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I'm Chris William, and welcome again to the most widely watched and the longest running program on Carolina business policy and public affairs.

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On this edition of Carolina Business Review, Christopher Chung from the Economic Development Partnership of North Carolina, Bob Morgan, from the South Carolina Chamber of Commerce.

- Welcome again to our program.

Yeah, I'm gonna play favorites a little bit.

I didn't say this at the top of the program, but these gentlemen joining us now, Christopher Chung, Bob Morgan.

Guys, welcome among some of my favorites.

Certainly nice gentlemen, but also a lot of fun to talk the issues with and aren't afraid to talk about the issues at hand.

Guys, welcome.

Good to see you both.

- Good to see you too, Chris.

- Good to see you, Chris.

- Alright, guys, let's, let's start.

I wanna start with a quote, Bloomberg, not Michael Bloomberg, but Bloomberg, the news source.

And I think you know where I'm gonna go with this, but Bloomberg had in an article about a month ago, and I'm gonna quote a couple things, it won't be long.

For the first time since the government in the US started tracking it, six southern states, North Carolina, South Carolina, Georgia, Tennessee, Florida, and Texas, contribute more to the nation's GDP than the Northeast.

Bloomberg called it a $100 billion wealth migration tilting the US economy's center of gravity to the south, and then, the southeast accounted for more than two thirds of all job growth across the US since early 2020.

Gentlemen, I've gotta ask a question.

Easy one, these are the good old days.

Are these the good old days?

- Well, I think we're, those of us who are in the economic development space, it really has been a pretty unprecedented past few years, especially when you consider the fact that these past few years took place against the backdrop of this really unprecedented global pandemic.

When we look at activity levels, meaning the types of big economic development deals that North Carolina gets a chance to compete for and presumably South Carolina does as well, just the sheer size and volume and type of the projects that we get a chance to go after, that's really unlike anything that I've seen in more than quarter century of doing this in three very competitive states across the country.

A lot of that, of course, just has to do with broader macroeconomic trends and how the federal government is really trying to juice up certain sectors that we believe are key to American competitiveness for the next quarter century or longer.

But the upshot is that at a state level, we're getting a tremendous opportunity to compete for the types of jobs and investments that will define our state's economy for the next several decades.

And that's just a really exciting background against which to do this work every day.

- So Bob, are you chuckling because you're just, you're giddy about it, because it is something to be excited about?

- Well, it's all very positive and you can't talk about the growth without two things that are going on.

One, jobs are moving to the south, but people are too, raising the age old question, are the jobs following the people?

Are the people following the jobs?

And it's both.

The other thing that we're seeing is the electrification of the automotive sector, which has driven so much of the numbers from the last couple of years in both states, the Carolinas are literally in on the ground floor of that industry, whether it's the assembly of automobiles, which we saw the announcement last year, a Volkswagen, a $2 billion, 4,000 job facility right outside of Columbia.

Whether it's the chips that are being manufactured that will go into the automobiles.

That's a big part of the story and we're very competitive and we expect to see even more such announcements in the coming years.

- So Chris, you just said something about in the last 25 years of you being in this industry, economic development, this has been the biggest you've ever seen and Bob, since December of last year through May for South Carolina and the number's a little bit fungible, but not too far off of this.

Since then, $15 billion in economic development investments have been announced in South Carolina.

I mean, it used to be a billion dollars used to be big, but now a half a year, December, May, South Carolina $15 billion.

I mean, these are really big numbers.

Not to underscore this guys, and not to keep pounding the drum about this, but is there a dark side to this?

Is there a downside that we need to be maybe modeling out now that trees don't grow to the sky?

Are you worried about anything?

- Well, the question is workforce, right?

Unemployment 3.1%, we're looking at, again, 4,000 jobs for the Volkswagen Scout assembly plant.

Where are those people gonna come from?

Well, a lot of them are gonna come from existing employers.

That's gonna put a squeeze on them.

It will continue the flow of people moving here from the Midwest and and other places.

But workforce is the number one issue.

And that challenge will probably lead to even greater automation than what we see today.

Or it will accelerate that faster than it might otherwise have happened.

- Yeah and let's first understand why we're seeing all these big projects looking and locating in both the Carolinas as well as some of our competitors states.

Part of it is exactly what Bob said, which is the automotive industry, which is just a huge part of our economy worldwide, is undergoing a once in a multi-generational shift towards electrification.

And what that means is new assembly plants to produce the electric vehicles, but also further upstream, you've gotten new investments being made to manufacture the batteries like what a Toyota is building right outside of Greensboro.

Their first electric vehicle battery plant in the entire world is going up as we speak.

