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While climatic variance and geopolitical crisis may dampen the World Bank’s predictions for global economic growth from time to time, there is no longer any doubt that globalization is the dominant business environment.
Increasingly connected marketplaces afford businesses a potential of more than 7 billion customers. But navigating and thriving in this global environment requires different and specialized knowledge, tools and training. It requires that business leaders have a new mindset—a global mindset.
Educating these new global business leaders is the mission and goal of the College of Charleston’s School of Business. The School of Business is one of six undergraduate schools that make up the 244-year-old college located in the heart of the city’s vibrant historic district.
With almost 300 students majoring in international business, the school has a substantial commitment to educating global business professionals, and under the leadership of its dean, Dr. Alan T. Shao, all students of the School of Business will graduate with a global mindset.
“I’m working to integrate global topics throughout the entire school of business curriculum,” says Shao. “A business education today is not complete without an understanding of global business. As we implement our initiatives, our students—whether they are a finance, marketing or supply chain major—will have an understanding of what globalization is all about.”
A Global Mindset
The confluence of education and globalization came early for Shao. “My destiny was determined in the crib,” he jokes but he’s not far off the mark. Shao’s father was a professor at Old Dominion University for almost 40 years where he taught management information systems, accounting and finance. The youngest of four brothers, Shao is the fifth Ph.D. in business in his family.
Shao credits his interest in globalization to his family as well. “I’m bi-heritage. My father is Chinese and my mother is an American from South Carolina so, by definition, I’m an international person.”
But what really “lit the fire” for Shao’s interest in globalization was studying abroad. “Thirty-six years ago I studied for one year at the National Taiwan University in Taipei, Taiwan,” he explains. “It was the best learning experience of my life. It taught me how to live in a culture where I didn’t understand the language and how to get along with people I didn’t understand. It went far beyond the books. From that point on, I was sold on devoting my academic life to foreign markets.”
Shao earned a B.S. in general business and an M.B.A. with a concentration in management from Old Dominion before obtaining his doctorate specializing in global marketing and marketing research from the University of Alabama in 1989.
In 1990, Shao joined the faculty of the University of North Carolina at Charlotte as an assistant professor and director of their international business program. In his 19 years at Charlotte, Shao rose to Associate Dean of Professional and Global Programs and North Carolina Ports Professor of Marketing, but more important to Shao than the titles was what was accomplished in his tenure at Charlotte.
“I was challenged to start revenue-generating, self-supporting programs in foreign markets. We successfully began MBA programs in Hong Kong, Taiwan and Mexico, as well as a dual degree Masters of Science program in Economics in Denmark. It educated our students and gave foreign students the opportunity to get our degree, but it also generated money for our local students at Charlotte. We were able to create scholarships and significant faculty development funds through the revenue generated.”
“I loved every minute I spent at that university and in the city of Charlotte,” says Shao. “Charlotte is an amazing city.”
In 2009, Shao’s global background was welcomed at the College of Charleston when he accepted the position of dean of the School of Business. The internationalization of the campus is a “top tier priority for our campus strategic plan,” Shao explains.
“Globalization opens up a whole new perspective on business,” he continues. “Educating someone to have a global perspective allows them to think differently; to open up their mind to a different way of looking at business.”
Currently, the school’s students in the one-year accelerated MBA program visit a foreign market where, for three weeks, they visit foreign manufacturing and service companies to get a local perspective on how business is done. The foreign market visits are a requirement of graduation.
“Ideally, a student’s study abroad would include learning from a foreign professor and interacting with foreign students and local people,” Shao says. “Exposure to both academics and actual business experience through tours, internships and the like allows a student to see how business is actually conducted in another country.
“And the global experience shouldn’t end when the student returns to the U.S. Each class should have globalization embedded in the curriculum. Hearing export strategies from a Chinese business person who actually exports to the U.S. adds interest and value to a curriculum.”
Shao also emphasizes what he calls diversity of the mind. “Optimally, our business classrooms should be filled with students from a variety of cultures. If you have students from Germany, Russia, Mexico and Brazil in a class with American students all doing a case study each might look at it very differently because their cultures are different.
“They may come up with a solution that is very different from someone with only a U.S. perspective and it can open the minds of all the students involved to understand and appreciate different perspectives on how to attack a problem. Different perspectives create that diverse mindset.”
The “Ready-to-Work” Graduate
Shao’s passion for a global education for his business students is only equaled by his passion for the ultimate outcome of their education. “My goal for each one of our graduates is to be a ‘ready-to-work’ graduate,” he says. “That’s so important. So how do you create a graduate who is ‘ready-to-work’? You create it by working closely with businesses.
“The more closely linked the business school is to the business community, the better equipped our students will be for employment. We’re designing our curriculum needs around the needs of the business community so when they need to hire, our students’ learning already fits those needs.
“For example, BMW, Boeing and Michelin told us that student knowledge of an ERP (enterprise, resource and planning) system would be very beneficial, so we ordered the software and we’re integrating that into our curriculum. This gives our graduates the added advantage of a skill these businesses are looking for in hiring.”
“In our halls, it’s difficult to tell who’s a practitioner and who’s an academic,” says Shao. “We have the business community through our halls every day. They are part of what we do.”
Chief Executive Officer for InterTech Group Anita Zucker is a current executive committee member and past chair of the board of governors who supports Shao’s push for globalization at the school.
“International trade is vital for my companies,” says Zucker, “and it’s becoming more vital for this region. Now that Boeing has come to Charleston, they’re bringing people from all over the world here who are interacting with the people working and living in South Carolina. We have to make certain that a global perspective is incorporated into the teaching at the school. Our community needs to have that level of knowledge and experience.”
Another board of governors’ member, Marco Wirtz, is president and CEO of German-based Daimler Vans Manufacturing which assembles Sprinter Vans for the U.S. market in their plant in Ladson, S.C. Wirtz is pleased with the internationalization focus at the school and especially with its new offering of a major in supply chain management, available in fall 2015.
“International business is about logistics,” says Wirtz. “It’s crucial for an internationalization effort. Logistics methods and processes change as the world changes. It’s wonderful that businesses can get students from the college with fresh knowledge and fresh ideas into their companies to help them change with market changes and remain competitive.”
Global Mindset from the Top
Shao also emphasizes the importance of government’s role in supporting globalization efforts at the school. Current board of governors’ members include Speaker of the South Carolina House Bobby Harrell, State Senator Paul Campbell and past member and current U.S. Senator from South Carolina Tim Scott who spoke at the school as recently as a few weeks ago.
South Carolina Governor Nikki Haley has also spoken at the school twice in the last two years. But political support of the college’s global initiatives is part of a larger realization: global trade is a major economic driver for South Carolina.
“Gov. Haley has charged Charleston and South Carolina with developing the economy,” Shao explains. “The governor understands the business advantages of globalization and she and South Carolina Secretary of Commerce Bobby Hitt are doing a very good job of educating businesses and consumers about it. The state’s global mindset comes from the top.”
And that mindset and economic development plan appears to be working. Many global companies call South Carolina home.
The first 787 Dreamliner aircraft rolled off Boeing’s North Charleston Final Assembly Plant in April of 2012 bound for the Air India fleet. Boeing employs about 6,500 people in the plant and is a huge presence in the area; it has recently acquired additional land with the intention to grow.
“When you have such a behemoth of a business in the region, you create global interest,” says Shao. “Many smaller businesses—vendors of Boeing—have built up around the Dreamliner plant.”
Another global behemoth that’s found a home in South Carolina is BMW who recently announced that it will make a $1 billion investment to its Spartanburg plant to increase production up to 450,000 vehicles by the end of 2016. In 2011, BMW exported more than 192,000 vehicles worth $7.4 billion, making it the largest auto exporter in the U.S.
Those 192,000 vehicles, destined for 130 different global markets, were all exported from the centerpiece of the state’s global trade engine: the Port of Charleston.
A Global Portal
President and chief executive officer of the South Carolina Ports Authority James Newsome, III, calls the Port of Charleston a “major strategic asset of the state.”
“Businesses locate in areas of global sourcing and global manufacturing,” says Newsome, who is also on the school’s board of governors. “Businesses locate near a great port because it gives them access to the world.
“I think there is universal acceptance in the state that the port is an important asset. I know that not only from statements made, but also from the money invested. In addition to what the port is investing, the state has set aside some $700 million for various infrastructure-related port improvements.”
With growth in fiscal year 2013 of over nine percent and expected growth of more than six percent in fiscal year 2014, the Port of Charleston is growing at more than twice the rate of the general U.S. port market.
A new container terminal located at the former Navy base that will expand capacity by 50 percent is one of the improvements earmarked for the money, but the lion’s share of dollars will be spent on deepening the port’s harbor to 50 feet or more.
The Charleston Harbor Post 45 deepening project is in study phase currently but at its projected completion in 2018, the harbor will be able to accept larger post-Panamax container ships, further enhancing the port’s contribution to the state’s economy.
The expected growth at the Port of Charleston is a good reason for a better connection with Charlotte according to Newsome. “As capacity increases in Charleston, we’re going to need more capacity to move containers by rail,” he says. “With the new intermodal facility in Charlotte, it makes sense to grow that connection. There could be synergy between South Carolina and North Carolina in moving freight so we need to work more closely together.”
Shao also sees Charlotte’s potential in global business. “I know Charlotte well,” Shao says. “Charlotte is well-positioned to continue their upward trend toward being a global hub of business.
“Charleston has a jump on the global mindset. We already see global business as an economic engine. Charlotte needs an aggressive campaign by the academic community, business and government to get out the word that it’s good to be global and to show how other states and regions have been able to lift their profiles by taking advantage of markets outside the U.S.
“With advancements in transportation and technology, no place is too far anymore. Businesses need to understand the opportunity.
“Certainly, Internet search engines can show you trading opportunities worldwide, but trade councils, U.S. Export Assistance Centers and the Department of Commerce’s Gold Key Program all do a tremendous job of promoting international trade.
“I would suggest getting your toes in one market first. There’s a lot to learn when exporting or importing into a foreign market. It’s good to learn the basics of international trade through one market before expanding all over. And there’s no substitute for travel abroad. Do your homework before you leave but definitely go to that market and see if your product works.”
There is more growth ahead for the College of Charleston. Although efforts to pass a University of Charleston bill in the state legislature that would allow the school to offer doctoral programs was defeated last month, that’s one mission incoming President Glenn McConnell has said he’s going to undertake.
McConnell has advocated doctoral degrees along with research programs linking logistics with the Port of Charleston or programs tied to work at Boeing. He believes that to strengthen the institution, “what you do is build in these other areas where there’s a perceived need. The college has to be relevant to this business community and to the demands of today.”
As Shao and College of Charleston School of Business work to advance the global mindset, as Shao says “developing business students who understand that we live in one world and that world is one huge market,” it is clear that they are on the fast track to success.
Charlotte-based building supply company Tucker-Kirby has been a well-known and respected name in the Charlotte business community for many years now. Founded in 1920 by W. F. Tucker Sr. and Robin S. Kirby Sr. as Tucker-Kirby Hardware Co., it was originally located at the corner of W. Ninth Street and Railroad.
“You can still see a portion of the foundation of the building,” beams Terry Ward, vice president of Tucker-Kirby, who recently located the exact site.
A couple of years later, the company moved westward to Palmer Street and Railroad, where it remained for over 80 years before eventually losing the property to railroad acquisition. In 2004, it moved to its present location anchoring the Wilkinson Park Business Center. Says Ward, “We’re still on the same route, just farther down.”
