(upbeat music) - [Narrator] Major support for Carolina Business Review provided by Colonial Life, providing benefits to employees to help them protect their family, their finances, and their futures.

High Point University, the premier life skills university focused on preparing students for the world as it is going to be.

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

- The very well-documented impact, full impact of COVID-19 on not just our lifestyles but our business and industry is fairly well known.

But the positives now coming out of this are also being fairly well known now.

One is of course, what Apple's announcement meant to the Research Triangle region of North Carolina.

I am 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 North and South Carolina for 30 years now.

In a moment we start this week's dialogue.

What is going on?

And later on, he is a CEO of the Research Triangle Park and the Research Triangle Foundation, Scott Levitan joins us again.

Stay with us.

(upbeat music) - [Narrator] 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, an independent licensee of the BlueCross and BlueShield 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.

On this edition of Carolina Business Review, Dr. Joseph Von Nessen from the Darla Moore school of business, University of South Carolina.

Vicki Lee Parker-High from the North Carolina Business Council and special guest Scott Levitan, president and CEO of RTP and president of Research Triangle Foundation of North Carolina.

(upbeat music) - Happy summer and welcome to our program Vicki Lee, good to see a Joey, welcome back.

I hope you all are doing well.

Joey, I'm gonna start with you.

Unemployment, labor shortages, federal unemployment benefits, state unemployment benefits.

This stew that we have around workers and around motivation has been very murky.

Is it getting more clear?

Are people going to come back in the workforce anytime soon?

- Well, there are a variety of reasons why people have been staying out of the workforce over the past year.

One of the major reasons is that we've seen a federal supplement to unemployment benefits which has particularly in the service sector limited the incentive for people to come back.

So in South Carolina, the cutoff there is about $16 an hour.

So if you are earning less than $16 an hour before the pandemic then it was financially more attractive for you to stay on unemployment than move back into the workforce up through the end of June when those federal benefits were rescinded in South Carolina.

So that's going to help move people back into the labor force in the service sector.

But beyond that, we've seen baby boomers retire at an accelerated rate over the last year.

We still have a lot of parents staying home with children.

That will change a bit in the fall as students go back to school in a more normal learning environment.

So there are a variety of reasons why people are hesitant to go back to work and that's creating this labor shortage which is affecting all sectors.

- Vicky Lee, how do you weight in on that?

I know the humane part of you wants people to have what they need to have to survive.

But as Joey just outlined and we've heard and you know because you're a senior representative in business, this idea of giving people an income and not motivating them to go back to work, it's gotta be a tough one.

- Yeah, well, I mean, I'm not gonna lie.

It certainly is a challenge.

And I have heard from businesses where I've even heard a recent example of a business where they increased their wages and they offered more benefits.

And even with doing that, it was still a challenge to get people to come back to work.

As Joey mentioned there are a number of reasons.

One of the other things that we have noticed as well is that there has been a huge uptick in the number of new businesses created.

So a good number of people have also taken this opportunity to launch their own businesses and strike out on their own so that's also a factor in there as well in addition to the childcare and people just retiring.

I've heard of a lot of people who just simply said, "I'm going into semi-retirement."

So there are a number of factors in play here.

- Vicki Lee, how punitive has this as you just described that people are not taking the bait to go back to work.

And that of course, that's my turn, how punitive is that been to businesses?

How much frustration are you actually hearing?

- Well, I mean, to be honest, again, it is real.

For the first time we list job listings on our website, and I have to say that the last two months, this has been the longest list that I've ever had to upload.

There are a lot of people, a lot of business owners looking for qualified workers.

I do think it is starting to present a challenge for them in terms of being able to want to get back into the economy and to start generating more profits for themselves and getting their products out on the main street.

It really started to take us toll for some businesses.

I've heard it often.

I've heard even example of a business owner who was worried about taking vacation because not having the employees that he had in the past and just be a concern about who's gonna be there to run the shop while he's gone.

So it's very real.

- Joey in South Carolina, Governor McMaster already put a kibosh on the idea that federal unemployment benefits were gonna continue.

He stopped it.

Is there a cause and effect that's already being seen?

- Not that we can directly observe yet.

That's probably gonna take 30 to 60 days before we see any real meaningful data that show what's happening.

If we look in South Carolina, there are about 100,000 individuals who are affected by this legislation change.

And so we'll be tracking to see if that makes a dent particularly in the service sector.

But one other point I wanna come back to looking at this labor shortage is part of this is actually just an exacerbation of what we were witnessing before the pandemic began.

