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April 2014
Going Global
By Barbara Fagan

     A new zeitgeist is growing in Charlotte—a feeling that Charlotte is on the brink of something even larger. And there’s evidence to support that feeling. Things are happening here and around the globe that are and will continue to significantly impact Charlotte as we strive for greater prosperity.

 

A Global Business Environment

     There was a time when being a global company was an exotic idea. Smaller businesses tended to be local; larger ones national. Today, going global is not only a possibility, it is almost a necessity. Consumers, businesses and governments have become accustomed to searching for the best products and services worldwide.

     “When you speak about the global competitiveness of the Charlotte region and how we might enhance that going forward, you have to understand we start from a very strong base,” says Michael Almond, CEO of the international business and economic development firm Antaeus Consulting, LLC.

     Almond has spent more than 35 years involved in international economic development, most notably as a member of the Council on Foreign Relations from 2007 to 2012 and as president and CEO of the Charlotte Regional Partnership from 1999 to 2005.

     “We have a strong manufacturing base, a strong distribution base, energy, banking and finance and health care here,” Almond continues. “Our diversified economy has enabled this region to avoid or be late to join recessions and be quick to recover from them.

     “The Charlotte region is a destination market for foreign investment. If you were to combine the gross state product of the two Carolinas and compared that to countries around the globe in terms of GDP, the Carolinas would rank around 15th or 16th in the world.”

     Michael Gallis, a transportation and logistics expert and principal of Michael Gallis & Associates, likens our present day attempt to define our future growth to the work 20 years ago by Jerry Orr and others on growing the airport to be an economic force.

     “We were maybe third or fourth tier down the line,” says Gallis of the airport’s previous status as a freight center. “We weren’t a global hub, we weren’t a U.S. hub, and we weren’t even really a Southeast hub. We were just a regional hub serving the immediate area.

     “‘How does Charlotte get in the game?’ we asked, but we realized the only game to get in was global. Great global hubs around the world are dynamic and successful because they have the greatest access to markets. Trade from around the world passes through them and businesses love them because from them, they get direct access to the world market. Cities like New York, San Francisco, Los Angeles and Atlanta are doing so well because they’re big global access points.”

 

Ask the Experts

     Mark Beattie is a principal with Hickey & Associates, LLC. His firm specializes in global site selection, public incentives and workforce solutions. When evaluating potential business sites, they consider certain key factors fundamental to the search process.

     Among them are: availability/cost of land and proximity to major highways, available infrastructure (utilities, sewer/water, power, transportation networks, etc.), site-ready location, cost of doing business, access to raw materials and supply chain, access to logistical support, tax and regulatory environment, availability of labor and wage requirements, location of zone designations that may affect the company, availability of public incentives to offset startup cash and reduce long-term reoccurring costs, and quality of life.

     Beattie confirms that Charlotte has many advantages it can use to attract business globally.

     “The strength of the businesses that are currently here are a stabilizing influence,” he says. “And Charlotte has grown up. It has greater diversity than ever in terms of its population and business representation. From a global perspective, the more diverse your platform of business and cultural opportunities, the more attractive it is for those considering the area from a foreign direct investment perspective.

     “Charlotte also has a good quality of life. People don’t work 24/7 and businesses recognize the importance of an environment where employees feel comfortable and can enjoy their off time. Charlotte is a place of recreation, leisure and cultural engagement. The proximity of the mountains, the sea and other city venues within a two or three hour drive all add to the quality of living here.

     “Also the growing visibility and positive reputation of the city is a huge strength in competitiveness,” Beattie continues. “The way that Charlotte handled the Democratic National Convention was very positive and the upcoming soccer match between English Premiere Team League’s Manchester City and Liverpool this August will have the whole world tuning in.

     “Our ability to attract world class artists, like when Yo-Yo Ma performed with the Charlotte Symphony a couple of years ago, is recognized in the cultural world. All of these things give Charlotte visibility around the globe.”

     His observations are matched with comments for real executives at real businesses choosing to do business from Charlotte.

     “I am an advocate for Charlotte. Our relocation from New York City to Charlotte has been nothing short of spectacular,” says Eric Steigerwalt, head of U.S. Retail, a division of Metlife, Inc. which recently moved into new office space in the Ballantyne area of Charlotte. We have been hiring for over 900 positions and we have had over 77,000 applications for these jobs.”

     “The numbers work for Charlotte, there is no doubt about that, but what is even more important is the quality of life in Charlotte,” says John Williams, CEO of Domtar, Inc. in nearby Fort Mill. “With its proximity to the mountains and to the shore, and the culture in this community, it is an easy decision.”

 

How Do We ‘Get in the Game’?

 

     How do we ‘get in the game’? We’re already in it.

     A grass roots Charlotte group, dubbed by The Charlotte Observer as the Global Vision Leaders Group, describes the long-term economic vision for the Charlotte region to become “a global hub of international trade”: a great inland port city leveraging its financial, energy, health care, educational, entrepreneurial, manufacturing, and logistical resources to world prominence.

