(upbeat music) - [Announcer] This is "Carolina Business Review".

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- Well, summer has come and now it's almost gone, and boy, has it been hot.

I'm Laura Ullrich filling in for Chris William, and welcome to the longest-running and most widely-watched program on Carolina business policy and public affairs.

The show has aired weekly in North and South Carolina for over 30 years.

We are so grateful for your support.

North Carolina was just named number one in business by CNBC for the second year in a row.

What's driving these accolades, and what would help South Carolina compete for the same title?

We'll talk about this and other issues in our first segment today, and we'll also welcome our special guest Bob Luddy, a leader in entrepreneurship and education, to learn more about what he's seeing in the economy as we enter the final four months of 2023.

Our conversation begins now.

- [Announcer] Major funding also by BlueCross BlueShield of South Carolina, an independent licensee of the Blue Cross and Blue Shield Association.

And Martin Marietta, a leading provider of natural-resource-based building materials, providing the foundation on which our communities improve and grow.

(upbeat music) On this edition of "Carolina Business Review", Antjuan Seawright from Blueprint Strategy.

Vicki Lee Parker-High from the NC Business Council.

And special guest Bob Luddy, president of Captiveaire.

(upbeat music) - Antjuan and Vicki Lee, so good to have you here today and really happy to get to connect with both of you.

Vicki, I'm gonna start with you.

As I alluded to in the intro, North Carolina just got named number one in business for the second year in a row, and we just continue to see a wave of economic development announcements across the state.

What's driving this?

What's driving businesses and people to North Carolina?

- I know, it's exciting!

It's the one thing that unifies us when we see those results.

I think we found our formula years ago and we've stuck to our knitting.

I mean, we have a great university system that's producing highly-skilled workers who companies are anxious to scoop up.

We have an excellent, still excellent academic regular school system that a lot of parents are attracted to, as well a lot of energy and support has been put behind our smaller businesses, which really make up a huge part of our economic ecosystem.

And the bigger companies know that they need those smaller suppliers, those vendors.

They need those folks out there to make them strong as well.

And so, they see that growth.

We've had record growth of new businesses over the past several years and it's still continuing to grow.

There's still people opening their doors, here.

There's still plenty of services and products being made here, and it just makes for a vibrant, really strong economy.

- Yeah, that's great.

Antjuan, I know you're in, spend a lot of your time in South Carolina, as do I. I live in South Carolina, work in North Carolina, so both the states are really important to me, too.

But in the same survey, South Carolina was 27th.

South Carolina, if you dig into the rankings, they would rank really highly on things like infrastructure and the economy, but 46th on health and life and 37th on business friendliness.

And so, I'm curious for your viewpoint.

Are there specific policies that you think could really help South Carolina compete more for that title?

- Well, first of all, congratulations to North Carolina, because I believe when North Carolina leads, in this case, the Carolinas succeed, because I do believe that there's some trickle down that will happen as a result of North Carolina's leadership.

But part of the challenge I think we have in South Carolina differentiating us from North Carolina is North Carolina has made consistent investments into the basic infrastructural things that attract business and economic development.

And do not get me wrong, we've had our own share of economic development success, but not at the same level of North Carolina.

And I think it's because when you think about water, infrastructure, you think about housing, when you think about education, both at K through 16 level, North Carolina has continued to treat those things as investments, not expenses.

Whereas in South Carolina, I think the politics become a distraction and some of our assets quickly become a liability in some cases, so it turns industry off.

However, I will say that there's a tremendous opportunity with this new wave of economic development that's coming across the South for South Carolina to regain its footing in the conversation and really lead, especially on things like new green technology in the EV space and others.

I think there's a tremendous opportunity.

I think where there's a crisis, there's also a tremendous opportunity.

- Absolutely, absolutely.

With some of these policies and some of these things you say are holding South Carolina back just a little bit, are you seeing some movement on these things?

Are you hearing conversations that lead you to believe that there might be some change there, going forward?

- I think all these things go back to elections.

We oftentimes say in politics, "Elections have consequences."

And we've seen what happens when you have a sea change in leadership.

In a state like North Carolina, I think that was the thing that twisted the cap off the bottle a bit and you saw the economic development winds just blow across the state.

We haven't seen those tectonic plates shift in South Carolina in the same way.

As a result, in some cases, we still continue to lag behind our neighbors, both North Carolina, Georgia, and others.

And so, I think we have some work to do at the ballot box in order for us to keep up with the ever-change of growing economic development in this country.

- I appreciate that.

Vicki, every time I hear these announcements, they always come with a big number of jobs attached to them, right?

And so, what about the workforce?

How do we get enough workers to serve some of these companies that are coming to the state?

- They're in high demand, very high demand.

