Summer 2014
Our natural economy S.C. thrives on the great outdoors The Little River Blueway, along the Savannah River National Scenic Byway
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County Spotlight: Greenville | BMW’s Expansion | S.C. Delivers
Table of
Contents COVER STORY: Our NATURAL ECONOMY 30
The outdoors’ role in business creation, economic development, workforce recruitment and quality of life for South Carolinians.
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Walking the Palmetto Trail 20-year project links state’s geography, history
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Sharing the outdoors Promoting outdoor assets as S.C. travel destinations
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Pedaling the economy Swamp Rabbit Trail good for business, recreation
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Building businesses Entrepreneurs make active life their livelihood
Cover photo: The Little River Blueway. (Photo/ Kirks Smith) Contents photo: Congaree National Park. (Photo/File)
Feature 22
BMW’s Expansion
South Carolina’s automotive sector may have hit a magic number with BMW’s latest announcement
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BMW’s new X4 model. (Photo/Scott Miller)
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Departments 6 Bill Settlemyer’s Viewpoint
12 Business Accelerator
40 S.C. Delivers
8 Upfront
14 Spotlight: Greenville County
48 1,000 words
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From the
Editor
Creative Director - Ryan Wilcox rwilcox@scbiznews.com • 843.849.3117 Senior Graphic Designer - Jane Mattingly jmattingly@scbiznews.com • 843.849.3118 lowcountry newsroom Managing Editor - Andy Owens aowens@scbiznews.com • 843.849.3142
Dear Reader, For someone who grew up playing in the woods, picking wild blackberries and riding a bike or a horse on dusty Georgia roads, the idea of the Great Outdoors as a cause or a movement causes a start. Why, of course, children belong outside! And we all fare better if we spend at least part of the day out in the fresh air. We are blessed in South Carolina that so much of our natural beauty has been preserved. From the foothills to the Midlands to the coast, there are stretches of open land, forest and sparkling water. And more and more, trails and byways are being gently developed, making it easier to walk, bike or kayak. These splendors have always brought thousands of visitors to our state, but now they are valued for so much more. The young and highly skilled workers sought by many of our businesses are looking for just the kind of livability South Carolina provides: reasonable cost of living, challenging jobs with great opportunity, and, after work, Licia Jackson easy access to the call of the wild. Editor, Read about the intertwining of the outdoors and business — the BusiSCBIZ Magazine ness of Outdoors — and be sure to look at some great photography inside. On another business front, BMW has done it again! In late March, the automaker announced it is expanding once again at Greer, investing $1 billion and adding another 800 jobs to build an X7 model and boost the plant’s annual production capacity to 450,000 vehicles. Within a few days of the announcement, BMW suppliers were already announcing their own expansions. And such is the ripple effect across our state. BMW is good not just for the Upstate, but for counties as far away as Clarendon and Dorchester. Read about the impact on the entire state inside this issue. Don’t miss our spotlight on beautiful Greenville County or the business accelerator focus on the Iron Yard’s Digital Health Accelerator. And learn about the latest developments in supply chain news in SC Delivers. Award-winning columnist Bill Settlemyer writes about the elusive economic recovery. And we have a letter to the editor from State School Superintendent Dr. Mitchell M. “Mick” Zais. So, set aside some reading time for this summer issue of SCBIZ. And when you’re done, for heaven’s sakes, go outside! I’ll be there too. Enjoy!
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Bill Settlemyer’s
Viewpoint The Recovery – Are we there yet?
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he worst economic downturn since the Great Depression officially began near the end of 2007 and lasted until mid-2009. Since that time, the recovery has moved in fits and starts, thanks to a multitude of factors. This summer will mark the five-year anniversary of the official end of the recession. So, are we “there” yet? Are the economies of South Carolina and the country back on track? I think you know the answer: Not by a long shot. While major multinational corporations and the wealthy are thriving, small businesses and low- and middle-income Americans are still not experiencing the robust economic growth that typically follows a deep recession.
Grave new world
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Much has been written about stagnant wages and limited job opportunities for middle-class workers, a trend that started more than a decade before the recession. The key culprits are the march of technology (automation) and the outsourcing of jobs to other countries where wages are significantly lower than here in the U.S. It all adds up to a “grave new world” where the economy grows but jobs and wages don’t. Millions of middle management, manufacturing and even professional jobs are disappearing, never to return. It’s also a world where even getting a good education is no guarantee of a good
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job. The “barista with a bachelor’s degree” is an unwelcome stereotype for the Millennial generation, and it’s all too real. Likewise, the rise of temporary and “just in time” employment are turning middle-class dreams into ongoing struggles, not just for Millennials but also for older workers.
Better, but... Let’s throw in a bit of positive spin here. In South Carolina, things are getting better. Home sales and prices are on the rise; unemployment is down; tax revenues are up thanks to economic growth. In the Charleston region where I live, construction cranes once again dot the skyline as a commercial building boom gathers steam. Housing sales are strong and prices of properties in Charleston’s Historic District are soaring. There are a lot of good things happening and it feels like the good times are rolling again. And yet the undertow of a weak job market persists, dragging behind us like an anchor holding back a speedboat running at full throttle. Small businesses are caught in the middle – cautious about hiring due to the fear that the recovery will once again lose steam and backslide, while at the same time experiencing lackluster sales growth, thanks in no small part to the labor and wage problems hobbling the middle class. When consumers can’t (or won’t) open their wallets, small businesses are first to feel the pinch.
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This is in sharp contrast to the previous recession roughly a decade earlier, when big business and the stock market took a hit while small businesses and consumers fared somewhat better. My guess is that the aggressive job cuts by large corporations and state and local governments, as well as the substitution of automation for labor, are the major causes of the country’s persistently tepid recovery this time around. It’s a weird and scary recovery when corporate profits and the stock market soar while the middle class and lower income workers continue to struggle. It’s a pattern that does not bode well for the short or long term future of the economy or our democracy.
New perspective needed As a former small business owner, I know how all-consuming it can be just to keep a business afloat and growing. But I think the time has come when owners of businesses of all sizes need to engage in some serious macroeconomic thinking about how we can work together to maintain a large and vibrant middle class. There are no easy answers, but we’d better start looking for them.