You've got companies like Wolfspeed, which are making materials which go to drive the energy efficiency of those electric vehicles.

These are facilities and investments that will not cost anything less than a couple billion when you put them down.

So that's a big part of why both North and South Carolina have had such huge numbers.

You look at semiconductors, the US government making a very strong concerted push to bring more of that industry back to the United States, so that we don't seed all of that manufacturing know-how to parts of the world that may be wrapped up in conflict in the foreseeable future.

And those semiconductor plants, those are billions of dollars, thousands of jobs every time.

So that's a big part of why we see those types of deals.

I agree with Bob, workforce is gonna be the number one limiting factor for where these investments choose to locate and whether or not these industries will continue to be successful in the Carolinas, but also anywhere here in the United States where we wanna see those jobs created.

- Bob, back to your point about the concern about workforce and not to say that's not credible and I don't mean that, but economic developers have been saying workforce has been critical and triaged and the tough thing for years now.

Is it more of a crisis?

Is it a crisis?

Have we reached a tipping point?

And one more question, let's just throw this into it as well, if everyone is facing the same challenges around finding talent, is it really then an issue because it, the bar is the same for everyone?

- I wouldn't call it a crisis.

I would say it's identified as the number one challenge that is holding businesses back.

We hear that consistently in talking to our members and employers across the state back to the, where I started, our people following jobs or jobs following people.

Both of our states need to do things to keep ourselves attractive to the people who are voting with their feet, moving from the northeast and into the Midwest.

They're attracted by jobs, they're attracted by good weather, low taxes, the right to work status of our states and protecting the livability that will cause people to wanna move here.

That's part of the challenge of meeting that workforce challenge that we all face.

It's a tight labor market and to compete wage inflation becomes part of the story.

But when you look at our two states and the southeast compared to the rest of the country, we're still very competitive.

- And Chris, to Bob's issue and economists has called this a job full recession if there is a recession going on, and you could argue one way or another, but the jobs really are still pretty tight and the unemployment rate went down recently.

So back to Bob's point, how do you find talent?

Is that really the achilles heel?

'Cause it hasn't seemed to stop the old North state.

- Well, I think the, I'm not an economist, but when you look at where companies are gonna source their talent from long term, I mean there's of course the way that we organically produce talent, that's a function of things like our K through 12 educational systems, our two year community colleges, our public and private universities.

Those of course continue to feed talent into this labor pool that we offer in North Carolina.

Again, same story down in South Carolina.

Then you've got additional tributaries that feed that talent pool like retiring military.

We've got a hundred thousand active duty members of the service right here in North Carolina, 20% of which every year are turning over and re-exiting military service into civilian life.

And that represents a huge potential pool of talent.

And then both Carolinas benefit from continued in-migration, people moving here from some other part of the country, whether that's the Northeast or the Midwest.

And here in North Carolina, anyway, the average age of that in migration is in the early thirties, typically with at least some college education.

So a very attractive source of additional talent that augments the labor pool that's already being organically produced.

That said, still gotta upskill.

So you gotta develop workforce to meet the needs of industry in the future.

And as a country, we have to look at immigration, yes, we wanna grow our own talent, develop our own talent, but at a certain point, including in high growth sectors like the semiconductor industry, we're gonna have to take a look at national immigration policy and make sure that we can get the world's best and brightest coming here to be part of our national economy, versus allowing them to stay in China or Taiwan or Japan where we don't get to harness their benefit in addition to the great American workforce that companies already have right here.

- Yeah, Bob, just a quick go ahead, please go ahead.

- Well, I just couldn't agree more and would would further observe that the legislative session that took place earlier this year could accurately be dubbed as a workforce development session, a focus by republicans, democrats, the House, the Senate, doing things like consolidating the services that the state offers through more than a dozen agencies into a one-stop shop for companies and individuals to help grow the workforce as well as support for our technical college system.

Tuition is basically free now if you're in any discipline that relates to the jobs that are going unfilled in the economy.

And so there is a concerted effort and focus to, as Chris said, grow the organic talent that's here as we continue to get more than our fair share of in-migration.

And then immigration reform also being part of the solution.

- Okay, I wanna keep this going, but before we do that, I want to just tell everyone coming up on the program just in time for fall, actually, just in time for Thanksgiving.

We're gonna have Jay Jandrian, I'm sorry, I always say that wrong.

Jay is a chief executive officer of Butterball.

It's interestingly enough, you thought your Turkey was high last year, inflation is still rocking.

And then also Lynn Good, chairman and chief executive officer of Duke Energy will also join us.

Chris, let me come back to something and just, just very quickly, is there anything Jones Street or the General Assembly in North Carolina, And Bob, I'm gonna ask you the same thing about the State House in Columbia.