And honestly, with our association, that's usually the first thing I hear is about getting, finding those skilled workers.

We're producing a lot of them, but we are, like I said, we're snatching them up as well.

So, there is a lot of attention being brought.

I mean, that recent budget, there's more investment in workforce development.

There's a lot more activity with our small business development centers and our small business technology development centers to make certain that we are matching the skills that they're getting with the demand and the jobs that are out there as we're moving to this more high-tech environment.

It's not just in Research Triangle.

I mean, technology is spreading everywhere.

It's in every job.

No matter what you're doing, there's a technology component.

There is that understanding that, like he said, we are investing to make certain that those workers are getting those skills.

Even if it's working in restaurants, there's technology involved.

There's things that they have to learn and how to engage with that growing industry.

I think we're doing our best to keep up demand.

We keep up pace with demand.

- Yeah, so Antjuan, one of the things I wanna ask you, too, before we have to move on to the next segment is, we hear a lot about immigration into the Carolinas, but we also need to grow our own talent from the people who are already here.

What are your thoughts on that?

- Well, I think the tax system has a lot to do with some of the economic development boom you see in North Carolina.

But there's a severe brain drain that's happening all across the South.

And so, we have to incentivize younger folks to stay, not just come here for college, but to stay in the Carolinas to raise a family and retire.

Because as I oftentimes say, no one retires and moves up north.

And so, we have to keep our talent here in South Carolina to raise a family and create generational wealth.

That comes with ages, that comes with housing, that comes with access to the internet, it comes with transportation, it comes with healthcare, it comes with those bread-and-butter issues that matters to everyday working families.

And all those things have to be not only affordable, but they have to be accessible.

And when you make accessibility and affordability marriage in such a way, I think you create a generational spend for four or five, six generations.

- Great, so I have a question, Vicki, right before we go to talk to Bob Luddy.

What about the more rural parts of the states?

A lot of this growth we're seeing is in the more urban parts, but there's such a rich rural part of both the Carolinas.

What about them?

- That doesn't escape, I think, our leaders, for example, and I think you and I talked earlier about when we look at the bipartisan infrastructure bill, there are a lot of strong language in urging people to invest in our rural communities, our underrepresented communities.

There's a lot of money coming through our states and through these agencies.

And they all have those components where they're really encouraging to reach out to small businesses.

I can speak for organizations like myself and my other partners across the state and in South Carolina, 'cause we do partner- - Thank you.

(Laura laughing) - With quite a few groups there that are, we are really working hard to get the word out to the small businesses in those rural areas, in those areas that have felt that they have been left behind in the last boom.

We wanna really ensure that that does not repeat, so we are making inroads to reach out to them so they know how they can participate in the opportunities that are there.

- That's great.

Antjuan, I'm gonna give you 30 seconds.

- Tapping into the diversity of the Carolinas, rural, urban, suburban, race, gender, all those things that make the Carolinas special, I think will be key going forward, including the organic creation of small business, because we've seen small business growth happen in the Carolinas, too.

And that means something, Entrepreneurship means something when it comes to creating generational wealth, particularly in minority communities like the ones that I come from.

- You ended us on a perfect note, because now we're gonna turn to our special guest, Bob Luddy.

Bob is president of Captiveaire and he's known as quite a dynamic entrepreneur.

Captiveaire is in Raleigh.

And he's also created multiple private and charter schools across the state under the banner of Thales Academy.

Bob, welcome to the show.

- Oh, delightful to be here with you today.

- Yeah, thanks so much for joining us.

As president of Captiveaire, you have a really interesting viewpoint.

For folks that don't know Captiveaire, one of the things you do is produce ventilation systems, mostly for commercial kitchens.

The restaurant industry has just seen an absolute roller coaster since the beginning of COVID, and I'm curious what you're observing in that industry now, and does demand remain high?

- Demand is very high and has been, really, for about 30 years.

Because you notice, even, it intensified during COVID.

People wanna eat out more.

Now, food's being delivered to them, so you have reduced cooking at home and more cooking being delivered, being picked up in supermarkets.

So, it's a long-term growing industry.

- That's great.

I'm curious, too, how COVID just, I think almost everybody became a little more aware of air quality and air filtration due to the virus.

How has that changed your business model?

Has that allowed you to expand into other industries that you weren't in previously?

- Absolutely.

Air quality's been an issue for the last 50 years, but it hasn't been handled very well.

One of the reasons is there wasn't a technology that allowed more outside air to come in the building.

Some years ago, maybe eight or 10 years ago, this idea of a direct outside air unit which could produce up to 100% outside air, clean, fresh, filtered outside air heated and cooled to humidity now exists.

There's half a dozen companies in the US making this product.

And with COVID, finally, they came to the recognition this virus is spread through the air.

