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Sonoco, a global manufacturer of consumer and industrial packaging products and services, with more than 300 operations in 35 countries.

Okay, so it is hurricane season.

It is also back to school, which also means back to work.

I am not sure we talk enough to describe what we do on this dialog, and have been doing for over three decades now.

We talk, we debate, we discuss with insiders and leaders, from literally the mountains to the South Carolina coast and the North Carolina coast and all across the Carolinas about things like bold public policies, strategic workforce, infrastructure, transportation upgrades, smart debate, tax policy, banking, energy, agribusiness and everything in between that keeps pushing the Carolinas economy further ahead and expansion and expansionary.

Over the next half hour, we will meet the leaders, some entrepreneurs redefining what it means to do that and to be prosperous right now.

So let's get started.

Stay with us.

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Welcome to brighter banking.

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

On this edition of Carolina Business Review John Hood from the John William Pope Foundation, Carl Blackstone of the Greater Columbia Chamber of Commerce, and special guest Steve Henry, president of paper and Packaging.

Domtar Hello and welcome again to our program, gentlemen.

Thanks for being here.

You know, it's hurricane season, and this is just my impression, but the way we've kind of dealt with that over the decades was ho hum.

Okay, we're going to get a couple of storms.

But a year ago when it blew through the Carolinas and of course, the deadly toll in Western North Carolina seems to have brought a different gravitas.

John, do you get that?

Do you get that sense that there's there's more to it now for us?

I think that's right.

I think there's a maybe a slight precedent with Hurricane Hugo.

Remember when it hit?

It went through Charleston, it hit Charlotte when it got to places like Charlotte.

They're they're not quite as used to thinking about hurricane season as a threat of that magnitude.

And similarly, western North Carolina, western South Carolina, parts of Georgia, etcetera, western Florida, that they weren't used to thinking about the hurricane season in quite the way.

And of course, the the scale of the devastation in Western North Carolina.

You have hurricanes in the Carolinas.

They've always happened.

They're going to continue to happen.

We mostly tend to associate those with the coastal areas, the coastal plain.

There used to thinking about being vulnerable.

And I think part of what has been so sobering and so, as you say, transformational about the Helene story is where it hit and the fact that people really weren't expecting the kind of damage in the mountains from a hurricane, then they experienced.

This is change policy for us.

Absolutely.

I mean, long term, we've got to start looking at, And I'm sorry, Carl, in more than just the year following the devastation, does it change the DNA?

I think it does.

At least it puts the thought that these things can hit all parts of the state.

There's nobody's safe from a hurricane in either state.

Quite frankly.

So I think, from resiliency and to how do we I mean, there's going to be bills this year in the General Assembly how to meet paying folks back.

And there's still costs being occurred from these storms a year later.

So the impact that it has, I think, will actually drive more funding to reserve accounts for, natural disasters, things like that.

The road and the road repair work that had to be done very expensive.

So I think it has to be, part of the dialog and thinking that that's just not a fluke.

It's going to happen again at some point.

Yes.

You're right.

The coast has always been set, and it is second.

Zero.

In my right.

Yeah, yeah.

We saw a bunch in the 90s and early 2000, and we took a break and got lucky for a number of seasons.

I think we're we got to make sure that we're always prepared for that.

So, John, last question on this because we do want to get but there was a recent, report and study and published that the average loss for western North Carolina businesses, the average loss was 330,000.

Some small businesses don't even have that total revenue.

So I cannot I mean, you talk this devastated.

You can't recover some of these business and think about it.

In the mountains, water has nowhere to go.

You know, that's why it was so devastating that that amount of water dropped in places where it just doesn't have very far to go.

The force just wiping things away, wiping whole communities away.

I mean, they're not going to be able to be rebuilt fully in that.

And we have remember, in North Carolina, we have some families and businesses, certainly families that haven't really fully recovered from the 2016 and 2018 hurricanes that hit eastern North Carolina.

So some of these things take a very long time, and it doesn't help when the state manages the money poorly.

One last piece of this is the first time we've not had a national FEMA response.

I mean, they're pushing that down to the states.

