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While most industries have marched onward with smart computers, smart phones, smart cars, and smart household appliances, electricityóthe very thing that powers all the restóhas been lumbering along in the shadows of its old-fashioned mechanical, thermal magnetic-based distribution system for close to a century now.
“We have analytics and controls over everything else,” exclaims Ryan Kennedy, CEO of Atom Power, LLC. “Electricity got left out. Circuit breakers, through which electricity is distributed, open with a switch and close with a switch—purely mechanical. Their characteristics cannot be altered.”
From early on in his electrical background, Kennedy thought there must be a better way, a safer, more efficient way, to distribute electricity. His company, Atom Power, established in 2014, is now ready to prove this idea and change how the electrical distribution industry operates and how we all receive electrical power.
The Series A funded energy technology company moved in 2015 into new headquarters in the Portal Building on the University of North Carolina at Charlotte campus.
New Circuit Breaker Technology
Atom Power has developed a new circuit breaker technology that utilizes digitally controlled solid-state components built into a product call the Atom Switch. The Atom Switch is a circuit breaker that provides all of the functionality of a traditional circuit breaker but is software driven, allowing operators to dynamically change characteristics.
“Using the Atom OS software platform, we could have one Atom Switch be a 20-amp circuit breaker one day, then simply program it to be an 80-amp circuit breaker on another day, depending upon need and circumstance,” explains Kennedy.
In addition to being able to manipulate the ampacity, the Atom Switch is fast, operating over 100 times faster than mechanical circuit breakers, mitigating short circuit and arc flash hazards. Atom Power has created an end-to-end product, both with the hardware and tightly integrated software.
“For the first time in history, we will allow full digital control of an electrical infrastructure all while making it safer and easier,” says Kennedy.
Every electrical system within any building has an incoming utility service and is protected by a network of circuit breakers which “trip” or interrupt the flow of electricity in the event of a short circuit or power overload. In today’s commercial buildings, multiple branch circuit breakers feed everything from the HVAC system to the lights and receptacles to security.
Circuit breakers have to withstand huge amounts of electrical current and they are very imprecise when they trip. “There are only limited methods by which you can tell anything about them or how much current is flowing through them. The existing systems operate under a big veil of mechanical complexity,” says Kennedy.
Engineering companies are routinely engaged to do complicated, detailed coordination studies to decipher the order in which circuit breakers will trip in case of an overload as well as to determine how much electrical energy will be created in the event of an arc flash event due to a short circuit.
“An inherent cost of engineering a building is in doing coordination studies, which figure out which circuit breakers trip first, which parts to use for large systems, and how big the fireball will be in the event of a short circuit event. Everything you do affects everything downstream,” explains Kennedy.
“These studies are quite expensive for building owners to have done. Now, OSHA has adopted standards for ensuring electrical safety in the workplace (most hazards of which are caused by the slow speed of mechanical circuit breakers), making these studies just short of mandatory.”
Atom Power is lifting the veil of complexity with its software designed to make the function of its solid-state circuit breakers visible. With the software in play, operators can now see all of the circuit breakers and panels in their infrastructure, see how much power is being consumed at the circuit breaker level, change the characteristics of the system, and control remotely (turn breakers off and on).
“It’s been taken for granted for so long that this is just complex; that to know how to actually install a full electrical system, you have to have all these experts, conduct all these studies, analyze all these products, and be told what to buy. Our product is self-aware; it knows where it’s at in the system. It tells you everything about itself,” says Kennedy.
The slow tripping speeds of traditional circuit breakers are also problematic—they can cause short circuits and arc flash hazards. When the circuit breaker is slow to respond to a short circuit, huge amounts of energy are released with risks that include fires, explosions and personal injury.
With thousands of breakers in a system, operators can’t truly know for sure which one will trip first in a fault, which is why they must rely on engineered coordination and arc flash studies, says Kennedy.
“Believe it or not, these problems still have not been solved,” Kennedy continues, shaking his head. “Conversely, an entire industry has been born out of these problems. Lines of protective wear are available for workers who must handle these electrical risks. Insurance companies are now asking building owners what their arc flashing hazards are within their facilities.
“Our Atom Switch trips over 100 times faster than a traditional mechanical circuit breaker,” compares Kennedy. “As soon as we see a short circuit happening, we snuff it out—no delay. It knows to trip itself before the one upstream. Now we don’t have to have such huge amounts of power or design a system to tolerate such huge faults. We are going to eliminate arc flash and short circuit hazards in the industry.”
Sensibility Sparks Ingenuity
In 1994, Kennedy, a Charlotte native, was fresh out of high school and unsure about what he wanted to do. His mother was an architect; his father taught photography. Sparked by the amount of construction underway in uptown, Kennedy decided to become an electrician: “I started out with tools and a hard hat.”
“I didn’t understand why we were doing a lot of things in the trade the way we were doing them,” he recalls. At that time, he says, a lot of emphasis was put on the tradesmen to figure out how to carry out the drawings and intent of the drawings.
As an electrician, Kennedy soon discovered that he wanted to be involved with the engineering behind the systems; to be a person who designs some of it. That desire prompted him, five years later, to return to school and study electrical engineering at the UNC Charlotte, and to become a professional engineer licensed in several states.
He continued to work in industrial and commercial construction in Charlotte, but his thoughts about how electrical power should be distributed never left him entirely. In 2004, while working on a project with solid-state lighting controls using “bricks of silicon,” the question surfaced again: “Why can’t we use transistor-based, solid-state materials to provide and control power to electrical circuits in general, not just lights?”
It seemed the industry was not ready. When Kennedy, the newly graduated engineer, talked with fellow engineers about this idea, most were confounded by the technical challenges and preferred to stick with the old, tried-and-true circuit breakers. Kennedy notes that this was around the time Google was becoming popular and before the Internet of things. So he tabled the idea once more.
“Talking with some colleagues at UNCC, it dawned on me that there had been quite a few advances in the past 10 years, especially around solid-state devices for power applications. It prompted me to revisit the idea,” shares Kennedy.
“Myself and a couple of Ph.D folks got together and discussed the physics behind it, some potential applications and agreed that there is a huge opportunity.”
Atom Power will soon have three products on the market: the Atom Switch (or solid-state circuit breaker), the Atom Panel which will contain switches of deliberately selected ampacities and that will allow operators to see their system at work, and the tightly integrated Atom OS software which allows operators to see, control, and modify their entire electrical distribution system.
Breaking the Circuit
The fact that an entire electrical system can be controlled by three products is huge. “This represents an incredible leapfrog in technology,” touts Kennedy. “Currently, it takes hundreds of different parts in various voltage, amperage, and short circuit capacities to do this job. Now there is one box that I can program from 0 to 100 amps. It’s a truly unified design.”
Atom Power is focused on the facility-side commercial and industrial power distribution markets. “They could be installed in a large high-rise building or something that only requires one panelboard,” says Kennedy. “That’s the beauty—this is an accessible product that will reach all markets.
“There is art to this as well as science. We were able to put more of the right-brain approach to it so that it would be compelling for the customer, so they could see and feel it. We’ve made our products very simple and easy to understand. Now you can walk up to an electrical panel and even someone with no electrical experience can understand what’s going on. We’ve made the user experience one of the highest priorities.”
Kennedy expects that Atom products will be a draw to clients interested in new technology that want something that looks really cool in their building. “Now, electrical panels are ugly and you can’t see anything happening. With these,” he motions to his boxes, “you can see it working—lights light up and you can see how much power is moving through.”
Kennedy, who sits on the board of the Electrical Engineering Department of the UNCC College of Engineering, is joined by two partners in founding Atom Power. Greg Crumpton, founder of Charlotte-based AirTight Mechanical, Inc., an HVAC company that was recently acquired and merged with FaciliTech, under the Service Logic, LLC brand, serves as chief marketing officer.