Bill McKinnell IV, company president, explains, “We needed to expand, but we needed to still be in the vicinity of uptown. Much of our business is generated by uptown construction, and being close to uptown is good for ‘pickup business’—work that can be handled by pickup truck.”
Set in Cement
For more than 90 years, Tucker-Kirby Co. has been a recognized provider of concrete, masonry, waterproofing and geotextiles for the residential, commercial and industrial building markets in the Carolinas. It sells to general contractors, subcontractors and top masons involved in the building of high-rise buildings, schools, medical and sports complexes, dormitories, supermarkets, big-box stores such as Wal-Marts and Sam’s Clubs and others.
It has been a supplier for a major Camp LeJeune military project, the largest masonry project in North Carolina’s history, the Apple Data Center in Lincoln County, and the Charlotte Motor Speedway’s zMAX Dragway Complex.
In addition to its headquarter facilities in Charlotte, Tucker-Kirby now has two other branches, one in the Raleigh/Apex area and the other in Columbia, S.C. These expansions have allowed the company to continue to grow its presence in the Carolinas and to follow its contractor clients into other states including Georgia, Tennessee, Mississippi, Kansas, Nebraska and Colorado.
The products Tucker-Kirby sells represent six divisions of the 16 divisions of construction as defined by the Construction Specifications Institute’s MasterFormat. They are: Site work and Drainage, Concrete, Masonry, Waterproofing, Finishes, and Specialties. The bulk of the company’s multi-million-dollar revenue comes from sales related to the concrete, masonry and waterproofing divisions.
Products include such items as ADA mats, concrete stains, curing and sealing compounds, epoxies, expansion joint material, concrete form materials, reinforcing mesh, rebar, vapor barriers, masonry cement and mortar, reinforcing wall bracing materials, flashing, anchors and ties, silicone and urethane caulk systems, rubberized asphaltic sheet membrane, fire safing insulation and rigid foam insulation.
“We don’t sell ready mix concrete, but we sell all the accessories—everything that’s below that concrete—and we don’t sell brick and block, but we sell the accessories to make them work,” explains Ward.
“When you see a concrete or masonry building, it’s not just a box,” continues McKinnell, “there’s quite an infrastructure to it. You have to tie that masonry in with metal ties and anchors and waterproof it. On a typical project, we could have $100,000 in materials in a building and none of it would be visible once the building is finished.”
Currently, approximately 60 percent of revenue comes from masonry-related sales and 40 percent concrete-related sales. Tucker-Kirby also sells pre-mixed bag goods, primarily for construction projects in urban areas too tight for the big concrete mixer trucks to get on site. “Ten days out of the month we are sending tractor trailer loads to Wal-Mart construction sites,” says McKinnell.
The bids that Tucker-Kirby prepares and the products it sells are “spec-driven,” or specified by the architectural plans and specifications of a given construction project.
“For this reason, our sales people are well-trained; many are certified in masonry and/or tilt wall casting,” says McKinnell, who credits much of the company’s success to its knowledgeable sales force. “Our people know the product line, the industry and they can read the plans and specifications. Our customers can feel confident that our quotes reflect the plans.”
“We don’t have order takers,” adds Ward. “We have true salespeople and we truly want to be a partner to our customers.” He says that Tucker-Kirby works closely with the North Carolina Masonry Contractors Association and participates in its certification programs: “They used to be just for masons; now we send our people to them.”
With regard to competition Ward says, “Everybody’s prices are basically the same. There’s not a nickel’s worth of difference between our prices. It boils down to us having the knowledge and the service to get the business,” says Ward. “Some of our competitors have tens of branches; others have hundreds, but we—with our three branches—are the workhorse for the masonry and the tilt side of construction in the region.”
A Cohesive Block
The Tucker-Kirby sales force starts out in the warehouse. “I came up through that route,” says McKinnell. “It makes a difference. The average person wouldn’t know anything about this business. We have 10,000 different products to learn about.”
Between the three branches, Tucker-Kirby employs 28 people. “A business is no better than its people and we have great people,” affirms McKinnell
Tucker-Kirby is the quintessential family business. While none of the company’s ownership, management or staff have been related to either the Tucker or Kirby families since the McKinnell family bought the business in 1984, a significant number of them are related to the McKinnells as spouses, in-laws, siblings, sons and daughters.
“We have lots of family members who work here, not just our family but multiple members of other families,” says Ward, who is married to McKinnell IV’s sister who also used to work for the company.
“Nepotism laws don’t apply here,” assures Bill McKinnell III, who represents the second generation of McKinnells to own Tucker-Kirby. “We like it this way. We operate as a family and it works smoothly.”
His father, Bill McKinnell Jr., attended The Citadel in Charleston and went to study at Kings Business School in Charlotte. Mr. Tucker and Mr. Kirby approached the school for possible candidates to work in their company.
“The school recommended my father,” says McKinnell III. “He came in 1930 and stayed for 45 years, moving up the ranks from sales to management to part-owner of the company in 1964.”
McKinnell III then came on board in 1966. “My Dad said he would continue to call me Billy but everyone else had to call me Bill and I was expected to carry my own weight. I didn’t want to be just like everybody else; I wanted to do better,” says McKinnell III.
Before retiring in 1975, McKinnell Jr. witnessed the sale of the company in 1974 to a Florida-based entity that had a building supply division.
“It was a good marriage for a while but the Florida company got into financial trouble and started draining the cash assets of the former Tucker-Kirby,” says McKinnell III. The company was involved in Florida real estate and went under, forced to turn the business over to the bank in 1984. By this time, Bill McKinnell IV had been on board since 1977. McKinnell III and McKinnell IV, father and son, bought out the company in 1984. Ward started work at Tucker-Kirby in 1985.
“We refer to that time prior to buying the company as ‘the dark days,’” says McKinnell IV. “It was a learning experience and a bump in the road.”
It was more than a decade later, in 1997, that McKinnell IV and Ward describe how they helped prompted McKinnell III’s retirement in a good-natured way. “He had been talking about it for a number of years, but hadn’t set a date or planned anything,” says Ward. “So, Bill and I got together and threw him a surprise retirement party with 300-400 people in attendance, including customers.”
Nowadays, McKinnell III admits, “I don’t come here much anymore, but I’m always interested in what they’re up to.”
Ward and the McKinnells are all natives of Charlotte. Ward came to the company straight out of high school. McKinnell IV was just 15 credit-hours shy of earning a degree from UNC at Charlotte. “A job opened up that I wanted and I promised my folks that I would go back and finish,” says McKinnell IV. That didn’t happen but the company presidency ultimately did.
“Very few of our employees have four-year degrees but they are highly trained professionals; knowledgeable in their jobs,” affirms McKinnell IV.
Strength in Construction
For Tucker-Kirby, the downturn in the economy hasn’t inhibited their growth. In 2008 when the downturn began, the company was able to increase staff in the Charlotte office and expand into the Raleigh/Apex market.
“Luckily for us, we had a good bit of work coming in from projects with Duke University Health System, Durham Bulls Stadium and dormitories and other buildings on the campuses of UNC at Chapel Hill, N.C. State University and UNC at Charlotte. Plus, we had branched out to military work,” says Ward. “Federal monies were made available for military and civic work. This pretty much kept us going through the slowdown.”
“Our sales staff had to expand on their core territories to find additional work, but we didn’t suffer any loss of staff due to the downturn,” says McKinnell IV.
Importantly, Tucker-Kirby had also begun to get involved with tilt construction projects, here in Charlotte, the Raleigh area and states outside the Carolinas.
Tilt construction is essentially concrete wall casting for large construction projects. Massive walls are built (poured) sideways on top of the building’s concrete floor slab or pad before being tilted (lifted) into place by a crane.
“We sell the release agent that is applied so the wall won’t stick to the pad,” explains Tim Stewart, Tucker-Kirby’s tilt specialist. The walls are built with lifting inserts that enable the crane to erect the walls without breakage. Walls can be stories high or several walls stacked on top of each other.
“One of our vendors has recently come out with an insert capable of supporting 24,000 pounds,” continues Stewart. Only two companies in the nation are authorized to sell these—we are one of them.”
Tucker-Kirby also owns bracing equipment that can be taken to construction sites. “That also gives us an advantage in the marketplace,” says Ward.
The expansion to Raleigh has paid off.
“Since opening the doors in 2007, the Tucker-Kirby Raleigh location has focused heavily on the service aspect of contractors’ needs along with a great sense of urgency on delivery schedules. Growing the product offering has also been a major focus aligning the company with top-ranked equipment lines in the industry like EDCO Masonry Saws, EZ Grout Mixers and STIHL,” says Guy Harrigan, operations manager of the Apex office.
“This, in addition to the material inventory levels in stock, speaks volumes about Tucker-Kirby’s partnership commitment to the contractor and has allowed the company to grow even in a very sluggish economy,” he adds.
Looking down the road, Ward expects the company to expand to other areas. “We’ll do our research on places and figure out where we need to be.”
A Uniform Mix
The masonry industry has its fun and competitive side. One of Tucker-Kirby’s vendors sponsors the Spec Mix Bricklayer 500, an annual fastest bricklaying trial competition between regions. The winner enjoys a trip to Las Vegas for the company’s annual convention, and has the opportunity to compete for the World’s Best Bricklayer title against winning masons from around the globe.
“Last year we were asked to host the trial competitions,” offers McKinnell. “Well over 200 people were in attendance at our facilities. We’ve been honored to be chosen to host the event again this year,” says McKinnell.
Despite the ownership changes from the original lineage, the McKinnells were never tempted to change the name of the company. “The Tucker-Kirby name was so well known when we bought the company,” says McKinnell, “that changing the name would have been a big mistake; it would have required a total rebranding. It was a case of ‘If it’s not broke, don’t fix it.’”
“We’ve even had the same phone number for decades,” adds McKinnell III with a chuckle. “Customers know us.”
It’s not surprising that the company has an adage that says, “If people come to work at Tucker-Kirby, they retire at Tucker-Kirby.”
“It’s always been like that,” attests McKinnell. “It’s a good solid company with a good reputation and fair pay. I think that’s what’s made it so successful.”
John Norman thought he was in college studying to become an engineer, when he realized he had a proclivity for accounting. He completed his bachelor’s degree in business administration and a master’s in taxation from the University of South Carolina, and joined up with Charlotte’s PricewaterhouseCoopers as a tax consultant. That was the early ’90s and already he was developing a passion for small to mid-sized companies doing business internationally.
Unraveling the complex tax laws governing foreign-owned businesses became his niche. He enjoyed solving problems while developing business relationships. When Norman learned of GreerWalker LLP and its focus on middle-market companies and international affiliations, he realized its business model closely aligned with his interests and joined as a senior associate in 1993.
Today, he has overall responsibility for the firm’s global services and manufacturing and distribution practice, and is managing director of its exit planning and investment bank affiliate, GreerWalker Corporate Finance, LLC. In short, he specializes in resolving international tax issues for foreign firms doing business in the U.S., as well as U.S. firms doing business in foreign countries. He is considered an expert in mergers and acquisitions, transfer pricing, entity selection, entity structure and ownership changes.
With just a receptionist, Charlie Greer and Kevin Walker started the firm in 1984 primarily to serve manufacturers and distributors. The practice has changed drastically in 35 years. Today, GreerWalker has 12 partners and over 100 associates, and is one of the 10 largest CPA firms in the Charlotte region and considered among the top 200 CPA firms in the nation. It is also the exclusive Charlotte member firm of PKF International, one of the world’s largest networks of independent accountant associations.