So the changes that have been happening at the federal level through DOJ's cuts are going to have a significant impact this year, which will make will force legislators to think differently on how they fund it.

Let's shift to, important public policy in the Carolinas.

In the, in the North Carolina, the US, in North Carolina, the US Senate, seat being vacated by Thom Tillis, not running for reelection.

No big surprise.

I think, how does that pan out?

If we look at the governor's race in North Carolina last year, the Dems won easily.

Yes.

Can you transpose that type of DNA onto the Senate race?

Not really, because the Senate, the governor's race last year in North Carolina, had a Democratic candidate, Josh Stein, against a disaster that was never going to win, and it actually ruined for Republicans other races.

Just the closer you word proximity to the governor's race on the ballot as a Republican, the literally.

On the ballot.

Yeah.

So, so that won't be the same this year.

It'll be competitive.

You know, North and South Carolina rhyme, but our politics are quite different.

North Carolina is a very competitive state and Senate race.

Governor's race has been for decades will continue to be Roy Cooper, the longtime governor, former attorney general.

So he's been elected statewide many times in North Carolina.

He's leading in the latest polls by 6 to 8 points over Michael Whatley, the chair of the Republican National Committee, used to be the head of the state party in North Carolina, and before that was a Dole Elizabeth Dole aide work for Bush.

So he's been around politics, but he hasn't been on a ballot.

And so the name recognition for Michael Whatley is very low.

For Roy Cooper.

It is virtually universal in North Carolina.

So it's not surprising that Cooper would start six, eight points ahead, something like that.

But he's below 50%.

And it is it's going to be the most expensive Senate race in the history of the United States.

Is it a billion?

Did I see that number?

It might get up to a billion.

But even if it doesn't, it'll probably be the most expensive Senate race in our history.

And that means that there'll be a chance for either candidate to win.

I do think Cooper is favored at this point.

But but in North Carolina, the three political parties, Republicans in this order, Republicans, independents and Democrats, I mean, that's a meaningful shift soon.

Fall to the third.

You're right.

I mean, it's a party for a party that had been majority party in North Carolina for most of the history of the state.

This is a humbling experience to not only fall below unaffiliated, which is the largest category in North Carolina, is unaffiliated, but they're going to fall below Republican within the next few months.

Now, again, those unaffiliated voters aren't always undecided voters.

Many of them are already loyal D's or loyal R's.

So don't be.

Just don't.

Some of our Republican friends get excited about this.

And I point out, you know, we have ten statewide elected offices in North Carolina.

Half of them are held by Republicans, half by Democrats.

Calm down.

This is going to be a competitive race.

Calm down.

How expensive is the governor's race in South Carolina?

It's going to be expensive.

I mean, but that's just the nature of campaigning.

Do you think a high watermark expense?

Absolutely.

And especially since we have an open race, it'll be yeah.

We're different.

We have Republican controlled, supermajority in both houses, and all constitutional offices are held by Republicans.

So it'll be a Republican seat.

We've got five in the race now.

Odds on favorite.

I would put the attorney general and the lieutenant governor, as to the end of the day, will be there.

Got a couple of members of the House of Representatives are running as well.

It's early is really early.

So the, primaries June of next year.

So it'll get very expensive, you know, get nasty early in, in South Carolina.

Okay.

You want to you want to, what happens is so Nancy Mace, Ralph Norman, both congressional candidates have announced for that role.

Yeah, Pamela Everett and Alan Wilson.

I think the end of the day ever.

And, Wilson probably will be in the De in a runoff.

Okay.

So there won't be any surprises on party switch down there in the governor's mansion?

I don't think so.

Yeah.

And you're laughing because you're probably right.

Anyway, we'll unpack that later.

Gentlemen.

Thank and stay with us.

So many things to talk about.

And unpack before we do that, before I bring our guest on coming up on this program.

He has been here before.

He has a meaningful opinion in this country when it comes to being a central banker.

He is the president of the Richmond Federal Reserve.

His name is Tom Barkin.

He will be back on this program.

Also, speaking of leaders from the College of Charleston, we are welcoming again, Doctor Andrew Hsu who is the president of College of Charleston as well.

