From biotech and finance to craft brewing, tourism and manufacturing, North Carolina arguably has one of the most diverse business environments in the country.
That may be one of the reasons it often tops the list of the most business-friendly states. But there are several other factors, too. The cost of doing business in the state is about 10% below the national average. Earlier this year, North Carolina lowered its corporate tax rate from 3% to 2.5%, the lowest rate in the country. The state also has access to a highly educated workforce, with at least 60 four-year colleges and universities within its borders.
From Raleigh-Durham to Charlotte and Asheville, several cities showcase what drives the state’s growth and why North Carolina may be one of the best places in the country to start and grow a business.
A state primed for growth
North Carolina has become a destination for people leaving more expensive coastal states in search of jobs and a better quality of life.
For three straight years, North Carolina has added more than 100,000 new residents annually. From 2017 to 2018 alone, the state’s population grew by 113,000 people.
“I don’t think there’s any industry that’s having an easy time staffing with the kind of human capital that they need, so one of North Carolina’s biggest advantages right now continues to be population growth,” says Christopher Chung, CEO of the Economic Development Partnership of North Carolina.
This influx likely is a boon to the state’s business communities, especially Raleigh-Durham, Charlotte and Asheville, which all serve as microcosms of North Carolina’s business diversity.
A hub of business diversity
North Carolina has gone through an economic transition in the last 50 to 60 years, when industries like furniture manufacturing and tobacco farming dominated.
Today, there is a wider range of industries. There’s the booming biotech industry in Raleigh’s Research Triangle; the finance industry in Charlotte, which is home to 425 corporate headquarters, including Bank of America; then there’s the craft brewing industry in Asheville, which helps to generate around $200 million in tourism revenue to its county in the form of state and local taxes.
Raleigh’s main industries are clean technology, life sciences and advanced manufacturing. By last count, there were more than 500 companies in Raleigh’s Research Triangle Region Cleantech Cluster, more than 500 life sciences companies, more than 40 gaming companies and major IT firms like Red Hat and IBM.
“There’s a nice balance of old and new tech. Being a technology company ourselves, it’s really cool to be proximate to big established players ranging from IBM to Lenovo to SAS and Red Hat, but then there’s also a really vibrant, early-stage tech scene,” says Jake Kiser, COO of StrongKey, a data security company located at WeWork Durham, One City Center.
Charlotte also has a thriving business hub. In recent years, the city has been lauded as the third best metro for STEM job growth (2018), the top metro area for growth in women-owned firms (2017), and second for tech job growth (2016).
Since 2001, Charlotte has added 200,000 jobs. Its finance industry is the second largest banking center in the country, with banks that hold more than $2.3 trillion in assets. However, healthcare, IT and advanced manufacturing are also thriving business sectors. Charlotte has the fastest growing tech talent pool among 50 markets, with more than 54,000 tech workers.
But North Carolina isn’t just finance and high-tech. In the western part of the state, Asheville is home to an ever-growing number of brewers. The Asheville area has 48 breweries, accounting for some of North Carolina’s more than 300 breweries and brew pubs. Two of the country’s top brewers — Sierra Nevada and New Belgium — also have opened breweries in the local area.
Low corporate taxes have helped North Carolina build this business base, but so have seeking foreign direct investment (FDI) and incentive programs such as a Job Development Investment Grant, Chung says.
“We look at the incremental new tax revenue that a company creating jobs here would generate, and then we give back a portion of that incremental tax revenue — be it property taxes at the local level or income taxes at the state level — as a grant in exchange for them creating jobs,” he says.
The state also has opened offices and placed FDI representatives in China, Germany, India, Japan and South Korea, part of its continued effort to encourage more foreign direct investment. The move has paid off — from 2014-2018, Indian companies invested $409 million and created 4,400 new jobs in North Carolina.
These government efforts aside, many of North Carolina’s business leaders say talent is the state’s main competitive advantage.