“It’s been all organic growth,” says Greer. “We’ve never had a merger.” About 25 percent of the firm’s clients are international.
When Norman joined GreerWalker 20 years ago, he says, “Everybody was doing total quality management, which is looking at your processes to determine how to become viable and independent.”
That’s when it became evident to Greer and Walker that they needed to delve into international markets, to offer global services, to avoid losing business. “Now we’re on the offense with it,” he asserts.
“Nowadays,” Norman emphasizes, “there’s no such thing as international business. If you’re in business, you’re going to have to deal globally. But,” he insists, “being effective in a global arena requires team effort.”
Klaus Becker, honorary consul of Germany, has worked with Greer and Walker for over 30 years. “They go out on a limb to be good corporate citizens and to interact with people,” says Becker.
Becker, president of Nirosteel LLC, considers the firm’s close ties with the community instrumental in developing strong business relationships. The three met when both companies operated out of 112 S. Tryon Street.
“They really do an excellent job of supporting the German community,” offers Becker. GreerWalker also supports the consul and the German American Chamber of Commerce. The firm’s generous investments include organizing seminars and supporting German-related speaking events.
“I really admire Kevin and Charlie,” admits Becker. “They’ve worked very hard to become the largest privately-held CPA firm founded in Charlotte.”
Under Norman’s leadership, the firm’s global services have steadily grown. About 80 percent of Norman’s time is dedicated to tax planning, compliance and consulting services for a wide range of international businesses.
While global business is essential to the firm’s continued growth, the company also specializes in real estate, construction and motor sports. Greer says, “It’s a rarity for a firm our size to have such a strong international tax practice.”
Greer credits the firm’s team model with setting it apart from other CPA practices. “Every client is a client of the firm and not the individual partner, so there’s a sharing of clients that you don’t see at other firms,” explains Greer. “Whenever a client gets into an international situation or is going to Germany and Italy,” comments Greer, “we automatically get John involved.”
“John’s always focused on what’s best for the client in everything he does,” says David Jones, a fellow partner who specializes in manufacturing, distribution and international business. “He creates relationships with clients that are more than just professional and client. They’re friendships,” he says.
“John’s very practical and has dealt with a lot of different businesses over time and not only helps people make tax decisions, but also helps with general business planning,” adds Jones. “There are many professionals that approach taxes and assurance as if they were a product, but have very little interaction with their clients. We as a firm, but John in particular, strive to be a lot more than that—we constantly talk what else we can do to help our clients.”
For example, it’s not unusual for GreerWalker advisors to discuss buy-sell agreements with clients, life insurance for owners and other non-tax or assurance-related business transactions. According to Jones, companies must take into consideration several aspects to succeed in global business, and Norman is extremely thorough in covering all the bases.
Client loyalty has been a key factor in the firm’s steady growth. Repeat business long-term from middle-market companies has been essential. “One Chinese company was about $2 million when they started with us,” says Norman. “Now they’re about $200 million.”
Over the last decade, changing economic circumstances necessitating doing business outside the country have contributed to growth. A decade ago, East Coast residents viewed California as a foreign country, jokes Norman, a native of Akron, Ohio. Today, his practice has dozens of U.S. privately held middle-market companies that have survived by globalizing.
In the mid-1990s, U.S. textile and apparel companies made up the first big wave of outbound work. “To remain competitive, they had to go south,” Norman says. “To get around intensive labor costs, they produced in Mexico, Honduras and Guatemala. Those that didn’t, closed.”
Before setting up shop in another country, small privately-owned firms need someone who understands the impact structures can have on company profits and navigate through complex U.S. international tax laws. That’s Norman’s specialty.
“The U.S. international tax law is really written for the old multinationals in the ’60s, and it hasn’t really been upgraded,” comments Norman. “For privately-held businesses, there are some really unfortunate hoops and quirks that can result in seriously negative effects.”
In terms of global markets, the international arena is broken into two categories: Inbound is when companies originating outside the U.S. come here; outbound is when U.S. companies do business in other countries.
When engaged globally, it is important to realize it is not a level playing field. For example, one major mistake businesses make is assuming they’re eligible for indirect foreign tax credits. “If you pay taxes in another country on your income there, that credit does not naturally flow back to you as a U.S. owner,” explains Norman. “So you end up paying twice on that same income unless you do some tax planning.”
That is the type of situation where clients need skilled tax advisors who understand international tax laws, effectively tax planning to ensure clients receive all the credits to which they are entitled. Through market analyses, advisors also help clients avoid setting up facilities in jurisdictions that are heavily taxed.
By staying abreast of international market trends in distribution and manufacturing, the firm helps clients operate more profitably. For example, in the global apparel manufacturing business, the high fashion industry has 13 seasons, rather than four. Fashion industry colors rotate every month to keep apparel trends fresh. If it takes designers six weeks to finalize color schemes, manufacturers aren’t able to produce apparel in China and get it to U.S. stores in time.
As a result, over the last several years, much of the high fashion production has shifted back to the western hemisphere. Some has returned to the U.S. while some has gone to nearby Honduras, where there’s only a three-week turnaround. But more of the higher-end products are being made in North and South America.
While relocations of giant manufacturers like BMW, Siemens and Boeing make headlines, small family-owned foreign businesses bring their share of jobs to the region. They may create 20 to 30 jobs at a time, but it’s not insignificant.
Norman and his colleagues get a lot of new clients from working with the Charlotte Chamber of Commerce and the Charlotte Regional Partnership as they bring companies to the area. They also get business referrals from local law firms, bankers and PKF International. When companies express interest in Mecklenburg County, GreerWalker advisors sit down with them to review tax structure, business structure and incentives to come.
Norman points out that Charlotte’s central geographic location makes it extremely marketable. The accessibility to Charleston ports, a major airport and the trucking industry make the Charlotte region a prime location. The area’s well-educated, well-trained workforce and openness to diverse groups is another plus, he says.
“When I came to Charlotte, basically what I was told was it didn’t matter where you came from or what you did,” recalls Norman. “Just get involved in some community organization and give back to the community, and you’ll be accepted.” He finds that attitude equally applicable to the community’s broad acceptance of foreign firms.
“It doesn’t matter if you’re from Germany, Japan or China; the expectation is that if you give back to the community, you’re going to be accepted,” says Norman.
International business inevitably depends on relationships at the local level. For example, a foreign manufacturer inbound has to ensure a continuous production cycle for dependable distribution of its product. That means it has to have local resources readily available—repair parts and service technicians—for its production processes, otherwise production stops.
“So the only way to increase sales and be accepted in the U.S. market is if you have spare parts and technicians that are available right away, not days away,” says Norman.
Norman points to a German machine tool maker for textiles that actually set up sales and service companies in the U.S. The same thing is happening now with Chinese companies. Being local also lowers shipping costs. One client that makes machines used in nonwoven textiles noted its customer moved all of its production from the U.S. to China five years ago to save on labor cost, but recently brought it back because the savings in the cost of electricity to run the machines far outweighed the labor savings overseas.
According to Norman, location says it all. Two thirds of the U.S. population is one trucking day away, and Charlotte is half way between New York and Miami. Quick access to U.S. Interstates 85 and 77 running north and south and 26 and 40 running east and west are major sellers.
“We are at the center of the hub to reach U.S. markets from a distribution standpoint,” says Norman. “From the airport, service technicians can get anywhere in the world within 24 hours.
“In the ’60s and ’70s, mostly German and other European companies were drawn to the area. Chinese companies mostly settled on the West Coast. But the West Coast is only a third of the U.S. population,” continues Norman, “and going west to east with transportation doesn’t make sense.
“There’s just so much that’s right about Charlotte. I always question when they don’t choose this region. I think we will continue to see more direct investment from Asia.”
Typically, it’s not cost effective for U.S. companies to invest directly in China, but in Hong Kong through Wholly Owned Foreign Entities, known as WOFE’s. Norman says, “It’s a weird thing between China and Hong Kong—same country, but different rules.”
Since Hong Kong has no currency restrictions, U.S. companies can send currency back to the U.S. or anywhere at any time. China has restrictions on getting money out of the country. But there are no restrictions going between China and Hong Kong. Hong Kong has no tax treaty with the U.S., but China does. Because Hong Kong has a 17 percent tax, U.S. companies have to decide if they want to pay the tax and not get a credit, or set up the business to get a flow-through credit and do the surplus.
That’s the type of tax challenge Norman thrives on helping clients understand the implications. “I love problem-solving and thinking outside the box,” he admits. He likens the necessary acuity to math word problems. “If you’re a word problem person, you belong in tax,” says Norman. “That describes tax people.”
Today, there are seven Class I freight railroads in the U.S. that account for 69 percent of freight rail mileage, 94 percent of revenue, and 90 percent of rail employment. The remainder of the rail activity is undertaken by over 550 Class II and Class III regional and short line railroads.
Railroads transformed American life. They opened vast new areas of the American interior to settlement while stimulating resource use, commercial farming, and manufacturing. There is no doubt that they were particularly important to economic development in the South.
Taking On a Challenge
Revitalization of a Railroad
One of his first recollections upon arrival in Star, Menzies says, was looking at 30-some miles of dilapidated track that were pretty much scrap metal, abandoned years earlier. “Just moving the freight car alone, the tracks would literally move or spread. That’s how run down they were,” he describes.
Known for its distinctive hunter green color with cream and magenta accents, the short line visage is as regal and dignified as its Carolina Route logo. Rail fans can catch the 90-car, 4-6 engine, 10,000-ton unit corn train as it winds through the Sandhills through Aberdeen, up the 2.8 percent hill beyond, and then through the countryside and curves to the ACWR headquarters in Candor.
Carl Hollowell, vice president of operations and general manager, describes usual operations: “Most weekdays, we’ve got a ‘miscellaneous’ freight between Aberdeen and Candor and often up to Star, or the reverse. The big draws, and the most important financial impact on the railroad, however, are the 90-car unit grain trains that come from the Midwest via CSX at Hamlet to Aberdeen. These trains supply the major poultry feed processing plants in Candor: Perdue and Mountaire.”
Short Line Goes Long
Last spring, ACWR located and acquired an existing building in Candor, just eight miles away from is Star location, and began retrofitting the 91,000-square-foot warehouse facility to turn it into a locomotive repair shop facility, installing 4,600 feet of track leading to the building and a locomotive pit which allows access to the underside of engines for repairs.
Last fall, the company also moved its headquarters there. It maintains refueling and locomotive repair operations at its Star location.
“It’s common for us to take a locomotive worth $30,000 in scrap and turn it into something worth $300,000,” attests Dale Parks, vice president of mechanical and chief mechanical officer.
“Dale has been building the locomotive, freight, and passenger railcar repair business for years now,” says Menzies. “In fact, Dale and his team have built the business to the point where we had greatly exceeded our capacity in Star to keep up with it. Interest has only increased since we’ve located to our new facility and we expect this to be a key part of our future business.”
Parks says the repair facility is the only one of its kind in the state and one of the few on the East Coast. He firmly believes that he and the team are tasked with saving an important part of Americana by restoring vintage railcars such as the “Roamer.”
ACWR’s longer term goal in Candor is to develop the rest of the 78-acre rail-served industrial site that will offer manufacturers easy access to rail and bring jobs and a stronger tax base to Montgomery County, says Smitley.
The company is marketing a 70-acre business park and multimodal facility dubbed the Midland Multi-Modal Industrial Park in southern Cabarrus County, just seven miles east of Charlotte, with highway access to I-485, rail access to both Norfolk Southern and CSX, and all utilities.