Bill Settlemyer bsettlemyer@scbiznews.com
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viewpoint
Letter to the
Editor
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remove those who simply aren’t helping students learn. I have been an outspoken proponent for career and technical education in our state. No one has worked harder than I to change the one-size-fits-all, four-year college preparatory curriculum that we force every student to pursue regardless of their aspirations. I have been fighting to change a system that forces poor kids into failing schools where there are no options, no escape, and where ZIP code is destiny. Throughout the state, high poverty schools are knocking it out of the ballpark. The difference between those schools and high poverty schools that are failing is not the funding level, demographics of the students, or the education level of the parents. It’s the competence of the adults in the system. To get these schools back on track, we have proposed the creation of a transformation school district. The goal of this district will be to remove perennially failing schools from the control of adults who have proven unable to run effective schools. Tennessee, Michigan and Louisiana have all instituted similar districts with great success. We can do the same in South Carolina. Our children don’t have the luxury of time – they need a solid education today, and we’ve laid the foundation with big ideas and programs to make that happen. Dr. Mitchell M. “Mick” Zais State Superintendent of Education
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he purpose of this letter is to respond to snarky comments in the “Viewpoint” section espoused by Mr. (Bill) Settlemyer (spring issue of SCBIZ). I agree that these are critical times for our state, its citizens, and our students. The children in our schools will not get another chance for an excellent education. That is why we need to continue pressing for reforms to public education. However, Settlemyer’s assertion that neither Gov. Nikki Haley nor I realize the importance of K-12 public education and its connection to economic development is out of touch with reality. Governor Haley has done a fantastic job attracting businesses to our state; our economy is the 12th fastest growing in the country. She understands that a skilled, prepared workforce is essential to economic development. Contrary to Settlemyer’s assertion, we are not tinkering around the edges. Throughout my tenure as state superintendent, we’ve proposed big ideas and seen some of them approved by the General Assembly. We have expanded school choice by increasing funding to public charter schools. According to the National Charter Schools Association, South Carolina has moved from 25th in the nation to 12th in our support of public charter schools. We are fielding an educator accountability system that will allow us to recognize and reward our exceptional teachers and principals. It will help good teachers become great and provide schools the flexibility to
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UPFRONT regional news | data
A taste of rural life: S.C. nature photos win contest
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almettos and magnolias, with some marsh grass thrown in, were the subjects of winning photos in the 2014 Rural Summit Photography Contest, announced in March. The first-place photo, “Palmetto Field,” was taken by Jessica Oswald of Gilbert, showing a lone South Carolina palmetto tree in a tranquil marsh field. Gerry King of Rock Hill won second place with his photo, titled “Magnolia with Bee Collecting Pollen,” and Nicholas Mariano of Myrtle Beach won third with “On Watch.” The three photos are shown here and can also be viewed at www.sccommerce. com in the photo gallery section. The contest drew more than 90 entries, which were narrowed to five finalists by the S.C. Department of Commerce staff. They were displayed at the
Photo/Gerry King
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Photo/Jessica Oswa
Photo/Nic h
olas Mari
24th annual Rural Summit, held in Sumter. Conference attendees voted for their favorites. Sponsored by the Small Business and Rural Development Division of the S.C. Department of Commerce, the Rural Sum-
ano
mit Photography Contest is part of the annual South Carolina Rural Summit conference. The contest was open to the public, and the entries were to reflect the unique features of rural life in the Palmetto State.
FAST FACTS | THE GREAT OUTDOORS $
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The amount South Carolinians spend annually on outdoor recreation.
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$18 billion
Cover Story
At least 54%
The percentage of South Carolinians that participate in outdoor recreation each year.
201,000
The number of direct jobs outdoor recreation generates in South Carolina.
$1 billion
The amount of state and local tax revenue outdoor recreation generates in South Carolina. Source: Outdoor Industry Association
Source: Outdoor Industry Association
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Upfront
Brewing a new degree
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o, maybe more than a few of us could say that beer was one of our favorite subjects in college. Well, for selected students at Horry Georgetown Technical College, beer will be not just a top subject but their major — as an associate’s degree in brewing rolls out in 2015. The idea for the state’s first such degree grew out of a hallway conversation, says Marilyn Fore, executive vice president of academic affairs at the college, whose main campus is in Conway. “We said, let’s see if there is a need.” Surveying possible employers in breweries, distributing, marketing and sales, administrators found more than 100 jobs for graduates within the next three years. Right away, two local breweries offered to help. It has been a whirlwind for Fore, who said she’s never seen so much excitement about a new degree.
NEW ECONOMIC DEVELOPMENT Here are announcements in South Carolina since Feb. 6, 2014. Company U.S. Engine Valve Orian Rugs Toray Industries Inc. Walker Emulsions (USA Inc.) Esurance Kaman Engineering Services WeylChem U.S. Inc. King Machine Meyer Tool Inc. Core Molding Technologies Inc. Pulcra Chemicals Starflo Corp. Koyo Bearing North America-Orangeburg Birdsong Corp. BMW CRR Carbon Resources Recovery SC LLC Copac Global Packaging Precorp Inc. Suminoe Textile of America Corp. Signode Palmetto State Armory Aerial Options
County Investment No. of jobs Oconee $29.5M 125 Anderson $13M 125 Spartanburg $1B 500 Orangeburg $4.65M 11 Greenville $2.1M 450 North Charleston N/A N/A Kershaw $10.8M 49 Sumter $3M 20 Greenville $5M 50 Cherokee $6.4M 50 York $3.1M 17 Clarendon $1M 12 Orangeburg $10M N/A Darlington $47.3M 55 Spartanburg $1B 800 Anderson $20M 30 Spartanburg $14.8M 32 Greenville $14.8M 29 Cherokee $5M 100 Lexington $15M 130 Lexington $4.2M 300 Marion $410,000 13 Source: S.C. Department of Commerce
ational outdoor retailers are setting up camp in South Carolina, and crowds of shoppers are following. When Cabela’s opened its first store in the state recently, 2,500 people lined up to get the first look at the retailer’s hunting, fishing and outdoor gear. Besides Cabela’s, other big national retailers such as REI and Bass Pro Shops have opened their doors or announced plans to build new stores throughout the state. Proponents of these national retailers say they bring new jobs, economic development projects and more outdoor retail options to the state. Opponents say tax incentives give bigger retailers an unfair advantage. Bass Pro Shops and Cabela’s received or were guaranteed a combined $2.2 billion in incentives from both state and local governments nationwide over the past 15 years, according to a 2012 study by the Franklin Center for Government and Public Integrity. Some opponents also say big-box stores could hurt local retailers that sell outdoor goods. Yet many stores with smaller foot-
An artist’s rendering shows what the Bass Pro Shops Outdoor World store in North Charleston will look like when it opens in 2015. (Rendering/ Bass Pro Shops)
prints have remained open or expanded in recent years, like Half-Moon Outfitters. The outdoor equipment retailer now has five locations in South Carolina and three in Georgia. Earlier this year, Cabela’s opened its 100,000-square-foot store at Magnolia Park on Woodruff Road in Greenville. The store has 235 employees, including part-time workers. Within less than a mile along the same road, outdoor enthusiasts can find Academy
Sports, Dick’s Sporting Goods and REI, which opened a Greenville location in 2011. “South Carolinians are part of an exceptional outdoor tradition ... We wanted to build a store in the Greenville area to recognize that,” Cabela’s CEO Tommy Millner said. Another Cabela’s is planned for the Rock Hill-Fort Mill area, to open in 2015. Bass Pro Shops also looks to South Carolina for growth plans. It currently operates one store in Myrtle Beach and plans two new locations in the state. The outdoor retailer in April announced plans to be the anchor tenant and developer for a 75-acre plot between Greenville and Spartanburg. It will build a 120,000-squarefoot facility by 2016 and recruit hotels, retail stores and restaurants into the mixed-use development along Interstate 85. Bass Pro Shops also plans to build a roughly 150,000-square-foot store in North Charleston by 2015. It will be the anchor tenant for a 2-million-square-foot development in the Ingleside Plantation.