Because we had already seen a historically low unemployment rate particularly in South Carolina going into the pandemic in 2020.

And so now that demand is ramping back up to a certain extent this is just an extension of what we were experiencing then.

Because if you look at industries like construction and manufacturing, for example, that are paying about $30 an hour on average, the ending of these federal benefits is not going to help them.

They need more direction on long run changes with respect to workforce training 'cause that's really gonna be the solution that they're gonna be looking towards.

- Vicki Lee, Joey just talked about the service sector.

And of course the sub sub sector of that is restaurants.

What's gonna happen to restaurants?

You think restaurants will ever come back?

Were we over restauranted to begin with and this is a somewhat a natural retrenchment of what restaurants look like?

- In some ways, I guess that remains to be seen.

Again, I can just think of a personal example where again, my husband and I went out to dinner to one of our favorite restaurants to get out and we pulled up and it was online showing it was there and open and we pulled up in lights out, it was gone.

And that has happened a couple of times.

Again, is it just gonna create a natural balance at the same time?

I have heard of a couple of restaurants opening.

So again, people are venturing.

So I think we have to wait to see if it's gonna balance out but right now it certainly is looking like the restaurants are taking a hit even though I know that we've put a lot of money into the restaurant legalization program.

Millions of dollars went into that.

I guess we have to wait and see if that was enough to help those.

But one of our business members, I called her up and she's closed.

Again, it's taken its toll.

There is a bright side, but there are some people who really took it really hot.

- Joey, is the seasonal of summer travel and spending enough to save restaurants?

- I think it will be enough to restore the overall demand, yes.

I think that restaurants are changing as Vicki Lee has mentioned.

And particularly when we look at customers and what their preferences are when they're looking to spend and they're looking to go out to eat part of it is just getting back to normal being able to go out again.

But over time, they're gonna be looking particularly if prices rise over time, they're gonna be looking for an experience.

Whether that's more of a service related experience or maybe it's different types of food but something unique and different that a lot of these new restaurants are looking to satisfy that demand.

Because if they're just looking more at a basic need of we're looking to go out to eat or not to not to cook at home, for example, take out works.

And that's often cheaper and restaurants have adapted to that.

So what type of service can restaurants offer that's a value add that they may not have offered before?

There's a demand there consumers are spending, we're seeing the service sector and spending on services ramp up.

So we'll see how restaurants adapt to that new demand.

- We have about a minute before we bring our guest in, Vicki Lee, you get the last pitch at least in the first part here.

We've seen an emerging trend during this COVID recovery, if you will.

The trend is that big businesses now are investing in small businesses.

That's good, right?

- Yes, yes, I mean, of course we're familiar with the government funding.

However, there is a large companies that have stepped up to play.

I mean, of course we've heard about Facebook and I think they've made over 100 million dollar investment and take credits for businesses as low as well as Google.

They did over $340 million investment.

Lowe's here in North Carolina donated $25 million.

So they're not small sums.

These are significant contributions there.

American Express had a campaign to support small businesses, they literally gave you $5 if you spent more than $10 with any local small businesses.

Each consumer got up to 10 transactions on that.

And we're seeing bigger companies now target smaller companies for vending and their supply chain.

They're looking more intently even looking more broadly at historically underutilized businesses and black owned business and women owned businesses.

So, there's a silver lining and this has been a trying time, but it has brought attention to the need and the value to interact and work with our smaller companies.

So there's a lot of dollars out there.

- Joining us again, the president and chief executive officer of RTP as well as the president of the Research Triangle Foundation of North Carolina.

We are glad to have the ever demure Scott Levitan, Scott, nice to see and welcome back.

- Thank you very much, it's an honor to be here.

- Let's start with gosh, the 900 pound gorilla.

The Apple that finally came through.

First time they said no to North Carolina.

Second time it was one of the largest economic development announcements in both states.

How is it still reverberating within RTP and places beyond?

- Well, they never said no.

They said, wait.

So, we waited.

It's been a terrific announcement.

They have been very communicative.

It's been a model announcement because of the 100 million or so that they've committed to support public education and another 100 million to invest in broadband around North Carolina.

That's the kind of civic business leadership that we really need everywhere, not just in North Carolina.

- Well and Scott, early on when you were on the program the last time, and I know you were brought in for the idea of convening this idea of what RTP is going to be going forward the next 60 or 70 years.

This has got to give you some wind at your back when it means redefining what RTP is.