The industrial park is a piece of a larger development strategy the company calls RailVantage East (Moore, Montgomery) and RailVantageWest (Charlotte, Midland) to develop other available properties as logistics centers along the ACWR short line. Unabashedly, Smitley touts it as “Connecting North Carolina’s freight to the rest of the world.”
Connecting With Strength
Menzies views trucking companies as partners more than competitors: “While ultimately dependent on short haul trucking for distribution, railroads are making a comeback in the long hauls. Over the last 15 years, highway congestion, higher fuel costs, driver shortages and pending safety regulations are moving shipping from trucks back to rail.”
Of their relationship with the Class I carriers, he says, “It’s common for short line railroads to have issues with bigger rail companies because the interchanges are often undersized and inadequate, but fortunately with both CSX and NS, ACWR has substantial track at their interchanges with their Class I partners that result in a seamless transfer of customers freight.”
Menzies admits he took a risk by purchasing ACWR knowing that it would require tremendous capital investment, but he says the rewards have far surpassed anything imaginable. They are now focused on keeping up with the projected 30 percent population growth over the next few years.
He says they continue to look for opportunities to collaborate with adjacent landowners as well as communities that seek to attract new industry, jobs and tax base to North Carolina. As a result of these strategic partners and acquisitions, ACWR has sites and partners across its network that position it very well for long-term future growth.
Menzies’ vision for the Aberdeen Carolina & Western Railway Company was to strengthen and enhance the fabric of American industry. In fact the ACWR’s tagline touts with “Connecting with Strength.” Menzies has been able to bring together diverse and competing interests that includes trucking, logistics companies, Class I rail carriers as well as state and local political leaders that has resulted in new industry on his network that not only touches North Carolina but also the global economy.
A polymath, derived from the Greek polumathçs “having learned much,” from polu- “much” + the stem of manthanein “learn,” is a person of wide knowledge or learning, whose expertise spans a significant number of different subject areas. Such a person is known to draw on complex bodies of knowledge to solve specific problems or, as here, to bring broad perspective to the interpretation of historical events.
While the term is most often used to describe great thinkers whose expertise spans a significant number of different subject areas, in less formal terms, a polymath may simply be someone who knows a lot about many different things.
In either case, it would aptly describe Chase Boone Saunders. A Charlotte native and a fifth generation North Carolinian, Saunders is an attorney with the McNair Law Firm and experienced mediator, a retired N.C. Superior Court judge, a savant of many subjects, and an accomplished artist.
He graduated from UNC Chapel Hill, where he studied history and English, obtained his law degree from UNC as well, and has taken various financial planning and real estate courses at local universities and business schools.
In addition to practicing law, Saunders is a volunteer or otherwise involved in a number of professional, historical, business, civic and charitable activities, and has been widely recognized for his achievements in his profession and in the community. In his “spare time,” the passionate historian watercolors “the changing face of the two Carolinas.”
He is one of a growing number of Charlotteans heralding the zeitgeist to position Charlotte as the global hub for international trade on the East coast of the United States, advocating that increased commerce means greater prosperity for the region—more business, more jobs, more wealth, more innovation, more opportunities for all.
“We have the opportunity to build a new city—and that happens rarely in someone’s lifetime,” Saunders says straightforwardly and profoundly.
A Rare Opportunity
In his series of watercolors titled UPTOWN FROM, Saunders describes the city thusly:
“Charlotte is a work-in-progress, Information Age City ever creating its future by coupling a mid-East location astride pre-Columbian, Indian trade routes to the energy of her people. Named by her founders for the English Queen Charlotte, and later called the Queen City, her towers of commercial power are visible over a verdant forest canopy as the center of a region with significant business activity.
“Charlotte is a city built on hard red clay which only the value of hard work made productive. And it is no different today! Charlotte continues to welcome and acknowledge the successes of those who come here to work hard, live, and play.”
This Renaissance man has a clear vision and enthusiasm for Charlotte that is as evident as the sparkles in his eyes—and contagious.
“Charlotte is on the threshold of another boom driven by its strength as a logistics center. Representative of that is the new intermodal facility at the airport which makes Charlotte a ‘city of ports’ rather than a singular port city.
“And we have the opportunity to build that new city,” he maintains.
Saunders is a member of the Charlotte World Affairs Council and Charlotte World Trade Association, and a presenter and promoter of Regional Development Initiatives and the Charlotte 2030 vision theme: Create It, Make It, Move It with Central Piedmont Community College (CPCC) President Tony Zeiss and nationally-recognized urban planner Michael Gallis. He is founding member of the global vision leaders group, community and civic leaders who believe that time is of the essence.
He characterizes the group as a “21st century, open-source entity”—a collaborative forum linked by a common goals, common interests, and digital communications. Described more from the wealth of materials amassed at www.CLTglobal.com, and referenced with respect thereto, various group leaders have made and can be scheduled to make presentations of CLTglobal materials and updates can be requested and resources shared at the website.
This grassroots group is aptly named. Its goal is to advocate, promote and stimulate Charlotte and its surrounding region as a global hub of international trade—a great inland port that’s an economic powerhouse.
In the Create It, Make It, Move It initiative, the group highlights three key components of that goal: innovation and entrepreneurialism; manufacturing, especially advanced manufacturing; and a distribution infrastructure that moves goods efficiently and for a lower cost around the world.
While the goal may seem a stretch to some, there are real indicators that support the global vision for Charlotte. Charlotte is already a growing center of energy, finance and health care, and its standing as a transportation and distribution hub has been elevated exponentially with the merger of American and US Airways, the improvements to the airport and the new intermodal distribution facility.
Charlotte has also been recognized for its global competitiveness in an IBM and Site Selection magazine report which named Charlotte as one of only 12 U.S. cities to make its Top 100 Global Cities.
The seed of the global vision leaders group began simply enough two years ago, when Saunders shared his visualization of Charlotte through four distinct booms and busts with Zeiss at a Rotary Club meeting. Together, they decided that the time was right for Charlotte to be proactive and create a model for the city’s next 50 years—a vision for a new city. But what would that new city look like?
“To determine that, you first need to pull back and say where has Charlotte been? What is its history?” explains Saunders, a former president of the Mecklenburg Historical Association.
A Perspective on Charlotte
“Charlotte is a story of place and people,” Saunders starts out.
“At its most fundamental, Charlotte exists because of its location. It’s located at a crossroads of trading paths which were Indian paths, and before that, most likely, animal migratory paths.
“Charlotte was built on the high ground between two creeks. In Europe, castles would have been built on the location, but in America, we built towns. The crossroads of what is now Trade and Tryon was situated on a trading path called the Great Wagon Road that ran along the Piedmont from Philadelphia through Lancaster County on the east side of the Appalachians.
“The trading path, about 745 miles long, ran through Charlotte on its way to Augusta. In the early 1700s, it was the path that the new immigrants took south after they arrived in either New York or Philadelphia.
“In the 1740s and 1750s, the British had worked out a peace with the Cherokees so that the path could be enlarged into a road. And relations were friendly with the Catawba Indians, so the area around Charlotte and South Carolina was available for settlement.”
Saunders points out that the people who settled in the Charlotte area were independent and self-reliant—a defining force for its future.
“In the Battle of Culloden in 1746, the Scots were wiped out as a power in England,” Saunders explains, “and 40,000, 50,000, maybe even 60,000 Scots immigrated into America, settling in western Pennsylvania.
“Other settlers in the Colonies were the Scots-Irish, driven from Northern Ireland because of wool tariffs and other economic privation. They were Scots and Presbyterians. America was the place where everyone who wasn’t an Anglican was sent or was encouraged to go, and that included Puritans, Anabaptists and many different sects. All the religious dissenters—the people who thought differently—came here. When all the land in Pennsylvania had been acquired, they migrated south along the Great Wagon Road and settled our region.
All you have to do is look at the names of present-day South Carolina counties: York, Chester and Lancaster. All of those counties were named after western Pennsylvania counties.
“So if you think about the people who settled here, they were oftentimes run out of their countries. They had to travel across the sea, and then they had to travel down a wagon path with whatever they could carry. Only the toughest of people who had no other choice would do that,” remarks Saunders.
“That gave rise to a highly independent, fairly well-educated, self-reliant group of religious dissenters. And they also had no great love for the English. The end result was the Mecklenburg Declaration and Resolves in 1775 when Charlottetown left the Crown.
“This dislike of the English and the control the Crown exerted over the colonies led to widespread tensions and gave rise to the Regulators in Alamance County who rebelled against excessive taxes, dishonest officials and the building of the Royal Governor’s palace in New Bern. Locally, the major source of contention was the Vestry Act.
“That was a damnable piece of legislation,” asserts Saunders. “The Vestry Act required all landowners to pay money to the Anglican Church to support local Anglican preachers who were basically reporting back to the Crown on the status of things. Presbyterians were paying preachers from another faith to impose their practices on the Presbyterians—spying on them, performing their marriage and death ceremonies, and educating their children to be good little Anglicans.
“That didn’t sit well with the people. They decided they should create a town that would allow them to have a charter and be a political entity which could negotiate with the Crown. So in 1768 they created Charlottetown.
“By this time the Regulators were in open revolt and Governor Tryon needed a military force, provisions, and guns to fight them. So the people of Charlottetown struck a deal and provided troops and provisions with the agreement that the Royal Governor wouldn’t enforce the Vestry Act—and the people of Charlottetown could educate their children and have religious freedom.
“But afterwards, the English Parliament, who had to approve the agreement, refused to honor the deal. So the people decided they couldn’t trust the British. By 1775, concurrent with the Battle of Lexington, Charlotte declared itself independent through a declaration and a number of resolves; the event was called The Mecklenburg Declaration of Independence.
Boom No. 1: Gold!
“Charlotte’s location along the Great Wagon Road made it an important supply center throughout the Revolutionary War, but its first real economic boom came in the 1790s as gold was discovered in Cabarrus and Mecklenburg counties. The largest deposits of gold were found in rock from which it had to be extracted. That took skill. That brought in miners, financiers, and mining engineers and a mining industry began.
“There was enough gold here that it became the local specie and until the California Gold Rush, Charlotte was the leading gold producer in the nation. Charlotte petitioned for and received a branch of the U.S. Mint in 1838.”
At the turn of the century, the economy also depended upon the movement of raw materials and produce along the rivers where they could enter the Landsford Canal. Saunders cites canals as the area’s way to transport goods in the early 1800s but by the 1840s high technology was carriage by rail…the new transportation of the day.
“So forget canals,” Saunders says. “Charlotte had to have a railroad. Eastern North Carolina already had a railroad. Initially they didn’t want to extend it all the way to Charlotte, so folks from Charlotte started talking to people in Upstate South Carolina. Camden, which was the richest part of the Upstate, didn’t like the idea but Columbia was just getting started and they said it looked good to them.
“That caused the businessmen in eastern North Carolina to rethink running a railroad to Charlotte and, by 1856, Charlotte became the intersection of both a North-South and an East-West railroad—each of a different gauge—but we were nevertheless at the crossroads. Salisbury, the largest city in western North Carolina at that time, missed out on that important opportunity. It made Charlotte part of the East Coast supply chain and reinforced our logistical position.
“Cotton had been a significant crop in Charlotte, as it was in the rest of the South,” Saunders continues. “In the 1850s, cotton factors sprung up to handle the financial transactions, warehouses were built and the population of Charlotte doubled between 1850 and 1860. This was the real beginning of Charlotte as a center of commerce.