UPFRONT
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Outdoor retailers a big catch for South Carolina
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Business accelerator
Business Accelerator
Spartanburg accelerator targets health care technology
Left: Local business leaders and investors join together for weekly pitch practice at the Digital Health Accelerator in Spartanburg. Above: Roundtable discussions start on Day One of the Digital Health Accelerator last summer. (Photos/The Iron Yard)
By Jenny Peterson, Staff Writer
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ollowing its success in accelerating the growth of technology startups, The Iron Yard’s Digital Health Accelerator in Spartanburg focuses solely on technology companies that serve the health care industry. The three-month accelerator program offers entrepreneurs a unique advantage – the backing of The Mayo Clinic, a worldwide health care nonprofit. Eric Dodds, a co-founder and chief marketing officer of The Iron Yard, said he hopes this new model will be the next big thing. “If we have connections to organizations like the Mayo Clinic and other major investors, we’ll have a much better platform on which to help (startups) accomplish significant milestones,” Dodds said. “Our team flies around the country and networks at all kinds of events; we even make (our own) investments in companies, so we can have strategic relationships.” The Iron Yard pays each company that is accepted into the Digital Health Accelerator
$20,000 in seed money; in return, The Iron Yard acquires a six percent ownership in the company. Each accelerator session is capped at a maximum of 10 companies. “In exchange for the money we give them, there’s an equity exchange – like buying stock,” Dodds said.
Hundreds apply, 10 are chosen This allows The Iron Yard to have a stake in the startups’ success. “It’s very competitive; we have hundreds of companies that apply,” Dodds said. Companies accepted are working on a web or mobile product with a large national or international market. Dodds said competition among other accelerator programs prompted The Iron Yard to focus on up-and-coming niche industries like digital health care, which focuses on everything from wellness applications to enterprise software. Companies get free office space for a year and even access to on-site housing, if needed.
Startups also get access to mentoring, networking and expert advice on navigating the field of digital health care, such as adhering to the rules on patient privacy. “We leverage our connections to bring in experts who solve problems,” Dodds said. “It cuts the fat on figuring out those different issues, and it significantly reduces time.” The Iron Yard can also do fundraising, marketing and hiring for startups. “Some (startups) need to just get customers in; others need help with the design of their product,” Dodds said. The Iron Yard also has a coveted networking event, “Demo Day,” in Spartanburg, where entrepreneurs pitch their ideas to large-scale organizations such as The Mayo Clinic that can invest in them. “We also fly them out to San Francisco and do a demo at a conference focusing on digital health services,” Dodds said. The Digital Health accelerator’s first class of entrepreneurs completed the program last September. All the companies are still operating, and half have already raised out-
Venturing beyond South Carolina The Iron Yard has opened another niche accelerator focusing on green technology in Asheville, N.C. The accelerator in Greenville will not run this year, Dodds said, as The Iron Yard is tweaking that location’s focus to a niche industry. The Iron Yard also runs computer programming code schools in Charleston and Greenville. Locations across the Southeast in Atlanta, Houston, Tampa and Durham, N.C., are now in operation or coming soon. The code schools further support the startups by turning out a knowledgeable and skilled workforce in advanced computer programming. “If we can have a relationship (with startups) where we can help them accomplish more than they could have done on their own and be successful more quickly, and if we get to be part of their company and increase their value, then everyone wins,” Dodds said.
Business accelerator
side working capital. The next digital health accelerator session will begin in July. Applications are being accepted until May 31.
By the numbers $20,000
The amount of seed capital companies in the Digital Health Accelerator receive.
6 percent
The amount of ownership the Iron Yard has in each company accepted into the Digital Health Accelerator
10 3
The number of people in an ideal entrepreneur team - a designer, developer and business/sales person.
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The maximum number of companies accepted into each Digital Health Care Accelerator program
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county spotlight
Greenville
Falls Park on the Reedy in downtown Greenville features a suspension bridge. (Photo/ Greenville Area Development Corporation)
Innovation booms in Greenville County By Jenny Peterson, Staff Writer
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istorically, quaint and leafy Greenville County has positioned itself as a manufacturing center in South Carolina. Conveniently located along the Interstate 85 corridor, it offers easy access to major cities like Atlanta and Charlotte while also being convenient to the Port of Charleston. With favorable tax rates and a well-trained local workforce, Greenville County is the choice for international companies BMW and Michelin for their North American headquarters. More than 50 Fortune 500 companies have followed, including 3M, Lockheed Martin Aircraft and Logistics, Honeywell, Caterpillar and General Electric. The manufacturing industry remains the county’s largest single industry employer. Special Advertising Section
Greenville Section Sponsor:
About Greenville County County Spotlight: greenville
Population: 470,940 Average household income: $45,818 Median home value: $155,580 Median age: 37.6 Source: Greenville Area Development Corp.
Over the past five years, Greenville has seen a boom in new technology and startup businesses, attracting young innovators and entrepreneurs to the area. The new industry has taken off. Greenville has re-invented itself as a place for entrepreneurs and technology startups to thrive. More than $1 billion has been put into new capital investments countywide over the last five years and more than 6,000 jobs have been added. This new industry sector has helped Greenville land on many top-ten lists in national business publications. The Greenville metro area was rated No. 1 in Best Cities for Jobs in spring 2012 by Forbes Magazine, one of the Top Ten Most Affordable Cities by Relocate America in 2010, and one of the 10 Fastest Growing U.S. Cities in 2012 by CNN Money.
