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Wednesday, 03 May 2017 14:06

The past, present, and future of Haywood County’s economic development

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A new business or a new family moving to town isn’t solely due to the luck of the draw.

Likewise, a shuttered mill or dilapidated neighborhood isn’t solely due to being dealt a bad hand.

Each occurs thanks to a complex set of factors not far removed from a card game; players compete against each other for a reward using both skills and dollar bills independent of the cards they’re dealt. 

There are winners and there are losers in the world of economic development, to be sure — the well-financed players who are dealt great hands can and do dominate the game.

Not among those well-financed players — the likes of the Mecklenburgs, the Wakes and the Buncombes — is one rural county in Western North Carolina that, despite modest means and a middling hand, has through savvy play and plain gumption managed to stay in the game. 

But as the players, the pot, the rules and even the definition of “winning” in economic development continue to change with every shuffle of the deck, how does Haywood County stack up when the chips are down?

 

The Appalachian advantage

Think of Haywood County as a bathtub.

When money is spent in the community from outside of it, water is gushing into the tub through the faucet. This happens when people buy goods or services from Haywood County producers. 

When Haywood County residents buy goods or services from New Bern, New York or New Delhi, the bathtub drain opens and money leaves the community. 

When a local business buys an advertisement from a local newspaper, water is sloshed around inside the tub. 

Healthy communities open the faucet by attracting, enhancing or retaining those who sell goods and services to the outside world; at the same time, those communities plug the drain by supporting local businesses whenever possible. 

Declining communities are just the opposite, and are particularly vulnerable during recessions and depressions. They can’t attract new businesses, and existing businesses aren’t expanding or are leaving altogether, resulting in fewer “exports” and fewer options for locals to buy local. 

Charged with helping to fill Haywood County’s tub are a number of national, state and local organizations, the foremost of which are the Haywood County Chamber of Commerce and the Haywood Economic Development Council.

SEE ALSO: Down in the flood

Haywood County’s bubbly bathwater contains a variety of economic sectors, each an independent bubble of varying size, but each adhering to another, different bubble — all connected somehow, bobbing up and down in that tub. 

Historically, agriculture has always been one of the bigger bubbles in the local economy; Haywood County is home to more than 700 farms covering almost 90 of the county’s 555 square miles. 

“I think agriculture is doing great here,” said CeCe Hipps, president of the Haywood County Chamber of Commerce. “What I’m noticing is the smaller, little niche agriculture entities — the hydroponics stuff and herbs, instead of having big old tracts, where they just grow lots and lots of corn.”

Haywood Economic Development Council Executive Director Mark Clasby said one of the things he’s most proud of is the Buy Haywood program, started more than a decade ago.

“The idea was that we would help the producers, and in this case we’re talking about the tomato and pepper producers here in the county,” said Clasby. “We started thinking, ‘How do we get them into the grocery stores?’”

Getting produce into grocery stores opens the spigot, while keeping cattle in the county closes the drain. 

“There’s a lot of cattle producers, not only in Haywood County, but in Buncombe and the surrounding areas,” he said. “When the cattle producers have to transport their cattle to South Carolina or Tennessee, the cattle lose weight on the trip, and you get paid by the pound.”

With livestock markets in Canton and Asheville closed, the Haywood Advancement Foundation — of which Clasby also serves as executive director — saw an opportunity and helped with the construction of the WNC Regional Livestock Center in Canton, which not only keeps cattle here but also attracts business from across the region. 

Tourism also attracts business from across the region, state and country. In the post-flood era, tourism spending has surged from $98 million in 2004 to $168 million in 2015 (28th most among the state’s 100 counties), saving county residents an average of almost $260 a year in taxes. 

“It’s been pretty dramatic growth,” Clasby said, pointing to a graph showing that even during the Great Recession, Haywood County’s tourism industry remained stable, but for two years of flat revenues in 2008 and 2009. 

business sectorsToday, increasing regional competition from destinations offering newer, more relevant amenities could begin to drain some of those dollars away from the county, especially as the region’s premiere destination for decades — the Ghost Town in the Sky amusement park in Maggie Valley — is now but an economic spectre.

Haywood County’s Tourism Development Authority helps market the area and is funded by a room occupancy tax, but thus far hasn’t been able to obtain an increase in that rate from the General Assembly.

“We could benefit greatly by having some additional hotels and motels in the area, as well as some additional attractions,” Hipps said. 

Closely related to tourism is the retail sector of Haywood County’s economy, and one need only look to crowded Main Street in Waynesville on a crisp fall afternoon to see why. 

To date, more than $12.4 million has been collected in sales tax in the county since July 1, 2016, up 4.8 percent over a similar period in 2015. 

Like the TDA, the Downtown Waynesville Association has for decades marketed the strip as a destination, but unlike the TDA, the DWA has been able to use some of the tax revenue it’s given for product development – in this case, aesthetic improvements. 

Those retail businesses — big-box stores like Walmart and Best Buy, or small-town mom-and-pops — rely on the manufacturing sector to produce the products they sell.  

