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- The head of a Commerce Department in any state is a crucial role.

And in South Carolina it's doubly crucial because there's a new boss in town.

I'm Chris William, and welcome again to the most widely watched and longest running program on Carolina Business Policy and Public Affairs seen each week across the Carolinas for 30 years.

Thank you for your support.

This week, a one-on-one and executive profile with Harry Lightsey.

He is the new Secretary of Commerce in South Carolina.

What is his plan coming out of COVID and as momentum has been stronger than ever, when it comes to employment and business in general, we start our dialogue right now.

- [Announcer] Gratefully acknowledging support by Martin Marietta, a leading provider of natural resource based building materials, providing the foundation upon which our communities improve and grow.

BlueCross BlueShield of South Carolina and independent licensee of the Blue Cross and Blue Shield Association.

Visit us at southcarolinablues.com.

The Duke Endowment, a private foundation enriching communities in the Carolinas through higher education, healthcare, rural churches and children's services.

(upbeat music) On this edition of Carolina Business Review and executive profile featuring, Harry Lightsey, South Carolina's Secretary of Commerce.

(upbeat music) - As I said, there is a new boss in town, South Carolina Department of Commerce now has a new secretary, relatively new.

He is no stranger to the Palmetto State or to the Southeast for that matter.

We are honored to have once again on this program, in his new role, the Secretary of Commerce for the great State of South Carolina, Harry Lightsey, your honor welcome to the program, and it looks like you are staying healthy I hope.

- Yes, definitely, it's an interesting time we're in, but hopefully we'll be putting this behind us as we get through this year.

- Mr. Secretary, no surprise to anyone South Carolina has had the wind at your back in many ways when it comes to growth, international investment, capital investment over the last decade, both with previous Secretary Hitt, but just in general with business, the bright glare of the growth of the Palmetto States been pretty amazing.

Two questions, sir, is that momentum sustainable?

And what's your strategy going forward?

- Yeah, so let's break that down into two parts.

First of all, I would be of course, incredibly remiss if I didn't acknowledge the just record breaking 11 year run of my predecessor secretary, Bobby Hitt.

11 years in this job is unprecedented.

And what he was able to accomplish over those 11 years is really speaks for itself as you mentioned, really an incredible record of accomplishment.

And certainly we should acknowledge that gives us a great foundation to come off of.

We just announced our 2021 numbers, and it was a record breaking year in a number of contexts, even dealing with the pandemic, we were able to have over right around $5.7 billion in capital investment in the state and creating almost 18,000 jobs in the state and just in the last year.

So just a great record as we come out of 21 into 2022, we currently have more projects underway in 2022 in January than we did in 2021.

So we do have a lot of momentum and that's a good thing for that for our state.

In terms of where do we go from here?

What I have said consistently since I took the position is I really truly believe that the next five, 10 years in business are gonna be a transformative for every business.

And I think that helping our existing businesses that are already here in the state, deal with many of these new technologies that are going to be brought to the market and commercialized increased automation, artificial intelligence, vast increases in the type of computing in the auto industry, which is very important to South Carolina, the conversion from the internal combustion gasoline engine to the battery electric vehicle.

These are transformative technologies that will really reshape many industries.

So I think existing businesses in the state are going to have our help and support to figure out how to deal with these.

But at the same time all of these changes are gonna create opportunities for our state.

And so we have to be nimble and we have to really work hard to capitalize on the opportunities that present themselves in the next five to 10 years.

If we do it well, I think that'll lay the foundation for another 50 years of growth in South Carolina, and that's a tremendously exciting.

- So Secretary Lightsey, so you were very intentional about six months ago when you came on the job to look and listen, you went on a listening tour, what came out of those conversations that may have surprised you or you didn't expect?

And how does that inform your strategy?

- Yeah, so I have not, although I'm from South Carolina, I had not really been in the state in about 10 years.

So as you mentioned, that it was very intentional on my part to try to get around the state, and talk to businesses, and talk to the people and hear what's going on.

And of course, what I learned was things are going incredibly well in many, many parts of our state.

And the biggest surprise to me, I think was when I left 10 plus years ago, many parts of our state we're in pretty tough shape, they were experiencing very high unemployment, there was a lack of opportunity, they were very depressed in terms of their prospects, but today, of course, things are not uniform around the state, but I will say they are uniformly better comparatively to where they were 10 years ago.

So we had some counties in our state 10 years ago with unemployment rates approaching 20%.

Today we don't have a single county that is double digit unemployment, and even our toughest counties are in the single digits.

And some of our areas of our state are really at what I would consider a full employment economy.

And so the biggest issue that I hear a lot from businesses, that's kind of a big change for at least from my perception in South Carolina, is we're concerned about our workforce, we don't know where our workers are gonna come from.

We're having trouble finding people who can fill the jobs that we need to thrive and grow as a business.