Denis Kouroussis is the third founder and serves as chief technology officer. Kouroussis holds a Ph.D. in electrical and computer engineering from University of Toronto and was the founder and CEO of Volta Energy. With 10 years of experience in the industry his background spans the world of semiconductors, EDA and power electronics.
Prior to becoming an entrepreneur, Kouroussis had designed and implemented solutions in low power design and developed algorithms for power grid verification with numerous publications in the subject matter. Kouroussis previously held engineering and technical management positions at ATI/AMD, IBM Microelectronics and Apache Design Solutions.
The staff of Atom Power is diversified across engineering disciplines. “We have mechanical, electrical and computer engineers on board,” says Kennedy. “We need an equal share of all of those. There are also many resources here locally that we can use to ramp up.” Kennedy expects to almost double his staff within the coming year.
Kennedy finds Charlotte to be a better place to operate now that it has, itself, become an energy hub. “Charlotte is becoming internationally known for power and energy engineering. This is where you go to learn about energy.”
Asked about the company’s biggest challenge, Kennedy responds simply, “To make it work consistently, safely and to go through UL (United Laboratories) and National Fire Protection Association testing—it’s never been done before.”
Atom Power is not in this for money or fame or notoriety, according to Kennedy, but he does want the company to be a household name.
“We’re trying to fix something that is broken; change the industry. It is a slow process but in a $40 billion industry, slow is a relative term. I expect it to take about 20 years for our technology to become the standard for power distribution.”
Famous business magnate Walt Disney once said, “Do what you do so well that they will want to see it again and bring their friends.” In the economic development arena, this has been South Carolina’s winning strategy.
Formula for Success
The Secret Weapon
Making It Happen
South Carolina’s ports are being propelled by sheer momentum—the momentum of the state’s economic development successes.
Building on Economic Development Success
Connect the Dots
Digging Deep to Compete Globally
When two successful companies join forces, it often means that one enterprise falls subject to the other, loses its identity and perhaps employees as well. Not so with the combination of AirTight Mechanical, Inc. and FaciliTech, Inc., two heating and air conditioning (HVAC) companies home-grown and prospering in Charlotte.
Today, they are thriving as AirTight FaciliTech, under the umbrella of Denver-based Service Logic, one of the largest privately-held energy and HVAC/mechanical services holding companies in the United States. Its mission is to build a national footprint of high quality companies through the acquisition of boutique HVAC service companies that retain a strong local presence.
Service Logic acquired FaciliTech in 2007 and, with the intent of expanding the Charlotte market, acquired AirTight in 2014. Eventual merger of the two companies is a planned component of the acquisition.
Combined HVAC Strengths
AirTight FaciliTech services include general HVAC services, operational assessments, planned maintenance, emergency repair, energy optimization, design build, critical site services, and professional consultation.
“The primary reason for the combination is to merge complementary skills,” says Scott Gugenheim, senior vice president of the combined entity. “Each company has its strengths—and weaknesses. Now we can go after the full portfolio of client needs.”
Whereas FaciliTech’s focus is on heavy industrial services such as automation and integration of building controls, chillers and boilers, AirTight is highly involved with mission critical cooling systems, UPS (uninterruptable power supplies) support services of electrical systems to commercial and industrial mission critical sites, as well as the comfort cooling markets of commercial office buildings.
Both companies are very active in the health care and higher education markets, primarily with maintenance service and repair. The company’s expertise is diagnosing equipment failure and problems, assessing and working on different systems and brands, and getting equipment back online quickly and safely—while staying in constant communication with its clients.
Most of the company’s customers are located within a 100-mile radius of the Charlotte region. The majority of its work comes from repeat business. An increased focus on mission critical services to IT data centers and mechanical systems has allowed the company to expand its base to South Carolina, Georgia, Florida, Nevada, Pennsylvania, and Tennessee. Customers include data centers, banks, motor sport and health care facilities, as well as new construction projects.
“The merger has not gone as smoothly or quickly as we would like,” admits Greg Crumpton, co-founder of AirTight along with his wife and partner, Connie. “Although the companies are almost identical on paper and successful in their methodology, they are about as far apart culturally as you could get.”
AirTight, established in 1999, had an inverted pyramid structure—a bottom-up leadership model. Crumpton describes the AirTight environment as “a funky culture and personality” and being “very entrepreneurial.” FaciliTech, founded by Nick Sarif in 2001, was more traditional in leadership from the top over a core group of long-term employees.
“Scott is taking the best of both cultures and blending them into one,” explains Crumpton. “With more than 75 employees, we needed to go for more structure, but we are trying to keep that entrepreneurial spirit. It’s a work in progress. We’re working hard to keep the mojo on the good side.”
One major change is the hiring of a new vice president of operations in April. Russ Correll, originally from Illinois, has been in the Charlotte area since 1988. He is a 35-year industry veteran and formerly employed with Siemens Building Technologies.
“Russ will be the guy to let the rubber hit the road,” says Crumpton. The company saw few other changes in staff as a result of the merger.
“Right now, we’re busy learning about each other’s customers,” comments Gugenheim, “and internally learning about each other’s business and employees. The merger is also helping to provide some of our employees with new and expanded career opportunities.”
Being On Call is Mission Critical
“We have a considerable amount of autonomy from Service Logic,” affirms Gugenheim. “We’ve kept our names and cultures. We’ve built our local senior management teams and they run the company.”
“Our industry is littered with bought-up companies that are then white-washed to be alike. Service Logic liked the uniqueness of this company. They don’t come in heavy-handed. They do merge everybody onto a common accounting platform, but as far as decision-making, it’s very locally driven,” says Crumpton.
AirTight FaciliTech joins 11 other operating companies and 26 independent offices under the Service Logic umbrella.
AirTight, which started out in a former single-family home in Charlotte, grew to a 6,000-square-foot facility on Stuart Andrew Boulevard. FaciliTech operates out of a facility on Mathews Mint Hill Road in Mathews. Plans are underway to house the combined company in a new facility on Hundred Oaks Drive in Charlotte this coming September.
Both Crumpton and Gugenheim point out that much time, effort and resources are given over to education of the employees. “We are firm believers in education for all employees,” says Crumpton who expects to spend a significant amount of money in 2015/2016 on education and training for staff, including the labor associated with getting it done. “It’s a significant investment that pays for itself over time.”
“I believe in a read, learn and share mindset,” says Crumpton. “The industry is constantly changing. Once employees learn something new, I expect them to share it,” says Crumpton.
“We have modeled our training program for the technical side as an apprenticeship,” explains Gugenheim. “Technicians work during the day with peers for on-the-job training and then we expect them to go to a technical community college for HVAC- related curriculum. We pay for their training.
“Many employees will go to Central Piedmont Community College here in Charlotte; others to Rowan County Community College or Cabarrus County Community College. The company works with CPCC, Wake Tech and Cleveland County Community College to train mission critical operators through the MCO Program.
“This was made possible through a federal grant to North Carolina to help technicians learn and understand the environments of critical missions and the specific aspects of their operation.”
“Mission critical equipment affects multi-million dollar operations and many lives that depend on those operations,” says Crumpton. “We’re trying to build a workforce to support these needs. We’re always trying to find that next rising star to get them on their way.”
The company also does work in the comfort aspect of HVAC—specific needs within the building as well as with chillers and boilers.
AirTight FaciliTech employees are on-call 24/7. Scheduling of both primary and secondary on-call technicians is necessary during hot weather months.
“Our work involves mission critical equipment, so we can receive calls any time,” says Crumpton. “An IT professional could call at 3 a.m. because an alarm is going off in his facility. We answer the phone and get someone to start helping his situation immediately.
