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

Major support provided by: Colonial Life, providing benefits to employees to help them protect their families, 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; Sonoco, a global manufacturer of consumer and industrial packaging products and services with more than 300 operations in 35 countries.

- Recently, there was a headline that read and I quote, "The Federal Reserve has a problem.

Interest rates are too high and interest rates are too low."

You can say that Carolinas have a similar problem.

Business is so good, and business is so good, it's hard to keep up.

I'm Chris William.

Welcome again to the most widely watched and longest running program on Carolina business policy and public affairs seen across the Carolinas for more than 30 years.

In a moment, we dive into the issues of the day around the economy, around economic and city development here in the Carolinas.

And later on, she is the Chief Executive Officer of what is and was a very high flying, innovative business startup at one time in the Palmetto State in the southeast, Lou Kennedy from Nephron Pharmaceuticals joins us again.

Stay with us.

- [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.

(dramatic music) On this edition of "Carolina Business Review," Scott Hamilton from the Golden Leaf Foundation, Carl Blackstone of the Greater Columbia Chamber of Commerce, and special guest, Lou Kennedy, President, CEO, and owner of Nephron Pharmaceuticals Corporation.

(dramatic music) - Hello, welcome again to our program.

Nice to see you both.

Welcome back.

- Thank you for having us.

- Scott, you're gonna get the first pitch.

- All right.

- I don't know how many miles you put on your car, but it's gotta to be pretty amazing.

- It is, yes sir.

- And I know, not just traveling around North Carolina, but I know your footprint for travel's pretty big.

Scott, when you're not just in urban cores, but when you Golden Leaf, obviously, if you read anything or know anything about it, has tentacles everywhere.

You're in rural areas, small towns, talk to a lot of people.

Are you getting a sense at all that there's anxiety around a slowdown in the economy?

Or what about jobs, or any issues that are going on that maybe weren't apparent even a year ago?

- I really think that there's still some anxiety about where is the economy gonna go.

It does not seem to have slowed down.

A lot of counties in North Carolina are undergoing their property reevaluation.

And those values of houses are going up astronomically.

I mean, it is amazing.

And so there's some opportunities as those communities are looking at tax rates and the new valuation.

And employment in rural North Carolina is always of a concern.

I think a lot of communities, small, rural communities across North Carolina continue to have a lot of grit.

They look at where are their strengths and how do we overcome some of our challenges by focusing on our strengths?

And that, I think, I have seen as I've traveled across North Carolina, one of the things where they're focused is on that, how do we move forward with looking at these opportunities?

What are those things that we can do to be sure that we're able to move forward?

- Yeah, so Carl, same question, but maybe a little bit different tact.

And that's the idea at the top of the show we talked about the idea that the Fed has two problems.

- Yeah.

- High rates, low rates.

The Carolinas have a problem, too?

It's really a good time to be and working in the Carolinas, but it's also very tough, as Scott just outlined.

In the Midlands, across the state, what are you seeing in South Carolina?

- I mean, the growth has been so good over the last few years and we continue to see the future look really, really bright.

But with growth come growing pains and the growing pains are gonna be- - [Chris] And not small growing pains, right?

- No, no, not.

You know, infrastructure, housing, workforce.

We still have such a large number of people moving into the state, but our labor participation rate is very low relative to the other states, which means we're seeing more retirees move into the state.

But they need services.

They need to go out to restaurants and have a wait staff or go to dry cleaners.

We need a workforce, but the folks that are coming in don't always wanna work.

So we gotta retrain a lot of people and we've gotta think differently on how we train people.

- Back to the jobs, Scott.

Do the rural areas, do small towns, are they a big part of the answer for filling jobs in, not just these major announcements in these cores like Columbia for Scout or like Toyota Battery, et cetera, VinFast, et cetera, et cetera.

But I mean, isn't there an answer somewhere to repatriate some of those workers?

- Oh, absolutely.

And I think what is some opportunity is the commute of some of those workers coming from some of the smaller areas into those employment centers.