“The existence of two railroad lines meant that a factor could sell his goods—primarily cotton—either to the North or to the South, wherever the price was better.”
Charlotte’s railroads also featured prominently in the Civil War. “The North blockaded all of the Southern ports on the East and Gulf coasts,” Saunders explains, “and they could bombard any of the factories in the coastal cities, so the Confederacy had no safe place to make engine shafts for their blockade runners, or cannon balls or gun shells.
“Charlotte was inland but it was on the railroad, so the naval arms industry with its engineers set up the naval works for the Confederacy in Charlotte. After the war, Charlotte had some assets to restart its economy. Charlotte wasn’t burned down by Sherman’s troops like Columbia, S.C., and other southern cities, so we had a leg up on growth and the emerging new technology—electricity.
“Electricity allowed you to build and power cotton mills wherever there was a decent body of running water, but you needed engineers to set them up. Because of the Confederate Naval Yard, the engineers were already here.
“J.P. Morgan had the monopoly on electricity in New York and the Middle Atlantic States. In the South, James B. Duke, who made his first fortune in tobacco, decided that he would invest in the same technology and build a regional economy with it. Electricity powered mills, lighted buildings, lighted streets, and powered street cars and electric trains.
“As events unfolded, he was helped in this effort by the governor.” Saunders explains, “In 1916, North Carolina was hit by two Category 4 hurricanes causing more than three days of downpours. Tremendous flooding destroyed most of the bridges on the East Coast and in the mountains and flushed any of the towns along rivers. Just west of Charlotte, the Catawba River crested 47 feet above flood level.
“It was so bad that food had to be brought in by railroad to keep people from starving. As a result, the governor determined that couldn’t happen again and proposed to Duke that if he dammed up all those rivers, he could develop steam plants at the dams to help pay off the expense.
“So that’s how Duke came to control the authority of the dams from the mountains to the county line and ultimately down into South Carolina. It was the beginning of the energy business in the Carolinas. It was a wonderful stroke of luck for Charlotte. It gave us an energy business which is critical to our regional economy.”
Booms No. 2, 3 and 4: Military Base, Textiles and Banking
World War I brought Charlotte’s second economic boom. “With war clouds inevitably coming,” Saunders says, “Charlotte sensed an opportunity, sent a delegation to Washington and persuaded Congress to give Charlotte a military base.”
Camp Greene is built in just a few months on the acreage of the Dowd Farm and 60,000 men from all over the country arrived by train into Charlotte. “Each one of these soldiers,” says Saunders, “was getting $8.00 a month and $4.00 had to go home, but he had $4.00 he could spend here.
“The military base was a real boon to Charlotte. It brought in a lot of cash and all the support businesses associated with it but it also, importantly, brought awareness to the rest of the nation. Now there was a place called ‘Charlotte,’ and it was where their sons were.
“Because of the base and the growth of the local textile businesses, local banks thrived and a branch of the Federal Reserve was established in Charlotte in 1927. This meant that Charlotte was a financial player and was able to affect the flow of money through its branch of the Fed throughout the region.”
So by the 1930s Charlotte had regional roads, trains, electricity, telephones, radio, automobiles, and trucks. Commercial aircraft were the next technology.
“In the early 1930s,” Saunders continues, “planes are the ‘the next new thing’ and Mayor Ben Douglas decided that Charlotte was a growing city and needed an airport. By this time Charlotte was in the Great Depression and Douglas had to figure out how to put people to work. He got a grant from the Works Progress Administration and put the word out that Charlotte was going to build an airport and anybody who wanted a job should show up. People walked, thumbed and drove to the west side of Charlotte and built an airport.
“In the beginning there wasn’t much traffic at the airport, but it was important because of its location. Airmail and travelers moving between Florida and New York were the primary source of business. The airport would expand during World War II when it was taken over by the U.S. Army and made an essential part of the war effort. After the war, it would service a number of traveling salesmen selling goods manufactured in Northern companies and abroad throughout the region. By the 1950s, the airport joined the list of logistical resources which would contribute to the economy. Mayor Belk led efforts to expand it.”
“By the 1950s Charlotte was in its third economic boom as a leading regional textile center,” Saunders continues. “Threads, elastic, fibers, and fabric were being produced. Some of the materials were sent to Michigan to be put in automobiles. Some were used in North Carolina cities for the furniture upholstery. And much of it was used to make articles of clothing ranging from socks to pants to sweaters.
“The expansion of the textile industry led to growth in the area’s trucking. Charlotte’s location, which allows access to half the U.S. population within a day’s drive, gave Charlotte a tremendous advantage in distribution…another logistical, supply chain asset.
“You overlay that with the development of the interstate highway system in the 1950s and Charlotte gets I-85 and then I-77 with its easy to access I-40. About the same time, WBT led the way in building a huge transmitter with East Coast range and WBTV later came on to make Charlotte the broadcasting center for the region.
“Because of good transportation, a favorable labor environment and the airport, foreign companies start to make Charlotte their home. Especially German companies, which produced machinery and chemicals used in the textile industry, located in Charlotte and all of the surrounding counties in North and South Carolina.
“Charlotte’s fourth and most recent economic boom resulted in the city becoming the second largest banking center in the country. But it all started because some very entrepreneurial bankers decide they had to get bigger, and to do that they had to cross state lines.
“Hugh McColl smartly took advantage of a Florida loophole at a time when interstate banking not the law of the land, acquiring a trust company in Florida. Thereafter, he was instrumental in getting federal laws changed to permit interstate banking and began to aggressively acquire bank after bank in the Southeast and then, nationally. He led local bankers in perfecting this expansionary model. The Charlotte banking community grabbed market share and surprised the nation by becoming a huge force in the industry.
“There’s synergy to banks,” Saunders says. “Once you have banks, people and businesses start moving to where the money is. And they could do this by air.”
In 1979, the airport became a hub servicing many cities. Another piece of the logistics story fell into place.
“But the airport still had a modest model,” explains Saunders, “so in 1997, Airport Director Jerry Orr and transportation and logistics expert Michael Gallis started thinking of ways to grow the airport and increase freight flow to build revenue. They met with Norfolk Southern executives and decided, with city support, to build a state-of-the-art, 21st century intermodal facility…the most efficient location for the exchange of cargo among trains, trucks and planes. Norfolk Southern agreed, invested $92 million, and the intermodal facility opened at Charlotte Douglas International in 2013.
“With this intermodal facility, Charlotte has a unique asset for moving goods faster. This means the city is now a player in the global logistics supply chain. Outside of Long Beach, California, the three largest intermodal facilities are Chicago, Houston, and now, Charlotte, North Carolina. The new intermodal facility is a logistical Lamborghini. It is designed to race. It is designed to compete. Now it just needs a driver to realize its potential.”
The Age of Fulfillment
“The next big age is going to be the Age of Fulfillment driven by logistics,” asserts Saunders. “It’s the age of ‘I want it,’ ‘I want it now,’ and not only that, ‘I want it to spec.’ Silicon Valley is designing the software that will allow the customization of mass to make this a reality.
“Ford today can make a million variations of its F-150 truck because it can design and test all those variations on a computer. They want to let you determine the features you want and the computer sends the instructions to the machines that make the truck customized to your needs. And once it is made, today’s consumer wants it delivered tomorrow so that he or she is fulfilled!
“What’s also important about this customization revolution is that it is part of another movement, that of the end of inventory. Inventory has costs associated with handling, spoilage, deterioration, damage and storage. Ideally, a manufacturer wants to make it and move it to the end user without delay. That places a premium on locations where you can do that.”
“All of this is part of the re-shoring and next-shoring of American industry. That is what the new industrial revolution is all about. ‘Real nations make things,’ says Chris Anderson in his cutting edge text Makers. And it matters where you are located.
“The driver of Charlotte’s this next boom will center on logistics. Logistics means flow. The faster and less expensive the flow of anything, the more successful a business or a city can become. To do an inventory of local ‘flow’ assets, we need only consider our regional crossroads location and the companies involved in the ‘flow business’ using highways, planes, rail to Eastern, Gulf and West Coast ports, oil and gas pipelines, communications platforms, financial data pipelines, and big data pipelines moving all of the information supporting the cloud and streaming content to our smart phones. (This is why Google, Apple, Amazon, and Disney are in the region.)
“Add to that a critical, human resource pipeline, a ‘workforce pipeline’ to provide a trained workforce, which is being built by Heath Morrison of the Charlotte Mecklenburg Schools, Tony Zeiss of Central Piedmont Community College, Bill Anderson of MeckEd, and Phil Dubois of UNC Charlotte,” confirms Saunders.
“Access to these pipelines means businesses can operate smarter, faster and cheaper. Successful 21st century businesses, manufacturers and distributors must locate where they can get their stuff to the largest markets the fastest and the cheapest without inventory. Charlotte is one of those singular locations on the planet with all essential pipelines.
“Remember cities like Tyre, Athens, Corinth, Venice, Pisa, Genoa, Carthage? All of those places used their logistical assets to grow as acknowledged by the history books. Logistics matters.
“The country has been divided into seven economic megaregions. Not only is Charlotte in the center of one of them (the PAM or Piedmont Atlantic Megaregion), but she is also the only major distribution location midway between the North and South and the East and Midwest.
“We’ve got to leverage these assets to attract new domestic and international businesses. We’ve got to educate everyone and explain to them the opportunities which they present. This needs to be in the consciousness of our business and civic leaders,” says Saunders, clearly a man on a mission.
“We’ve got to have a strategy to leverage all business sectors with these assets because we are in a global competition for jobs and opportunity. Other cities are aggressively positioning themselves for the future. We have to realize we’re in a global competition,” Saunders emphasizes.
“And we need leadership with local solutions, because we can’t count on anybody to do this for us. We can’t count on Raleigh or on Washington to solve all of our problems. Charlotte’s going to have to come up with its own solutions. Business people have done it before.
“The task is doable. All we have to do is look how we got here. We started a city. We started a gold mining industry. We started a military base. We started a manufacturing and textile powerhouse. We started a banking center. We started an energy hub. These and other things were started by the people of this community who had a dream, who had a vision. All of it was the result of individual and collective creative energy!”
Creating a Global Crossroads of Commerce
As part of this focus on global commerce, the U.S. Commercial Service and the North Carolina District Export Council are gathering the U.S. Commercial diplomats from 14 countries in North and South America here in Charlotte in October to provide information about access to world trade.
From Saunders’ perspective, this is a propitious time in the history of this community because we now have the opportunity to play on a global scale. This has never happened before. The event in the fall will more formally introduce the foreign trade community to Charlotte, to be followed next year by the completion of the Panama Canal expansion allowing transit by the huge post-Panamax cargo ships.
They will deliver the commerce of the world to the ports (in most cases the newly expanding Port of Charleston) where it will transit by rail to Charlotte’s intermodal facility for further distribution. That will help make Charlotte a true inland port city in the center of a thriving global commercial marketplace.
“Creative energy, making things and moving things is what we have done in Charlotte since the beginning. Our tradition is summarized in the phrase “Create It, Make It, Move It.” It is the elevator pitch that sums it all up. We can use it to attract business and investment capital to the region and aggressively pursue domestic and international trade and business opportunities.
“There is no reason we cannot build a 21st century economic city-state with our assets to create a new city with new trade routes, using new technology and new energy to become a major player in this new age.
“It is time for Charlotte to envision how she will become a new regional city in a global marketplace. It is all about thinking BIG,” emphasizes Saunders. “Charlotte—a place where we create it, make it, and move it better and faster than anyone else. Why not here and why not now?”