Drastic downturns in American manufacturing during the 1970s that were further aggravated by NAFTA in the 1990s didn’t spare Haywood; when longtime local anchors of the sector like Dayco, Wellco and Lea Furniture left town, they also left a huge hole in the economy and altered the very fabric of this blue-collar community. 

“We’re still looking for manufacturing,” said Clasby. “But we’re looking for advanced manufacturing, and we’ve been successful in that here locally, going for the small and medium-size businesses.”

With that trend comes a concerted effort to fully utilize the 10-plus acre Beaverdam Industrial Park in Canton, which is currently home to a few large operations but has room for more. 

Other local companies like ConMet, Evergreen Paper, Giles Chemical, Haywood Vocational Opportunities and Sonoco Plastics, however, remain and continue to produce millions of dollars worth of products each year and employ hundreds of workers each. 

No longer whale-hunting, economic developers in rural America realize that dreams of landing a 1,000-employee manufacturing plant are just that — dreams. 

In their waking hours, professionals like Clasby and Hipps are thinking big by thinking small. 

“I think anything under 50 employees, that’s the sweet spot for us,” Hipps said.  

Those employees — whether 50 at a startup tech company or 450 at a medical products manufacturer — will be accompanied by, on average, another 1.53 persons in their household, according to U.S. Census Bureau data from 2016. 

Some in that household will attend public schools — another huge county economic engine — but everyone in that household will, at some point, consume health care products or services.  

Despite who pays for it, or how — as is the subject of ongoing national debate — a robust medical community is the salve to many a county’s economy across the country.

“When you have a community that’s our size that has a hospital, that is a huge asset. Having a hospital with the name Duke LifePoint behind it is another bonus,” said Hipps. 

The Haywood Regional Medical Center — then a public hospital — was purchased by Duke in 2014 after years of shaky performance that included Medicare and Medicaid reimbursements being yanked by the Centers for Medicare and Medicaid Services in 2008. 

“That’s when we hit rock bottom,” Hipps said. “But now that the hospital is privately owned, there’s more money and more resources for them to use so they can survive on their own.”

Consequently, this once-underperforming sector appears poised for growth, no matter what might happen on the national stage.  

“There are a lot of opportunities,” Hipps said. “And you can’t leave out Mission [Health System, a non-profit community hospital system]. They are competitors, but competition is good in this community, and we need it.”

That Haywood County’s economy has fared better than many even as the health care sector was endangered is somewhat remarkable in itself.  

“It’s a major segment here in Haywood County, and as far as wages they certainly pay quite well,” said Clasby. “Just the hospital is about the third-largest employer here in the county, and if you add in all the auxiliary and dependent businesses, it’s hard to put a number on it.” 

Dependent businesses — anything from physicians practices to auto dealerships — are ultimately begun by entrepreneurs who, while not exactly in a bubble of their own, chart the undercurrents of each economic sector.

Encouraging and facilitating entrepreneurship can bear great returns, but homegrown heroes like BearWaters Brewing in Canton and Elevated Mountain Distillery in Maggie Valley — winner of the Haywood Chamber’s 2015 Business Start-up Competition — aren’t the only gamblers in that game. 

Also at the table are members of the county’s real estate industry, who are seeing high demand, low inventory and a sales volume that’s rebounded from 2011’s $166 million to $236 million in 2016. 

But in today’s internet economy, the sector with the most to gain or lose is probably the creative and cultural sector — the artists and artisans, coders and creators, dancers, designers, decorators, painters, performers, photographers and writers who contribute as much beauty and truth as money itself.

Overwhelmingly self-employed or working in small enclaves, the creative economy is an oft-overlooked player with assets that ripple outward through any community, like a leaky faucet that drips, drips, drips into the tub. 

 

Attract and repel

Existing economic sectors in Haywood County can and do expand and contract, and so can be said to both attract and repel growth opportunities. 

This occurs for a variety of reasons. 

The nearly immutable challenge in Haywood County since its inception has been the region’s mountainous terrain. 

“Our largest employers are our school system, our hospital and Evergreen, so we need to look at where we can we put another Evergreen,” Hipps said. “The challenge is the land — trying to find another piece of land that you can put an Evergreen on.”

Scarcity of buildable land has led naturally to unaffordable residential and dated commercial building stock, as well as a dearth of multi-unit development. 

This in turn limits population, which hurts Haywood County’s chances of attracting larger regional or national chains.

“We’ve approached people like Fresh Market before,” said Hipps. “And that’s one of the problems we have. The way that our demographics show up, it doesn’t show the influx of wealthy tourists that we get in the summer months — and when we say summer, we are talking about spring through Christmas.”  

Another limiting factor — again, due to the topography — is infrastructure. Sewer and water connections can be hard to come by or expensive to create, and the kind of broadband speeds needed to attract serious tech ventures or even telecommuters from Asheville aren’t yet available in the county’s rural areas, despite a number of local efforts. 