So that has probably been the biggest express need that I've heard, and it is certainly a significant change from the past in South Carolina.

And one of our challenges is to figure out the right things that we can do at the Department of Commerce, working with the folks in education, working with folks in the employment area to really help our businesses get the workers that they need.

- As you well know sir there's a pretty high priority on tax reform in South Carolina this year, and handicap that it could happen.

Would you expect that meaningful tax reform will happen?

And how does that change anything that you talked about when it comes to either workforce or capital investment?

- Yeah, so as our governor mentioned in his state of the state address, if you look at South Carolina in comparison to our neighboring states, and indeed to many other states where we compete for investment and for businesses to locate, our tax rights are relatively high.

And so the governor proposed a reduction in the state income tax, that would put us in a much more competitive area income taxes obviously one factor.

There are other factors in terms of our tax structure, property taxes also are relatively high in South Carolina, but fortunately counties have the ability when they're recruiting a business to come into a county to negotiate a reduction in that businesses property taxes over time.

Of course, that doesn't help the businesses that are already in the county that don't enjoy those tax advantages.

It is certainly something that we need to deal with.

On the other hand tax reform is a big lift and a very complicated subject.

And so the legislature will deal with that as it deems appropriate.

And it's certainly the legislature is the decision making body here, we acknowledge that and we'll see what they do with it.

- Do you think there's a general, back to the tax reform idea and the odds that it may happen in some form or fashion.

The idea that South Carolina's had more cash on hand historically than maybe ever before in recent memory, does that embolden legislators to feel more at ease about enacting things that could have like tax reform, that could have an immediate hit to total revenue so this cash in general balances, you think that's a good thing?

- Well, so I think, and I've heard legislative leaders and obviously the governor as well say, that this large amount of money that we're dealing with in the state, of course, our own budget is running a surplus, and has for the last year.

But in addition obviously we have a lot of federal money to deal with as the federal stimulus bills from the pandemic need to be dealt with.

And so that the combination of those two factors is kind of what is created this a unique opportunity where the legislature has this historically large deal of money to deal with.

The governor has expressed his desire that the legislature used this unique opportunity to affect transformative changes, to invest in our state in a way that transforms the areas in which these investments are made for the longterm, and not just for immediate hit as you will, but investments that can help provide the longterm opportunity to better the quality of life for the citizens of the state and to help the state continue to grow and thrive.

And I echo the governor sentiments on that, many of the legislator leaders, the chairman of the house ways and means committee, has certainly echo those sentiments as well.

So I think in terms of what a legislator would refer to as one-time money, money that they can make an investment with.

It's just an immediate thing that once it's spent it's done, it doesn't recur it doesn't come back.

Those seem to be the right philosophies to deal with that money.

In terms of whether our state budget will continue to run the surplus that it has over the last couple of years, I leave that to the legislature and the economists.

We certainly hope hopeful that we will do our part in commerce to continue to bring business and help our businesses in this state grow, and bring new businesses to the state to help that happen.

But it's a question of where the legislature is and feeling how they want to deal with any prospects of continuing surpluses in the budget.

- Sir, would you expect that the historic size of the surplus would also mean a greater amount for commerce to have to use for incentives et cetera?

- Yeah, so we've proposed in our budget a new concept, which kind of echoes these sentiments of both the governor and the legislative leadership.

We're calling it the Strategic Economic Development Infrastructure.

And what we would propose to do with this money if the legislature approved our budget requests, would be to use that money to seek out and opportunistically invest in infrastructure, or in unique opportunities to provide a platform for growth for the future.

Currently, our incentive structure that we administer at commerce to attract businesses into the state is tied to recruiting a particular business.

And so a business commits that it's going to create a certain number of jobs in the state, or it will make a certain amount of capital investment in the state.

And in return for that, we are allowed to approve incentives for them tax incentives for them as they make those investments and create those jobs.

But what I'm talking about here is the opportunity to make investments in infrastructure, or in things to be built in the state or to be created in the state that are not tied to a specific business coming here, or to creating a certain amount of jobs, but would more provide a platform that would allow us to recruit businesses in the state in the future.

- Kind of in the same vein sir, the idea that if you get more money and if you're allowed, allowed is not the right word to say, I apologize for that.

But if there's a general feel that commerce can operate with some, I'll call it discretion not secrecy because as you well know is the state house, the general assembly was critical of former Secretary Hitt, but also commerce that there was not enough transparency, and that happened almost two years ago.

And I know you were committed some of your comments initially when you first arrived on scene in commerce where you were committed to transparency.

So given the, do you feel like it's a new day and there's a new relationship with the state house when it comes to how you move forward, still be respectful around secrecy and around negotiations, but also keep those in the loop that need to know, but we'll also keep those things discreet as you need it.

- Sure, and I will say, I think I would acknowledge that when I arrived here, the department already had some very good initiatives underway, under-secretary hit to increase transparency within the agency.

