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Four industries seen as key to diversifying Charlotte’s economy

While the seeds were already planted, the recession and the tremors it sent through the financial sector helped pave the way for new industries in Charlotte.

Although the city is still known as a banking capital, some expect those new industries — energy, foreign investments, biotechnology and small and minority-owned businesses — to substantially change the city’s business landscape and work force and play a major role in diversifying its economy.

Here’s a look at those sectors — and the challenges to keep them growing.

Energy

With the founding of Duke Energy Corp. in 1904, Charlotte has been an energy hub for more than a century. But the energy sector has been growing and diversifying as domestic and international energy-related companies have expanded or opened new facilities in Charlotte.

Tony Crumbley, vice president of research at the Charlotte Chamber of Commerce, said Duke’s pending $17.7 million acquisition of Raleigh-based Progress Energy would make it the largest power company in the country. If federal and state regulators and the U.S. Justice Department approve the purchase, Charlotte-based Duke would provide electricity to an estimated 7 million customers in North Carolina, South Carolina, Florida, Indiana, Kentucky and Ohio.

It was Duke that first attracted Shaw Power Group to Charlotte, said Jeffrey Merrifield, senior vice president of Baton Rouge, La.-based The Shaw Group.

Shaw, founded in 1987 as a pipe fabricator, expanded into the energy industry in 2000 when it acquired a Boston engineering firm and launched SPG. The company saw growing opportunities in the energy field – and in Charlotte.

In 2003 SPG formed a consortium with Alstom Environmental Control Systems of Knoxville, Tenn. The consortium won Duke contracts to retrofit four of its coal-fired power plants in North Carolina with equipment designed to reduce harmful emissions. The company opened a Charlotte office in 2004.

SPG named Charlotte its headquarters in 2007, Merrifield said. At the time, the company employed about 700 people. Today, that number is more than 1,100.

Merrifield said SPG is the largest builder of coal and nuclear power plants in the U.S. and the largest provider of air-quality-control systems for coal power plants. The company also owns 20 percent of Westinghouse Corp. and builds all its nuclear units.

In December, SPG announced plans to add 225 jobs by the end of 2011 as part of its new partnership with Toshiba Corp., which in 2009 established an engineering center in Charlotte. SPG will design and build most of the company’s new nuclear power plants.

Merrifield said Charlotte has more than 250 companies that employ more than 26,000 workers in the energy field. And new energy companies continue to move to Charlotte or expand their facilities here, including Areva Inc., a Bethesda, Md.-based nuclear power plant engineering company that employs about 650 people in Charlotte.

In November 2009, Areva signed a long-term lease on 180,000 square feet of office space in the Meridian Corporate Center in north Charlotte for future expansions.

Erlangen, Germany-based Siemens Energy announced in March plans to invest at least $170 million and expand a gas turbine manufacturing facility on Westinghouse Boulevard in Charlotte. Mark Pringle, Siemens director of operations, said the expansion is expected to create close to 1,000 jobs over the next five years. The company employs about 800 people in Charlotte. The new 450,000-square-foot facility is scheduled to be running by October, he said.

In November, the company completed construction on a $50 million, 75,000-square-foot office building at its Westinghouse Boulevard plant, which will eventually accommodate about 225 new workers who will oversee the design and manufacture of generators.

The majority of Charlotte’s energy-related companies, such as Shaw, Toshiba and Siemens, all build large power-generating units, Merrifield said. He expects that those companies, in the coming decade, will attract suppliers looking to sell equipment to the larger companies. Moreover, smaller companies in the green-energy industry, such as Charlotte-based Sencera, which manufactures solar panels, will also continue to grow and expand, he said.

“This kind of growth is a great opportunity for all of us,” he said. “Charlotte is still seen around the world as a banking capital. But I think in the not-too-distant future we’ll be recognized both in the U.S. and internationally as an energy capital as well.”

But as Charlotte’s energy sector grows, Pringle said the city will be challenged to have enough skilled workers.

“There’s plenty of people in this area looking for jobs, but they don’t necessarily have the right skills,” he said. “We need to continue to beef up the infrastructure to train all levels, from blue-collar construction workers to engineers. We have to be careful that as the city grows, the infrastructure grows along with it.”

Foreign investment

Growth in Charlotte’s energy sector has helped bolster another increasingly vital part of Charlotte’s economy, foreign investment.

Justin Hunt, the Charlotte Chamber of Commerce’s economic developer for European businesses, said the city has been the recipient of foreign investment for decades. The influx of foreign companies in Charlotte started in the 1960s and ‘70s, fueled by the then-thriving textile industry.