Like many of our special guests and organizations, the story of this company has been going on, and its origins can be traced directly back more than 200 years.

We have that kind of legacy in the Carolinas for some of our companies, and for a good part of the history of this company, they have been manufacturing in the Carolinas.

Joining us again is the president of Fort Mill, South Carolina based packaging company Domtar, Steve Henry.

Steve, welcome back to the.

Thank you.

Thank you for having me.

Do you dream sleep, eat, tariff fear or is it something now that is the Steve how do you think about tariffs?

Do you model it out.

Do you know that.

Is it going to hit the panel.

Has it hit the panel.

What do you think?

I think a lot about tariffs.

As a matter of fact in my household the family is declared a morator Obviously we have to think about it.

We have got an amazing team of 14,000 people across North America.

We have primarily domestic supply chain, which is a huge, competitive advantage.

But maybe to break it down both short term and longer term in terms of, how we're seeing the tariffs impact us today and kind of how we I think once we get past the uncertainty, how we would anticipate the tariffs to, impact us in the future, you know, in that here in the now, what it is contributed is a tremendous level of uncertainty into the economy.

And we see it both in terms of, you know, business.

Sentiment as well as consumer confidence.

And what we see across certainly we participate in many different markets that are through all facets of our economy.

And generally both businesses and consumers are being conservative right now.

So overall demand for products, and we see it outside our industries and markets as well.

The demand is down, which obviously is not healthy for, manufacturing.

The other thing that that is a bit counterintuitive to most people right now is what we've seen in the short term is in our core markets, we compete.

We have to be globally competitive.

But the level of imports coming into the United States have doubled.

This year compared to where they're at on a historical basis.

And the reason for that, in my opinion, is, you know, foreign competition is really trying to bring as much product into the United States at pre tariff levels as they can.

And and they're willing to inventory and carry, you know, carry those costs.

I think there's a lot of debate in our country.

Why haven't we seen the tariff kind of financial impact at the consumer level, on the business level, to the extent that we would expect.

You mean positive or negative for you?

Yeah.

Well, negative.

I think mostly is people expecting those costs to get passed along.

And I think, you know, you look at retailers, I think they've done the same thing in terms of the Walmart targets of the world.

I think there's a lot of inventory that we're going through, but eventually we will run through that pre tariff priced inventory, and eventually those costs will have to get absorbed by businesses and and consumers out there.

But I don't it is coming.

We haven't seen it or felt it necessarily.

From our perspective we feel we're well positioned because our most of our raw materials are domestic in nature.

And so when you think about fiber in particular, most of our fiber comes within 150 mile radius of our facilities.

So we're largely, I think, well positioned, given the tariffs, our biggest, request.

Right.

As we know, we need to be globally competitive.

All we want is a level playing field, in our, in our domestic markets and in particular.

And that's and that's certainly what we're striving for.

So I think once we get past this period of uncertainty, and into the future, it certainly will help level the playing field and certainly help support us manufacturing more broadly, Mr.

Hood.

So let's talk about labor markets.

Is Domtar able to find the workers you need at the prices you you could pay that have the skills that you need right now?

Or is this a problem that you're struggling with?

I think it's a challenge.

You know, I'm excited and energized.

Our country really wants to have a renaissance, a manufacturing renaissance in our country, which is which is fantastic.

And I've worked in manufacturing for my entire career over 30 years now, and it has been an unbelievable experience.

There's just tremendous, people that I've gotten to work with.

You feel good about the sustainable products that we're producing for our society.

And I feel really good about the positive economic impact we have here throughout the Carolinas.

As well as across North America.

What we are seeing, though, is through the generations, parents in particular, less and less parents are encouraging their children to go into manufacturing.

And so, we are generally what we consider the employer of choice in our local communities in terms of the level of wages and the benefits that we provide.

But that alone, the societal values and expectations have changed.

Right.

And so our facilities, because our capital intensive, they run, 24 hours, seven days a week, that's not as appealing to today's generation, right?

When when you want to have a better work life balance.