Is there anything that they can do to influence immigration, National domestic Immigration policy in a meaningful way that would help the job situation?

- Again, immigration is one of those things that is determined by Congress and the executive branch at the national level.

There probably isn't a whole lot that state or local legislators can do other than continue to shine a very bright light on the workforce challenges that employers here in North Carolina and South Carolina continue to face.

And again, hopefully a lot of those labor challenges are met long-term with talent that is either moving here to North Carolina from the northeast or that have produced higher educational institutions.

But at a certain point, especially in these critical industry sectors where the US is gonna be doing battle with China for the foreseeable future, there's gonna be a bit of a competition for the best and brightest in sectors like semiconductors or vehicle electrification or biomanufacturing.

And as a country that was built on immigrants, my parents immigrated here from Taiwan 50 years ago.

I'm a big believer that while we wanna grow our own talent, let's make sure that we continue to be a beacon for the best minds in the entire world who can help the US continue to dominate the global economy.

- Bob, you see that any differently?

- No, and let me step into political quicksand here.

I've just learned this week that of course E-Verify is a federal program, but have just learned that states have discretion as to whether or not to implement it.

South Carolina is a state that that requires e-verify by all employers and is aggressive in enforcing that.

Privately, many of our manufacturing companies will tell you that when e-verify took effect, they lost some of their best workers, folks who could not, were not in with the proper legal status.

And so politically there is very little interest in changing that it will require national immigration reform that will need to have measures to secure our borders, but also to increase the flow of talent coming into the country to help fill some of these jobs that are going unfilled.

- Let's shift gears just a little bit on a recent program here.

We had the president pro tempore of North Carolina Senate Phil Berger, talking about education and of course education is a hot button for so many reasons, and many feel like not just in North Carolina, but in general, those who make policy and make laws have not put enough money or enough attention into public education.

And of course that's the debate that rages on.

Senator Berger felt differently.

He felt like the North Carolina Senate and House and General Assembly has done good things for education.

But nonetheless, and when I ask you both, you're economic developers, you know those who make policy, you have an idea yourself around that.

So Chris is, is the quality of the students coming out of public education enough to satisfy the quality that's needed and not just in tech jobs, but in general for those looking to hire in North Carolina?

- Well, I think that answer depends, ultimately whose answer that that matters most is not what I have to say about that.

It's really the businesses that are creating jobs in our economy and they're going to be the best authorities on whether or not the graduates of our education systems, whether that's K through 12 or post-secondary, are they meeting the needs that employers have as they navigate their own challenges and their own transformations of their industries.

And I think depending on what you talk to when you listen to these companies, certainly they're having a variety of experiences with what that workforce looks like.

All that speaks to a need to make sure that as the education and workforce community continue to crank out graduates and credentials and degrees to make sure that what we're teaching aligns with what the businesses and job creators are looking for to be successful in their industries.

That's fundamentally the problem that has to be solved both at a national level, but of course right here at a state level.

Let's make sure that whatever kids are learning in the classroom has relevance in the workplace that they will be graduating into 12, 10, 5 years from now.

That's gonna be the best way to ensure that we keep our homegrown talent in jobs here in North Carolina created by businesses that choose to expand in North Carolina because of the access to talent that they enjoy here.

- Bob, you know this nuance of this debate as good as Chris Chung and as good as anyone else, I mean, how do you come down on it?

- Well, we're in a, have a focus and give Governor McMaster credit for raising, starting teacher pay.

We're on a schedule to get from 30,000 a year or two ago up to 50,000 by 2026.

That's part of the answer.

But you know, Chris, part of the challenge, the COVID effect, there's growing evidence that kids who are in college, particularly in the engineering field, did not get the hands-on educational experience that engineering students previously had gotten.

And so that's causing a lot of companies, they're having to go out and hire kids who are smart, but they're not coming with that hands-on experience.

And companies are having to now run courses lathing 101.

That previously kids would've, would've gotten while they were in school.

So it's changing the dynamic of hiring practices by a lot of our employers.

- Chris, if I could mention one other thing that's really, really neat, I don't know if you've had Catherine Truitt, the state superintendent from North Carolina in the program recently, but I really like what her agency is doing with this portrait of a graduate where we're starting to incorporate soft skills or what we call durable skills, communication, collaboration initiative accountability into that public K through 12 curriculum.

That's oftentimes what you hear from a lot of employers is while someone may possess the technical hard skills, they really feel like they have to remediate a lot of employees in those softer skills.

Well, I think our department of public instruction starting to bake that into the curriculum in a way where it can be taught as well as progress by each student can be measured.