Planned startup growth
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Above: The food and entertainment industry in Greenville’s metro area is thriving, with many restaurants offering outdoor seating along the revitalized Main Street. Left: Greenville’s downtown central business district has been reborn. (Photos/ Greenville Area Development Corporation)
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Special Advertising Section
The county’s move toward attracting high-end, startup businesses to the area was not an accident. It was carefully planned by the Greenville Chamber of Commerce, according to John Moore, executive vice president of economic development with the chamber. It started in 2006 with a study of which new industries had the potential to grow in the Greenville County market. Moore said the study was done with comparable cities such as Raleigh, N.C., and Charleston. The study showed that Greenville could pursue and support high-end startup companies that could potentially piggyback with existing industries. Moore said the chamber decided to take a deliberate and careful approach to attracting these new businesses. “We were looking for startups with a big economic impact,” Moore said. “There’s a science to it – an art to it. We started an effort to see if we could generate momentum
County Spotlight: greenville
NEXT Innovation Center tenants 2007: 8 companies 2014: 135 companies plus a waiting list Source: Greenville Area Development Corporation
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Above: The NEXT Innovation Center – a cool, community-oriented incubator site – opened in 2007 to attract and support new startups. Left: A welder works in a manufacturing plant. Manufacturing is the largest single industry employer in Greenville County. (Photos/Greenville Area Development Corporation)
and see what the companies needed, and how we could be competitive. We had the right leadership and a chamber that allowed us to be very creative.” The first big step in attracting and supporting new startups was building the NEXT Innovation Center – a cool, community-oriented incubator site. “We pitched it as a neighborhood,” Moore said. “We’ve built a different model – more of a private and entrepreneur-
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Special Advertising Section
led model.” The NEXT Innovation Center opened in 2007 with eight startup companies as tenants. Leaders forayed into new territory learning how to properly support these new industries with angel investors, seed funding sources and networking opportunities. “While large manufacturers need ports and funding from traditional banking systems, these startup companies need support services because they are small,” Moore said. “They don’t have legal departments (for example), or human resources, and they don’t know how to recruit.” He added, “Banks won’t lend (to startups)
if they don’t have working capital, so we got investors – specialized investors. The companies also need to find talent to help them grow; a company may go from one person to 10 or 20 people rapidly.” The NEXT center worked with nearby Clemson University on the need for specialized workforce talent; it’s similar to the way the university turns out qualified workers for the manufacturing industry. The efforts have paid off. There are now 135 startups in the NEXT Innovation Center, and there’s a waiting list for even more. The word quickly spread about Greenville’s tech industry and friendly business climate for startups. As a result, Greenville County has seen a nearly 4 percent increase in the number of self-em-
County Spotlight: greenville Automotive manufacturing accounts for the biggest investment and top number of jobs in Greenville County in 2013. (Photo/Greenville Area Development Corporation)
ployed business owners since 2009. The STEM (science, technology, engineering and math) sector is now the thirdlargest area employer; these workers earn $1 billion annually, each averaging almost $56,000 per year.
forming public schools and one of the lowest property tax rates in the country provide an additional incentive for families. More than 3,000 new residential units are in the pipeline for Greenville’s down-
town, according to Brooke Ferguson, development manager with the Greenville Area Development Corporation. With more than 5.2 million visitors in 2012, tourism remains a bright spot
Quality of life
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Following the economic and population growth, the food and entertainment industry in Greenville County has also thrived. The city of Greenville now boasts more than 600 restaurants – from fast food to haute cuisine. Greenville is listed among the South’s “tastiest towns” by Southern Living magazine. Greenville’s metro area is an example of the rebirth of a downtown central business district with a zoo, a minor league baseball team and the Carolina Ballet Theatre. Falls Park on the Reedy River features a suspension bridge overlooking a series of waterfalls. “You can imagine our ability to recruit professionals to the community,” said Kevin Landmesser, interim president and CEO of the Greenville Area Development Corporation. “Quality of life is a big deal.” Situated near the mountains, Greenville County has three state parks and more than 60 city and county parks. High-perSpecial Advertising Section
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County Spotlight: greenville
in Greenville’s economy. Several new hotel projects are in the pipeline. A “Greening of Greenville” movement, with a focus on alternative energy, positions the city as a living laboratory to test green technology.
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Advanced Materials
Automotive
Aviation
Biosciences
Office
Non-target
Building on manufacturing Greenville County continues to support its largest industry leader, manufacturing. Landmesser said many international companies from Germany, Brazil, Italy, France and Japan have come on the scene. The new International Center for Automotive Research at Clemson University continues to interest manufacturing and automotive companies that are looking for skilled workers. Businesses are also eyeing the opening of the inland port in Greer in Greenville County, which allows manufacturers to ship international freight through the Norfolk Southern rail directly to the Port of Charleston.
Projects on the horizon
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Greenville County 2013 Capital Investment by Target Industry
Business in Greenville County isn’t slowing down anytime soon. According to Moore, the county will continue to aggressively bring in new startups in fields such as information technology and research and development for advanced manufacturing. “We just went through another target industry study and found three new areas,” Moore said. They include office and financial services, information technology and distribution, all industries that could be built around the inland port. Landmesser said whatever new industry is pursued next, working with all cities in the county makes Greenville County stand out among its peers. “We have a partnership with economic development departments in the municipal cities of Greenville, Mauldin and Greer and work closely with the Upstate Alliance to brand and market the area,” Landmesser said. “Our strong team and comprehensive approach is our differentiator.”
Investment $27 million
$83.1 million Total: $238.9 million
$113.1 million $1.5 million $9.2 million $5 million
Jobs 61 230
321
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Total: 1,001
84
300 Source: Greenville Area Development Corporation
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FEATURE
South Carolina’s automotive sector may have hit a magic number with BMW’s latest announcement By Bill Poovey, Staff Writer and Scott Miller, Editor, GSA Business
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ive days after BMW Manufacturing Co. dropped news of its latest expansion, auto supplier Precorp. Inc. said it would expand in Greer. The tooling company will invest $14.8 million and hire 29 people. A day later, Suminoe Textile of America Corp., another automotive supplier, said it would expand its needle-punch carpet facility in Cherokee County, investing $5 million and hiring 100 people. These economic ripples are expected to continue as BMW boosts annual production in Spartanburg County from 300,000 to 450,000, a magic number of sorts in the automotive world.
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Story continues on page 26; see the timeline on page 24
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BMW’s new X4 model will be produced at the manufacturing plant in Greer.
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A timeline of success Background: Based in Germany, BMW’s storied legacy began when Bavarian Motor Works was formed in 1916. The new company merged two small aircraft engine manufacturers. In 1923, BMW began to build motorcycles. A defining moment came in 1928 with the production of the first BMW car. Recalling the company’s origins as an aircraft engine manufacturer, BMW’s white‐ and‐blue logo is recognized worldwide. The logo symbolizes a pilot’s view through a propeller as alternating white and blue segments.