It's not on the counters.

For example, in Thales, we use 100% Captiveaire outside air units so you have fresh air coming into every classroom continuously, and we found that to be an enormous help during COVID.

And I think you'll see over the next 10 years, it'll be the standard in the US.

- Really interesting, really interesting.

Vicki Lee, I'm gonna let you ask Bob a question, here.

- Yes, Bob, you said something that was really interesting to me and I also saw it on your website.

I think when we think about air quality, we certainly make the connection to our health, but there is something there you mentioned about productivity, how having healthier air leads to higher productivity.

And so, I was curious if you could talk a little bit about that, 'cause I don't think we always connect those two dots together.

- Yeah, you can gain CO2 in a building.

The outside air has a CO2 about 400 parts per million, outside.

The standard currently for buildings is 1000.

It's substantially higher, and it's gonna make you tired and it's gonna make you lethargic.

We established a standard of 600 parts per million.

If you're in that level, it does two things.

It dilutes viruses to a level where they're not a problem, and secondly, it doesn't make you tired.

But if you stay into a high CO, you become very lethargic, very tired.

And so, people tend to be tired in the afternoon because you're generating more CO2 throughout the day.

These problems are all curable now with new technologies, and they're important.

Sometimes we build these buildings and we forget, we build buildings for people.

That's the whole purpose.

And that individual gets lost sometimes with decor and architecture and many other things, so our focus is on the individual, keeping them healthy, giving a good environment to work in.

- This is so interesting.

I don't know if you guys have ever thought much about this, but I haven't.

Antjuan, did you have something you wanted to ask?

- I do, Bob.

I would love to hear from you of how the climate crisis has impacted air quality and how it impacts business.

That's number one.

And number two, we talk often about the economic development boom that North Carolina is experiencing.

But we all know with the developments and the building of plants and industry, that has impact on our air quality in every community, but in particular, minority communities, where we know there are health challenges that are generational.

You add environmental factors, it then becomes generational healthcare challenges, which impacts the workforce and how we conduct and how we do business, which ultimately impacts how the dollar circulates in those same communities.

- The way we look at it is, first, we have to take care of the individual.

If you're gonna bring in outside air and you're gonna filter that air, it's gonna cost more money than if you just recirculate the air.

Once that's done, then we'd say, how can we do that more efficiently?

The new technology, DOAS, direct outside air systems, are very efficient.

They drain all the humidity out so they run at a lower level so they can provide a much higher level of indoor air quality at the same utility cost.

If you try to bring in the environmental concern and say, "Well, you're spending too much money on electricity," this means we're short-changing the individual.

We put the individual first and the environment second, and I think that works out pretty darn well.

- Bob, I'm gonna change the subject just a little bit, but we hear a lot about the labor shortages that exist, especially in the Carolinas where business has been running pretty hot.

Are you having trouble finding high-quality employees?

- The biggest problem with high-quality employees is probably primarily in the vocational area.

You think about it, somehow we abandoned vocational education, which is so important.

We need a much higher emphasis on vocational education, so we in process try to train our own people to develop them.

And this whole idea of school choice where we have a plethora of opportunities is gonna create a much better working environment than having a monopoly on the school system.

- Do you partner with any of the local community colleges where you are, or do you do all the training in-house?

- We do both.

Where the community college can provide what we need, we're happy that that occurs, and where they can't, we do in-house training.

- In the past couple of years with inflation rising and now thankfully coming down a bit, but how has that impacted your company?

Have you had to make actual changes to your business model due to inflation?

- The business model's constantly changing.

We have to adjust to the environment.

Obviously, with steel tariffs, it raised our cost of materials very substantially, so we have to continue to work on efficiency.

With our labor, we buy the best processing equipment in the world.

Most of it comes from Italy.

And the same for our service agents.

We give them the best equipment in the world, and that's how you gain productivity.

You can't push people to work harder or longer.

You have to give them the tools to be very efficient, and that's our focus.

- Antjuan?

- Bob, you mentioned private school investments.

Of course, that's not the argument here today, but how do we strengthen the public school system to prepare kids at the vocational level for the jobs of the future?

Because one could say in rural communities like I grew up in, there is no private school option.

Parents can't afford a private school option.

So, the idea is to strengthen public school classrooms so that we can train generations of children to be prepared for jobs of the future.

What does that look like in your mind as a businessperson and someone who's trying to prepare the next generation of Carolinians for jobs of the future?

- Well, I think the public school system needs a major refocus on vocational education, because 70%-plus of the people are gonna be working in vocational skills.

We've abandoned that.

It's gotta be re-energized.

And second, they have to be willing to change.

The thing with public school system, it's been around a long time.

It's very bureaucratic and it's hard for that system to change.