And some of those things that we've been able to implement in the months that I've been here, we have committed to additional steps that we're going to take to increase the visibility into what the department is doing.

But at the same time protects the confidentiality of information that would allow us to compete with our other states to attract investment jobs, and also the confidential information of the particular companies that are here in the state or that are thinking about locating in the state.

So we have a number of things underway, and we will continue to look for additional opportunities where we can increase our transparency, because I do think, generally speaking, we are dealing with the taxpayer's money, and the citizens money and they have a general right to know what we're doing and how we're doing it, absent circumstances where we need to protect competitive and interests for the good of the public.

I will say that in terms of our strategic development infrastructure money that we've requested, we've put forward that we would do whatever the legislature deemed appropriate in terms of the transparency and approvals before that money gets spent or committed.

So we're committed to full transparency on that, and to whatever type of oversight that the legislature deemed appropriate.

- Mr. Secretary, anybody that is a casual observer of the business of South Carolina, is going to know that infrastructure's important, transportation broadband, in your former life as a bell south, and an AT&T executive, you know a little something about broadband and interconnectivity.

When you look at the challenges and the bottleneck and broadband has been identified, as is agreements with those that don't telephone poles or power poles.

How do you deploy that knowledge?

How do you lead and allow broadband to be more quickly deployed?

- Yeah, so broadband is certainly a key technology for the future.

And we want to see that as broadly deployed around the state as we possibly can.

The legislature has designated the office of regulatory staff is kind of the lead at a state agency on that.

And we are working very closely with the office of regulatory staff as they work to implement broadband expansion throughout South Carolina.

One thing they have done, and I've had several meetings with them, they have successfully mapped all of the entire state in terms of broadband access.

And so we start out knowing where we have broadband, and where we don't have broadband, and that is a tremendous advantage because there are many states that have no idea, where the infrastructure is, that would allow them to expand broadband in their state.

So I think South Carolina has some unique advantages.

First of all, geographically we're a small state.

And so frankly, we are located very close to each other as compared to some states where they have very long reaches to reach pockets of population.

And so just the geographic nature of the state will allow us to expand our broadband reach, more so than the challenge many other states would face I would say.

Secondly, as I said, knowing where we have to do our work and where we don't need to do work is also a great asset for us to have as we really start to work with our telecommunications providers around the state.

And figuring out how we want to expand broadband, how we want to enhance broadband, and in some cases broadband assets were deployed quite a while ago, and now they're somewhat outdated.

They needed the type of bandwidth that could be provided needs to be expanded, those kinds of things.

But I think we have a good plan, we have a good start, and I look for us to very quickly expand broadband throughout the state with the support of the legislature.

- Sir, we have about two and a half minutes, I don't want to not give a little bit of heat and light here to the whole idea of supply chain was created a lot of angst before the holidays and for awhile that the supply chain was disrupted, et cetera, et cetera.

Of course, South Carolina has one of the premier ports in the country and the world.

But beyond that, the idea of Overland traffic, of getting boats in, of ships in, of just the supply chain in general, do you feel like most of the biggest issues are behind us and now it's a matter of time before that works through the system?

And again, we have a couple of minutes left.

- Yeah, so let me just acknowledge, I think that the Port of Charleston is an incredible asset to South Carolina and to the Southeast region.

And the legislature has made some great investments in terms of expanding our port Hugh Leatherman Terminal, the dredging of the port or things that are coming online, either this year or in the very near future.

And that will increase the capacity of the port, which will be a great thing for the entire region, and particularly for South Carolina.

I think supply chain, the one thing that the pandemic showed many of our businesses is just how vulnerable they have become.

And I think one of the opportunities we're gonna have over the next few years is I think that a lot of businesses are looking at onshoring parts of their supply chain.

And so there is going to be a momentum to bringing business some parts of the supply chain back into the United States.

And South Carolina with its really strength in manufacturing and advanced manufacturing, I think is uniquely positioned to take advantage of that.

- And when it comes to the ports, and it's not meant to be a leading question, but I would guess President Jim Newsome has announced that he will be retiring.

Barbara Melvin has been clearly the heir apparent, I'm assuming you think there's not gonna be much disruption with the transition and leadership.

- No, I don't expect that at all.

Barbara has certainly been there.

She has been in the number two position for quite a while.

She understands the port, and has I think all of the right characteristics to take over and continue to build our port.

- Mr. Secretary, thank you.

I wish we had more time to unpack a lot of other things, but you seem to have plenty on your plate, but thank you for your leadership.

Welcome back to the South and the Carolinas, and we a wish and hope the best to you, stay healthy.

I'm assuming you've been healthy and hope that we'll continue.

- Yes, so far I've managed to the dodge the virus, but we'll continue to work on that.

- Thank you, sir.

Best of luck until next week for all of you.

Thank you for watching.

Stay safe tonight.

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