I think that's one of those things I'm really excited about that's gonna differentiate North Carolina in terms of our talent pool as we go out there try to recruit more corporate investment.

- Yeah, okay.

We've got a few minutes left.

I wanna unpack the idea that both states fiscally are, as I said earlier, very healthy.

You all have been around a while and you know, policy and how it's made to some degree, but you also know business and economic development and many other things.

So as both states now have a a very nice cushion of several years of budget surpluses, how do we need to think differently about it?

And not to say that you're gonna circumvent what the general assemblies are debating, but you also have a different, you have a different point of view.

Do we need to think of more aggressively about investment, differently about investment?

And this is a big question.

Does enough of this surplus make its way into rural communities?

Actually, let's start there, Bob, what do you think?

- Well, certainly investments in broadband in rural areas are part of the stimulus dollars and the infrastructure dollars that are finding their way now from Washington into the states.

And hopefully that's part of the answer for poverty in the rural areas.

Healthcare and the rural areas continues to be a major priority interest and Clemson University has gotten a $20 million grant to study the application of artificial intelligence for the delivery of healthcare in rural areas.

But Chris, we don't have much time left, but as I'm here with Chris Chung, who I think very highly of, I can't help but think back to, it wasn't that many years ago that the Chinese ambassador to the US was speaking in Charlotte and he started talking about the great assets of the Charlotte region.

He said, "You've got that great port down in Charleston, you've got the universities in the Research Triangle Park, you've got the automotive sector in the upstate, the airport, and the banks in Charlotte."

We live in a remarkable region and we don't need to lose sight of some of those big picture things.

Higher education infrastructure like hub airports and one of the largest container ports on the Atlantic Coast.

Taking care of business means investing in those kinds of things.

And it is the good old days right now and we think it's gonna continue for a while.

- So, Chris, to stay on that theme and thank you Bob, you're pretty good at doing this television thing.

Thanks for helping me get to that here in about three minutes left.

And we do have a little bit of wiggle room here, but Chris, back to that same thing.

So we started with the idea of being the good old days, pretty amazing time, as you both know, probably much better than I do.

But how do we make sure, how do we miss or over, not overstep, but get away from what this infrastructure, this baked in high cost of operating and living that the northeast has faced or the west coast has faced.

How do we not do that here in the Carolinas?

- Well, that's always the trick with managing growth and I think North and South Carolina, the problems that we have do stem from being high growth states.

And while those are no less challenging of a problem, they're far more preferable to having problems around stagnation or shrinkage, which is what a lot of regional and state economies are dealing with outside of the Carolinas.

The challenges we have are, because both states are growing, both in terms of business investment and population that moves here, good position to be in relatively, but again, doesn't make some of those challenges any easier.

I think when you talk about rural North Carolina, for example, I think that's one reason to, again, applaud both the governor and the general assembly for meeting in the middle and getting Medicaid expansion passed.

That is gonna be a huge driver of health outcomes in some of the most economically challenged parts of North Carolina, especially in our rural areas.

And that is a great accomplishment for the state.

North Carolina did very well in leveraging federal broadband funding, $1.6 billion from the federal government that's gonna be invested in getting broadband capability more fully out to especially our rural parts of the state.

I still believe long term we've gotta continue investing aggressively in education and transportation infrastructure.

Those two themes continue to be a big part of why states can build their economies.

Different parties will differ on what amounts and in what ways to invest.

But I think at the end of the day, we've gotta make sure that whatever surpluses we have today, we're plowing those back into the future of North Carolina in a way that allows us to manage the growth and the demands that are coming from all of this continued activity that we're lucky to benefit from.

- And Bob, in about a minute, the shortest term, the nearest thing that people looking at inflation and possibly a recession, is either one of those on your radar is being something to keep an eye on?

- Absolutely.

We kicked off a grassroots tour last night.

We'll visit 25 different chambers and talk to engage over a thousand business leaders over the next three months.

And inflation was the number one issue identified as holding back businesses more than any other, a year ago it was workforce.

This was just one chamber.

As we have now launched the tour, but I think we're probably gonna see that consistently that inflation is affecting businesses large and small.

- Bob, thanks.

That's the last word, Chris, nice to see you, Bob.

We love having both you guys on.

Thanks for being game and going along with some of the things we bring up.

You both fine men and we're glad to have you on and be leaders.

So happy weekend.

Thanks for watching our program.

Always appreciate the support.

Until next week, I'm Chris Goodnight.

- Gratefully acknowledging support by Martin Marietta, Blue Cross Blue Shield of South Carolina, Sonoco, High Point University, Colonial Life, and by viewers like you.

Thank you.

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