History of BMW in South Carolina
New service agreement with the Port of Charleston, shippi through the port to increase U.S. X5 production begins
Pro of Z
$400 million Groundbreaking in Greer, Spartanburg County
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1992
First Z-roadster came off the assembly line
additional investment in plant and 400 new jobs.
1,00
car m
2002
1923 1916
1928
Photos: BMW Manufacturing Co. Timeline design: Ryan Wilcox Source: BMW Economic Impact Study, Moore School of Business, University of South Carolina
h ing e
Production begins on 2011 X3 Sports Activity Vehicle
oduction begins Z4 Coupe and M Series Z4 Aerial photo of the Spartanburg plant, August 2013
$750 million
$1 billion
investment to add 1.5 million square feet to factory, 500 new jobs
00,000th
manufactured
2,000,000th
investment and add 800 new jobs to produce a new X7 model.
car manufactured
2012
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The Bimmer Capital BMW’s EXPANSION
BMW will boost annual production capacity by adding a new, larger X7 model to its four other X models at the plant. BMW AG CEO Norbert Reithofer said at the March announcement that the $1 billion expansion will make the Greer plant the company’s largest in the world. BMW produced its first vehicle in South Carolina in 1994 and has expanded regularly since, especially in recent years. In 2010, BMW completed a new 1.2 million-squarefoot assembly line, part of a $750 million expansion. Two years later, BMW announced plans to invest $900 million to accommodate production of the new X4. The automaker rolled the new vehicle off the line March 28, the same day it announced plans to invest another $1 billion and hire another 800 people, this time to produce a new X7 model. BMW also plans to build a plug-in hybrid of the X5 at the plant in the future. With the X4 and X7 joining the X3, X5 and X6 at the plant, production is expected to reach 450,000 by the end of 2016, while employment will swell from 8,000 to 8,800, BMW officials said.
The X Factor
BMW’s new X4 rolls off the line on March 28, the same day the automaker announced plans to invest another $1 billion and hire another 800 people to produce a new X7 model. (Photo/Scott Miller)
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BMW’s Expansion, from page 22
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“Once you get to 400,000 you need to localize more content so you lower the transportation costs into the plant and really to lower foreign currency exchange exposure,” said Dave Andrea, a senior vice president and industry analyst at Troy, Mich.-based Original Equipment and Suppliers Association. “That is a significant threshold for them,” Andrea said. “It raises the confidence level for the suppliers and that’s what brings in-
vestment. When you look at the kind of the economic multiplier of an assembly plant, when you are at that 400,000-unit level, you have increasing levels of domestic content. It typically translates down through the supply chain.” That elevated production also sparks discussion about BMW’s establishing a local engine manufacturing facility, particularly if the German automaker decides to build a second North American plant. BMW reportedly is weighing its options.
The plant, which once produced roadsters and coupes, now deals solely in X models. Producing one model series “stabilizes production schedules for the plant and suppliers. That lowers the cost of doing business,” Andrea said. Andrea said growing the lineup of X models at one location also “tends to draw more local manufacturing, engineering and maybe some product engineering support that you wouldn’t necessarily need so close by if you didn’t have so many models you were producing.” Additionally, BMW exports 70% of the X models and Andrea said the diversity of global markets “helps stabilize demand.” Andrea and suppliers themselves speaking privately said it’s not possible to quantify the impact on suppliers. He said there will be new orders for components exclusive to the X7s, such as body panels, and also an increase in demand for components shared
BMW’S EXPANSION
“This expansion means Spartanburg will have the largest production capacity of any plant in our global production network.” Norbert Reithofer BMW AG CEO
across models. BMW Manufacturing President and CEO Manfred Erlacher said the expansion could attract new second- and third-tier auto suppliers to the state. The heightened production presents suppliers with a sound business case to establish facilities here, rather than ship product to South Carolina, Erlacher said. “The Tier 1 supply base, we really have that built out pretty well here,” Erlacher said. “But 80% of parts are coming from suppliers, so there will be a lot of possibilities, especially for the second- and third-tier suppliers.” He said those companies build a range of products, such as plastic parts, cables and connectors.
Longer chain
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BMW executives, manufacturing industry representatives and economic analysts all predict the automaker’s expansion will trigger more than a trickle of growth in the supply chain. “I’d call it a flood,” Lewis Gossett, president and CEO of the S.C. Manufacturers Alliance, said of the impact on suppliers. “We can’t know which suppliers. We can’t know how much. There will be quite a few companies that are going to benefit dramatically from this.”
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BMW’s EXPANSION www.scbizmag.com
The BMW plant in South Carolina, which once built roadsters and coupes, now deals solely in X models. (Photo/BMW)
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First-tier suppliers also have opportunities as BMW ramps up production, said Harald Kruger, BMW Group’s head of production. The plant does not have a press shop, so the company will need to do more business with metal-stamping companies, he said. Ralph Schwarz, a spokesman for BMW supplier Draexlmaier Automotive of America in Duncan, said the company has grown along with BMW Manufacturing Co. since 1996. The company manufactures interior systems, instrument panels, consoles and door panels. Draexlmaier also provides BMW with electrical components, including driving harnesses that are assembled in Mexico and then shipped to Duncan, where they are stored and delivered on demand to BMW, Schwarz said. Schwarz said Germany-based Draexlmaier Group’s plant in Duncan has grown from about 80 employees in 1996 to about 700 now. He declined to speculate about increased demand from BMW’s new X7 model.
“That has yet to be determined,” he said. He said any future expansion “depends on how business is developing.”
Start your engines? Draexlmaier is one of about 40 BMW suppliers in South Carolina and 170 across North America. S.C. Department of Commerce Secretary Bobby Hitt, who formerly worked for BMW, said the automaker uses about 70% American-made components. Engines for the X models continue to be imported. Hitt said there have been discussions for 20 years about BMW locating an engine plant somewhere in North America. Bloomberg News, quoting three unnamed sources, reported in December that the Munich-based company was weighing the possibility of a motor factory in Mexico or the United States, saying the decision could be made in 2014. BMW executives decline to discuss the prospect of building an engine plant in the South or in Mexico, but Andrea said the latest announcement enhances that prospect. “If BMW does pursue a second assembly
plant and that might be in Mexico, I think you would open up the options to an engine plant that might be equal distance that can serve both assembly plants in an economic manner. “If you would have told me (BMW) is just expanding in the U.S., it makes more sense to put it closer to Greenville. An engine plant decision would be determinant on a longer-term strategy for North American assembly for BMW,” Andrea said. He said engine plants or transmission plants typically require a “minimum of 400,000 units. Typically those are in the 700,000s.” Harald Kruger, BMW Group’s head of production, said BMW has not made a decision on building an engine plant in North America. He did not say if boosting production to 450,000 units would impact that decision but noted there are many variables at play. Kruger called 450,000 vehicles manufactured annually a “top level” of production for the South Carolina plant, saying boosting capacity beyond that figure would be difficult logistically.
