RESEARCH TRIANGLE PARK – As another day dawns with no decision yet made public about a new Apple campus in North Carolina or the Triangle’s bid for Amazon HQ2, questions remain about the state’s chances to win either or both massive projects. And a site selection executive with one of the world’s best known consulting firms – BDO – says “significant self-inflicted wounds” such as the House Bill 2 bathroom bill casts a shadow over an otherwise shining reputation among economic developers.

Also, he warns, the state is “pricier” than many people think and lower taxes “won’t be a silver bullet.”

“North Carolina in recent years has been an interesting study.   The state has been working hard to reinvent itself in the economic development world.  Unfortunately, it has needed to,” says Tom Stringer, who leads the Site Slection and Business Incentives practice for international consulting firm BDO.

“As everyone in my profession knows the Dell project from the early 2000’s has caused heartburn across the state  – and I see that some critics in North Carolina are criticizing the Apple courtship, referencing Dell,  as deja vu all over again.

“More recently North Carolina hurt itself again with political turmoil over certain issues, to the consternation of the business community.  So from a site selection standpoint there have been significant, self-inflicted  wounds.  That’s the bad news.”

BDO photo

Tom Stringer

“People who know, know BDO,” the marketing slogan goes. And among its better-known executives is Stringer. He’s spoken out on several occasions about the Amazon HQ2 project and has believed for a long time that HQ2’s $5 billion in investment along with 50,000 jobs will end up in the Washington, D.C. area.

But Stringer doesn’t dismiss North Carolina as a corporate expansion destination as a series of recent economic development wins with firms such as Infosys, Biogen and others bringing more jobs to the state. Amazon also recently disclosed plans to build new distribution centers in Garner and Charlotte.

“The good news is that in reforming the incentives North Carolina is taking a strong first step towards reinvigorating itself for corporate expansion.,” Stringer said, referring to changes the General Assembly made earlier this year in an apparent bid to help land Apple’s campus and up to 20,000 jobs as announced earlier this year by CEO Tim Cook, a Duke University graduate.

“North Carolina is an asset rich state,” Stringer explained.

“It’s problems are man-made.  In our world those are easy to overcome.”

Political reaction

Stringer’s comments produced reaction from both Republicans, who control the General Assembly, and Democrat Gov. Roy Cooper.

“Our office has a longstanding policy that we do not comment on economic development prospects. But in general, Sen. [Phil] Berger feels the pro-growth reforms legislative Republicans have implemented in North Carolina – including a business-friendly tax climate and robust economic development tools – make our state extremely attractive to companies looking to move here,” said Shelly Carver of the President Pro Tem’s office.

David Rhoades,  Communications Director for the North Carolina Department of Commerce, also wouldn’t comment about the Apple or HQ2 projects specifically. But he did explain how Cooper deals with companies that voice HB2 concerns. Earlier this summer, executives from Biogen said at a jobs announcement that the firm would not have expanded to North Carolina had HB2 not been repealed last year.

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“Governor Cooper has clearly and consistently stated that HB2 negatively impacted the state’s reputation and ability to recruit companies,” Rhoades said. “There’s no doubt the repeal of the measure made a difference, because as the Governor has also said, we know of a number of companies that would not have come or expanded but for the change in economic leadership and repeal of HB2.”

When questions come up, Rhoades explained how the governor responds.

“If companies raise questions about HB2 during the recruiting process, we deal with those questions head on.  There’s plenty of evidence that North Carolina is a diverse and welcoming place with the kind of people who work hard and can help a business be successful in our state.

“If asked, we explain the bipartisan compromise that removed the harmful, discriminatory law from the books, while acknowledging the result wasn’t a perfect solution. ”

Rhoades then noted more efforts by Cooper.

“Last October, Governor Cooper issued Executive Order No. 24, prohibiting discrimination in his administration on the grounds of race, color, ethnicity, sex, National Guard or veteran status, sexual orientation, and gender identity or expression in employment, and it also requires those doing business with the state to do the same.  Companies appreciate this discussion and understand the Governor’s commitment to work for anti-discrimination protections for all people.”

WRAL TechWire and other media have reported that Apple pushed back a decision about expanding in North Carolina due to concerns about legislation at the General Assembly. Numerous sources told WRAL in June that a decision was “imminent.” Later, sources said the political concerns emerged such as proposed constitutional amendments. But even when the General Assembly adjourned, returned for more consultations and adjourned again no Apple news has emerged.

But Stringer sayd North Carolina leaders need to be concerned about more than politics.

NC ‘pricier’ than you might think

Since the Amazon HQ2 project was announced a year ago and 20 finalists (including the Triangle) were announced, the capital city region has scored well and poorly in a growing number of studies about which site would be best for Amazon. In one area, North Carolina has scored very well: State and local taxes.

Stringer agreed – to a point.

“It’s always good when you can make such a competitive claim.  But state and local taxes are just two of the components of the overall cost of a project, and the truth is North Carolina is pricier than many people realize,” he said.

“It has abundant skill sets and while that’s a plus, wage rates are correspondingly higher than other jurisdictions.

“Real estate there is not a cheap date either, particularly in the Research Triangle. ”

Stringer said incentives also come into play with Maryland offering billions – an investment North Carolina officials have said the state can’t match.

“While both labor rates and property costs are higher in other places – including the Washington, DC area, where I believe the Amazon project will end up – those cost differentials can be mitigated with incentives – ala Maryland’s.,” Stringer said

“Incentives are used to offset and balance out costs, and when you’ve got a project of this size, high cost jurisdictions will step up to the plate one way or another to bring down the overall price tag for the company.

“Bottom line:  North Carolina’s low local taxes compared to its 19 competitors won’t be a silver bullet.”

So who gets Apple? Amazon?

Stringer skipped out on a prediction about Apple but did declare an Amazon front-runner in detail.

“That’s wide open at this point,” he said of Apple. “I wouldn’t want to speculate.”

An Amazon prediction is easier.

“Even before they named the 20 finalists I’ve believed they are going to the Washington DC region.  For a host of reasons that’s still my guess,” Stringer said

“As for North Carolina – could I see them selecting it instead?  Yes.

“Would I say it’s the favorite?  No.  I think it’s going to be the DC region.”