- Well, it does.

Since the beginning of COVID including Apple, we've had over 12 companies announced just in RTP $4.5 billion of investment over 5,000 jobs.

We've never had a period when RTP had that kind of investment and attraction.

So it is a new world.

You know, I'd love to take credit for what happened but I sit at my desk and eat chocolate.

So, I can't.

This is a broad range of companies and businesses that are all involved in forward facing technological research development business activities.

They run the gamut in terms of a balanced economy.

We have FinTech, traditional IT like Google and Apple, Ag tech, North Carolina and South Carolina have tremendous activity in Ag tech.

It really is a broad basis for a future looking economy.

- Joey.

- Scott at these high-tech companies now have the opportunity to hire workers not just locally, but from all over the US and all over the world because of the work from home environment in a post COVID economy.

How is that impacting or how will that impact the strategy for hiring local and for making sure that these announcements are creating job opportunities for the Carolinas and for North Carolina in particular?

- Well, every company that comes here, one of the first stops that they make when they're prospecting is not only the universities, but our technical colleges in Durham, Wake and other counties.

We have exceptional Durham tech and Wake tech are really exceptional institutions in that they build relationships with companies with the goal of up training or initial training for people so that they can get these jobs.

I will say that using Apple as an example, they intend to hire almost exclusively locally.

So they will be working with our tech colleges, with our universities to really make sure that the students who may have... People who live here can be up trained or appropriately trained for the jobs that they're bringing or college graduates really wanna stay in North Carolina and they feel like this is the place where they can do it.

- Vicki Lee.

- Yeah, well, a couple of questions.

I'm gonna start with the pipeline 'cause you mentioned 12 new announcements recently, what's the pipeline looking like?

I know there's still people knocking on the door.

You don't have to give specific numbers, but how is that looking compared to previous years in terms of people now looking at RTP?

- Well, if you talk to our partners at EDP PNC, Chris Chung and his team and Michael Haley in Wake and Ryan Regan and in Durham, it's accelerated over previous years.

The biggest concern we hear from prospects thinking about our region is, is there gonna be enough talent to be able to accommodate the demand that another company coming into our region will play?

It hasn't stopped anybody yet for making a decision to come to North Carolina.

- Let me follow up on something.

You talk about all these new announcements, thanks for bringing that up Vicki Lee.

But you also mentioned Scott earlier on in this dialogue that Google is going to Durham obviously a lot of engineering jobs.

So when you think about these announcements, you've got Apple and Morrisville, North Carolina.

Google now in Durham, you've got Kerry, you got Apex.

So they're on the periphery of RTP.

So is being in quote unquote RTP, is there a new definition for that now?

Is it a virtual RTP?

- Yeah.

We're the triangle reach.

And however you define it, it's either the 7,000 acres of RTP, the three counties that we traditionally consider the triangle, but we also have to include the seven halo counties because as you know, there are huge facilities that are being located outside of the traditional three counties.

We're actually becoming a region, not just a donut with a hole in the middle of it, which is RTP.

So it does generate a lot of conversations about business leadership triangle wide and helping the counties and DOT and the school systems and affordable housing and accessible housing.

How do we sort of develop regional strategies for that, that can be played from the top level of the region but also work up through the counties where a lot of the funding for those initiatives comes from in the state?

Our board has really challenged us to help figure out strategies to be a convener, not to make new regional organizations because we certainly have enough of that.

But how can we use our resources to buttress and support existing organizations like Regional Transportation Alliance, Research Triangle Regional Partnership.

What can we do either financially or staff wise or convening business leaders to help them be more successful and to help us plan appropriately for the doubling of the population in our region, which is anticipated over the next 20 years?

- Joey.

- So following up on this idea of a virtual knowledge economy, what are your thoughts on commercial real estate going forward both short and long-term?

Obviously that's a major challenge right now but as we look ahead over the next decade, do you have some perspective on where you see the knowledge economy fitting in businesses in that space?

How are they gonna use commercial property?

How is that going to change?

- That's a big question and I'm a dirt guy by training and so it's dear to my heart.

What the tea leaves are saying from companies, 'cause we're building a hub, which is a new town center for RTP that the virtual work...

Working at least partially virtually is probably embedded in our future in terms of space.

Now, a number of companies that we speak with so the obvious response would be, oh, well then everybody has all the space they need.

and so we shouldn't be building commercial space.

But the reality is that using hoteling and having people be able to stay within their workplace, because there are decks and gardens that they don't have to check in when they come into work that that might argue for a different kind of building typology which will continue to drive commercial development.