     In the ethos Gallis, Tony Zeiss of CPCC and Chase Saunders of the McNair Law Firm, founders of the Global Vision Leaders Group, the Charlotte region will accomplish this through a three-prong initiative: Creating things better than our competitors by adopting entrepreneurialism and innovation as prominent and core values of the region; making things better than our competitors by growing our advanced manufacturing and export base and providing these businesses with world-class employees through exemplary education and training; and moving things faster and cheaper than our competitors through the new Charlotte Regional Intermodal Facility and access to the deep water ports of Charleston and Savannah.

     With this vision in place, the Charlotte region enters the global competition. Through this technological disruption of traditional markets how competitive a region’s offerings are across the globe will determine how successful it becomes. Participation in this new marketplace also brings increased competition from around the globe.

 

Measuring Global Competitiveness

     The idea of measuring competitiveness on a global scale may seem daunting, but several respected surveys/reports have come about to do just that—like the Ease of Doing Business Index and the Indices of Economic Freedom—which look at factors affecting economic growth. Neither of these considers as many as the Global Competitiveness Report, which made up of over 110 variables.

    The Global Competitiveness Report is an annual report published by the World Economic Forum since 2004. It ranks countries based on the Global Competitiveness Index, which integrates the macroeconomic and the micro/business aspects of competitiveness into a single index.

     The report “assesses the ability of countries to provide high levels of prosperity to their citizens. This in turn depends on how productively a country uses available resources. Therefore, the Global Competitiveness Index measures the set of institutions, policies, and factors that set the sustainable current and medium-term levels of economic prosperity.”

     The variables evaluated include the following: Institutions, Infrastructure, Macroeconomy, Health and primary education, Higher education and training, Market efficiency, Technological readiness, Business sophistication, and Innovation.

    Since 2010, Switzerland has led the ranking as the most competitive economy in the world. The United States, which ranked first for several years, fell to fifth place (behind Switzerland, Singapore, Finland and Germany) due to the consequences of the financial crisis of 2007–2010 and its macroeconomic instability.

    Charlotte ranks among the World’s Most Competitive Cities in a report recently released by IBM and Site Selection magazine. Of the top 100 global cities, including many of the larger business meccas: New York, London, Paris, Hong Kong, Singapore, Dubai and like, Charlotte ranks 40th or higher across the board.

     In fact, Charlotte was one of only 12 U.S. cities to make the report’s ranking, grouping it among Atlanta, Chicago, Dallas, Detroit, Houston, Los Angeles, Miami, New York, Philadelphia, San Francisco and Washington, D.C.

    The analysis replicates the strategic shortlisting process that companies often utilize when making location decisions. It takes qualitative measures such as business environment and quality of life, while also weighing quantitative cost factors.

    The study looks at five investment types: international headquarters (35th), shared services (20th), software development (40th), financial services (26th), and life sciences R&D and production (35th), and ranks each city for the different types of business operations based on defined factors. The breakdown enables cities seeking to attract investment to understand their competitive position within each sector and business function.

    The report also compared cities “across the board” for overall competitiveness in a cross sector ranking for the qualitative and financial attractiveness. Warning that cross sector scorings possibly hide particular strengths of individual cities, Charlotte weighs in at 74th financially and 33rd in quality. The relative tradeoff is best illustrated by Dhaka, Bangladesh, ranking first financially and last in quality.

    For all sectors, the results display a clear tradeoff between quality and cost, with higher quality locations tending to have lower financial attractiveness and vice versa. For cities seeking to attract investment, it is important that they understand their competitive position within each sector and business function, and are able to see how this translates into a particular value proposition to investors within a regional or global context.

 

A Global Contender

    Charlotte has always been at the crossroads of commerce. From its founding in 1768 at the crossing of two Native-American trading paths to its Gold Rush in the early 1800s and the rise of the region’s textile mills and banks, the city is now known as a top U.S. energy hub, the second largest U.S. financial center and third in the nation in world-class health care facilities.

    Some of Charlotte’s major advantages are simply because of where it is located. The area east of the Mississippi represents 29 percent of the contiguous land of the U.S., 59 percent of the population, and 60 percent of all manufacturing establishments, and 65 percent of all manufacturing employment. A full 50 percent of all exports come from the eastern U.S. Charlotte business can reach 60 percent of the U.S. population within two hours by air or 24 hours or less by truck or rail.

    Fifty-five of the country’s top 100 metropolitan areas are within 650 miles of Charlotte. It is already a major distribution center midway between the Northeast, Midwest and Florida markets. As a global hub, it has easy access to interstates, rail, intermodal and airport, and most importantly, ports.

    Of Fortune 500 firms, 264 are represented in Charlotte. And Charlotte is at the epicenter of the Piedmont Atlantic region, the fourth largest concentration of manufacturing in the country and home to 918 foreign-owned businesses.

    Beside its pleasant climate and good natural resources including a relatively low cost of energy, the greater Charlotte metropolitan area is home to 2.2 million people and is the second largest city in the Southeast, and its population in a 100-mile radius exceeds that of Birmingham, Jacksonville, Miami, Tampa, Memphis, Nashville or Norfolk.