And so we are having to challenge ourselves and think about how do we alter our shift schedules, how do we make ourselves more appealing to today's generation?

They are our future.

And so, you know, we don't see as many applicants today as we did ten years ago for the same manufacturing jobs, even though we have the best jobs.

And in a particularly, rural community.

But what we do is we work with other manufacturers.

I think we have to work on this together.

We work with partners, in the States and our local communities as well.

And we do a tremendous amount of outreach, in particular through the schools, starting all the way at elementary, obviously focus more at the middle school, high school level.

And then obviously very involved with our universities in terms of having interns, cooperative education, entry level, engineering and sales programs for for people to enter our industry.

Nice to meet you.

Specifically in south in the Carolinas.

Paper has always been a large industry, along the coast, along the waterways, Barnesville and Plymouth and North Carolina.

Tell me, what's the long term strategy in the paper business?

With so many people moving, we're losing farmland and we're losing forest.

What is the sustainability model going forward for a place with such rapid growth, like the Carolinas?

That's that's a great question.

And, you know, I think it begins with, we we practice, sustainable harvesting.

And you're exactly right.

Probably the, you know, there's a lot of discussion about that often.

And it's really it's the urban development is the biggest threat to our to our forests.

For every tree we harvest, we plant three trees in its place, and we ensure we work with NGOs.

We work with, internationally recognized certification standards to ensure that our, our customers can feel really proud to use our products.

And it is being sustainably harvested from, a forest resource availability.

And just I would say more broadly, all of the natural resources that we need to use, whether it's, water, energy, the trees, obviously, we we continue to focus as an industry on how we can continue to be more efficient.

We were recognized, by our industry organization.

It's called FPA, but, Leadership and Sustainability Award for dam to our for we we've started an internal competition to to reduce our water usage at our facilities.

And oftentimes water projects are the projects that don't necessarily make the ROI, you know, cut off there.

But it's the right thing to do in terms of really having that forward thinking view so that our industry's here for the next hundred years.

What's amazing at Domtar, we have we made a transition three and a half years ago, going from a public corporation, to a private, single private strategic owner who has a 40 plus year time horizon.

And it's been really, exciting to work with him because what we want to do together is really transition.

This industry we've seen here in the Carolinas, it's been more of a sunset industry, unfortunately.

And really what we want to do is we want to make this a sunrise industry.

And if you look at our Plymouth, North Carolina facility as an example, the products that we used to produce there are not needed as much by society today.

And so we invested heavily and repositioned that facility to make what's called fluff pulp, which is the main raw material that goes into baby diapers and adult adult incontinence products.

We also made a significant investment at the Marlborough, South Carolina facility to reposition it into what what's called the thermal base paper.

But if you think about your Amazon box may have three labels on it, and there's a paper base in there, and we're the only producer of that here in here in North America, when you go to Starbucks and you get your cup of coffee and they put on the, sticky media with your name and your preferences for your cup, that that's another example of thermal, but we're investing heavily.

You do have to continue to do that.

And I think that's a bit of the challenge in the industry is when you're a public company.

And I worked for many of those over the course of my career.

There's a lot of short term, you know, financial pressures, the I think the value of working for a, strategic, private, long term focused investor is we can really invest and ensure that we're here for the next 50 to 100 years.

But let me go back to a terrorist question and not to beat this horse down.

But, you know, we're so focused on tariffs and the uncertainty of it, as you said.

And we've heard that over and over again, there's uncertainty.

Business doesn't like uncertainty.

However, I've got to think, Steve, that the tariffs have an end date.

I mean we can't this is not sustainable.

Of course it's not going to be good for anybody's pal on the globe.

So a year from now and maybe it's not a year, maybe it's 18 months.

Maybe it's nine months a year from now.

Is this even going to be a dialog about tariffs and the uncertainty of it, or do you feel like we are going to get over a hump where you can be more?

Heck, we're just worry about inflation and hiring the right people.

Tariffs was so yesterday's news.

I would tend to agree with you.

I think this is a point in time we're seeing a kind of a reset in the global trade, policy here, whether it remains long term or not, I think at some point in time and whether it stays or whether it dissolves in the next few years, what we have to stay focus to your point is remaining globally competitive.

