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Forum reveals mixed economic outlook

March 15, 2012

After a gloomy economic climate has prevailed in the Hickory Metro during the past several years, glimmers of hope are emerging in the region's outlook.

"How do you get ranked eighth worst metro in America to find a job," Catawba County Chamber of Commerce President Danny Hearn said of a recent list published by U.S. News and World Report, "and we wake up this morning and we are ranked the ninth best metro in America for economic development announcements."

Site Selection magazine's inclusion of the Hickory-Lenoir-Morganton Metropolitan Statistical Area (MSA) in its "10 best" places for economic development foreshadowed positive news delivered during the Chamber's Economic Outlook for 2012 delivered at Catawba Valley Community College on Thursday.

During the forum, a near-capacity audience learned about other ways the economic climate in the region and the nation are showing signs of improvement. The forum, featuring economists, economic development leaders and population data analysts also presented insight into hurdles that could hinder the region in the future.

A new niche
Catawba County Economic Development Corp. President Scott Millar explained how the region has managed to experience success when it comes to recruiting new jobs. Some of that success, he said, is related to a quietly growing "fruit" project in Maiden.

A project under construction on Apple Inc.'s site within view of U.S. 321 will be the world's largest, end-user owned, privately held solar farm, Millar said. Alongside an existing Apple facility which is the nation's largest LEED platinum-certified data center, the ongoing expansion will be the nation's largest biogas-fed duel cell operation, he said.

Add Apple's projects to work ongoing for several years at the Catawba County EcoComplex, as well as Duke Power's solar power and smartgrid projects at Marshall Steam Station, and Millar said the region is starting to find a new niche.

"All of this is support for our newest target initiative to play into the opportunities coming in the world's energy development sector," he said, adding those specific projects "are developing a platform where we can go around the world and talk about emerging energy opportunities."

"There are a number of new jobs going to be created in new sectors, and one of those is the energy sector," he continued. "We are trying to position ourselves to get manufacturing-related jobs within that target sector."

In fact, Millar said that during the past year two out of three economic development projects announced for existing buildings were energy-related. Among those was Turbocoating, which represented a $15 million investment and 100 jobs.

"Certainly, the fact that (Apple is) here, is driving a lot of interest and knowledge around the world," Millar said. "More people outside Catawba County are focusing on us."

Signs of improvement
On a broader scale, the nation is currently more than two years deep into an economic recovery, Wells Fargo economist Michael Brown told business leaders gathered in CVCC's auditorium.

"We have been averaging around 2 percent growth, and we anticipate that to continue for another 24 months," he said, adding that areas of notable strength involve businesses investing in their operations, as well as small business growth. "We took quite a hit to small business optimism during the recession. We are starting to see that rebound a little bit. Our clients are starting to tell us their revenue expectations are starting to rise."

When optimism increases in the small business segment of the economy, there is a chance to see faster job creation, he said.

"You are starting to see that with (national) jobs gains in excess of 200,000 per month," he said.

Also, while Brown said he expects to see another couple of years of increases for consumer spending in the 1.5 percent range, until personal income gains begin to occur at a faster rate, the employment picture will continue to remain somewhat stagnant.

Pitfalls exist, however, when it comes to challenges in the nation's housing market, an issue particularly prevalent in the Hickory region, he said. Although there are signs of increases in home sales and building activity, he said the end of a recent moratorium on foreclosures impacting 49 states could flood the market with available homes, drive down values and create ongoing burdens on the economy. A series of tax cuts currently set to expire in 2013 could further impede economic recovery, he said.

"There is a lot of uncertainty out there," Brown said, adding he is anticipating "A sustained pace of economic growth; business spending will continue to grow; consumer spending will remain modest; and the housing market will continue to be slow with some stability at the end of the year when some foreclosures begin to clear."

Cause for concern
While there are signs for hope, a festering problem ails the nation's economy.

"Educational disparity is translating to the unemployment rate rising," Brown said, adding that the nation's deficient levels of education account for a half to 1 percent of joblessness in states where unemployment is the greatest.

"This is the smoking gun," he said. "When you look at how North Carolina has performed, yes, things have gotten better, but we are still lagging in the nation ... We are doing great on the economic development front. Now we need to do better on the human development front."

Western Piedmont Council of Governments Data Analyst Taylor Dellinger said declining levels of education among the Hickory region's population is compounded by demographic trends that show residents aged 25-34 are moving away.

"That group of population in our region decreased by 20 percent in the last 10 years," he said. "Part of that has to do with people that left the area to seek other opportunities. We can't keep going where we continue to lose younger people. We have to come up with a way to attract younger people."

One thing tangential to the loss of younger residents, he said, is educational attainment. Compared to North Carolina's other MSAs, the Hickory-Lenoir-Morganton MSA is last when it comes to the percentage of the population over age 25 with a high school diploma, Dellinger said.

When it comes to a four-year college degree or higher, this region is 12th to 13th in the state.

"The unemployment rate here is higher than the state average. Educational attainment has a lot to do with that," Dellinger said, adding the state unemployment rate is 10.2 percent, but in the Hickory-Lenoir-Morganton MSA, the rate is in the 11-12 percent range.

"We have to increase the educational attainment levels of people that are here, but at the same time, attract people to get the jobs of tomorrow."

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