But in rural North Carolina, there is still a very large focus on how do we create economic opportunity creating jobs?

How do we develop that?

- But you look at that, we still have funds that are being deployed now from the federal stimulus dollars to put broadband in these rural communities.

So I think you're right on the money that these rural communities are gonna provide a great opportunity to fill some of these remote jobs.

But those resources hadn't been fully deployed.

- [Chris] So what percentage would you say they're deployed?

- I think it's in the low 20s.

- 80?

- Yeah.

- Low 20s?

- Low 20, 25.

- To have broadband in every community?

- The dollars that were allocated, I don't think they've deployed, but maybe 25, 20, 25%.

- For the dollars amount, and I don't have percentage of what coverage is.

There's still always that argument of coverage is, are you served, are you unserved, or is this area covered but not served?

And those definitions still cause a lot of confusion on where deployment is in broadband, but it still needs to be deployed across the state.

- And you know, I didn't want to go down this rabbit hole, Scott, but the question is, in the rural areas, is there anxiety that it hasn't been deployed?

Or is it kind of well, it'd be nice, but we're not really- - No, they want high speed, reliable broadband.

- [Chris] Okay.

- They understand that they've got to have that.

- [Chris] Yeah.

- And for those communities that don't, they know that is one of the challenges they have to overcome is, how do we do that?

And so State of North Carolina has had some good programs to help with that from some of that federal funding.

Of course, the funds from U.S. Department of Ag and some of the other federal funds for broadband extension are getting there.

But it is still something that is a big challenge and deploying it and getting it out there and getting the last mile and door-to-door deployment is a big nut to crack.

- Someone once said, "It's not that the money's not there, the will's not there, the infrastructure's not there.

It really comes down to who owns the poles that the fiber's gonna be strand on."

- Yep.

- Is that the case?

- 100%.

Yeah.

- Yeah.

- Pole attachment agreements are one of those nuts that are tough to crack.

And something that initially people didn't think about.

- Right.

- Years ago, as some broadband was being deployed in western North Carolina, some of that fiber was going from pole to pole.

And the landowner came out and asked the fellow what they were doing.

They said, "Well, we're stringing broadband on the poles."

And he said, "Well that's not in the agreement I have."

And they had to go back and negotiate that agreement 'cause they didn't have the lease ability, for the poles to be on his property was for electricity.

- Interesting.

- And so those pole attachment agreements are something that, there's a lot of focus on that now.

That was 15 years ago or more.

But it is still something to work through, those pole attachment agreements.

- Let me ask you both a one off for each one of your areas.

Lowcountry, Boeing, a great win for South Carolina a few years ago, now about not just repatriating some of the folks from Seattle and Washington, but huge facility.

Boeing in the news, corporate challenges.

Does that trickle down to the area and the suppliers to Boeing, and will it impact South Carolina?

- It may have a short term interruption, but I don't think a long term it'll have an impact at all.

I mean, the growth that they've seen in the Lowcountry has been so significant over the last 20 years.

Granted, Boeing is a piece of that.

The demand is still very high for those airplanes.

There may be, again, short term interruption, long term, I don't think there's an impact at all.

- Yeah, Scott, in North Carolina, the General Assembly's in session?

- Mm-hm.

Yes sir.

- Short session.

What would you expect to come out of this session that could be positive to may be germane to what we're talking about or just might be a surprise?

- Yeah, there's gonna be a lot of focus on community college and changing the funding mechanism for community colleges to really address the technical side and how community colleges are funded across the state.

And it's a major initiative, Propel NC.

And they are working with the General Assembly on that to move that forward.

It will enhance opportunities for those community colleges, provide more funding for them to be able to focus in on those technical skills to help supply that labor force that's so dearly needed.

- I'm not looking to start a fight here.

And I'm in between the community colleges and higher ed, but it seems like the wind is at the back for community colleges, when higher ed has been going through not just the political ramifications, but the cost to attend four year education has gotten dramatically, the FAFSA issue.

Is this a good moment to be a community college or a technical college?

- I think it is, and I think there's a new focus on community colleges.