We're just coming out of COVID and we'll see whether those predictions pan out but that's the overarching message we're hearing.

That people will be needing different space.

Whether it's retrofitting existing buildings or designing new kinds of office space for companies.

- Let me just jump in here just quickly, just a quick follow-up to that, Scott.

You almost have to have a town center now.

Well, you do have to, I mean, it's do it or die if you don't build the hub and more of the hub, is that fair to say?

- Chris, we have bet the firm on the hub.

Hub is a one and a half billion dollar project.

Just to get the $65 million of infrastructure done Durham county is contributing $20 million.

This is a real vote to support what you just said, our companies voted to tax themselves for $10 million and the foundation is putting in the rest of the money.

So money talks and everyone sees that in order to be a competitive region, RTP needs to have that kind of mixed use town center.

- Thank you, Vicki, sorry to interrupt, please go ahead.

- Yeah, no problem.

My final question is I think going back to what Chris mentioned before the ripple effect and clearly getting the big wins the Google and the Apple that also draws the more entrepreneurial spirit.

So I guess my question, are you also seeing more venture capitalists or investors that are also coming to fill out that ecosystem and are you seeing more investors?

And can you talk a little bit about what that's shaping up for some of those smaller wanna be one day Google companies?

- Yeah, so I wish we had an hour to talk about that, 'cause that's a really rich question so thanks for asking it.

Just to give some context, four or five years ago we took 450,000 square foot of vacant space that had been leased to IBM that we owned.

We converted it into something called the frontier, which we deemed cheap and cheery space for people- - My office space, I got there quite a bit.

- So it's completely full.

And what's really interesting in terms of a data point is there were 310 companies in RTP and 110 of them are located in the frontier.

They weren't even here four years ago.

So what a terrific transformation in terms of the startup economy.

'Cause we all know that that's where the greatest job generation comes from and it provides opportunities all around.

And so VC just like virtual office work, VC are in our region and they are very much in touch with our entrepreneurs.

The piece that we need to work on more is accessibility to venture capital is not equitable across race in many instances.

And so we've partnered with NC IDEA on a program they're putting in a whole bunch of money and we're putting in a whole bunch more to a grantmaking VC entity for local M/WBE companies.

So that we start to try to close the gap, 'cause that's really the way we're going to address diversity equity, inclusion issues in our society all over.

So we hope we can be an example and have some great successes.

The reason why we joined up with NC IDEA is that in their first round they had such a talented pool that folks who didn't get the first grants, it was a shame because they were such capable companies and their business plans were so outstanding.

So we went ahead and we're putting in over a million dollars over the next couple of years to partner with NC IDEA on that program.

So I appreciate the question, gave me a chance to tout something that we're really proud of and hopeful for.

- Scott, we have about a minute left and I wanna ask, this is a fairly large question.

So we got to keep it short and I know you'll probably be glad a legacy partner for RTP was IBM is IBM, still very important.

There was a surprise announcement just before the July 4th weekend that Jim Whitehurst, who was deemed the heir apparent after the Red Hat acquisition and merger has left the firm.

There was some question about whether it was his idea or IBM's idea, and that's still playing out to some degree, I guess.

Were you surprised that Whitehurst is now not part of IBM?

And what does that mean for IBM longterm?

And we have about 45 seconds.

- So I'm glad I don't have a lot of time because it was a surprise and we will have to watch how IBM's new core plays out.

They have been a very important partner in RTP.

And we love the fact that Red Hat is working with them and RTP as IBM sort of redefines its business model.

So I can't prognosticate the effect on it.

But it's too bad that a North Carolina leader of IBM is no longer the president of the company.

- Yeah, and I understand, thank you.

Good answer, we're out of time.

And I understand that a company is not any one person that was just a surprise announcement, Scott, nice to see you.

Thanks for joining us back again.

Vicky Lee, always nice to see you, thank you Ma'am.

- Thank you for having me.

- Dr.

Von Nessen, always good, glad you're healthy and good to see you from USC.

Hope you have a good one.

- Thank you Chris, likewise.

- Thank you, take care.

If you have any questions...

Thank you guys, questions or comments go to our website.

Until next week, have a good weekend.

- [Narrator] Major funding for Carolina Business Review provided by High Point University, Martin Marietta, Colonial Life, The Duke Endowment, Sonoco, BlueCross Blueshield of South Carolina and by viewers like you, thank you.

(upbeat music)