“European companies that built textile machines or produced chemicals and dyes started coming here,” Hunt said. “Over the years the diversification and growth of that base has been very significant. We’ve had momentum for quite some time on the international side and that continues.”

Hunt said Charlotte has been successful in recent years in landing very large investments from foreign companies, including Siemens Energy. He said the company’s planned $170 million facility is the largest foreign manufacturing investment in the Charlotte area since the 1970s.

Saertex, an energy company headquartered in Germany, announced last year plans to expand its Huntersville manufacturing facility, add 178 jobs and invest $6.5 million in new machinery and equipment. Saertex, which works primarily in the wind energy, aerospace, civil engineering, auto and shipbuilding industries, opened the Huntersville facility in 2000 and employs about 130 workers.

In January, Paris-based Capgemini announced plans to open a $4.2 million office in Charlotte, creating 550 new jobs over the next three years. Capgemini provides consulting, technology and outsourcing services. The Charlotte facility will serve banking, insurance and capital-market clients for the company’s Financial Services Global Business Unit.

Hunt said such big announcements are offset by the fact that the majority of the foreign companies that open or expand in the Charlotte area are smaller, private companies. But in some cases those small investments turn into bigger projects, he said.

“Oftentimes, these companies come here with one or two people at a sales office. But then in 10 years, once they’ve established a U.S. customer base, they build manufacturing facilities and expand their work force,” he said. “This kind of investment is extremely important for us.”

Take Single Temperature Controls, a subsidiary of Single Temperiertechnik GmbH of Hochdorf, Germany. It started operations in Charlotte with one sales manager in 2008, Hunt said. Today, the company has five employees.

In December, it leased 7,900 square feet of space in South Point Business Park in southwest Charlotte to house its new marketing, distribution and service facility, which is intended to help expand the company’s U.S. customer base in medical plastics, electronics, aerospace composites and pharmaceuticals.

Hunt said that while Charlotte continues to attract a growing number of foreign companies — 565 in Mecklenburg County last year compared with 280 in 2000 — the city still has its limitations.

“We can’t be all things to all people,” he said.

There are some overseas projects that just don’t lend themselves to Charlotte, such as large manufacturing facilities that require gigantic tracts of land, which are increasingly rare in Mecklenburg County, he said. There are also companies that want to be close to their U.S. customers or require a deep-water port, he said.

“So, we don’t always win these deals, but we’ve got a pretty good batting average.”

Biotechnology

One of the newest business sectors to arise in the Charlotte area is biotechnology, a catchall term for an industry melding science, biology, technology, energy and engineering.

In part, the North Carolina Research Campus in Kannapolis helps fuel the industry in the Charlotte region. David Murdock, former CEO of Dole Foods, founded the campus in 2005. It serves as a center for biotechnological, agricultural, food science and nutritional research. Clyde Higgs, vice president of business development for the campus, said its role is to provide a place where collaborative research is done at the intersection of health, agriculture and nutrition.

“Great discoveries are not made in a vacuum,” he said. “It’s a combination of multiple disciplines working together.”

But Charlotte’s challenge is to create an environment in which that collaboration can happen, he said.

“It used to be that if you were a pharmaceutical company or medical device company, all good ideas had to come from within your own four walls,” he said. “Organizations can no longer afford to think like this. Good ideas come from working together. That sounds logical and simple, but collaboration is truly a contact sport. How do you facilitate collaborative research?”

Higgs said many Charlotte-area companies and organizations that fall under the biotechnology umbrella are fragmented. But the NCRC is making strides in changing that, he said. Scientists and administrators from nine North Carolina universities, including the University of North Carolina at Charlotte’s Bioinformatics Research Center, work out of NCRC facilities. Also, nearly a dozen companies have facilities there, such as Burlington-based LabCorp.

“In a decade, the number of universities and companies here will be significantly higher,” he said. “This will help codify the local biotech industry and, in turn, get more products onto the market.”

Also helping grow the region’s biotech industry: Margie Benbow, executive director of the North Carolina Biotechnology Center’s Greater Charlotte office.

Benbow said her office is charged with helping support biotechnology research and businesses and creating jobs in the biotechnology industry. The nonprofit, which is based in Raleigh with five regional offices throughout the state, is funded through the General Assembly.

“Because we’re a regional player, we’re able to pull together different collaborators, which make our efforts stronger,” she said.

Since 2006, the center has awarded dozens of research grants to state universities, physicians and research centers, including the NCRC.

Benbow said she has seen the number of biotechnology jobs increase in Charlotte, where there were just five biotechnology companies in 2003 compared with 43 in 2010. Charlotte had only 10 “bioasset” companies in 2003, Benbow said. Such companies support biotechnology companies, which can range from a law firm to a manufacturer. Last year, there were 362 such companies.

