North Carolina is on the right track, and our conservative policies have created an exceptional business-friendly climate that will continue to be a haven for businesses looking to escape overregulation and higher costs elsewhere,” state House Speaker Tim Moore, R-Cleveland, said in November.

Economists, however, tend to believe that states and their politicians are limited in what they can do to grow their economies outside of how the national economy is performing.

Desatnick said another example of bipartisan support comes from a legislative commitment to fund a business marketing program that she said “will level the playing field for us versus our competitors.”

“That will enable North Carolina to have a significant share of voice in the business and talent relocation space.”

Christopher Chung, the partnership’s chief executive, said the strong 2021 performance “speaks to North Carolina’s fundamental advantages — our strong workforce, thriving industries, and diversity of people and place — which appeal to both businesses and individuals seeking greener pastures in a post-pandemic world.”

“Our annual report is just a snapshot of those successes, but it is a testament to the amazing growth and opportunity happening in our state.”

Reaction

A national site-selection official said North Carolina and the partnership “certainly had a banner year,” in part because of the ability of Cooper and Republican legislative leaders to keep politics out of economic recruitment and development.

“Gov. Cooper has emerged as a pro-business Democrat — able to work with a Republican legislature to keep the state’s business climate one of the most attractive in the nation,” said John H. Boyd, founder and principal with global site-selection firm The Boyd Co. of Boca Raton, Fla.

“This is reminiscent of the great economic development run of former Gov. Jim Hunt. The impressive track record achieved in 2021 is a credit to the governor’s office, how the legislature views economic development and the heavy lifting (that) has to take place to keep the state at the forefront of the competitive battle for new industry among the 50 states.”

Boyd said North Carolina should continue to benefit from Georgia’s contentious political climate, citing “controversial social legislation,” as well as “sky-rocketing crime in Atlanta, similar to out-of-control crime waves in Philadelphia, New York and Chicago.”

“It should create economic development opportunities in North Carolina in 2022 and beyond.”

Boyd said the state’s film production industry is primed for new growth, which he said should benefit the Triad, Piedmont Triad Film Commission and RiverRun International Film Festival.

“UNC Greensboro is home to a new video-game design and eSports program,” Boyd said.

“Those skills sets are in huge demand for film and related multimedia industry relocation projects as eSports is taking off around the country like nothing I have seen in many years.”

Boyd cautioned that North Carolina’s future economic success hinges on availability of labor and the rise in the cost of doing business.

“In this era of unprecedented mobility, operating costs do matter,” Boyd said.

“In fact, it is often the first phase of a site-selection search carried out prior to labor market and real estate investigations. The types of operating cost savings that existed just a couple of years ago for a company like Fujifilm Diosynth, Apple and Pratt & Whitney are not as great.

“One of our most recent BizCosts.com surveys shows the Raleigh/Durham metro area with some of the fastest growing commercial real-estate costs in the entire Sunbelt.”

Boyd said South Carolina and Tennessee will “aggressively promote significant cost of doing business advantages versus North Carolina in the months ahead in numerous site selection and development industry platforms.”

“The message for North Carolina is not to take your foot off the pedal and take economic development success for granted.”

336-727-7376

@rcraverWSJ

"North Carolina is a place of opportunity and growing prosperity. My priority is ensuring that growth continues, and that all North Carolinians are able to share in that prosperity."

Gov. Roy Cooper

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