North Carolina Community College System's really moving forward.

There's been some change in leadership.

And they are really focusing in on the mission of community colleges and that technical skill, in supplying a skilled workforce for the employer base across North Carolina.

And in rural North Carolina, you know, it's communities in their name, community colleges.

And they are the driving factor in some of those communities for economic development and economic enhancement.

They need to be, because they can look at some of those innovative ways that can help those smaller downtowns that need it.

I know some community colleges that are doing satellite offices, or satellite branches in the smaller downtowns' empty storefronts.

So it gets students to the downtown.

That starts to generate some of the revenue and commercial activity.

And so there's a lot of opportunity with community colleges.

- In 30 seconds.

- Yeah, the job market's changed as well.

Employers need folks that are trained on certain things.

They don't necessarily have to have a four year degree.

The cost of higher ed has gone so crazy that there's pressure now for us on the technical college to produce somebody that can come into work and learn a trade or craft.

And the jobs are good paying jobs.

So I do think the wind's in the backs of the local colleges, tech and community colleges.

- And I'm not gonna ask you to comment on this, and this is gonna be it 'cause we wanna bring our guest on.

But it's interesting in South Carolina that you talk about the community college.

Greenville Tech in the Upstate now has a four year degree because of, of course Michelin and BMW.

And it's gonna be interesting to see if that trend is expansive across community colleges to go more toward the higher ed.

You get a pass, you don't have to say anything about that right now.

- Thank you.

(laughing) - Alright, we're gonna meet our guest in just a moment.

Before we do that, coming up on this program, we just mentioned one of the big economic development projects, or wins in the Old North State is the Toyota battery plant going on in the triad area.

Sean Suggs, who is head of that for Toyota, will be here.

And then also coming up, we do this right about this time every year, and that is take the temperature of tourism, which is the single largest industry or maybe right behind the agribusiness in the Carolinas.

We have Wit Tuttle from North Carolina Commerce, as well as Duane Parrish at PRT in South Carolina will be here as well.

A Chamber of Commerce executive once said that we celebrate our business successes in so many ways, but we should also examine and at least lift up some of the failures just as much because there's a lot to learn.

Nephron Pharmaceuticals has been and is a high flyer in South Carolina.

Lou Kennedy, its overt Chief Executive, has been on a tear and on point and no exception to aggressive growth of herself.

She moved quickly to increase production by 50%, if that, if not more, and push workers to be more productive during the early days of COVID.

And then a year or so ago, the company ran into trouble with the FDA and the VA.

Since then, Nephron Pharmaceuticals has had a successful capital raise of 350 million.

Joining us now, Nephron owner, Chief Executive Officer, Lou Kennedy.

Lou, welcome to the program.

Congratulations on the capital raise.

That's a big number.

- It is a big number.

Big interest rate, too.

(all laughing) - Of course.

High rates, wonderful thing.

Lou, the past two or three years since COVID, the fog of COVID, an issue with the FDA, a recall by the VA. What's the biggest lesson you learned out of that?

- I would say that we focused a lot since that FDA visit.

And mind you, they came in four times over 11 months.

And so we were the first facility pretty much after COVID that they started to visit.

Dr. Califf, who happens to be from Columbia, South Carolina, the new commissioner said, "We're gonna come out swinging.

We haven't been in the pharmaceutical companies or the device companies in two plus years, and so we're gonna make sure that everything's safe for patients."

So we were the first ones through that.

We've come through all of that and emerged the other side.

Now all of my competitors are under recalls.

They've either gone bankrupt, shut down.

It's been a tough year for especially the division that we focus on, drug shortage.

Those companies have really had a tough time these last two years.

Thank goodness we've been reinspected and we are good to go.

- How do you not stay... And this is just a personal question.

How do you not get discouraged when there's not just bad news about the company, but, you know, somebody once said, "Success has a thousand fathers and failure's an orphan."

And not to say that, but sometimes you feel a bit of a failure, everybody does.

How do you not get discouraged?