“By 8 a.m., we’ll be back in touch with our client to review what’s been done and keep them updated—that’s important as well. Our job is to make sure their equipment is up and running; to give them peace of mind.”
AirTight FaciliTech has excellent first-responder capabilities—it’s not uncommon for AirTight FaciliTech staff to be the first on the scene, according to Crumpton.
Crumpton also points out that education of existing customers and potential customers is equally important. In order to further efficiency, prevent breakdowns, save money and further sustainability, customers need to know what is changing in the market.
“Our willingness to embrace current and emerging technology allows us to show our customers how to look at their businesses holistically all the way down to access control,” explains Gugenheim. “We need to know the questions the CFO is going to ask next year before they know it so we can guide them on capital planning and execution of their capital budget.”
“We’re not the cheapest people in town to work with, but the work is done right and they don’t have to redo it,” says Crumpton. “We do quality work on the front end so it’s more cost-effective down the road.”
“We know that customers must succeed for AirTight FaciliTech to be successful,” Crumpton explains. “We make a concerted effort to learn and understand the customer’s business. By understanding your clients and working hard to anticipate and satisfy their needs, you build long-term relationships.”
Crumpton got his mechanical leanings from his father who worked in HVAC for a large company in Atlanta. “Mother wanted me to be a lawyer or doctor,” remembers Crumpton. “I wanted to be in something in the mechanical industry.” Crumpton went to work in the same company as his father, working his way up to division leadership, then part ownership of the company.
He sold his interest in that company to start up AirTight. “I’m a serial entrepreneur,” admits Crumpton who also describes himself as a lifelong learner. “I didn’t care much for formal education until I was an adult and learned how much I needed it. I went back to school at night at Clayton University in Atlanta and have been in continuing education ever since.” Crumpton is also behind two new start-ups in Charlotte.
Gugenheim grew up in Charlotte, then moved to Raleigh to attend and graduate from North Carolina State University. He was working with Piedmont Service Group, also owned by Service Logic, when he was tapped for the senior vice president and general manager position at AirTight FaciliTech. His new position facilitated a move back to Charlotte.
The company finds it important to give back to the community, according to Crumpton. This is reflected in their support of the National Children’s Cancer Society, Special Olympics, Cool Kids Campaign, and Susan G. Komen for the Cure.
Crumpton admits to feeling the impact of the 2010 recession but says the company came through pretty lean but debt-free. “We still were able to collect 99.2 percent of every dollar invoiced,” says Crumpton. “Even training went forward; we knew things would turn around and we needed to be prepared.
“It allowed us to look at a merger through a good lens,” affirms Crumpton. “There was nothing making us want to be acquired or making us want to merge outside of it being a good business decision. People make bad choices when you get into a crack. We were never in that position. We’re very happy to be part of Service Logic. It feels like a partnership; a very strong relationship.”
Service Logic has bought out the interests of both the founders of the companies, Crumpton and Sarif. Both will remain on board in a consulting capacity. Crumpton works on the Service Logic executive team, is active in mergers and acquisitions, and is also the liaison to the mission critical world on a consulting basis.
The company’s five-year plan is to double the Charlotte market business.
“We have a little green swish under our logo,” says Crumpton, referring to the Service Logic graphic. “We’re still AirTight and FaciliTech—we’re just better.”
Cloudbilt has been on an upward trajectory since its founding in 2009 by successful serial entrepreneurs CEO John Stewart and CTO Ben Brantly.
Initially named Saber Business Solutions, Inc., the Charlotte-based company started out providing managed services and custom app development to users of Salesforce. Growth came rapidly. Stewart and Brantly hired their first employees in 2010, released their first ezCloudAudit app in August 2011, and followed that shortly after with what is now their flagship MapAnything app in December 2011.
By 2012, both Stewart and Brantly thought it time to branch out to develop client relationships and increase accessibility. They identified Atlanta as a primary hub for software development, and in May 2012, Brantly moved there to head up Cloudbilt’s Office of Technology in the northern suburbs.
Brantly and his staff of developers is tasked with expanding the company’s inventive technology strategy and vision, developing innovative CRM software. Brantly also evaluates emerging technology and industry trends to provide technical direction to both clients and staff.
A few months later, in September 2012, the company released its ezFileLoader app.
About that time, Stewart took stock and decided it was time for a shift in focus: “It was a couple of years in when we started looking at patterns in the projects we were working on and what products salesforce.com was promoting in their AppExchange, which is their marketplace for applications (think of it like the Apple iTunes store for business apps within Salesforce.)
“After determining the most prevalent customer needs, we started building products for the AppExchange, and in late 2012, they really started to take off. As a result, we decided to rebrand the company using the Cloudbilt name and focus solely on producing cloud-based software applications for users of Salesforce.”
Cloudbilt is now a Salesforce AppExchange ISV Partner with four business applications on the market and over 500 customers, including multiple companies in the Fortune 500. In 2014, Cloudbilt ranked #227 on the Inc. 500 after experiencing 2000 percent revenue growth in three years.
There’s no doubt about it, Stewart and Brantly are successfully making it work in the cloud!
Saber-rattling in the Cloud
Prior to Cloudbilt, Inc., Stewart had founded Saber Design and Analysis Services, LLC, a consulting firm providing engineering and manufacturing services to the aerospace and defense industry. A New York native, he holds a B.S. in Mechanical Engineering from Worcester Polytechnic Institute in Massachusetts. He successfully sold the company in 2011.
Prior to joining up with Stewart, Brantly had co-founded several other companies including Southern Computer Innovations, Educational Network Solutions, and SoftwareFixIt.com. In addition to his position at Cloudbilt as CTO, Brantly acts as the company’s Chief Architect, a role in which he directs the development of Cloudbilt’s AppExchange products along with custom client solutions and Salesforce deployments. Brantly was born in Georgia and attended Georgia State University.
As Stewart recalls, in 2008, as the financial crisis began to affect industries across the country, he started looking for new opportunities. At the time, however, “cloud computing” had yet to become a real thing that companies were considering.
“People weren’t really saying ‘cloud computing’ until around the time that IBM did their Super Bowl ad using the term in 2009,” remarks Stewart, “and from there, interest in cloud computing has been growing like you wouldn’t believe. So we jumped into it, knowing that we had the expertise and ability to develop, deliver and support new apps.”
Cloudbilt is a 100 percent cloud company that sells its apps on salesforce.com’s platform, meaning salesforce.com is responsible for delivery to the client. This puts Cloudbilt in the unique position of having very little infrastructure and virtually zero footprint. Alongside the main office here and the development office in Atlanta, it has remote field sales employees in Boston and San Francisco.
Though there’s never a “typical” day in his business, Stewart comments, “On a day-to-day basis, I do a lot of different things, from wearing the sales hat, to forming business partnerships, to sourcing new vendors for our products. Even though its software, we still license content from other people to add value for our clients, so it’s a variety of things.
“I love what I do; I’m passionate about it! The products, the company, these are my babies—mine and Ben Brantly’s.”
“We’ve seen Cloudbilt grow from zero end users to north of 23,000 licenses of our MapAnything application. And, really, the possibility of seeing that figure climb to 100,000 users in the next year or two, that’s what keeps me coming in. That’s exciting!”
“We do have a little bit of competition,” explains Stewart, “So, I think that it is important that we get the feature-function part of our apps correct. We have a product advantage due to the unique intellectual property inside our apps. We certainly know how to market, sell and navigate within the salesforce.com ecosystem. This gives our team the ability to approach building brand equity unlike anyone else.”
As Stewart puts it, Charlotte is also a key to adding value to a customer’s experience for a multitude of reasons. Although Stewart has family ties to the Charlotte region through his wife, he strategically chose the area so that he could find the best people to deliver amazing products and service to customers.