Continue to reposition facilities into growth markets, make sure that we've got the the best and brightest, most engaged team here and here in North America.

And that's what's going to enable our long term success.

Is the cost of capital dropping it.

Clearly it's dropping with the fed talking about even dropping interest rates.

Does that help?

I'm sure it helps.

But does that is that encourage you to be more CapEx in the next 12 to 18 months?

That's the cost of capital now is actually quite a bit higher than what it was just a few years ago.

Well, now.

With interest rates, we're all we're all eagerly looking forward to interest rate drops.

Yeah, I do think more broadly, businesses are going to have to, adjust to a higher cost of capital than maybe what we've enjoyed the previous five years.

To your point, it should trend in the right direction.

What I'm personally quite excited about is there are some strong elements in the in the recent tax bill that was passed that certainly are supportive of CapEx investments, supportive of, you know, investing not just in my company, but in manufacturing more broadly across the United States.

And I think those those will definitely be positive for our country.

Thank you.

We have about three minutes, John.

So, you mentioned urban development being a threat to forest acreage more generally.

The Carolinas are growing rapidly.

As we all know.

There's lots of people moving in, businesses moving in puts a lot of stress on our infrastructure.

Road capacity, water and sewer capacity, energy generation and transmission.

Are you concerned that we're keeping that?

We're keeping up with the infrastructure needs in the Carolinas.

And so serving businesses and consumers adequately?

You know, overall, I, I've been in the Carolinas now eight, almost nine years.

And, I think given the amount of growth that I have, of course I'm part of that growth and that I've seen and witnessed over my time here, you know, in the States, you know, can you always continuously improve?

We can.

But given the level, the phenomenal level of growth, I see both states as really being pro, you know, pro-business, pro-growth and making a lot of the right investments.

And I think the key is the public private partnerships.

How can we continue to work together to ensure that that infrastructure doesn't become a limiting factor to continuing that growth, into the future from a business perspective, the challenge for us, much like a shared on the water side, is you cannot wait until you have a constraint.

We're thinking ten, 20, 30, 40 years into the future, making sure we're making the right investments and the way we look.

Every resource is precious, and we have to figure out how to be a more efficient business and use less of those resources going forward and.

Into the future.

We have about a minute and a half left.

Do you have a quick.

Yeah.

Or are the colleges and universities meeting your expectations as it relates to delivering a product that can help you and, to grow folks right out of college?

So your entry level college age graduates, are they preparing them for for you?

Absolutely.

We we hire both out of the North Carolina, South Carolina university systems and we get, I'm really energized when I get to work with our young people.

It makes me excited for our future.

You know, they bring a fresh set of eyes, you know, certainly different expectations, but new opportunities come with them as well.

And so we're very pleased.

I'm a bit biased.

I the way I got into the paper industry was through with a cooperative education program at Virginia Tech.

And so we certainly this summer we had approximately 60, summer interns here in the area.

And, using those universities, I think that enables as college students, to get a more complete education.

And, they're more prepared to help us in, in the workforce.

You know, just just quickly about 30s you were you talked about the continuum of trying to find workers coming from high school all the way up through the technical colleges in South Carolina, at least.

I mean, does that work for you?

Do you feel like that's an effective use of your time to get in there?

Absolutely.

Yeah.

And you have to invest every year and, continue to develop that those relationships and that pipeline of talent.

I'll use myself as an example.

I had never been exposed to manufacturing through my family, just through the end of the career fields that, my, my parents and their families, you know, were a part of cooperative education and working with, manufacturing companies through my university has opened an amazing career for me.

And certainly now I'm opening it up to others.

Well, thank you, Steve.

Thanks for being back on the program.

Thanks for adhering to our time constraints.

You're you're you're a good sport.

But nice to see you again.

Thank you for having us.

It was a pleasure.

Thank you.

Carl.

Nice to see.

You.

Good to see you too.

Thanks, John.

Always.

Thank you for being here.

Thank you for watching.

If you have any questions or comments Carolina Business review.org.

Until next week I'm Chris William, Good night.

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