When the nation found itself in a mortgage nightmare after 2008, American Security Mortgage Corp. held on tight and persevered.
It might have been the Charlotte-based firm’s sense of attitude and excellence. It might have been the ethics and strong banking reputations of both founders Jim Abbott and Phil Mahoney. Or it might have been the free hugs.
Yes, employees at the mortgage banker participate in endless hugs when they come to work each morning, all part of an “unwritten” rule of sorts that has done wonders to boost morale and employee support.
“Our employees are the best in the business, and basically most come to American Security Mortgage and stay. We have longevity—people stay and even retire with us,” says Mahoney, the 63-year-old president and CEO of the company.
The difference between American Security Mortgage Corp. (ASMC) and other mortgage groups is also the fact that they are mortgage bankers as opposed to brokers. Mortgage brokers traditionally receive any number of rate sheets for a vast array of mortgage products from wholesale lenders. However, mortgage bankers issue mortgages from their own bank account.
Employees of ASMC closely watch pricing every day to stay competitive, and, they know their products. That’s what enables ASMC to secure and provide the most favorable mortgage financing products and pricing to meet the unique needs of each borrower customer.
Celebrating 15 years of in the mortgage banking business, Abbott and Mahoney are proud of their book of business and the company’s strong referrals and repeat financing.
They are at the top of their game. As a mid-size mortgage banker they are continually ranked in the top 10 of mortgage companies in the Charlotte metro area. Mahoney says it all began by paying their dues in the Carolinas’ corporate banking world and having a strong work ethic.
A Powerhouse Pairing
Both Abbott and Mahoney began their mortgage banking careers upon graduating from college. They worked “in the trenches,” they are proud to say, calling on Realtors and homebuilders and assisting customers with mortgage financing.
Chairman Jim Abbott was with First Union Mortgage Corp. for 34 years and from 1980 to 1995 as president and CEO. During his tenure, First Union Mortgage was generally ranked in the top 10 in the United States in home loan originations and loan servicing.
Abbott had hired Mahoney straight after his graduation from East Carolina University in 1974, when inflation reigned and jobs were scarce.
“I graduated on a Friday and was at work on Monday,” remembers Mahoney. “I actually had the job three and a half months before graduation. Just having a job during the recession was very lucky. I’d say 60 to 70 percent of those I graduated with didn’t have a job. My father also helped me with a strong work ethic—he worked 12 to 14 hours a day.”
Mahoney’s stint at First Union lasted 10 years with Abbott serving as a strong mentor, good friend and occasional golf partner. Mahoney went on to serve for another 10 years at Wells Fargo as Southeastern U.S. regional loan production manager and later as group head of mergers, acquisitions and joint ventures.
“At that time,” says Mahoney, “I was flying about 100,000 miles a year. Jim approached me and said, ‘Let’s start a mortgage banking business so you can see your son grow up.’ Frankly, that sounded very appealing. The banking corporate world had given me a great platform and experience, but I was ready for something different.”
So in June 1999, the duo fronted the funding for ASMC and opened their doors in a 4,000-square-foot suite in the same glassy office building in SouthPark on Rexford Road in which they are located today. They had six employees.
Today, the company employs 143 altogether—64 in their Charlotte headquarters and loan office and the rest in their other locations in Fayetteville, Gastonia, Hickory, Indian Trail, Jacksonville, Clayton, and Lake Norman.
They handle residential mortgage lending in South Carolina, in Wilmington and Morehead City, and also have a satellite office in Northern Virginia. ASMC holds licenses in the District of Columbia, Maryland, North Carolina, South Carolina, Tennessee, and Virginia. They now occupy 18,000 square feet at their Rexford Road headquarters.
Together, Abbott and Mahoney have been a good match. Both have served as president of the Mortgage Bankers Association of the Carolinas. Abbott also received the Distinguished Service Award in 1990 from the Mortgage Bankers Association of America, its highest honor.
Given their breadth of experience, Mahoney says they are intimately familiar with all the lending and customer service components necessary for all parties in a home sale.
Mahoney is also frequently quoted in area publications about the mortgage industry, and its highs and lows. In December, he served on a panel at UNC Charlotte about the current stabilization in housing markets across the country and the role played by the government takeover of Fannie Mae and Freddie Mac, as well as the Federal Reserve’s investment in mortgage-backed securities during the recession.
Finding Their Balance Quickly
When U.S. home prices declined steeply after peaking in mid-2006, it became more difficult for borrowers to refinance their loans. As adjustable-rate mortgages began to reset at higher interest rates (causing higher monthly payments), mortgage delinquencies soared. Securities backed with mortgages, including subprime mortgages, widely held by financial firms globally, lost most of their value.
“In 2008, frankly if you survived, you were lucky,” says Mahoney. “Only the truly good people made it. We had clean balance sheets, no repurchase risks. We found our balance quickly.
“We understood that the world was changing and we had better be able to work within government regulations. We never ran our ship ashore. We’re smaller, more nimble, and we adapted quickly.”
In response to stricter mortgage requirements that stem from the 2010 Dodd-Frank Act, Mahoney says his company is working hard to, as he says, “figure out the new system and work it.”
“We’re a good size for Carolinas; nationwide we’d be small. We’ve probably added seven people just in compliance areas—just checking the checkers,” he adds. “The rules are just now being promulgated; the full effects are yet to be determined. It’s made credit more restrictive. But has it made mortgages impossible to get? No. People have to jump through a few more hoops now.”
After the 2008 financial crisis, many mortgage lenders introduced guidelines that went beyond requirements for mortgages backed by the government. Some now appear to be relaxing those guidelines.
Mahoney says, “The pendulum had swung too far. Now we’re just trying to find that equilibrium. As a matter of fact, we’ve even been able to drop the minimum credit score a number of points for a government-backed loan.”
Loyalty and Longevity
Mahoney says loyalty and longevity are the two factors that contribute to employee buy-in to the mortgage banker. ASMC is doing its best to keep customers happy and to keep employee retention high. The principals believe happy employees who can process and approve loans at great rates and good credit scores make for loyal employees.
The tone in the Charlotte headquarters is collegial. Three larger-than-life headshot posters of Mahoney are mounted in the hallway, his contribution to the office for hugs while he is traveling, he says, laughing.
All three of them have been defaced with a red grease pencil. In one he is an angel with halo and feathered wings, in another he is a devil with horns, mustache and pointed chin; in the last one he is a pirate, complete with eye patch and missing tooth.
“I’m not sure which one I like the best, but I hope they like that one,” he says, pointing to the angel. “We have tried to have fun, and when I say that I mean business fun.”
During the real estate turndown last fall, ASMC laid off six employees. “Then we then went to our top-earning 18 employees and said, ‘Will you take a 10 percent pay cut so we have no more layoffs?’ And they did, and we did.
“Those people were underwriters, supervisors, people in processing, closing, financial,” he says. “We allow people to have the whole story of what is going on here. We are good communicators. They gain real insight into this business.”
And his favorite way to gauge employee success? “We have a litmus test for them. When I put my arm around them and introduce them to a customer, when that employee walks away I don’t have to apologize for them. That’s been very successful for us,” he says.
“In this industry people tend to move around. The ups and downs of real estate finance and trends affect them,” Mahoney adds. “Look at the big banks—they have lost thousands of people in the last five to six months.”
“If you look at our company, we have a lot of longevity. When people come here they tend to stay,” he says. “We offer an opportunity to move up, good pay and good benefits. They have the kind of jobs where when they wake up the look forward to coming to work. I truly believe that.”
Doing It Right
American Security Mortgage doesn’t exactly rely on advertising for customers. Their one brochure for potential residential homebuyers is relatively spare. Web presence? They are everywhere, it seems.
Their message: AMSC was founded on the core belief that home loans need to be handled by a team of in-house professionals and that by controlling each phase of loan processing, underwriting and funding, they are able to provide clients with exceptional customer service and on-time closings.
They are strong words of promise, but they appear to be performing to them. Customers come to ASMC looking for variety of mortgage products, including conventional, jumbo, FHA, VA and USDA loans.
Customers seem to be as loyal as the group’s employees. Kathy Adair of Charlotte says it was ASMC’s quick work and Mahoney’s attitude that spur on the popularity of the company. “I think Phil’s customers believe he is a fair and reasonable mortgage banker, and that is hard to find in this day and age.
“Customers might not realize this, but he still uses common sense,” she says. “He is a very caring and compassionate man. His customers are his employees, his borrowers, Realtors, builders, and mortgage peers.”
Abbott is very purposeful about the company’s vision: “To be recognized by our borrower, Realtor, and homebuilder customers, our employees and our competitors as the model of excellence in residential mortgage banking.” He encourages employees to keep that vision in mind at all times. By keeping it top of mind, he believes it helps employees to better participate and act on it.
“We’re so grateful to be where we are now,” Mahoney says humbly. “There was a time when American Security Mortgage was an unknown. Although Jim and I are both fairly well known in the industry now, we still appreciate it when we pick up the phone and people allow us some time. We are so thankful to the people that have helped make it happen.”
Mahoney doesn’t think ASMC will ever make the mistakes so many mortgage bankers made six years ago. “It’s obvious now that some of the Wall Street crowd thought they had they had assessed the risk in different types of lending, and guess what? They were wrong. They didn’t assess different types of risk,” he says.
Both Abbott and Mahoney, and their hugging employees, see a brighter future in processing and underwriting home loans.
“We will continue to expand the business until we hit our ‘sweet spot,’ which is a size that still allows us to know all of our employees and customers,” says Mahoney.
A new zeitgeist is growing in Charlotte—a feeling that Charlotte is on the brink of something even larger. And there’s evidence to support that feeling. Things are happening here and around the globe that are and will continue to significantly impact Charlotte as we strive for greater prosperity.
A Global Business Environment
There was a time when being a global company was an exotic idea. Smaller businesses tended to be local; larger ones national. Today, going global is not only a possibility, it is almost a necessity. Consumers, businesses and governments have become accustomed to searching for the best products and services worldwide.
“When you speak about the global competitiveness of the Charlotte region and how we might enhance that going forward, you have to understand we start from a very strong base,” says Michael Almond, CEO of the international business and economic development firm Antaeus Consulting, LLC.
Almond has spent more than 35 years involved in international economic development, most notably as a member of the Council on Foreign Relations from 2007 to 2012 and as president and CEO of the Charlotte Regional Partnership from 1999 to 2005.
“We have a strong manufacturing base, a strong distribution base, energy, banking and finance and health care here,” Almond continues. “Our diversified economy has enabled this region to avoid or be late to join recessions and be quick to recover from them.
“The Charlotte region is a destination market for foreign investment. If you were to combine the gross state product of the two Carolinas and compared that to countries around the globe in terms of GDP, the Carolinas would rank around 15th or 16th in the world.”
Michael Gallis, a transportation and logistics expert and principal of Michael Gallis & Associates, likens our present day attempt to define our future growth to the work 20 years ago by Jerry Orr and others on growing the airport to be an economic force.
“We were maybe third or fourth tier down the line,” says Gallis of the airport’s previous status as a freight center. “We weren’t a global hub, we weren’t a U.S. hub, and we weren’t even really a Southeast hub. We were just a regional hub serving the immediate area.
“‘How does Charlotte get in the game?’ we asked, but we realized the only game to get in was global. Great global hubs around the world are dynamic and successful because they have the greatest access to markets. Trade from around the world passes through them and businesses love them because from them, they get direct access to the world market. Cities like New York, San Francisco, Los Angeles and Atlanta are doing so well because they’re big global access points.”