- Well, the only people really printing the failure stuff is a local blogger who's not even a journalist.

So they print things and twist a seed of truth.

And so I can't let somebody that poorly educated give me a problem.

You just gotta get up and think about the families that count on their paychecks and their insurance and what they need in a good paying job.

That's what matters to me, not what the local blogger says.

- [Chris] Scott, question.

- I do.

And talking about employees, do you have challenges with finding employment?

And if so, what are some of the unique things as an employer you're doing?

We get a lot of focus on how community colleges are looking to find the labor supply for employers.

But as an employer, what are some of the unique things you're doing about bringing in employees?

- Well, first of all, the beginning of your question, the hardest thing I would say for us to staff are the entry level jobs.

- [Scott] Okay.

- We've raised our incoming rate to $23 an hour.

That's the entry level for any job in the company.

And so we are competitive with rates, but I would say that I'm doing a lot of crazy and creative things.

We did a big hiring spree about two months ago.

We onboarded over 800 people in a part-time capacity.

So we've had an on again, off again teacher program, or a educator program.

That's a great recruiting tool.

I also welcome lots of field trips.

You know, nobody knows when mom or dad are unemployed any more than the children who are suffering perhaps at home.

So just talking to each of the kids that come through, I'll often say, "Hey, tell mom and dad we're hiring.

Tell everyone we're hiring."

So I would say using some of those creative ways to get people in the door.

And then once they're in the door, I always, no matter where I am, shameless plug, "We're hiring," always.

- [Chris] Carl.

- Yeah, Lou, you've been such a instrumental leader in Columbia, but also across the state, whether it's the South Carolina Chamber of Commerce, but also help start SCbio.

What do you see, I mean, y'all were an anchor in SCbio.

What do you see the market the next few years for biotech in South Carolina?

- It's on fire.

In 2017, we had Dr. Joey Von Nessen perform a study.

We repeated it again February a year ago.

The healthcare life sciences industry in South Carolina moved from 12 billion to 25.6 billion in those short years.

- Wow.

- We've moved from somewhere around 400 companies and change to over a thousand.

So you're seeing an equal amount of growth in the Lowcountry, the Midlands and Upstate.

So it's wonderful, too, because there's so many of us finding about each other and then developing companies and ideas for us to work together.

Just us alone, as you well know, we opened a Nephron nitrile glove plant so we could reshore onshore valuable PPE right in the same industrial park where our pharmaceutical company is.

And that's been off the ground since last January over a year ago.

And it's rewarding.

It's nice to be adding to the ecosystem even, you know, organically.

- Right.

- You said something at the top of the program here, or at the top of your joining us.

And I wanna read the statistic.

2024 kicked off with the highest number of drug shortages on record.

323 drugs were running low, surpassing 2014 of a high of 320.

What's behind that number?

- Okay, there's a variety of things.

Sometimes the large pharma companies don't want to use their lines for things that are small margin.

And so they might choose not to make, a good example is sodium bicarbonate, use maybe six of those per patient per surgery.

And so the big guys will say, I'm not running that for another six months because I have something I can make more profitability on for those lines.

So the 503B, which is the name of the regs that we follow for drug shortage, they're so important to hospitals and surgery centers because as you said, there's so many things on drug shortage.

And they're very basic things like dextrose or Lactated Ringer's, things that are used during every surgery.

So it's important that we stay on board with what we're doing.

Now, because the FDA has been so critical and so harsh to all of the 503B companies across America, that too has caused a terrible shortage because as the companies either go bankrupt, shut down, or have to do a lot of remediation, it's costly, it's time consuming.

I mean, we worked for almost 13 months on our 1,500 commitments that we made to both FDA and to our outside consultants.

And it's costly.

And it just drives costs up and it causes a shortage in the marketplace.

- Can you get into that type of lower unit produced and be profitable?

- Yes - Clearly you must.

- Yes, well, we've always been in the generic business, so we've always operated on penny margins.

So you just have to be very good at innovation and automation in order to do that.

Now we employ a little over 900 folks at Nephron and about 150 at Nephron Nitrile.