“I think that Charlotte contributes to our success and our ability to provide value to our customers because there are a lot of people here that came from other places, myself included. In fact, the majority of my neighborhood has come from elsewhere,” says Stewart.
“Charlotte is a melting pot, which is great, as we have a very tech-savvy, educated workforce here. I credit the banks for creating this environment. When you really boil things down, banks these days are basically IT companies. In Charlotte, the banking companies have drawn in a large population of highly-skilled, educated people in the high-tech space that we can leverage and recruit to expand the company and deliver the best to our customers.”
Cloudbilt’s success and ability to provide real value to clients, especially in the high-tech and software worlds, is really dependent on the people. Stewart states that, because the origins of Cloudbilt came from providing Salesforce development and customization services, the company is in a better position to truly help customers through off-the-shelf software solutions in the cloud using the resources that salesforce.com’s platform provides in regard to development.
Staying on Top in the Cloud
Weighing in at 25 employees, Cloudbilt is able to offer advanced products without the bureaucracy that similar companies have to deal with. Says Stewart, “In terms of our structure, we really only have a few departments, including development, sales, marketing, and client services.
“Client services include our customer success managers who are responsible for training, adoption, and maintaining our customer base as well as our support functions. From a structural standpoint, the heads of departments report to me, and we try to keep things as simple as possible.”
Also, Cloudbilt is dedicated to reaching out to customers where they are, and this involves showcasing at salesforce.com’s trade show events, including the annual Dreamforce event that is highly attended. Stewart points out that Cloudbilt also spends a lot of time educating salesforce.com engineers and employees as to the benefits of the company’s cloud-based products.
Stewart makes it clear, “We’re very focused on a single marketing channel. We try to build our brand equity within salesforce.com. That, in turn, drives traffic to our AppExchange products and increases our downloads, and ultimately, this gives us more opportunities with customers.”
“Brand loyalty is created by making sure we produce a great product and employ a great services team to deploy the apps and train users,” Stewart continues. “This has resulted in a lifetime renewal rate of 92 percent. We’re not talking annually; we’re talking about the lifetime of the products. You build the loyalty by providing a fantastic application, listening to feedback from users, offering top-notch support, and making upgrades based on customer recommendations and desires.”
The company’s most popular product is MapAnything, an app that resides within salesforce.com’s platform and is used as a geo-location tool to engage in territory management, route optimization, and other mapping functions for field sales agents.
Cloudbilt’s ezCloudAudit app is a usage monitor and auditing tool built specifically for salesforce.com. Cloudbilt’s AddressAnything app provides address verification and predictive type ahead and auto-complete functionality. And, most recently, Cloudbilt’s ezFileLoader is a drag-and-drop attachment utility tool.
Apping the Future of Cloud Computing
Given their growth, Stewart is confident in the company’s strategies. “There are definitely verticals that make a lot more sense to us as we progress,” he says. “Certainly, financial services is one as we have a bunch of credit card companies as clients, but we also have five telecom companies you would recognize the names of that are very successful in using our products.
“Essentially, wherever there is a large number of field people (sales and services), that is the optimal fit for our MapAnything app because it really drives field productivity. Those are our ideal customers.”
When determining a need for employees, Cloudbilt’s senior management plans 12 months into the future. Each year, a budget is created for a headcount of new employees, and although department managers hold initial screenings, Stewart holds a personal interview with each candidate to ensure that he or she is the right fit for Cloudbilt, not just based on experience, but also based on a culture fit and a personality fit.
In terms of managing employees to build the future of cloud computing, Stewart credits a fairly straightforward hierarchy. In his opinion, this keeps things on track and ahead of the curve. When discussing success measurement, Cloudbilt relies on setting objectives for all departments that must be met in order to redeem success.
He claims, “I’m an engineer by degree, so in my world, it’s either pass or fail. We do a lot of management by objectives because this helps to keep our company on track, but it also sets clear standards.”
To add to Cloudbilt’s hiring and management strategy when seeking to provide excellent products and service, there needs to be a forward-thinking attitude at hand, and this is where Stewart demonstrates his leadership.
“I think cloud technology is the way of future, definitely,” continues Stewart. “It’s highly unlikely that any software provider will do anything but cloud delivery in the coming years. Highly unlikely.”
“As an industry, we’ll also continue to see a consolidation of platforms; no one will own their own infrastructure. So, you’ll build an app and deliver it on Amazon Web Services, or Oracle, or Salesforce, or Google’s app engine stack. I think you’ll see five or six players there, and everybody’s delivery of applications will be on one of those platforms. Everybody will rent software, but almost no one will own it.”
Mobile technology is also a big part of Cloudbilt’s strategy. In the past, mobile business apps were “view-only,” meaning field sales agents only had the chance to receive information, not interact. Today, however, these same agents are trading in desktops and laptops for tablets and smart phones and being given the chance to communicate in real-time with the office from the road. This can be anything from providing quote info to logging cost information.
Stewart feels that the cloud and Cloudbilt’s best days are ahead. He says, “For us, I don’t necessarily have any industry-specific concerns, but when I was in engineering, manufacturing would slow down and that would be a big problem. Because Salesforce is so diverse, we’re not tied to one industry, per se. That’s nice and leads to advancement. There’s always an industry that is experiencing growth.”
He adds, “Our biggest challenge, however, is finding the right people. The other challenge is continuing to grow in such a way that, with the resources that we have, we can continue to maintain quality in our software products and for our customer support…we have to balance that. In the end, however, I think we’re doing an excellent job of meeting these challenges.”
Stewart concludes with, “We’re going to continue to enhance our primary offering, MapAnything, and we’ll probably develop offshoot applications, child applications if you will, that are industry specific, but still part of the MapAnything family. That’s likely where our development strategy is going, and we’re confident about the future, especially with the backing of all that Charlotte has to offer.”
A wise adage says, “Shoot for the moon. Even if you miss, you’ll land among the stars.”
When it comes to marketing communication, the professionals at Red Moon Marketing take this maxim to heart, boasting an impressive list of clients including The Coca-Cola Company, Brown-Forman brands such as Jack Daniel’s, MTD’s Cub Cadet, Huber Engineered Woods, Snyder’s Lance and Harris Teeter.
While known primarily for its experiential marketing expertise, Red Moon Marketing shines in a variety of fields including brand promotion, event entertainment and sports marketing, branding, visual communications, as well as interactive media and public relations. And with a roster of more than 30 consumer and business-to-business clients, Red Moon Marketing has truly become a full-service marketing company.
“The unique thing about us,” says founder and CEO Jim Bailey, grinning, “is that we have what we call the ‘Red Moon Virus.’ Once we get in—and clients experience our service, expertise and total commitment to customer satisfaction—we end up sticking around for a long while.”
Bailey has significant experience creating partnerships and activating sponsorships within major sports properties including the NCAA, NASCAR, NHRA, NBA, MLS, MLB and the NFL and for clients such as General Mills, Pillsbury, Cinnabon, Mattel and more.
Mobilizing the Moonies
Bailey is a veteran marketer with over 30 years’ experience, including more than 20 years working with Coca-Cola during the “Cola Wars.” In 2001, Coca-Cola reorganized the department Bailey had been working in, moving a good segment of his responsibilities to the parent company in Atlanta. Bailey had three children in school in Charlotte and did not want to uproot them, so he decided to open an agency himself.
Bailey remembers vividly the autumn night in 2001, when he left his office on the fourth floor of the Coca-Cola Consolidated office building in SouthPark, knowing his time with the company was coming to an end. He remembers his mixed emotions as he left the building.
“The future was full of opportunity,” says Bailey, “and I knew I’d be taking valuable Coke marketing experience with me, but it would be hard to let go of the fierce brand loyalty I had developed over the years.
