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Archive for February, 2015

RAUMEDIC AG Selects Henderson County, Creating 172 Jobs

Mills River, NC – Strong economic activity and a late 2014 spike in client visits to Henderson County, included the introduction of the Henderson County Partnership for Economic Development (HCPED) to a new opportunity called Project Granite. The company was in search for a 60,000 sf building to locate their first US manufacturing facility, but with the improving economic health of the area, no such building was available. The search shifted to a 10-15 acre site, and after a comprehensive review of opportunities, the RAUMEDIC AG management team focused their attention on a 10 acre parcel in Broadpointe Industrial Park.

“We really fell in love with the area, and were convinced that the community partners that we met could deliver on our schedule for new construction and operation,” stated Raumedic CEO Martin Bayer and furthermore said, “Our new US production and headquarters will combine the strength of American & German engineering to offer high-precision extrusion, molding and assembly of medical and pharmaceutical grade polymer materials. For us, Henderson County provides an experienced and skilled workforce and the ideal business environment for our investment.”

Headquartered in Germany, RAUMEDIC manufactures polymer components that are used in the medical and pharmaceutical industries. It has approximately 580 employees and is part of the REHAU group, a polymer specialist, employing 18,000 people worldwide.

“When companies consider coming to the area, we want to make sure that they will hire our people and make a product we are proud to say is ‘Made in Henderson County’. In addition to meeting all of these expectations, RAUMEDIC will have a significant employment impact, hiring 172 new positions over the next several years, and paying an average wage in excess of $55,000/year. This company will result in $9 million in new annual payroll that will ripple through our local economy,” stated Chairman Tommy Thompson of the Henderson County Board of Commissioners.

“The NC General Assembly continues to work to improve North Carolina’s competitive position. Businesses like RAUMEDIC that create great jobs, pay great wages and create new taxable investment have choices about where to do that. We’re happy that after competing for this business, that RAUMEDIC has chosen Henderson County,” said Senator Tom Apodaca.

The RAUMEDIC project will help encourage the completion of Broadpointe Drive in partnership with the NC Department of Transportation where a current gravel section and small bridge separates park tenants. Representative Chuck McGrady who met with the RAUMEDIC management team early on said, “one of the most compelling investments that North Carolina can make to encourage quality job creation is in our transportation infrastructure.” Dave Modaff, Chairman of the HCPED Board, was also part of the recruitment team that met with the company early on. He shared, “RAUMEDIC represents the alignment of two target clusters for the Partnership, both plastics and medical devices, in addition to joining many other successful German-headquartered manufacturing operations in Henderson County.”

Mayor Larry Freeman welcomed RAUMEDIC to Mills River, stating, “It is exciting to see continued quality employment opportunities in our area. All of us on Town Council are excited that RAUMEDIC has chosen Mills River for their first US manufacturing location.” RAUMEDIC will join some of the region’s top employers as a tenant in the Broadpointe Industrial Park. Total project investment will exceed $27.1 million, with at least $10.6 million of that amount slated for construction of a state-of-the-art clean room operation for medical device manufacturing. Henderson County, the Town of Mills River, the Economic Development Partnership of North Carolina, the North Carolina Department of Transportation, the North Carolina Community College System, and Duke Energy all partnered on the project to encourage RAUMEDIC’s location.

The Henderson County Partnership for Economic Development, Inc. is a 501(c)(6) organization that works to: retain and attract quality jobs; solicit new business compatible with the assets and values of Henderson County; promote Henderson County’s business image; assist expansion of existing companies; and enhance Henderson County’s overall quality of life. For more information on the Partnership visit www.strategiclocation.com, and for more information on Raumedic visit www.raumedic.com.

JDIG Imperative to Compete for Jobs

The NC Justice Center’s report, “Picking Losers: Why the majority of North Carolina’s incentive projects end in failure,” is, at best, incredibly biased. The following response is from Ben Teague, Executive Director of the Economic Development Coalition for Asheville-Buncombe County and Andrew Tate, President & CEO of the Henderson County Partnership for Economic Development.