    As far as infrastructure, it’s hard to overestimate the importance of Charlotte Douglas International Airport (CLT) to the economic success and global competitiveness of the city and region. It ranks 6th nationwide in operations, 8th nationwide in passengers and 33rd nationwide in cargo.

     The merger of US Airways with American Airlines makes Charlotte the second largest hub for American Airlines, now the world’s largest airline, and significantly expands Charlotte’s access to international flights.

    The recent addition of a third parallel runway and the opening of the Charlotte Regional Intermodal Facility there are important parts of the plan to make Charlotte a global freight hub. Much of today’s cargo moves via a combination of modes such as ocean vessel to rail to truck, known in shipping as intermodal transport. Having multiple modes of transport in one common hub facilitates the transfer of freight, saving time and money.

    The hub represents a $92 million investment by Norfolk Southern with $15.7 million of federal assistance and will allow the future ability to transfer containers between trucks and trains equal to the current two largest facilities located in Dallas-Fort Worth and Chicago. It is expected to add long-term benefits of 5,000 additional jobs and $7 billion to the area’s economy.

    The new intermodal hub also has the added benefit of being strategically located between I-85 and I-77, providing easy access to the interstate system and better exploiting the city’s natural advantage of being a midpoint location for distribution of goods.

    Norfolk Southern Railroad’s $2.5 billion expansion of rail and infrastructure enhancement to its Crescent Corridor allowing the high speed movement of freight between the Southeast and Northeast is also a vital improvement.

    Easy interstate access also facilitates movement of import and export cargo from the intermodal hub to the southeast seaports of Savannah, Norfolk and Charleston, which, in order, are the second, third and fourth largest in container tonnage of all East Coast ports.

    The convergence of these factors with the $5.25 billion expansion of the Panama Canal, expected to be completed by December 2015, could substantially impact Charlotte’s global competitiveness. Historically, the bulk of the Charlotte region’s trade with Asia has moved across the Pacific through the mega port of Los Angeles-Long Beach and by rail or truck to Charlotte. When the larger capacity post-Panamax container ships are able to transit the Panama Canal, it will provide large capacity container ships an all-water route between Asian and East Coast ports and an alternative to movement via the West Coast.

    This could mean much higher cargo volumes for East Coast ports and the inland port of Charlotte could be a strategic logistical link for much of that cargo. Our growing profile as an international freight hub could mean greater international visibility and attractiveness to foreign and domestic companies looking for a location with an infrastructure that supports trade.

    “In West Coast ports, trade flow is about 98 percent Asian and two percent European,” comments Gallis. “For Atlantic Coast ports, cargo from Asia and Europe are about equal, but East Coast ports also get a large trade flow out of Latin America. We get trade cargo from Africa, the Middle East and the Indian subcontinent too, so literally all six trading blocs of the world flow through the East Coast.

    “We can have access to every one of those trading blocs if we have a global marketing strategy to tell the world that Charlotte is the most efficient place on the East Coast to ship goods.”

 

How Do We Become an Alpha City/Region?

    How do we become an alpha city/region? And how can you participate?

    Be aware. First and foremost, it is important to be aware of just how well-positioned Charlotte is to become a hub of global commerce—ultimately leading to increased job growth and prosperity. Being aware of its advantageous position will enhance your decision-making as you operate your business and enable you to better evaluate proposed initiatives in the public sector as well.

     Stay informed. Know Charlotte’s strengths and potential and keep abreast of developments and global thinking. Visit www.cltglobal.com for a compilation of great resources; attend the “Discover Global Markets: The Americas” program being held by the U.S. Commercial Service here in Charlotte October 29th through the 31st.

    Become a participant. Join in the global thinking and discussion about how Charlotte resources can be put to better and more synergistic use.

    Take advantage. Take advantage of opportunities to move your own business forward globally—maybe investigate international trade opportunities, partner with companies already doing business in other parts of the world, investigate the logistics of transporting your products overseas, look for reps overseas to sell your products, revisit your website to evaluate how well it displays your products/services and whether it accepts foreign currencies, or simply learn another language.

    As Chase Saunders says, “Think big. Think how far we’ve come and where we are headed.

    “Practically all human knowledge is available to all people on the planet 24/7—think Google. The digital and Internet revolution has erased distance from the access to knowledge—think Apple, Google, Samsung. It is now in the process of erasing time from the access to supply—think 3D printing.

    “Mass is being digitized. Products are being designed, prototyped, tested, modeled, and transmitted to production sites for one-off production.

    “Think about Amazon and the end of inventory with the just-in-time delivery of things your want. The key to erasing distance from these things are the key locations where things can be made and distributed faster than other places. In the U.S., there are seven of those places and we are at the center of one of them; the world is being divided into other locations as new trade routes are being set up for the next 50 years.

    “Charlotte is poised to be the leader in manufacturing and distribution for the entire East Coast with its incredible, new, and huge, inland, intermodal freight and passenger port. There is an old saying that reads, ‘May you live in interesting times.’ Charlotte is on the threshold of a dramatically interesting time.”

 

Barbara Fagan is a Greater Charlotte Biz freelance writer.
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