And so you'd think, well, with all that automation and robotics, are we replacing jobs?

No, we're just developing higher paid jobs.

So that's part of what, you know, I've heard these gentlemen discuss, and we are really dependent upon our local HBCUs, our community college and tech schools.

And in South Carolina, our governor has chosen to pay for many of the degree programs at the local community colleges, which us, as employers, we benefit from that.

- [Chris] Scott.

- I'm curious, along that labor force development, that pipeline, you talked about having a lot of students that come through on tour.

So what advice would you give to middle school students and high school students that have a interest in a biopharma or a biotech career?

- The main thing we do is, we host, and Carl knows this too, we have a huge intern program year round, but particularly in the summer.

Get a job in one of the local companies and see what's actually available.

We don't have to go to Atlanta or go to Nashville.

We can stay right here in the Carolinas with high paying jobs.

Our average wage is over 75K.

That's like double the median income in Columbia, South Carolina.

So we have good paying jobs and they're not all about four year degrees, they're all across the disciplines.

So I would say that, and I encourage every teacher I can find, bring your children to us.

Let us host you.

See what a microbiologist does, a machinist, a chemist, a PhD R&D chemist.

We've got all kinds of jobs.

- [Chris] Cool.

- [Carl] Yeah.

Intrigued with something you said earlier about the number of like looking for part-time employees.

- Mm-hm?

- With the labor participation rate being low and the number of retirees moving, is that something you see going forward as reliance on part-time employees a bigger piece of your workforce?

- Absolutely.

We recognize that the unemployment, there's just not that many people available.

So I put out about two weeks in a row, just ads and social media posts about part-time work anytime, 24 hours a day.

And we onboarded over 800 people that wanted extra income.

And so what we've done is, you know, it's harder to manage, but we have someone working from 8:00 to noon, noon to 4:00, 4:00 to 8:00, and so forth around the clock.

And we take, let's say four people and make one FTE by doing that.

We found that it's great, too, because we're getting very qualified want to work.

They're there because they want extra money.

So they're already there in a capacity to like make money and take it home for their families.

- Is that extra work for HR?

- Yes.

- Is it too expensive to do than having one FTE?

- It's what we have to do to get the job done.

So we're seeing increasing orders for IV bags, for example.

And so if I can't get one person to work a 12 hour shift, then let me get two, three, however I can do it.

So it's more from management.

The onboarding is hard early on, but afterwards, it's about management, leadership, and scheduling.

And it's just what we have to do if that's how we're gonna fill a role, let's just say it that way.

- Do you have enough evidence, or do you have enough history to see what the turnover of those employees would be versus a full-time?

- We just started it in January, so it's new.

- Yeah, we got about 60 seconds left.

And I know this is a big one, but is it more than anecdotal for workers to have childcare issues?

- Oh no, it's a real thing.

And I think it's not just childcare, but it's elderly care.

And I just hired a chief procurement officer started with me about six months ago.

She's commuting, believe it or not, between Wilmington and Columbia.

And she is off today because of her father.

I mean, it's a real thing we're all dealing with.

- Thank you.

Lou, wish we had more time.

Thank you for coming on and talking to us frankly.

- Sure.

- We appreciate your being here and leadership.

- Thank you.

- Thank you.

Carl, nice to see you.

Good luck.

- Nice to see you.

Thank you.

- Okay, Scott, how many miles do you put on your car?

- About 55,000 a year.

- Oh, well, that's not too bad.

(laughing) Careful to say that.

Thank you.

Nice to see you.

Thanks for traveling to Charlotte for us.

- Yeah, sure.

Thank you for the invitation.

- Thank you for watching our program, don't get up yet.

Thank you for watching our program.

Until next week, I'm Chris William.

Hope your weekend and your business are good.

Goodnight.

(bubbly music) - [Announcer] Gratefully acknowledging support by: Martin Marietta, BlueCross BlueShield of South Carolina, Sonoco, High Point University, Colonial Life, and by viewers like you.

Thank you.

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