THE COMPETITION FOR JOBS
The rivalry for quality jobs and significant economic development projects is far greater than mere competition among counties within North Carolina as characterized by the report. For projects which require the Job Development Investment Grant (JDIG) the true rivalry is between North Carolina and other states and nations around the globe.

However, this global and national competition is intensely local in its impact on communities. These significant projects, which typically create more than 150 jobs, have the ability to provide employment for communities and their connected regions in transformative ways, perhaps for generations.

The suggestion that JDIG is not effective because those resources tend to concentrate in already-prosperous areas of the state misses the simple truth that North Carolina would not otherwise be competitive for those jobs. Employers want a concentration of workforce. The urban areas are job centers for regions, which include rural areas.

Simply put: If we do not have access to the JDIG program, our state cannot compete. Ultimately the financial responsibility in a competitive project will be shifted from the state to local governments with far fewer resources. That would further shut out rural areas from the benefits of economic development.

The JDIG program isn’t about picking winners and losers, as the report contends. It’s about recognizing that businesses that create great jobs, pay great wages and create new taxable investment have choices about where to do that.

Currently the JDIG program faces two challenges: 1. approaching the cap on the amount of authorized grants, and 2. the scheduled sunset of the program on December 31, 2015. Both of these challenges broadcast uncertainty to businesses that are, and will be, assessing competing state locations.

Our competition is watching us now, as are many of the companies that might consider North Carolina for future job growth. Without an improved and expanded JDIG, the only winners that will be picked are the states that are competing against North Carolina for quality jobs.

PRUDENT INVESTMENT
North Carolina’s Job Development Investment Grant requires that companies meet their commitments for jobs, wages and investment before any incentives are awarded. In situations where companies did not fully meet their job growth goals, the grant agreements were terminated by the NC Department of Commerce, and the state was absolved of its commitment for continued incentive support. Simply put, if the company does not perform, no grant is awarded.

The program is also self-funded – the eligible dollars are generated by a percentage of withholding taxes paid by the new employees created by the project. It’s similar to the way a rebate works: the new funds paid out in JDIG grants are only spent if we win the project, the jobs and taxes it creates.

By design, JDIG ensures a positive return on investment for the taxpayers of North Carolina. The report prepared by the NC Justice Center characterizes a project which does not ultimately receive the rebate as a “failure.” An employer who creates a portion of the jobs promised—and therefore does not get a tax rebate—yet provides new employment and tax base for state and local economies should not be viewed as a “failure.” The incentive worked in helping land the project and creating more jobs—with no cash coming from state coffers. We would define this as prudent investment versus a “failure.”

LEADING THE WAY IN TRANSPARENCY & ACCOUNTABILITY
The fact that JDIG results are tracked highlights the accountability that is the basis of this program. Grant applications are carefully considered by a five-member committee that includes top Executive Branch officials and two appointees of the NC General Assembly. A cost-benefit analysis is done for each project, ensuring that the proposed project’s benefits outweigh its costs. If an agreement is entered into, it must include the claw-back provision to recapture part or all of the grant if the business fails to meet performance measures. All agreements must be reviewed and approved by the Attorney General.

In 2012, the Pew Center for the Public Interest analyzed incentives policies in the United States, reviewing nearly 600 documents and interviewing over 175 experts to examine how – and how effectively – states weigh the impact of their economic incentives strategies. Pew named North Carolina one of 13 states, “leading the way in generating much-needed answers about tax incentives’ effectiveness.” A 2014 report by Good Jobs First, an economic development watchdog group, ranked North Carolina #3 among the 50 states in terms of transparency of job-creation incentive programs. The study assessed the degree of public disclosure of economic development awards and outcomes.

The JDIG program started in 2002, and the life cycle of the program includes a significant economic recession that forced most businesses, large and small, to reassess their plans for continued economic investment and employment. Given that JDIG terms can last up to 12 years, it is certainly too early in the process to declare the JDIG program or the companies that have grown in our state a “failure.”