“Thinking about these things, I looked up at my office from the parking lot. The lights were still on, and through the corner of one window I could see the giant red Coca-Cola sign hanging on the wall—it looked like a large red moon.”
In that moment the idea for the company’s name and philosophy was born based on the Coca-Cola culture which works to create win-win situations for both itself and its clients. And while Red Moon Marketing now has dozens of clients in various business segments, it is proud of its Coca-Cola heritage, and even maintains offices in the headquarters of Coca-Cola Bottling Company Consolidated to this day.
“I’ve been in this building for a long, long time,” remarks Bailey, referring to the Coca-Cola Plaza. “As a matter of fact, my car can drive here pretty much on its own,” he jokes.
It was just a couple of months after the Coca-Cola reorganization that opportunities started coming Red Moon’s way. Bailey was joined by an old friend Greg Mercer, as well as Shyloe Cummings (now Shyloe Luehrs), Greg Luehrs and Jimmy Harte, who had all worked with him at Coca-Cola.
Bailey remembers the early days as “exhilarating, but not easy.” The hours were grueling, but the team pulled together as a tight-knit family.
“In Red Moon Marketings’s early days, everyone wore a lot of hats; something we still do to this day,” says Mercer. “Red Moon Marketing has a real team atmosphere with everyone willing to help each other out. Something you’ll never hear at Red Moon is, it’s not my job.”
In addition to Mercer, Shyloe Luehrs, Greg Luehrs and Harte, Bailey was joined by senior leaders Mike Adams and Tyler Sigmon, plus a host of other ‘Moonies.’ Bailey says he expects Red Moon Marketing to keep growing each year, a trend that has been the norm since the company’s founding.
“If it weren’t for these talented folks,” acknowledges Bailey, “we wouldn’t be anywhere near as successful as we are today.”
The First and Following Phases
Bailey recalls, “The first truly big piece of business we picked up was the WUSA, the Women’s United Soccer Association, featuring Mia Hamm and Brandy Chastain. From there, we picked up Charlotte icon Harris Teeter in 2003, and also partnered with Cinnabon on their NASCAR efforts and promotional efforts.
“In 2004, we were fortunate to enter a relationship with Brown-Forman, makers of fine distilled spirits, and also worked with YMCA when they opened the Lowe’s YMCA in Mooresville.”
Red Moon Marketing has dozens of successful relationships to its credit—teaming up with Procter & Gamble, Chick-fil-A, Huber Engineered Woods, the Zac Brown Band, Snyder’s-Lance, Woodford Reserve, and even helping develop the brand MolliCoolz!, a pelletized ice cream product featured on major networks, which was later purchased by Dole Foods.
Adams, approaching his third year of service, manages the Mello Yello NHRA Relationship. Adams is another former Coca-Cola Consolidated employee.
“I started with working for Coca-Cola Consolidated under Jim through his retail-tainment programs, grand openings, and other activities,” says Adams. “I worked for a number of other companies afterward and ended up back in Charlotte, staying connected to Jim, which brought me to Red Moon Marketing.”
Red Moon Marketing seeks out a younger demographic for its event marketing teams. Greg Luehrs points out, “The majority of our ambassadors are under 25. Charlotte offers UNCC, Queens College, Johnson C. Smith and Johnson & Wales graduates…it’s good to have all of these universities here to talk with about career opportunities. We travel extensively, so the Charlotte airport is also a benefit.”
Red Moon Marketing also played a huge part in the Charlotte racing community history by introducing the first primary spirits sponsorship to NASCAR with the Jack Daniel’s 07 Chevrolet with Richard Childress Racing. This sponsorship, along with several other new clients in 2007, led to Red Moon Marketing being recognized on the Inc. 500 list of Fastest Growing Companies.
“Our niche at Red Moon is experiential marketing. It’s going out and talking to the consumer, face-to-face, about all of the great brands we represent,” Sigmon says. “We’ve got people moving across the country every single day of the week. I’m on the phone every day with the folks that are on some of the programs I manage, making sure they’re getting the job done the Red Moon Way which means with tremendous attention to detail. But I also want to ensure our associates are enjoying what they do, learning from it, and growing in their careers.”
At Red Moon Marketing, there is no typical eight-to-five day. Virtually seven days a week, Red Moon Marketing’s teams fan out across the country handling projects ranging from the Jack Daniel’s Experience to the hundreds of other events such as the Cub Cadet Challenge and the Huber Engineered Woods tour.
All agree that Red Moon Marketing is about family and relationships, both internally and with clients and their brands. Just recently, Red Moon Marketing was designated one of Event Marketer’s “2015 Best Places to Work in Events.” One associate described it, “Red Moon is a wonderful and special place. The people here are the only ones that can truly understand it. I love the company and I love the people.”
Red Moon Marketing is also consistently recognized by the Charlotte Business Journal as one of “Charlotte’s Best Places to Work.”
Longevity is important within the Red Moon Marketing family, both client longevity and associate longevity.
“I started with Jim 12 years ago,” says Greg Luehrs, “after we both worked at Coca-Cola together. From the outset, I was determined to get involved with his vision, so I worked as an intern on my days off at first. After about a year, when Harris Teeter came on board, I managed that account, and from there, since 2004, I’ve been in charge of Brown-Forman’s Jack Daniel’s account.”
Shyloe Luehrs says as much: “Jim was known for success within Coca-Cola, and I admired his decision to create Red Moon Marketing. As a result of his leadership, we’ve been able to grow unlike any other marketing firm in the greater Charlotte area.”
Sigmon adds, “I think a big part of our history is being able to not only maintain our core clients, but actually grow those clients much like Greg has done with Brown-Forman. It started with Jack Daniel’s, but now we work with a number of their other brands including el Jimador and Woodford Reserve. While it’s rare in the agency world, longevity of client relationships is what has helped us to grow and keep growing.”
In his 10th year at Red Moon Marketing, Harte adds, “I worked with Jim Bailey at Coca-Cola and moved over to Red Moon Marketing a few years after he started the company. I oversee most of our Coca-Cola business and help manage our Procter & Gamble business.”
Asked about the camaraderie, Harte says, “It’s pretty simple. We all have very similar passions from the top down, and we all enjoy helping people, making people happy—that is a lot of what we do—making our clients happy. Additionally, delivering over and above expectations every single day. This helps form a family atmosphere, a place you’d want to hang out for a while.”
Beaming With Satisfaction
Customer service never takes a back seat at Red Moon Marketing. In fact, the entire team is dedicated to providing excellent customer service through the entirety of each interaction, whether that be face-to-face or through email, text or other means.
“Our clients’ customers often send notes up the chain saying, ‘Hey, these guys are an extension of our team.’ That’s probably one of the best compliments that you could ever get. For me, that’s what our philosophy is all about,” says Bailey.
Bailey comments, “Everybody in this business can do a better job of marketing themselves. We spend a good deal of time, energy and effort to raise up awareness and familiarity with the brands that we represent and their products. So, at the core, the best way to promote ourselves is by doing the best we can on everything we do.”
Red Moon Marketing represents top brands in the country and across the world, and endeavors to recruit top-notch talent to keep the company growing and its clients satisfied. But when evaluating potential team members Red Moon is looking for more than experience or a specific skill set; it is looking for the right attitude.
“I believe the selective gene is attitude, especially in a talent-filled city like Charlotte,” says Bailey. “We’re much more interested in the attitude a potential employee has versus the credentials or experience. We want everyone to exhibit the attitude that they can be better tomorrow than they are today.”
Bailey admits he is amazed when he thinks of all of the technological changes that have occurred during his career. “Over the many years I’ve been in this business, we’re now going to a much more personal experience with media. I think that’s where Twitter, Facebook, Instagram are becoming so much more important—because if I have a certain set of needs or set of interests, I can tailor the information I get simply by the people I follow, the companies I follow.