But the nearly immortal asset in Haywood County has also been the region’s mountainous terrain; it’s unique, it’s exclusive to the region, and it can’t be purchased at any price. The Great Smoky Mountains National Park, the Blue Ridge Parkway and the Pisgah and Nantahala national forests are world-famous destinations that contribute demonstrably to the quality of life — an important factor when a company decides to locate here, or to expand here. 

For families, the county’s award-winning public school system — ranked 11th out of 115 in the state — is a major draw, as are the relatively short commutes offered by Interstate 40 and Interstate 26. 

Both also make for easy access to major metropolitan areas in the Southeast that many businesses desire; indeed, Western Carolina Freightliner’s recent move from Asheville was predicated on finding good access to an interstate. In its new Canton location, it will be just dozens of feet from I-40. 

The company wouldn’t have left Asheville, however, if it couldn’t be assured that a quality workforce awaited in its new home.

“Every single roundtable we’ve had, that has been the number one issue,” said Hipps. “When companies are sitting in that boardroom, that’s one of the things they’re checking off — is that workforce available? If I’m going to bring in a high-tech manufacturing type of facility, or medical facility, is the workforce there?”

Issues with educational attainment, work ethic and even drug testing hamper every county’s workforce, and Haywood’s probably no more so than the next. 

But given the importance of a skilled workforce to employers like Harrah’s Cherokee Casino Resort, efforts are underway to augment workforce preparedness, including a chamber partnership with the TDA to create coursework for a hospitality training program, and a revitalization of Pisgah High School’s industrial education programs made possible by a $100,000 grant from General Electric. 

 

Cause and effect

In life, it is said that virtue is its own reward; in economics, it is said that reward is its own virtue. 

So how is that reward measured? And by whom?

Economics is one of the most information-hungry disciplines out there; strangely, it’s sometimes difficult to quantify the bottom line on growth or contraction attributable to economic development activities of the EDC and others. 

“Visually, sometimes you can see it, but sometimes it’s a little more challenging to put numbers to it,” Clasby said. 

While plenty of organizations track basic economic data like wage growth and employment, uniform standards for measuring economic development outcomes are far from plentiful and of unknown utility. 

The mechanisms of economic development on a state and local level do provide for a means by which to judge economic consequences on a case-by-case basis, however. 

In the case of Western Carolina Freightliner, an inter-local agreement between Haywood County and the Town of Canton has the county contributing $200,000 towards infrastructure improvements to the former An-Ton auto dealership on Champion Drive that will house WCF.

The payback is expected to take five to seven years.

“They’re going to create 35 jobs initially, and that’s probably going to grow to 60 within five years,” Clasby said. WCF will also collect sales tax on trucks, parts and repairs, part of which comes back to Haywood County and Canton.

“If I’m working on a project and they’re asking for incentives, I’m asking, ‘How many people are you going to hire?’ I’ll set a minimum there, and the county has a policy, kind of a guideline.”

But does an apples-to-apples comparison of outcomes, or a set of best practices, even exist?

“Probably not,” said Tom Tveidt, an economist who lives in Haywood County whose Syneva Economics supplies governmental and corporate decision-makers with objective economic data from which to plan economic development initiatives. “I’m sure some people have taken a stab at it.”

Haywood County Commissioner Mike Sorrells serves on the EDC board and is a small businessman. He looks at a number of different parameters before deciding if something should be incentivized. 

A recent designation by the North Carolina Department of Commerce, however, could have a undesired effect on incentivization in the future for Haywood County; a tiered system used for the state’s economic development programs assigns a 1 to 100 score to each county in the state based on indicators of economic distress. 

Companies looking for economic incentives can receive far more in state aid by investing in counties ranked in the bottom 40, called “tier 1” communities, or in the next 40 counties, called tier 2 communities, than they can in the top 20 tier 3 communities. 

The problem is, retirees who flock to Haywood County because of low taxes and a high quality of life drive up the county’s median income, creating what some local officials call a “false positive” that pushes Haywood into tier 3 and limits the amount of tax breaks the county can — and, based on true economic conditions, should — distribute. 

On the regional level, a 2015 initiative by then-Gov. Pat McCrory eliminated regional economic development agencies like the Advantage West Economic Development Group — which helped attract Sierra Nevada to Fletcher and fought for economic development in WNC —under a statewide Economic Development Partnership of North Carolina.

Now, with President Donald Trump’s budget proposals being debated in Washington, organizations like the Appalachian Regional Commission are facing unforeseen funding challenges and the western counties served by the MountainWest Partnership fully understand that the chips are down. 

Over the coming weeks and months, The Smoky Mountain News will explore the realities of a rural, mountainous community fighting to find success in the face of challenges. Each of the sectors and topics in this overview will be explored in greater depth to determine whether Haywood County’s holdin’ or foldin’ – and how well it’s played the hand it’s been dealt.

 

 

Top 10 employers in Haywood County

Evergreen Inc. Paper Products: 1024 

Haywood County Schools: 883 

Haywood Regional Medical Center: 808

Consolidated Metco: 475

Haywood County Government: 471 

Walmart: 391

Haywood Vocational Opportunities: 335

HVO: 329

Giles Chemical: 225 

Town of Waynesville: 173

(Full time employees)