BMW Suppliers across S.C. Here is a list of some of the suppliers serving BMW. About 50 suppliers have located in South Carolina.
Greenville
Pickens
Spartanburg
Stueken Eberspaecher TIGGES redi-Group J & J Services Drive Automotive Precorp
Lear Corp. Borgers USA Lindoerfer + Steiner DAA Draexlmaier Spartanburg Steel
Cherokee Suminoe Textile Boysen USA
Union
Gestamp Automocion
VCI-SC
Kershaw
Oconee
Dana Corp.
BorgWarner SPX Contech Metal
Clarendon
Advanta Southeast
Anderson
Robert Bosch Champion Tooling Friedrichs & Rath Inergy Automotive Plastic Omnium
Laurens Emitec
Lexington Michelin
Richland
JTEKT Automotive Koyo Corp.
Berkeley Nucor Corp.
Orangeburg Koyo Corp.
Charleston MAHLE Behr
Robert Bosch
Sources: S.C. Department of Commerce news releases and directories; SC Biz News archives; Moore School of Business study, 2008 Map design/Ryan Wilcox
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Dorchester
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FEATURE
NATURAL
The outdoors’ role in business creation, economic development, Stories by Liz Segrist, Staff Writer
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ew places in the country have mountains and beaches within a few hours of one another. Coupled with those attractions and the trails, rivers, campsites, hiking spots and cycling paths in the state, South Carolina can be a playground for the adventurer or a nature novice. The state’s untouched marshes and preserved forests provide explorers a glimpse into the past. Groups work to protect, promote and enhance its natural assets. People from all over the country visit each year to enjoy the outdoors, and some of those experiences result in people relocating here. The natural assets spur small and big businesses alike to open their doors in the state. The outdoors attracts young professionals, creates healthier communities and boosts quality of life — making South Carolina a great place to live. Take a break from the daily grind and step into the great outdoors.
FEATURE
economy workforce recruitment and quality of life for South Carolinians.
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Walking the Palmetto Trail
Sharing the outdoors
Pedaling the economy
Building businesses
20-year project links state’s geography, history
Promoting outdoor assets as Swamp Rabbit Trail good for S.C. travel destinations business, recreation
Entrepreneurs make active life their livelihood www.scbizmag.com
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Natural economy
nears final stretch
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massive statewide greenway is 20 years in the making — and groups are working to fill the remaining trail gaps within the next decade. Those who first envisioned the Palmetto Trail wanted South Carolinians and visitors to experience the state’s outdoor assets on a massive trail that traverses the state. “We have this unbelievably gorgeous state with so many ecosystems and such diverse terrain, so how do we connect all of that?” said Natalie Cappuccio Britt, the executive director of the Palmetto Conservation Foundation, a nonprofit that’s charged with securing funds and extending the trail. In the Lowcountry, hikers, cyclists and campers can enter the Palmetto Trail on a seven-mile trail through Awendaw Passage. The trail continues through cities and towns and alongside rivers and creeks, weaving through dense forests and crossing Revolutionary and Civil War battlefields across the state all the way to Oconee State Park in the Upstate. Along the way, users will encounter various elevations, ecosystems, typography and wildlife. Each passage is unique in terrain and length and can be completed individually or as an entire statewide trail. People on the Palmetto Trail can travel from the mountains to the sea of South Carolina without ever getting into a car. “The trail connects communities, showcases cultural and historical resources through-
out the state and improves quality of life for residents,” Britt said of the 425-mile trail that currently has about 315 miles completed. Former state governor Carroll Campbell allocated the initial funding for the state’s largest cycling and hiking trail project. The Palmetto Conservation Foundation has since worked with companies, state parks, local and state governments and the U.S. Forest Service to secure land easements and funding for the 25 completed passages. The goal was to complete the entire trail by 2004. But 10 years later, the trail has roughly 100 miles of gaps that need to be linked for a comprehensive trail system, and the foundation is working with less money than before. “The state provided funding for the building and maintenance of the trail from 1996 to 2007, at which time our funding was cut completely by the (Mark) Sanford administration,” Britt said. The largest gaps in the trail are in the Midlands and the Upstate. Since the state funding was cut, the foundation has relied on corporate support, grants and individual donors to complete and maintain it. Companies like BMW, Duke Energy and REI have stepped up to help fund much of the trail in recent years. Earlier this spring, SCANA donated $100,000 to build a bridge on an old rail line over the Wateree River, which will extend the trail from Sumter County to Richland County. Last year, the Boeing Co. funded the trail’s master plan that will enable its completion. The Palmetto Conservation Foundation used the funds to hire Mount
Pleasant-based Seamon Whiteside + Associates and Portland, Ore.-based Alta Planning Middl and Design, a firm Jocassee that helps comGorges munities develop trails. They held Oconee workshops around the state for public input and created a master plan that outlined the missing connections. While the foundation works to raise an unspecified amount to connect the passages, people are taking advantage of the trail. Endurance running companies and gyms use the trails to train clients. Families take camping and hiking trips on it. Businesses have built trails from the Palmetto Trail to attract hikers and bikers to stop en route. The trail boosts economic activity in the neighboring towns and cities, Britt said. “Companies want active employees who get outside and stay healthy and this trail provides that. It’s a recruitment tool for them,” Britt said. “It’s incredibly important for our state. Comprehensive trail systems are viewed as a big part of quality of life.” The hope is that the Palmetto Trail will be completed in less than seven years and that it will be a spine throughout the state that other trails can connect to, Britt said. “The Palmetto Trail tells the story of South Carolina better than any other single project.”