Sigmon acknowledges that while it’s important to keep up with technology, “The development of people here is a big thing. We work in an industry with a high potential for burnout. It’s important that we maintain a supportive and inspiring environment. Keeping people happy, giving them the chance to grow so that they don’t feel like they’re stagnant…that’s the key. If everyone in the company is growing, and the company is moving in the right direction, then we’re good.”
It is hard not to be overwhelmed by the portfolio of Red Moon Marketing’s customers and the scale of their work.
Bailey is excited, “Look—we picked up Procter & Gamble last year and what great fun that has been for us. If you think about all the brands they have, from Crest to Charmin to Bounty, this relationship is going to give us a lot of new doors to be knocking on.”
So, after more than 10 years, thousands of successful events, hundreds of sales building programs and dozens of happy clients, what’s next for Red Moon Marketing?
While no one can predict the future, one thing seems certain…Red Moon Marketing will always keep shooting for the moon for its clients.
For decades, improbable outcomes like David’s victory over Goliath in the biblical battle have energized politicians and administrators. With the highly anticipated completion of the Panama Canal Expansion next year and the expected increase in East Coast traffic from post-Panamax deep-water ships, North Carolina’s ports have been struggling to position themselves to vie for opportunities against neighboring Goliaths.
How can the Port of Wilmington and the Port of Morehead City effectively compete with deep-water ports of Charleston, Savannah and Norfolk? That is the question Paul Cozza, chief executive officer of the North Carolina State Ports Authority [NCSPA], has been grappling with.
He knows that with the volume of international trade continuing to grow, forward-looking businesses and industries are increasingly relying on competitive access to global markets.
He maintains that North Carolina’s ports of Wilmington and Morehead City, plus inland terminals in Charlotte and the Piedmont Triad at Greensboro, have the capability and capacity to serve as competitive alternatives to ports in neighboring states. For Cozza, it is a significant challenge, as an estimated 75 to 80 percent of North Carolina businesses engaged in import and export trade already take their business to ports other than Wilmington and Morehead City.
Compared to Goliath
“North Carolina ports are never going to compete with others,” Walter Turner, historian at the North Carolina Transportation Museum, makes clear in his book Waterways to the World. “Just look at the map. There is too much to overcome.”
Wilmington is at somewhat of a geographic disadvantage of being located 26 miles from the open ocean on the Cape Fear River. Container ships travel two to three hours from the port before arriving at open water, although that’s only 30 minutes longer than at the Port of Savannah. And neither port meets the general deep-water standard of 50 feet or more channel depth for a fully laden post-Panamax containership, nor does it make practical or economic sense to dredge them.
Jeff Miles, former acting executive director of NCSPA, has remarked similarly, “Charleston, Norfolk and Savannah today are just behemoth container operators. Engaging in an ‘arms race’ with those guys is a prescription for a serious loss. We can’t go toe-to-toe with them today.”
Clearly, going toe-to-toe with other port facilities would not be a wise business plan. Rather, as Miles also points out, we can compete against other ports because we are better, faster and overall have a better customer service record than any other East Coast port.
Anyway, if there were an ‘arms race,’ it was almost certainly lost a long time ago when the North Carolina General Assembly created the Ports Authority in 1945.Turner explains its unintended consequences, “In retrospect it would have been wiser to begin with a clear understanding to make Wilmington the major port, with Morehead City as a secondary port. One of the key reasons the state ports authorities of Virginia, South Carolina, and Georgia have been successful is that each had a mandate to build one major state port.”
Today, containers and bulk/break bulk cargo like dry cement dominate the 284-acre Port of Wilmington. Grains, chemicals, fertilizers, ores, minerals and cement are Wilmington’s chief imports. Forest products like lumber, paper and forage for livestock lead the list of exports with woodchips and wood pulp close behind.
The cargo is quite different at the Port of Morehead City. No container ships dock there. Bulk cargo rules the import and export sides of the 128-acre port. Sulphur products, rubber, scrap metal, potash and ores are its chief imports. Phosphate and phosphate products are by far the terminal’s leading export.
Just over a year ago, Cozza took over leadership of the NCSPA from Miles. Cozza, a West Point graduate with a degree in aerospace engineering, previously served as president of The CSL Group, a marine dry bulk cargo service and the world’s largest owner and operator of self-unloading vessels.
He also served in several roles, including CFO, senior vice president finance and administration and vice president for network planning, for Maersk Line, Limited, the world’s largest container shipping company. In addition, Cozza worked for more than a decade with CSX Corporation/Sea-Land Service, Inc., the shipping and container giant.
The breadth and depth of his port operations background brings a broad perspective to the 70-year-old NCSPA. He is upbeat about the future of the ports he oversees.
“I see more opportunities for us to do more good things for the state to improve commerce,” he says. “Surprisingly, Wilmington is the fastest growing container port on the East Coast with container volume up 21 percent. Containerization [Cozza points out the invention of North Carolina native Malcolm McLean] has been the fastest growing segment of United States trade for the past three decades.”
Cozza is looking for ways to compete effectively and grow his customer base. He is quick to point out the advantages of a small port—better customer service, lower cost and better union relationships.
“We are utilizing maybe about 40 percent of the Wilmington terminal,” maintains Cozza. That means less berth congestion and more crane capacity. Cozza brags about gate turnaround time: “For trucks coming on a round trip, we are turning them around in about 40 minutes. That is close to being the best on the East Coast.”
NCSPA Port Expansions
Cozza is overseeing two important expansions initiated by his predecessors. Both come online next year.
The first are two state-of-the-art “skin” storage domes currently being constructed at the Port of Wilmington for the storage of wood pellets. At 170 feet high, the domes are 10 feet taller than the twin support towers of the Cape Fear Memorial Bridge.
Wood pellets are bite-sized bits of dry, compressed biomass used to produce electricity in European power plants. In recent years, the United States has become the world’s leading exporter of wood pellets. Enviva, the South’s largest exporter of wood pellets is contributing financially to the project for the storage of its pellets.
“We expect to export Enviva pellets by end of first quarter of 2016,” remarks Cozza.
A similar two-dome storage facility will break ground in the second quarter of 2016 at the bulk cargo port at Moorhead City, according to Cozza. The project was delayed to allow WoodFuels LLC, another wood pellets producer, time to secure construction funds and to finalize contract details.
Annual pellet production at WoodFuel’s new plant in Sims, N.C., is expected to top 300,000 metric tons. And that is only the beginning—Woodfuels is already planning two additional North Carolina pellet plants.
The contract with NCSPA is what lured the Portland, Maine-based company to build in North Carolina. It’s investing over $116M in constructing the Sims plant and the Morehead City storage domes. When fully operational, Woodfuels will add 20 rail cars to every Norfolk Southern train arriving at Morehead City.
In June, the real estate development company USAInvestCo will break ground on the second major expansion at the Port of Wilmington. Doing business as Port of Wilmington Cold Storage (PWCS), the company is working with the state to build and operate a 103,000-square-foot refrigerated warehouse directly at the terminal. PWCS will blast freeze North Carolina turkeys, poultry and pork and then store, load, handle, unload and manage shipments to foreign and domestic ports.
North Carolina Agriculture Commissioner Steve Troxler is quoted as saying, “The [PWCS] facility is a vital piece of infrastructure that our producers have needed for a long time, and I’m happy that a public-private partnership will be able to make it a reality.”
Transporting turkeys, poultry and pork to Wilmington for export should reduce costs and improve logistics for North Carolina exporters. For years, their preferred destination was the Port at Charleston. With the new PWCS, they may reconsider that decision. Last year, perhaps in response to the PWCS announcement, the South Carolina Ports Authority voted to triple the size of its 55,000-square-foot refrigerated warehouse in North Charleston.