Why talent is the new currency of economic development
Skilled talent has fueled the state’s business ecosystem.
The Research Triangle in the Raleigh-Durham area is the epicenter of technology research and development in North Carolina. The research park’s proximity to three major research universities — Duke University, the University of North Carolina at Chapel Hill and North Carolina State University — fosters collaboration between the business and educational communities that benefit the local and state economy.
“The Triangle area has a vibrant entrepreneurial community and Durham is home to the Center for Entrepreneurship Development (CED), multiple incubators, angel investor networks and VC firms,” says Eric Masters, CEO of MATI Health Energy, based out of WeWork Durham, One City Center. “In addition, all the local universities provide tremendous access to talent, research facilities and expertise across almost every industry. Overall, a startup couldn’t ask for a better environment to learn and to grow.”
Veronica Creech, economic development manager at Raleigh’s Office of Economic Development and Innovation, says collaboration also has been key.
“Raleigh is a great place for business because of the collaborative nature of our community. The partnership between government, the private sector, and academia truly drive innovation and opportunity,” she says.
Michael Haley, executive director of Wake County Economic Development, calls talent “the new currency of economic development.”
“Our education and higher education ecosystems are incredible assets to the region,” Haley adds.
Like Raleigh, Charlotte has tried to maximize these assets.
“We’ve built a great city that helps companies attract and retain today’s best talent,” says Frances West, business recruitment and retention leader in Charlotte’s Economic Development Office.
West says her department has focused its recruitment strategy on making sure North Carolina is the right fit for companies from a workforce perspective. It hosts local talent panels, connects companies to universities and community colleges and has partnerships with nonprofits to upskill and train non-traditional and diverse segments of the workforce. WeWork has recognized this growing workforce and opened six offices in North Carolina — three in Charlotte and three in Durham.
“Where we are today is not by happenstance and where we will be in 10 years is not by happenstance — it’s all by intentional growth,” West says.
How a spirit of collaboration propels business
Talent may help to drive business innovation, but collaboration between the public and private sector has been pivotal, too.
Leah Ashburn, president of Highland Brewing Company in Asheville, says being in such a business-friendly climate has contributed to her company’s growth.
“Opening was more of a struggle in 1994 due to the newness of the industry as regulators had to meet existing yet outdated laws. However, the North Carolina legislature, supported by local counties and cities, relaxed Prohibition-era laws that were out of touch in today’s commerce,” she says.
Lisa White, vice president at White Labs, says North Carolina was an attractive place to relocate for the company, which provides high-quality yeast to local breweries to aid the fermentation process.
“Having our headquarters based in San Diego, which is a popular destination and outdoor-focused city, we knew we wanted to find a similar location with the same lifestyle on the East Coast. Since we are in the business of supplying products and services to professional breweries (among other fermentation related industries), we also wanted to be in a city that had a vibrant brewing community and deep-rooted culture in food and beverage innovation,” she says. “Asheville had the whole package, in addition to very supportive and collaborate government and city agencies that were eager to work with us.”
White stresses that working with governmental partners has been crucial. The local Economic Development Coalition was instrumental in White Lab’s relocation.
“They helped us with so many things, from construction and building to future goal planning. They even stepped in when we had setbacks with construction so that we could meet our target dates for the buildout,” she says.
White’s experience likely mirrors the larger business spirit across the state. The regulatory environment is more collaborative than a hindrance. The state is really committed to helping companies succeed and find the best talent, which allows North Carolina to nurture a diverse business environment, Chung says.
“We have a lot of assets that really address the biggest pain point right now for companies, which is, ‘where am I going to go that maximizes my chance to attract and retain the types of talent that my company — regardless of industry — needs to be successful?’” he says. “In my opinion, we offer an unrivaled solution to that question.”
This article is part of the “The Way We Work Today” series brought to you by FiveThirtyEight in partnership with WeWork. Together, they are exploring the best places to base your business in 2019.