Natural economy
Pointsett Reservoir
Peach County Blue Hub City le Saluda Wall Saluda Mountains Croft Glenn Springs Blackstock
Enoree Peak to Prosperity Lynch’s Wood Fort Jackson Wateree High Hill of Santee
Capital City
Lake Marion
The Palmetto Trail, when complete, will traverse the state from the Lo wcountry to the Upsta te. Hikers, cyclers and campers already fre quent completed sections. (Photos/Provided)
State Parks (near the Trail) State/National Forests Completed and Maintained Trail
Lake Moultrie
Santee Eutaw Springs Swamp Fox
Awendaw
Unfinished Trail
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The S.C. Great Outdoors Initiative works to inform people about ways to get outside and experience places like Table Rock in the Upstate of South Carolina. (Photo/File)
Sharing the outdoors
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very city and town in South Carolina has a story to tell. Throughout the state, there are outdoor recreational activities to experience and undisturbed natural assets to explore — and the S.C. Great Outdoors Initiative wants to spread the word. The initiative aims to promote South Carolina as an outdoor travel destination and help communities develop and market their outdoor recreation offerings. It promotes the tagline: “SC Great Outdoors – Get a Little Dirty.” And that’s what it’s all about, according to Michelle McCollum, the executive director of the initiative. “South Carolina has a great climate and terrain and lots of different opportunities for biking, hiking, rafting or beaching, but some of it remains under the radar,” McCollum said. “It’s our job to highlight all of the great things we have here that people might not know about.” The initiative, a S.C. National Heritage Corridor project, launched last year with plans to expand statewide. Its members are currently working with six communities to take inventory of their outdoor recreational assets and then promote them.
mock Fishing is a favored pastime on the Ham d) ovide to/Pr (Pho ty. Coast in Georgetown Coun
Dorchester County, Georgetown County, Florence County, Edgefield, Gaffney and Lake City have all signed on as pilot communities for the initiative. “The challenge that we see with communities in promoting their outdoor recreation
is simply lack of focus and funding,” McCollum said. “It has to become a priority from the decision makers and the funders.” The initiative partners with the federal, state and local government agencies, nonprofits, corporations, small businesses and residents. The state’s Forestry Commission, Department of Natural Resources and Department of Parks, Recreation and Tourism are among the partners. Leaders from both the communities and the initiative work together to implement a marketing plan and branding slogan, build downloadable travel itineraries online and create a website and social media presence to showcase the communities’ outdoor assets. They will put up signage within the area and create a statewide marketing campaign for each destination that includes ad placements with billboards, newspapers, news sites, and television and radio stations. Each ad beckons people to take an adventure and experience the unknown that lies in the small towns of South Carolina. Edgefield is promoted as a town “with history and homespun hospitality.” Lake City is all about showing how art and agriculture are “in its nature.”
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For those looking to go kayaking, paddle boarding or fishing, a campaign points to Georgetown County. Florence County boasts the history of its rivers, reminiscent of swampy battlefields and the Underground Railroad. Dorchester County is dubbed “the natural playground of the Lowcountry,” while Gaffney could entice those looking for peach cider and apple pies. McCollum hopes the initiative will inform people about opportunities to get outdoors throughout South Carolina in addition to the more well-known sites in Greenville, Columbia and Charleston. Outdoor recreation creates jobs, supports communities, generates tax revenue and helps drive economies across the country, according to the Outdoor Association. The association reported that Americans spent $646 billion on outdoor recreation last year, while South Carolinians accounted for $18 billion of that. “South Carolina offers spectacular outdoor recreation opportunities at treasured destinations, including Sumter National Forest, Hunting Island State Park and many others, bringing in dollars from residents and out-of-state visitors alike,” the report said. “Preserving access to outdoor recreation protects the economy, the businesses, the communities and the people who depend on the ability to play outside.”
or young professionals, it often takes more than a job and a paycheck to convince them to relocate. The newest-generation workers also want to be able to hike and bike on local trails and kayak and paddleboard on local waterways, according to several Charleston executives. They want quality of life outside of their office walls and they desire easy access to the outdoors. Affordable housing, bike lanes and the outdoors might not sound like the amenities technology firms need to recruit workers, but they are crucial components, according to Andrew Roskill, founder and CEO of Charleston-based BiblioLabs, a software company that helps modernize libraries’ offerings. Like much of the country, South Carolina has a tech talent shortage. While state universities and colleges ramp up computer science departments, Greenville-based The Iron Yard expands its coding school to Charleston and Atlanta, and the Charleston Digital Corridor continues its CodeCamp, the state’s tech companies are still recruiting outside the region. The growing tech community Events like the Char leston Digital Corri dor’s needs more software engineers, com- 2014 iFive:K are a draw for young professio nals. (P ho to/ Provided) puter science graduates, coders and programmers. In their search for qualified workers, many South Carolina firms look to tech hubs such as Silicon Valley, Austin, Boston, the Research Triangle and New York City. Charleston’s beaches, the arts and food scene and the cost of living can attract lots of talented workers to the region, but Sparc CEO Eric Bowman said more needs to be done. “We need that culture, that city, that lifestyle they want to attract these young, talented workers here,” said Bowman, who runs the Charleston-based company that creates software for government and commercial projects. Part of convincing a 20-something software engineer to move from San Francisco to Charleston, Columbia or Greenville is offering them things that fit their lifestyles, like access to outdoor activities, said Robert Prioleau, partner and strategy director at Blue Ion, a Charleston-based web design and marketing agency. Cities and counties throughout the state can create more public transportation routes; protect land for outdoor activities, such as hiking; approve more mixed-use, urban housing options; and adopt ordinances that promote biking, the executives said. The city of Charleston recently banned chaining bikes on parts of King Street unless they are on a bike rack, but techies, among others, want to be able to safely ride their bikes to work and have a convenient place to park, Roskill said. “People have woken up to the fact that Charleston is approaching other tech areas like Boston, New York and Seattle … We just need more talent now,” Roskill said.