Competitive Advantage in Niche Markets
Ironically, the fact that North Carolina does not have one designated major port may, in fact, be its strongest advantage in competing for port traffic because of the infrastructure supporting all ports and because its ports have specialty niches. Having alternatives for shipping, rail and truck transportation leads to lower costs and better choices.
The port at Morehead City, for example, is serviced by Norfolk Southern Railway. When transporting goods to the inland Port of Charlotte, it utilizes the new Norfolk Southern Intermodal Terminal at Charlotte Douglas International Airport.
The port at Wilmington, on the other hand, is serviced by CSX Transportation, which utilizes the CSX Intermodal Terminal at Charlotte. That’s the rail yard northeast of the airport on Exchange Road.
Unfortunately, basic container service between the Wilmington and the Queen City was discontinued in 1989 for lack of volume. One expansion of foremost on the minds of railroad officials at CSX is resumption of containerized rail service between the Port of Wilmington and Charlotte.
“If that service resumes, it will be driven by demand from the ocean carriers themselves,” says Cozza. “We have full double-stack capability between Wilmington and Charlotte. The infrastructure is there,” he says, describing the prospect for that service to resume as “very likely.”
Both ports are efficient in handling project, dimensional and heavy lift cargoes between vessels and inland transportation modes. Although Morehead City does not accommodate containers, it does handle bulk and break bulk cargo extremely efficiently.
Both ports are located within 700 miles of more than 70 percent of the industrial base of the U.S. Wilmington has vehicular access via U.S. 17, U.S. 74 and I-40 and I-140; Morehead City is likewise connected via U.S. 17.
Cozza’s $135M five-year strategic plan includes some important improvements. At the forefront are berth and crane enhancements at Wilmington so that operators can load or unload two ultra-large Post-Panamax ships at the same time. On-dock rail improvements and additional equipment are planned for shoreside operations at both Wilmington and Morehead City.
Morehead City is North Carolina’s bulk cargo terminal, the center for natural rubber and fertilizer imports and phosphate and sulfur exports. PCS Phosphate of Aurora, North Carolina, is NCSPA’s biggest customer for good reason. The conveyor system at the PCS facility at Morehead City loads ships at a fast 1,000 tons an hour.
Imports at Morehead City provide raw materials for two notable North Carolina industries. It is the country’s second largest port for importing natural rubber, the essential ingredient for Goodyear and Bridgestone/Firestone plants near Raleigh. Charlotte-based Nucor Corporation imports some of its direct reduced iron (DRI) from its plants in Trinidad and Tobago through Morehead City. DRI is the preferred scrap substitute or scrap supplement at Nucor’s steel mills in the United States.
Originally, it was contemplated that North Carolina would have three ports: Wilmington, Morehead City and Southport. However, the Southport development has been all but scrapped. Earlier this year NCSPA announced that it was selling the Southport Marina and 11 other undeveloped properties in Brunswick, New Hanover and Carteret counties. The undeveloped land no longer serves a purpose for NCSPA. They are real estate investments ripe for converting to capital and long term improvements at the ports.
Absent from the for sale list are 600 acres north of Southport that NCSPA planned to develop as a new international port rivaling Charleston and Savannah. Those plans met stiff local opposition from groups such as No Port Southport and others.
“That is a fantastic tract of land,” says Cozza. “Right now, if you look at our strategic plan, we have nothing in place to develop that property. It is not for sale,” he added, “but it would be if there was a significant commerce opportunity.”
Cozza frankly admits that North Carolina ports have underserved their customers. The ports forced Tarheel businesses to go elsewhere because services, equipment and facilities were not available. Cozza understands the economic facts of life.
If North Carolina businesses are using the ports at Charleston, Norfolk or Savannah and getting fantastic service, that’s good, he says. Whatever benefits North Carolina businesses benefits North Carolina. But if Tarheel businesses are experiencing high costs, a lack of truck availability or increased port congestion at Goliath ports, those are the companies he wants to help.
“We are not just looking at growing volume for the sake of growing volume. We are looking at growing capabilities that can help customers in North Carolina run their business better,” maintains Cozza.
That kind of attitude and determination gets the word out and builds satisfied customers, and satisfied customers build better prospects for increasing business. The sheer momentum that Paul Cozza is developing can overcome obstacles, and every so often beat a Goliath.
Following a growing national trend, in 2014 North Carolina became the 16th state to privatize a portion of its economic development responsibilities, moving key areas from under the umbrella of the N.C. Commerce Department to a private-public partnership (PPP, also P3).
Based in Cary and created by statute, the Economic Development Partnership of North Carolina, Inc. (EDPNC) is a 501(c)(3) non-profit PPP tasked with consolidating and enhancing the promotional piece of the state’s economic development strategy, essentially taking over the marketing and sales functions formerly performed by the N.C. Commerce Department.
PPPs for economic development are formed for the purpose of leveraging private sector capital investment, joining public and private sector resources and powers in formulating and implementing economic development policies and programs.
While new to North Carolina, nationally, economic development PPPs have been around for decades. Florida was the first in 1996, but TexasOne, JobsOhio, Arizona Commerce Authority and Missouri Partnership are just several of those currently operating.
Between 2010 and 2014, the Missouri Partnership assisted in recruiting 10,000 new jobs, $500 million in new annual payroll, and $1.2 billion in capital investment to the state. Leading that effort was CEO Chris Chung.
That is the same Chris Chung that has just started as CEO to the EDPNC. In addition to his work at the Missouri Partnership, Chung has an impressive background in economic development.
“I’ve been in the economic development profession for my entire career,” says Chung. “It’s the only career path I’ve ever known.”
Chung graduated Phi Beta Kappa from Ohio State University with a double major in Japanese and economics and has completed significant coursework towards a master’s in public policy and management. He is a certified Economic Development Finance Professional through the National Development Council.
Prior to the Missouri position, Chung began his career with Ohio’s Office of Business Development, eventually serving as manager, leading the sales force attracting new business investment and job creation and the office’s $80 million annual incentives budget.
Chung’s 10 years’ experience in Ohio’s public sector model and seven years’ experience in Missouri’s PPP gives him insight into the pros and cons of both and, he says, leaves him with a clear favorite.
“To me, it’s not any surprise that you have a third of the states in the country now opting to privatize some or all of their economic development functions,” he says. “It boils down to a few reasons—the first and most important is the leverage that you generate by being able to pursue private sector funding through a PPP.
By contract, North Carolina will provide the EDPNC with $17.5 million this year with the condition that the EDPNC raises at least $1 million of private sector money during that period. That fundraising minimum increases to $1.25 million next year. Current fundraising is in excess of $800,000.
Per Chung, the way the EDPNC is structured also avoids conflicts of interest. “In some other states, their PPP controls not only the marketing and sales piece of the economic strategy but also the incentives,” he says. “In North Carolina the Commerce Department retains the purse strings. Only Commerce administers incentives.”
EDPNC Focus Areas
While the responsibilities of economic development PPPs vary by state, in North Carolina the EDPNC focuses on five key areas: new business recruitment, export expansion, supporting businesses generally, small business formation, and tourism.
Responsible for employing 200,000 and a $20 billion economic impact, Chung says, “Tourism is an important industry sector for the state. We’re the sixth most visited state in the country.”
As far as small business formation, Chung explains, “Through our Business Link North Carolina (BLNC) we help small business owners tackle their concepts from ideas to execution, helping them write business plans and getting them financial and technical assistance.
“Our team functions like a call center fielding inquiries—about 15,000 a year—from people who want to start a business, whether it be a retail or community service business or small manufacturer. We help these individuals understand the paperwork, permits, licenses or anything else they need to get up and going as they build their business in North Carolina.”