Ask the Experts
Mark Beattie is a principal with Hickey & Associates, LLC. His firm specializes in global site selection, public incentives and workforce solutions. When evaluating potential business sites, they consider certain key factors fundamental to the search process.
Among them are: availability/cost of land and proximity to major highways, available infrastructure (utilities, sewer/water, power, transportation networks, etc.), site-ready location, cost of doing business, access to raw materials and supply chain, access to logistical support, tax and regulatory environment, availability of labor and wage requirements, location of zone designations that may affect the company, availability of public incentives to offset startup cash and reduce long-term reoccurring costs, and quality of life.
Beattie confirms that Charlotte has many advantages it can use to attract business globally.
“The strength of the businesses that are currently here are a stabilizing influence,” he says. “And Charlotte has grown up. It has greater diversity than ever in terms of its population and business representation. From a global perspective, the more diverse your platform of business and cultural opportunities, the more attractive it is for those considering the area from a foreign direct investment perspective.
“Charlotte also has a good quality of life. People don’t work 24/7 and businesses recognize the importance of an environment where employees feel comfortable and can enjoy their off time. Charlotte is a place of recreation, leisure and cultural engagement. The proximity of the mountains, the sea and other city venues within a two or three hour drive all add to the quality of living here.
“Also the growing visibility and positive reputation of the city is a huge strength in competitiveness,” Beattie continues. “The way that Charlotte handled the Democratic National Convention was very positive and the upcoming soccer match between English Premiere Team League’s Manchester City and Liverpool this August will have the whole world tuning in.
“Our ability to attract world class artists, like when Yo-Yo Ma performed with the Charlotte Symphony a couple of years ago, is recognized in the cultural world. All of these things give Charlotte visibility around the globe.”
His observations are matched with comments for real executives at real businesses choosing to do business from Charlotte.
“I am an advocate for Charlotte. Our relocation from New York City to Charlotte has been nothing short of spectacular,” says Eric Steigerwalt, head of U.S. Retail, a division of Metlife, Inc. which recently moved into new office space in the Ballantyne area of Charlotte. We have been hiring for over 900 positions and we have had over 77,000 applications for these jobs.”
“The numbers work for Charlotte, there is no doubt about that, but what is even more important is the quality of life in Charlotte,” says John Williams, CEO of Domtar, Inc. in nearby Fort Mill. “With its proximity to the mountains and to the shore, and the culture in this community, it is an easy decision.”
How Do We ‘Get in the Game’?
How do we ‘get in the game’? We’re already in it.
A grass roots Charlotte group, dubbed by The Charlotte Observer as the Global Vision Leaders Group, describes the long-term economic vision for the Charlotte region to become “a global hub of international trade”: a great inland port city leveraging its financial, energy, health care, educational, entrepreneurial, manufacturing, and logistical resources to world prominence.
In the ethos Gallis, Tony Zeiss of CPCC and Chase Saunders of the McNair Law Firm, founders of the Global Vision Leaders Group, the Charlotte region will accomplish this through a three-prong initiative: Creating things better than our competitors by adopting entrepreneurialism and innovation as prominent and core values of the region; making things better than our competitors by growing our advanced manufacturing and export base and providing these businesses with world-class employees through exemplary education and training; and moving things faster and cheaper than our competitors through the new Charlotte Regional Intermodal Facility and access to the deep water ports of Charleston and Savannah.
With this vision in place, the Charlotte region enters the global competition. Through this technological disruption of traditional markets how competitive a region’s offerings are across the globe will determine how successful it becomes. Participation in this new marketplace also brings increased competition from around the globe.
Measuring Global Competitiveness
The idea of measuring competitiveness on a global scale may seem daunting, but several respected surveys/reports have come about to do just that—like the Ease of Doing Business Index and the Indices of Economic Freedom—which look at factors affecting economic growth. Neither of these considers as many as the Global Competitiveness Report, which made up of over 110 variables.
The Global Competitiveness Report is an annual report published by the World Economic Forum since 2004. It ranks countries based on the Global Competitiveness Index, which integrates the macroeconomic and the micro/business aspects of competitiveness into a single index.
The report “assesses the ability of countries to provide high levels of prosperity to their citizens. This in turn depends on how productively a country uses available resources. Therefore, the Global Competitiveness Index measures the set of institutions, policies, and factors that set the sustainable current and medium-term levels of economic prosperity.”
The variables evaluated include the following: Institutions, Infrastructure, Macroeconomy, Health and primary education, Higher education and training, Market efficiency, Technological readiness, Business sophistication, and Innovation.
Since 2010, Switzerland has led the ranking as the most competitive economy in the world. The United States, which ranked first for several years, fell to fifth place (behind Switzerland, Singapore, Finland and Germany) due to the consequences of the financial crisis of 2007–2010 and its macroeconomic instability.
Charlotte ranks among the World’s Most Competitive Cities in a report recently released by IBM and Site Selection magazine. Of the top 100 global cities, including many of the larger business meccas: New York, London, Paris, Hong Kong, Singapore, Dubai and like, Charlotte ranks 40th or higher across the board.
In fact, Charlotte was one of only 12 U.S. cities to make the report’s ranking, grouping it among Atlanta, Chicago, Dallas, Detroit, Houston, Los Angeles, Miami, New York, Philadelphia, San Francisco and Washington, D.C.
The analysis replicates the strategic shortlisting process that companies often utilize when making location decisions. It takes qualitative measures such as business environment and quality of life, while also weighing quantitative cost factors.
The study looks at five investment types: international headquarters (35th), shared services (20th), software development (40th), financial services (26th), and life sciences R&D and production (35th), and ranks each city for the different types of business operations based on defined factors. The breakdown enables cities seeking to attract investment to understand their competitive position within each sector and business function.
The report also compared cities “across the board” for overall competitiveness in a cross sector ranking for the qualitative and financial attractiveness. Warning that cross sector scorings possibly hide particular strengths of individual cities, Charlotte weighs in at 74th financially and 33rd in quality. The relative tradeoff is best illustrated by Dhaka, Bangladesh, ranking first financially and last in quality.
For all sectors, the results display a clear tradeoff between quality and cost, with higher quality locations tending to have lower financial attractiveness and vice versa. For cities seeking to attract investment, it is important that they understand their competitive position within each sector and business function, and are able to see how this translates into a particular value proposition to investors within a regional or global context.
A Global Contender
Charlotte has always been at the crossroads of commerce. From its founding in 1768 at the crossing of two Native-American trading paths to its Gold Rush in the early 1800s and the rise of the region’s textile mills and banks, the city is now known as a top U.S. energy hub, the second largest U.S. financial center and third in the nation in world-class health care facilities.
Some of Charlotte’s major advantages are simply because of where it is located. The area east of the Mississippi represents 29 percent of the contiguous land of the U.S., 59 percent of the population, and 60 percent of all manufacturing establishments, and 65 percent of all manufacturing employment. A full 50 percent of all exports come from the eastern U.S. Charlotte business can reach 60 percent of the U.S. population within two hours by air or 24 hours or less by truck or rail.
Fifty-five of the country’s top 100 metropolitan areas are within 650 miles of Charlotte. It is already a major distribution center midway between the Northeast, Midwest and Florida markets. As a global hub, it has easy access to interstates, rail, intermodal and airport, and most importantly, ports.
Of Fortune 500 firms, 264 are represented in Charlotte. And Charlotte is at the epicenter of the Piedmont Atlantic region, the fourth largest concentration of manufacturing in the country and home to 918 foreign-owned businesses.
Beside its pleasant climate and good natural resources including a relatively low cost of energy, the greater Charlotte metropolitan area is home to 2.2 million people and is the second largest city in the Southeast, and its population in a 100-mile radius exceeds that of Birmingham, Jacksonville, Miami, Tampa, Memphis, Nashville or Norfolk.
As far as infrastructure, it’s hard to overestimate the importance of Charlotte Douglas International Airport (CLT) to the economic success and global competitiveness of the city and region. It ranks 6th nationwide in operations, 8th nationwide in passengers and 33rd nationwide in cargo.
The merger of US Airways with American Airlines makes Charlotte the second largest hub for American Airlines, now the world’s largest airline, and significantly expands Charlotte’s access to international flights.
The recent addition of a third parallel runway and the opening of the Charlotte Regional Intermodal Facility there are important parts of the plan to make Charlotte a global freight hub. Much of today’s cargo moves via a combination of modes such as ocean vessel to rail to truck, known in shipping as intermodal transport. Having multiple modes of transport in one common hub facilitates the transfer of freight, saving time and money.
The hub represents a $92 million investment by Norfolk Southern with $15.7 million of federal assistance and will allow the future ability to transfer containers between trucks and trains equal to the current two largest facilities located in Dallas-Fort Worth and Chicago. It is expected to add long-term benefits of 5,000 additional jobs and $7 billion to the area’s economy.
The new intermodal hub also has the added benefit of being strategically located between I-85 and I-77, providing easy access to the interstate system and better exploiting the city’s natural advantage of being a midpoint location for distribution of goods.
Norfolk Southern Railroad’s $2.5 billion expansion of rail and infrastructure enhancement to its Crescent Corridor allowing the high speed movement of freight between the Southeast and Northeast is also a vital improvement.
Easy interstate access also facilitates movement of import and export cargo from the intermodal hub to the southeast seaports of Savannah, Norfolk and Charleston, which, in order, are the second, third and fourth largest in container tonnage of all East Coast ports.
The convergence of these factors with the $5.25 billion expansion of the Panama Canal, expected to be completed by December 2015, could substantially impact Charlotte’s global competitiveness. Historically, the bulk of the Charlotte region’s trade with Asia has moved across the Pacific through the mega port of Los Angeles-Long Beach and by rail or truck to Charlotte. When the larger capacity post-Panamax container ships are able to transit the Panama Canal, it will provide large capacity container ships an all-water route between Asian and East Coast ports and an alternative to movement via the West Coast.
This could mean much higher cargo volumes for East Coast ports and the inland port of Charlotte could be a strategic logistical link for much of that cargo. Our growing profile as an international freight hub could mean greater international visibility and attractiveness to foreign and domestic companies looking for a location with an infrastructure that supports trade.
“In West Coast ports, trade flow is about 98 percent Asian and two percent European,” comments Gallis. “For Atlantic Coast ports, cargo from Asia and Europe are about equal, but East Coast ports also get a large trade flow out of Latin America. We get trade cargo from Africa, the Middle East and the Indian subcontinent too, so literally all six trading blocs of the world flow through the East Coast.
“We can have access to every one of those trading blocs if we have a global marketing strategy to tell the world that Charlotte is the most efficient place on the East Coast to ship goods.”
How Do We Become an Alpha City/Region?
How do we become an alpha city/region? And how can you participate?
Be aware. First and foremost, it is important to be aware of just how well-positioned Charlotte is to become a hub of global commerce—ultimately leading to increased job growth and prosperity. Being aware of its advantageous position will enhance your decision-making as you operate your business and enable you to better evaluate proposed initiatives in the public sector as well.
Stay informed. Know Charlotte’s strengths and potential and keep abreast of developments and global thinking. Visit www.cltglobal.com for a compilation of great resources; attend the “Discover Global Markets: The Americas” program being held by the U.S. Commercial Service here in Charlotte October 29th through the 31st.
Become a participant. Join in the global thinking and discussion about how Charlotte resources can be put to better and more synergistic use.