The biggest challenge facing the local biotechnology industry is trying to grow awareness, she said.

“Four out of five biotechnology jobs are nonscientific,” she said. “It’s like NASCAR; not everyone has to be a driver to be in the industry. There’s marketing, sales, accounting, procurement. There’s a lot of people who know how to do business here in Charlotte, and I wonder if they’re aware they can play an important role in the biotech sector.”

Small and minority-owned businesses

For 2011, the Charlotte chamber has identified small and minority- owned business as one of the areas in which it tends to focus.

Crumbley said that about 80 percent of the businesses in Charlotte and throughout the county are small, which he defines as having fewer than 100 employees.

“There is significant growth taking place with minority businesses in Charlotte, and we feel like we need to do more in terms of recruiting and support,” he said.

Jack Brayboy, president of Charlotte-based Brayboy Communications Inc., said the Charlotte Mecklenburg Black Chamber of Commerce is one source of support for minority business owners. Through his company, Brayboy produces and hosts a weekly TV show, “Charlotte Small Business Spotlight.”

“The show targets an undeserved minority community who oftentimes feels underappreciated,” he said.

Brayboy counts himself among that group. For nearly 30 years he worked as a TV reporter and anchor in Charlotte and Philadelphia. Running a business is new to him.

Charlotte, for the most part, is supportive of small businesses, he said, pointing to efforts such as the Access to Capital Summit at the Charlotte Convention Center in June. Hosted by the city and the Charlotte chamber, the event featured discussions with area business owners and officials from local financial institutions and government agencies.

Through his show, Brayboy said he’s connected with small and minority business groups, such as Charlotte- based National Hispanic Entrepreneurs Organization and the Charlotte League of Businesses, which is designed to help small businesses through increased exposure and shared resources.

“People talk about money a lot in this town,” Brayboy said, “and most of it filters down from the big companies to the mid-level companies. There needs to be more opportunities for smaller guys like me. And for that to happen, big companies have to take a risk. But in this day and age that’s tough for people to do because everyone is holding on to their wallets.”

Wayne Davis is also looking to carve out a niche in Charlotte with his small company, EZ-Tixx, which sells tickets to music and sporting events at large and small venues in Charlotte.

Davis moved to Charlotte from Scottsdale, Ariz., and founded the company in 2007. He also has offices in Virginia and Texas. Nine people work at the Charlotte office.

Last year, his company sold tickets to 745 events, he said. Since starting the company three years ago, the number of events he’s sold tickets to has increased by 25 percent each year.

But he was disappointed when city officials, through a bidding process, picked Ticketmaster last year over his company to sell tickets to events at Ovens Auditorium and the NASCAR Hall of Fame.

“I think we should let hometown companies sell tickets to hometown events and help out the local businesses,” he said.

Other than that, Charlotte is a good place to start a small business, he said.

“There’s a lot of organizations out there to help, but starting a small business is always a matter of trial and error and it’s never easy,” he said. “But so far, things are working out pretty well.”

Sam Boykin can be reached at sam.boykin@mecktimes.com.

Growing industries

A look at activity in the Charlotte area in 2010

Energy

Erlangen, Germany-based Siemens Energy broke ground on a $170 million gas turbine manufacturing facility in Charlotte and will create about 1,000 new jobs over the next five years. The new 450,000-square-foot facility is scheduled to be running by October, representing one of the biggest expansions in Charlotte in decades.

Foreign investment

The Charlotte Chamber of Commerce helped land 29 foreign-investment projects in Charlotte, including expansions and companies opening new facilities, said Justin Hunt, the chamber’s economic developer for European businesses. One of the biggest foreign investment projects was Swedish company ABB Inc., which is building a $90 million plant in Huntersville and creating 100 jobs to manufacture high-voltage cables. The new facility is expected to be in operation in early 2012.

Biotechnology

Nutramax Laboratories Inc. opened a new pharmaceutical manufacturing facility in Lancaster, S.C., and plans to create more than 200 jobs over the next five years. Greinier Bio-One North America Inc., a manufacturer of medical sampling devices, announced that it will create 51 jobs and invest $25 million in Union County over the next three years.

Small/minority-owned businesses

NDR Energy Group, a small, minority-owned energy consulting and management company, opened its headquarters in uptown Charlotte. The company markets and sells natural gas to utility companies throughout the U.S. Keva Walton, senior vice president of strategic partnerships and diversity for the Charlotte chamber, said the company was invited to Los Angeles for the 2010 Inner City Capital Connections, a program designed to stimulate the growth of capital to underserved inner-city markets by matching urban businesses with investors.

Source: Mecklenburg Times staff research

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