If they changed the focus and said, "Focus on the student, "focus on the teacher that teaches them, "and leave all the bureaucracy behind," that's basically how Captiveaire operates.

It's how Thales Academy works.

Our focus is on the student, a customer, the user.

And when you do that, you start making better decisions.

- Bob, you mentioned Thales Academy and I know you now also have Thales College and all of the schools that you've played a role in use what you call a classical education, classical model.

Can you explain a bit what that is and why you think that's important to train people for the workforce as well?

- We think about, what is classical education?

It's what I call learning from the masters, going all the way back to the Greeks.

Thales existed in 500 BC.

It teaches students how to be a good writer, a good thinker, a good researcher, how to make oral arguments.

These are all important skills needed in the workplace.

The classic education teaches the good things that happened over time, and the bad things helps us develop better judgment, better thinking skills.

And we use the Socratic so students can discuss issues.

Sometimes they're right, sometimes they're wrong.

This is a major learning process that goes all the way back to Socrates.

- Are you seeing, as an entrepreneur, I know you've written a book and you work a lot with other entrepreneurs.

Are you seeing interest in entrepreneurship growing?

Do you think this is something that's gonna continue to grow?

What are you seeing out there now?

- I think it is growing.

The obstacles of regulation at every level are more complicated now than when I started Captiveaire.

I think one thing we have to be very aware of is knocking down regulations that don't need to be there.

Because if you think about it, every business is a regulator.

It established standards and policies.

Competition essentially creates, is a regulator.

If we have a thousand private schools in North Carolina, they're regulating each other because they're gonna lose customers if they don't do things that please their customers.

So, keeping regulation down, keeping taxes down are very important to entrepreneurs, because it's very hard to start a business.

And particularly, go ahead.

- Yeah, I was gonna shift just a little, I wanted to focus a little bit on the small business centers that I mentioned, some of the community colleges.

What would you suggest would be some of the things that they could do to assist in helping develop that skilled workforce?

I know we just talked a lot about the K through 12, but since they are more, I guess, right at your doorstep, what are some ways we can do our job better to assist you in getting the skilled workforce that you need?

- Well, one is teaching the students rigor, 'cause the market is very rigorous.

The second is focusing on skills.

I know there's very, very good schools in South Carolina teaching cooking.

That's a major skill.

They can earn a good living long term, maybe a really good living if they're good at it.

Teaching skills in a very rigorous fashion is really the key, because you can't really teach entrepreneurship, but you can teach people the skills they will need to learn.

We focus on things like alertness, paying attention to the market, paying attention to your customers, learning how to be flexible, learning how to adjust in the marketplace.

That's a challenge for school.

But I do think that if they teach skills and they teach them rigorously, that person's gonna be able to compete in the marketplace.

- Bob, we don't have too much time left, but I just wanna ask, as you look forward for Captiveaire, what makes you most excited about the market and industries that you're in going forward?

- Well, if I look at the HVAC industry, DOAS technology, information technology, and new methods of air distribution will totally, radically change the HVAC industry over the next 10 years.

There was a talk given in New York in 2008, and the head engineer came out and said, "We've had 100 years to improve indoor air quality, "and by the way, you haven't gotten the job done.

"You better get to work."

I think you're gonna see the most intensive competition in the next 10 years, which will make everybody's life healthier and more productive.

- Yeah, that seems like a pretty positive change.

Antjuan, did you have another question you wanna ask as we wrap up?

- I do, Bob, as we wrap up.

Question for you or a thought for you.

How does the private sector and the business community work more with our technical college system and even our K through 12 system to make certain that the workforce is capable or able to receive students who are coming out of these institutions?

Because it has to be a public-private partnership in order for the long-term bill of health for the community to succeed.

- [Laura] We got about 30 seconds for that answer, Bob.

(laughs) Big topic, 30 seconds.

- I think they not only, obviously, financial support is important, but what's more important is sending highly-skilled individuals from businesses and industry into these schools to let them know what they think is important in their industry.

- That's awesome.

Thanks so much, Bob, for your time today.

It's really great to be able to hear from you.

And Vicki Lee and Antjuan, - My pleasure.

- It was so great getting to meet both of you and spend some time with you today.

Really happy to hear your insights, and there's a lot of exciting stuff going on in both North and South Carolina.

I say that all the time.

It is a great time to live where we do.

- It is.

- And thanks so much to all of you for your support of "Carolina Business Review".

Have a great weekend, and we'll see you next week.

(upbeat music) - [Announcer] Gratefully acknowledging support by Martin Marietta, Blue Cross Blue Shield of South Carolina, Sonoco, High Point University, Colonial Life, and by viewers like you.

Thank you.

For more information, visit carolinabusinessreview.org.

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