JDIG FOR THE ENTIRE STATE
When JDIG was created, so was the Industrial Development Fund/Utility Fund. The Utility Fund provides grants to local governments in the most distressed counties in North Carolina for public infrastructure in support of job creation. When JDIG grants are awarded to a company, 15-25% of the amount approved for disbursement is diverted from the company to the Utility Fund. In essence, this builds an account to ensure accessibility to grant funds for North Carolina’s least prosperous counties (tier 1 and 2). Since the inception of this program, the Utility Fund has awarded over $28 million in grants to tier 1 and 2 counties. 75% of the grants, and 73% of the grant dollars have gone to the most distressed tier 1 locations. As the number of JDIG grantees continues to grow, so does the potential revenue stream to support projects in the most distressed areas of the state.

WE NEED A PARTNER
These projects which are large enough to attract substantial attention from around the globe are also large enough to compel communities to compete by all means possible. Without a tool in place each community will seek special appropriations from the legislature to supplement and win projects. This essentially turns the economic development process into a political process and ignores the restraints of client decisions.

The Asheville and Hendersonville areas are unique in the fact that we are large enough to see major projects which would rise to the level of JDIG incentives but too small to fully shoulder the burden of financial incentives like some of the other major markets in North Carolina. The incentive that JDIG provides is make-or-break for our area, and for the surrounding counties from which we draw workers.

We urge North Carolina’s General Assembly to raise the JDIG cap and ensure the continuation of this important incentive. It is critical for our region’s economic health, which is critical to our state and its people.

Project Sharp Site Selection Exercise Recap

Continuing on the theme of offering a behind the scenes look at economic development, the Investors Update Lunch on Friday, January 30th gave Presidential and Patron members a glimpse at the Request for Proposal process. Attendees were immersed in a condensed process of responding to a faux RFP called Project Sharp, including developing a proposal with their team and then presenting to site location consultant Don Schjeldahl.

One week before the event the Project Sharp RFP was distributed, and project teams began their research and communications. Teams were instructed to identify a 100-150,000 sf building with 28 foot ceiling clearance, and if that was not available, then a 25-40 acre greenfield site (shovel-ready preferred) could be submitted. Each team learned quickly that such a building does not exist in Henderson County – a reflection of the low inventory levels for available buildings. Project teams were asked to present on Infrastructure & Access, Labor & Training, and Support Mechanisms as well.

Once teams arrived at the Henderson County Historic Courthouse community room, they were introduced to Don Schjeldahl with Don Schjeldahl Group. Schjeldahl is no stranger to site selection, with over thirty years of experience including the location of Sierra Nevada in Mills River. Schjeldahl introduced the client team: HCPED Chairman Dave Modaff (acting as the Human Resources Director), Board Member Kelly Leonard (serving as Plant Manager), and HCPED Treasurer Pat Wagner (acting as Chief Financial Officer).

ProjectSharpClientTeamProjectSharpTeams

Each team then had seven minutes to present. The client team asked realistic questions, and pushed when presentations lacked clarity or detail. Once all four teams presented, the client team gathered to assess the presentations they had just seen and determine a winner. Don Schjeldahl shared the strengths of each group highlighting on organized presentation materials, company testimonials of relocation successes, in-depth site and incentive information, and answering the tough workforce questions.

In the end, Team 3, championed by Craig DeBrew of Duke Energy won the project. Team 3 included Jack Bebber of the Van Winkle Law Firm, Brent Coston of Elkamet, John Mitchell of Henderson County, Nicola Barksdale of First Citizens Bank, Melissa Pennscott of Johnson Price Sprinkle PA, Alan Stephenson of Blue Ridge Community College, and Perry Hendrix of Asheville Savings Bank.

The exercise provided a realistic, but compressed, experience for attendees. The comprehensive information that is requested, the breadth of knowledge that is needed to present and defend your community, the teamwork that is critical as the community presents varied resources in partnership, and the competitive nature of the site selection process were all highlighted. The process also allowed attendees to better understand Henderson County’s strengths and weaknesses, and the importance of focusing on assets, and having a plan to mitigate any shortcomings.