Supporting existing North Carolina businesses is another key focus area. “We’re leveraging field offices across North Carolina to call on major employers in each of the state’s 100 counties to understand from them what they need to continue growing their presence in North Carolina and what if anything may be inhibiting them from future growth in the state,” Chung says.
“In those cases, we’re trying to connect existing employers with resources they can tap into at the state or local level or even within the private sector to help those companies continue to be viable and growing here.”
In 2014 North Carolina had a record $31 billion in exports. The EDPNC is tasked with fueling that continuing export expansion. “Exporting can be a great way for companies to increase and diversify revenues,” says Chung. “In North Carolina there are something like 11,000 companies that currently export. Many of those are smaller to midsize companies that don’t have sales offices in every country.
“That’s where our team from the international trade group comes in. Our team, some of whom are based overseas, can help companies with market entry strategies or in growing existing export functions. We take export promotion as a serious responsibility because overseas sales mean more dollars coming back to North Carolina to help grow those businesses.”
Certainly right now, the most visible focus of the EDPNC is new business recruitment. Boosting that effort is North Carolina’s perception, both nationally and globally.
Accolades come from a number of sources. Most recent is Site Selection’s Top 10 Most Competitive States which ranks North Carolina first place, up from fourth last year. The Southeast dominates the list with Louisiana, Texas, South Carolina and Tennessee rounding out the top five.
Forbes has routinely ranked North Carolina in the top handful of Best States for Business over the last five years, currently ranking it at number three.
And North Carolina ranks third in the nation for having the most favorable climate for businesses according to Chief Executive magazine’s annual survey, moving up one place from last year. (Interestingly, South Carolina ranked 10th, down from fifth last year, despite its ongoing success in recruiting large industrial projects and enticing businesses from North Carolina with generous incentives.)
“I like to brag about the perception North Carolina enjoys in the mind’s eye of corporate executives and business owners,” says Chung. “North Carolina is held in very high esteem as a business climate and that says something.”
Among the attributes the EDPNC highlights are North Carolina’s superior tax and regulatory environment, extensive transportation network providing superior market access, highly skilled workforce (58-campus community college and 16-campus university system helping to provide a workforce that is 36 percent more productive than the average U.S. worker), comprehensive banking resources and wide variety of economic development programs, and a low cost of living and high quality of life that helps recruit and keep talented workers.
While North Carolina has broad appeal for many types of business, the EDPNC is focused on several specific industry sectors. Says Chung, “We’re trying to position North Carolina as competitive for manufacturing, corporate headquarters, data centers, warehouse and distribution operations, financial services, food processing facilities, call centers or some similar back office functions.”
At the time of publication, the North Carolina General Assembly has failed to pass funding for the North Carolina incentives package. Chung remarks that potential investors in North Carolina shouldn’t worry long term about that and refers to it as a “temporary setback,” akin to “the natural conversation all states go through at some point, whether it’s when there is turnover in the legislative or executive body.”
He points out that North Carolina today is benefitting from some significant business-tax reform that has already taken place: “Now you have the corporate tax rates having gone from 6 percent to 5 percent with the opportunity to go to 4 percent and 3 percent in subsequent years, meeting certain revenue projections.”
Swedish carmaker Volvo recently announced plans for a $500 million manufacturing plant near Charleston, S.C. Volvo sidestepped both North Carolina and Georgia in making their decision.
Chung is frequently asked about attracting an automotive manufacturing company to the state. Surrounded by BMW, Mercedes Benz and Volkswagen plants just outside its borders, North Carolina remains the sole southern state without one.
“North Carolinians shouldn’t be disheartened by Volvo’s decision,” says Chung. “One state winning means a lot of other states did not win.”
Chung understands the frustration. “Automotive is important because of the sheer economic impact an automotive manufacturer can have on a state,” he says. “The trajectories of entire states’ economies have been moved by their ability to attract an auto manufacturer.
“You’ve got $1 to $2 billion worth of original investment made by the company itself, but then you’ve got all those additional suppliers, and that second wave of investment that usually eclipses the job creation numbers of the assembly plant itself. That’s what this game is all about and why it’s such a premium industry for economic development.”
North Carolina has taken an important step in attracting an automaker. Auto assembly plants need large tracts of land, often 1,500 or more contiguous acres with connectivity to utilities, rail, interstate highways and a skilled workforce. North Carolina has assembled four of these megasites: one in the eastern part of the state, two in the Triad region, and another southwest of Raleigh-Durham.
“It’s not easy anywhere in this country to get this much acreage with the needed characteristics,” Chung explains. “You want to make sure that when we are in discussions with automakers that we have some good site options to put in front of them.”
But even with megasite options, North Carolina is still at a disadvantage in luring automakers.
“Other states have been very aggressive in their incentives,” says Chung. “Incentives aren’t the only factor that is part of the decision. You’ve got quality of life, workforce, transportation infrastructure, energy costs, tax rates.
“Sometimes those issues will offset the difference in incentives, but if you did an apples-to-apples comparison of North Carolina incentives versus those of other states, if that were the true tie-breaker, then I think we’d be at a risk of losing in those situations,” he admits.
Focusing on Success
Per Chung, about 30 percent of the recruitment deals in the EDPNC’s current pipeline entail a foreign company or a company with foreign ownership looking at North Carolina. In order to attract foreign investment, the EDPNC uses contract representatives in investment promotions offices in Germany, Japan, Canada and China.
“These are four of the strongest markets for direct investment into the U.S.,” Chung explains, “but I’m also thinking about where else we should have representation. I think Korea makes sense. India is another market that continues to demonstrate potential for direct investment opportunities. Brazil’s economy may have cooled but the U.S. is still an attractive market for some companies there as well.”
The EDPNC works closely with the N.C. Department of Commerce. “We conference with Commerce every week, discussing the deals we’re working on and making recommendations on what we think is necessary to seal the deal for North Carolina,” explains Chung.
“Commerce reserves the right to final decision, as they should, but the EDPNC is dealing directly with the companies. Our job is to have a good finger on the competitive factors and where we are, so that we aren’t paying more than we need to in incentives, but that we aren’t underbidding incentives to the point where we run the risk of losing to another state.”
Regional Charlotte success stories include Sealed Air Corporation relocating their global headquarters ($58 million; 1,262 jobs); Gordon Food Service building a distribution center ($58 million; 275 jobs); Nestlé Waters North America building a water bottling facility ($40 million; up to 50 jobs); AvidXchange building a new corporate headquarters ($21 million; 603 jobs); and Red Ventures expanding marketing and sales operations (580 new jobs).
Recent successes for North Carolina include O’Neil Digital Solutions, a provider of publishing and marketing communications services, which expects to create 250 jobs over five years at a new $140 million printing and data center project in Monroe.
Also, Scott Safety, manufacturer of respiratory and protective equipment for firefighters, police and the military among others with seven global manufacturing locations, which will invest $28.7 million to expand their Monroe-based headquarters, supporting 67 new jobs.
Also, Tosaf USA, a manufacturer of advanced polymers and compounds based in Israel, which will open its first U.S. manufacturing plant in Bessemer City, creating 75 jobs and an investment in excess of $13 million over the next three years.
Also, San Diego, Calif.-based White Labs Inc., supplier of breweries, wineries and distilleries with fresh yeast and related products, which will create 56 new jobs with an expected investment of $8.1 million over five years when it locates its first East Coast operations in Asheville.
Chung makes special mention of the EDPNC personnel who successfully worked to bring a new state-of–the-art poultry processing plant and hatchery to Robeson County. With the new plant, Sanderson Farms, the third largest U.S. poultry producer, will invest approximately $139 million and create 1,100 new jobs.
“These are jobs for people in a part of the state that maybe hasn’t seen that many job opportunities in the past several years and that’s important,” says Chung. “Right now is a pivotal time in North Carolina’s approach to job creation and development and I’m honored to be a part of it.”