Take advantage. Take advantage of opportunities to move your own business forward globally—maybe investigate international trade opportunities, partner with companies already doing business in other parts of the world, investigate the logistics of transporting your products overseas, look for reps overseas to sell your products, revisit your website to evaluate how well it displays your products/services and whether it accepts foreign currencies, or simply learn another language.
As Chase Saunders says, “Think big. Think how far we’ve come and where we are headed.
“Practically all human knowledge is available to all people on the planet 24/7—think Google. The digital and Internet revolution has erased distance from the access to knowledge—think Apple, Google, Samsung. It is now in the process of erasing time from the access to supply—think 3D printing.
“Mass is being digitized. Products are being designed, prototyped, tested, modeled, and transmitted to production sites for one-off production.
“Think about Amazon and the end of inventory with the just-in-time delivery of things your want. The key to erasing distance from these things are the key locations where things can be made and distributed faster than other places. In the U.S., there are seven of those places and we are at the center of one of them; the world is being divided into other locations as new trade routes are being set up for the next 50 years.
“Charlotte is poised to be the leader in manufacturing and distribution for the entire East Coast with its incredible, new, and huge, inland, intermodal freight and passenger port. There is an old saying that reads, ‘May you live in interesting times.’ Charlotte is on the threshold of a dramatically interesting time.”
Nearly four years ago, Mike Guggenheimer knew that sales at RSC Chemicals, an Indian Trail manufacturer of hands-on household consumer lubricant and cleaning products including Liquid Wrench and GUNK, were optimal.
But what if the company pushed the envelope, capitalizing on the same basic technology RSC Chemicals had been using for 90 years, and formed a sustainable solutions platform aimed at big industry: deep sea oil rigs, waste management, underwater construction and dredging?
What if a new business could produce safe absorbent technology to clean oil spills? Or produce high-performing readily biodegradable industrial lubricants to keep high-risk businesses safer from the start?
“It made perfect sense to combine current technology developed by parent company Radiator Specialty Company and sister company RSC Chemical Solutions, look to acquire and invest in similar bio-based partners, and form RSC Bio Solutions,” says Guggenheimer, who is CEO of the newer company.
Extending Their Reach
“Radiator Specialty Company has a long-standing strength in formulating and manufacturing lubricants and cleaners, so the investments that led to RSC Bio Solutions are a natural extension of this core capability,” states Guggenheimer, 40. “And, Radiator Specialty Company has used bio-based ingredients for many years in its products.”
Thus began a journey of substantial growth for Radiator Specialty Company and a series of acquisitions and partnerships, including Ohio-based Terresolve Technologies’ ENVIROLOGIC line of industrial lubricants.
Guggenheimer and other company executives began working with Radiator Specialty Company owners Alan, Philip and Samuel Blumenthal to create RSC Bio Solutions. All three privately held companies are owned by the Blumenthals, a Charlotte family well known for their civic and philanthropic contributions including the N.C. Blumenthal Performing Arts Center, the Blumenthal Cancer Center at Carolinas Medical Center, and Shalom Park.
Radiator Specialty Company (RSC), RSC Bio Solutions’ founding company, was created by traveling salesman I.D. Blumenthal, great uncle to the current owners, in 1924 after a chance encounter on a Charlotte business trip led him to find a new way to plug a radiator leak. Solder Seal was the first of many products of RSC.
I.D.’s brother Herman joined the company in the ’30s, and when I.D. died, Herman took the helm eventually passing on the responsibility to his eldest son Alan in 1978, who served as president and CEO for 22 years. Currently, John Huber serves as president and CEO of RSC. Owners Alan, Philip and Sam, all brothers, are no longer involved in the day-to-day operations of the three RSC companies, but are “active and engaged owners,” describes Guggenheimer.
In 2010, RSC adopted the name RSC Chemical Solutions to better reflect its range of products, which include lubricants, oils, hydraulic fluids, fuel additives, degreasers, cleaners and sealers.
Guggenheimer describes RSC Bio Solutions as a separate but connected platform to RSC and RSC Chemical Solutions, a longtime name of trusted brands found in stores from Wal-Mart to Auto Zone. The difference? Bigger applications and entrance into a world of biochemistry where sustainability is key.
RSC Bio Solutions manufactures and distributes safer bio-based readily biodegradable cleaning, degreasing and lubricating products for risky business—oil spills, hazardous waste mishaps, etc.—and oversees partners that do both. “Think large cargo container ships or even the simplest of turf lawnmowers used in commercial applications…that’s RSC Bio Solutions’ target audience,” says Guggenheimer.
“The company’s founding story really embodies what we are all about, using chemical tools to solve a problem,” says Guggenheimer. “It ties into the ethos, the spirit of reliance, the ability to fix problems by your own hands. It really is who we are today.”
In 1941, the popular Liquid Wrench product became part of RSC’s line, while automotive chemical, plumbing and hardware products were added after World War II. Rubber production for the retail line was moved from California to Charlotte in 1949. GUNK Laboratories was acquired in 1959, resulting in the addition of an entire line of degreasers, and in 1964 a new office was opened in Charlotte.
In 2007, the company combined its entire work force at what is now 500,000-square-foot plant in Indian Trail where most manufacturing and distribution for all three companies takes place..
Investment in Emerging Tech
RSC Bio Solutions is in close control of procuring raw materials and research and development for its industrial lubricants—hydraulic fluids and gear oils, predominantly—but uses a mix of its own blending facilities and outside manufacturing partners throughout the world.”
Guggenheimer attributes RSC Bio Solutions’ rapid growth to identifying an “unmet” need in their search for other markets: “The key was finding industrial companies that were looking for safer technology without having to trade off cost or performance,” he asserts.
And pushing RSC’s eco-friendly lean was key from the start. “For RSC as a whole, we are committed to running an organization that is sustainable—from an environmental and social standpoint, but also from an economic standpoint,” says Guggenheimer. “We are working to ensure the next 90 years are just as successful as the first 90 years and we see the economic value that safer, readily-biodegradable technology can deliver to our customers.”
For several years, RSC had been researching and planning for its expansion into bio-based fluids while Guggenheimer took the lead in 2010 by negotiating deals with three partners.
Through a partnership with Gemtek, RSC Bio Solutions is now the exclusive North American licensee of SAFECARE technology for cleaners, degreasers and solvents in the industrial market. A partnership with Sorbent Green and exclusive distribution rights to GREENSORB, an absorbent for solvents, oils, hydraulic and functional fluids, followed.
Next came a partnership with Terresolve, involving an investment of growth capital and a minority ownership in the company (which has since become a majority ownership). In addition, the Terresolve ENVIROLOGIC brand of industrial lubricants is now available to RSC customers. “Now there is one company that offers a full array of high-performing, readily biodegradable alternatives to petroleum-based lubricating and cleaning products,” says Guggenheimer.
RSC Bio Solutions also capitalizes on the two retail bestsellers produced by RSC Chemicals. RSC Bio Solutions provides ready-to-use, safer, GUNK Powered by SAFECARE and Liquid Wrench Powered by ENVIROLOGIC products formulated for industrial applications.
Guggenheimer says this means that RSC and both divisions offer a one-stop shop for advanced, readily biodegradable lubricating, cleaning and degreasing chemicals in the industry “These powerful chemicals deliver an enhanced level of safety and business efficiency, reducing workplace hazards and costs across a wide spectrum of applications ranging from waste management and utility fleets to offshore marine and golf course maintenance,” he explains.
Before joining RSC, Guggenheimer was an operating partner for Blackstreet Capital Management, a private equity firm based in Maryland, and previously held a number of general management positions for chemical and textile manufacturer Milliken & Company, headquartered in Spartanburg, S.C.
Competition and Position
Customers of RSC Bio Solutions heavy-duty degreasers, bio-based surfactant blends and solvents, and lubricants go across the spectrum from construction and excavation companies to manufacturing firms with assembly lines.
“The case studies on our website speak volumes,” says Guggenheimer. “Once users decide to try our products, they are sold on RSC Bio Solutions. We also have a long history of approvals from equipment manufacturers,” says Guggenheimer.
There are many customers in the waste management industry. “Perhaps you have garbage trucks being used in a residential neighborhood, and a hydraulic fluid line breaks—you’ve got a real mess on your hands,” says Guggenheimer. “We have to prove that the technology is safer and it works without damage to your trucks. Our products are often better than petroleum-based lubricants; vegetable oils can offer superior lubricity.”
Currently, the company’s best sellers are ENVIROLOGIC products—mainly driven by EPA regulations in the marine industry and lubricants used in large ships and other vessels. “Our products are used by big equipment in sensitive places,” says Guggenheimer.
Airports and other aeronautical-related businesses tend to purchase the company’s cleaners, degreasers and solvents. “There are times when you don’t want chemical exposure to employees, and our safety benefits add real value,” explains Guggenheimer. “Oftentimes cleaners with water cannot be used in an airport hanger, for example. SAFECARE and GREENSORB draw oils out of the hanger, absorbing that oil and encapsulating it for safe disposal.”
Guggenheimer is especially proud of one Charlotte customer, Jacobsen, which designs and builds advanced turf maintenance equipment—big lawn mower fleets. “When a turf mower breaks down on the 18th green of the golf course and has a spill, and we can provide a safe solution that has real value to the client,” he states.
“We are very focused on and dedicated to environmental and alternative industries. We understand alternative technology. We are balancing breadth and scope with tailored customer service,” he says. “We cannot be everything to everybody, but we get to know our customers and their industries very well, as well as the application of our products to their needs.”
Guggenheimer adds that other companies make misleading claims about bio-based products—or simply offer products that don’t work—and that does more harm than good to RSC Bio Solutions. “It’s more difficult to overcome a less than satisfactory prior experience,” he says. “And truthfully, some competitors’ products don’t work.”
As a matter of fact, Guggenheimer says the Blumenthal family wanted to move RSC in a bio-based direction for many years but was wary of “greenwashing.” RSC needed to be sure that offering an environmentally friendly line of products meant more than just slapping a specialized logo on a plastic container. The bio-based products had to be as strong as their petroleum-based counterparts, according to Guggenheimer, to maintain the company’s reputation for quality.
Asked about competitive products, Guggenheimer responds, “We don’t focus too much on the competition because we think we can help build a new marketplace where a number of players can be successful. We worry more about bad competitors who mislead customers and make it harder to build the market than we do about good competitors. I hope we see more strong products from others. We actually have a big oil company as a customer now, and are helping them to address the need with their customers.”
RSC Bio Solutions looks to be positioned well as a thought leader in the ever-evolving world of eco-friendly functional fluids. Guggenheimer is on a mission to educate. He recently spoke at two bio-based chemical conferences, meeting with companies invested in being environmentally safer.
“My vision for RSC Bio Solutions is to be a global force for change in markets using big equipment in sensitive environments. Some of these market areas have been historically very reluctant to change, but I believe we can show them how our products actually reduce risk,” he asserts. “I expect our thought leadership and investments in this space to develop opportunities for RSC and address a looming sustainability challenge we all face.”
RSC Bio Solutions hopes to see significant growth on this platform. Guggenheimer says RSC also has plans for aggressive growth in their traditional consumer products such as GUNK and Liquid Wrench, as well as MotorMedic (maintenance chemicals for vehicles) and TiteSeal (leak repair products). He is quick to credit his colleagues and coworkers in bringing the company together in a “It takes a village” kind of way.
“Although RSC Bio Solutions is fairly small now relative to the full RSC enterprise, it stands as a greater percentage of total sales in the future,” he says. “At the same time, bio-based ingredients have played a role in the core business for many years and we expect the use of these materials to accelerate across the board.”