THE VIRGINIAN-PILOT
Copyright (c) 1997, Landmark Communications, Inc.
DATE: Sunday, January 12, 1997 TAG: 9701110744
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY MYLENE MANGALINDAN, STAFF WRITER
LENGTH: 103 lines
Well, so much for Carolina being on companies' minds.
Relocating businesses don't necessarily head first to the Carolinas, according to a new Dun & Bradstreet study released this week.
Virginia, proclaimed repeatedly by Gov. George F. Allen as ``open for business,'' finished sixth in the recent study that examined companies' primary choice of homes when moving their entire operations out-of-state between 1991 to 1995. Georgia topped the list, which included Southern and mid-Atlantic neighbors Tennessee, Florida and Maryland in the top 10.
To the surprise of many Virginia and local economic development officials, the Carolinas finished outside of the vaulted top spots. North Carolina landed at No. 14 and South Carolina clinched No. 16.
What gives?
Less than three years ago Money magazine proclaimed North Carolina's Raleigh-Durham area as the nation's ``best place to live.'' South Carolina reigned triumphant when it lured a $300 million BMW plant in 1993. Have the Carolinas - darlings of the New South, paragons of the Southern work ethic - fallen out of favor in the mind of Big Business?
Not so fast, say Virginia and local economic development officials.
Although fewer jobs and companies actually moved their entire operations to North and South Carolina, according to Dun & Bradstreet, companies are still putting branches or expansions in those states, said George Wallace, Hampton's director of development. The Carolinas still enjoy a reputation for having a favorable business climate, said Wallace and other economic development professionals.
When companies that are looking for prospective expansion sites check out Hampton Roads, eight out of 10 times they're comparing this region with a similar area in one of the Carolinas, Wallace said.
``We perceive them as the prime competitors,'' he said.
Although the Carolinas appear to lag behind Virginia in this most recent report, it's misleading, said the report's author.
``The Carolinas are 14th and 16th but I don't think that's the right message - to say they're doing poorly,'' said Steven Hess, director of analytical services at Dun & Bradstreet.
``They have low wages compared to rest of the country and even compared to the rest of Southeast,'' he said. North Carolina and South Carolina's wages are lower than Virginia's average annual pay in manufacturing, retail trade, services and government jobs, according to 1995 figures from the Bureau of Labor Statistics.
Retail trade jobs pay $13,936 in North Carolina and $13,379 in South Carolina, compared to $14,339 average annual pay in Virginia. Larger disparities exist in other areas, like government positions, which command $25,922 on average annually in North Carolina and $24,988 in South Carolina. In Virginia, government jobs pay an average $30,235 annually, according to 1995 labor statistics.
``I would say that North Carolina and South Carolina are part of the success story of the Southeast,'' Dun & Bradstreet's Hess said. Many of the relocating companies from the study attribute their new locations to the low cost of business and affordable labor costs. Those are shared characteristics in the South, Hess said. As right-to-work states with low workers compensation costs and low utility costs, Virginia and the Carolinas stack up nicely against each other.
Rankings in surveys belie the numbers behind the study, he added. More companies actually relocated into North Carolina, 547, than Virginia, 397, in Dun & Bradstreet's report. But Virginia gained 13,444 jobs, compared to the those garnered by North Carolina, 7,639, and South Carolina, 6,757.
``I don't think they've diminished their efforts at all,'' Wallace said about the Carolinas. ``I think Virginia has greatly accelerated ours.''
Hans Gant, president of Forward Hampton Roads, pointed to the renewed financial commitment the state and the region have pledged to economic development, in the form of an incentive program to entice relocating or expanding companies.
``This happened as a part of a conscious plan on the part of the state of Virginia to make Virginia competitive,'' said Gant, who heads the economic development arm of the Hampton Roads Chamber of Commerce.
Virginia has surpassed North and South Carolina in the perception of winning the war for expanding businesses. It drew national attention for landing three semiconductor plants: a $3 billion Motorola plant in Goochland County, a $1.2 billion IBM/Toshiba factory in Manassas, and a $1.5 billion Motorola/Siemens AG facility in Henrico County.
But the war could be heating up.
North Carolina wants to start a program similar to Opportunity Virginia, a state fund which matches infrastructure incentives that Virginia localities offer expanding or relocating companies, said Secretary of Commerce and Trade Robert Skunda.
``The war is continuing and there's ongoing competition,'' said Skunda, who oversees Virginia's recruitment efforts. ``One state might win a particular skirmish, in terms of winning a particular company headquarters. . . . On another day, we may lose one to one of those states.''
``It goes back to a point the governor made - we can't afford to rest or grow lethargic. Competition is constant,'' Skunda said. ``There are a variety of factors that businesses consider when looking at a relocation decision. The equation is a constantly changing proposition as well.'' ILLUSTRATION: GRAPHIC
ROBERT D. VOROS
The Virginian-Pilot
[For a copy of the graphic, see microfilm for this date.]
Expanding and relocating companies are cutting costs by moving out
of more expensive areas such as the Northeast and the West to states
such as Virginia and the Carolinas, which offer lower wages and
costs associated with doing business.
SOURCE: Bureau of Labor Statistics
KEYWORDS: ECONOMIC DEVELOPMENT