NAtural economy
Outdoor activities help recruit young professionals
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FEATURE
Cities want Swamp Rabbit Trail
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here the S.C. 183 bridge runs above the Swamp Rabbit Trail in Greenville, a hub of healthand fitness-related businesses has emerged alongside the trail. Cyclists, joggers, walkers and roller bladers can stop at the Swamp Rabbit Café & Grocery for meals from local farmers’ products. They can attend physical fitness and therapy sessions at Greenville Fitness and Rehab or take spinning classes at the Greenville Cycling Center, which recently opened on the floor above Boyd Cycling, a tire producer for cyclists. “Cyclists going to eat at the café will come look at our bike wheels and then check out people doing the cycling workouts upstairs,” Boyd Cycling co-owner Boyd Johnson said. “These companies benefit from the others being here — and all of these businesses depend on the trail.” The trail grew from the city of Greenville’s purchase of an abandoned rail line in 1999. The city planned to either create a commuter rail line or a community greenway. The idea of a multipurpose trail won out and, in 2005, city leaders and community groups began planning the future
l has Development of the Swamp Rabbit Trai as well as top, at es, ness busi for been good en tos/K cyclists, joggers and walkers. (Pho Osburn)
Greenville Hospital System Swamp Rabbit Trail. In 2010, the roughly 17.5-mile, multiuse trail that runs from Greenville to Travelers Rest opened. The trail had roughly
400,000 users in the past year, and trailside businesses saw sales or revenues increase by 30% to 50%, according to a study by Furman University and the Greenville County Recreation District. The use of the trail is attracting other businesses and economic development projects to the area, including former professional cyclist George Hincapie’s new Hotel Domestique in Travelers Rest. The city of Greenville hopes to expand its park system and build housing communities along the Swamp Rabbit Trail near downtown. Other Upstate communities are vying for the trail to expand into their communities. The city of Simpsonville hopes to extend the trail into the Golden Strip, passing through Mauldin, Simpsonville and Fountain Inn. If the trail is extended into Mauldin, Greenville leaders and Greenville-based Verdae Development are looking to create a housing and retail hub along Laurens Road. The Laurens County Trail Association also wants the trail to extend and connect to the statewide Palmetto Trail. Easley and Pickens are working to
NAtural economy
The West Ashley Greenway is among bike paths used daily by cyclists. (Photo/Gibson Pitts)
expansion
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ike enthusiasts want a network of bike paths to connect beaches, parks and cities throughout the Lowcountry. Charleston Moves Executive Director Tom Bradford has said bike paths boost tourism, attract newcomers and companies, impact quality of life for residents, and support business growth and creation. Cyclists are more likely to take notice of a business when they are not zooming down the road in a car, Bradford said. The pro-cycling nonprofit recently had a major win when Charleston City Council voted to convert one lane on the Allen T. Legare Jr. Bridge into a bike and pedestrian lane. This bridge connects downtown Charleston to West Ashley, and the new bike lane was a linchpin in the group’s Battery2Beach Project. If the project secures funding, bike paths will connect Folly Beach, the Battery in downtown Charleston and the Isle of Palms. The Charleston County Parks and Recreation Department also wants to create more biking options in the area. The county is planning the Lowcountry Lowline, a trail that would link Park Circle in North Charleston to the visitor center in downtown Charleston. Over the next 30 years, Charleston County also plans to add up to 100 miles of trails to connect all of the county’s parks. Potential routes are being considered now. Both Charleston County and Charleston Moves anticipate needing a mix of grants, private donations and government funds to complete the projects that are likely to cost tens of millions of dollars. In the interim, some progress has been made to improve bike safety in the Lowcountry. The city of Charleston and the town of Mount Pleasant have invested in bike lanes. The Ravenel Bridge, West Ashley Greenway and Sawmill Branch Canal in Summerville are used daily by cyclists. Signage has started for the Battery2Beach project. But many of the routes in the region are not connected or are unmarked, making them unsafe. Paths need to be connected and obviously identified for the safety of cyclists and motorists, Charleston Moves’ spokeswoman Pat Sullivan said. “Bike paths are huge for attracting people to the region and propelling Charleston as an active city,” Sullivan said. “We need to provide safe routes for tourists and residents alike to enjoy.”
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create a multiuse trail of their own on an 8.5-mile tract of abandoned rail that runs between the two cities, known as the Pickens Doodle. “Cities are using Greenville as an example of how trails can be good for everybody in the community,” Johnson said. “We all benefit from successful small businesses starting up and from residents being able to get outdoors and be active.” Since the trail was extended to the small Upstate city of Travelers Rest, property values there have increased and roughly 30 businesses have come to town. Empty storefronts and vacant buildings have been replaced with coffee shops, art galleries, retail space and restaurants, including the new Swamp Rabbit Brewery. The city is using the trail to recruit condo developments and fill more commercial space in its downtown. “We used to just be a spot between Greenville and Asheville. Now, we’re becoming a destination,” Travelers Rest Mayor Wayne McCall said. “The Swamp Rabbit Trail is probably the single most important thing that’s happened to the city of Travelers Rest in years.”
Lowcountry groups work to add bike paths
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Building businesses
Enjoying the ride
Boyd Johnson
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oyd Johnson knew that he wanted to ride his bike to work every day. The professional cyclist turned entrepreneur launched his cycling business in 2009 with his wife, Nicole. In May 2012, they moved Boyd Cycling from their home into their current location along the Swamp Rabbit Trail in Greenville. The building, a former meat packaging plant that had been abandoned for years, was in disarray. The Johnsons could see past the broken windows, graffiti-covered walls and dripping pipes. They renovated the bottom floor into a manufacturing and retail space. They have since expanded the space twice in two years. Boyd Cycling manufactures and sells bike wheels for both amateur and professional riders and then ships them all over the world. In the back room of their 3,500-square-
Boyd Johnson, above and at top, is a cyclist turned entrepreneur who manufactures and sells bike wheels. (Photos/Ken Osburn)
foot bike shop, the couple work alongside their eight employees to design and build bike tires, adding and tightening the spokes based on the riders’ capabilities. Their shop is visible from the 17.5-mile
Swamp Rabbit Trail, a multiuse greenway that connects the downtowns of Greenville and Travelers Rest. Walkers and cyclists stop in to check out their bike business, as well as the cycling gym upstairs, the new Greenville Cycling Center. Johnson said the trail provides grassroots marketing and interaction with potential customers. While the face-time is a major perk, he said the driving force behind locating their business along the trail was simply to incorporate the active lifestyle they crave into their daily lives. “We can leave our house, hop on the trail and ride into work. All of our employees commute on the trail as well,” said Johnson, who installed a shower in the shop for the bike commuters. “When we moved to Greenville, we wanted that option to be a part of our lives.”
Gliding through business
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local company has been making foldable kayaks for more than 80 years — and its new owners hope to tap into new markets. Folbot’s kayaks, the lightest of which is 24 pounds, fold up inside bags that can fit into cars or be carried. The kayaks, made in Charleston, are sold directly to customers all over the world or through its retailer, REI. “The outdoors drives tourism in South Carolina,” Folbot co-owner Eric Thome said. “People come here and fall in love with the beaches and all of the wildlife and they want to experience it.” Thome, an Aiken native and former business consultant for Booz Allen Hamilton in New York City, relocated to Charleston for his wife’s career. He and business partner Scott Peckham searched for a small business they could purchase and reinvigorate. They bought Folbot
A Folbot kayak takes less than 10 minutes to assemble. (Photo/Folbot)
in May 2012, retaining co-owner Bill Turner. “We started to talk about new things we could do with Folbot with fresh capital and fresh ideas. ... The fact that this business happened to be in the outdoor industry was a clear bonus,” Thome said. “It seemed like a great opportunity to introduce a great idea to a new audience.”
Guiding the adventure
Richard and Frankie Laurent
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Visitors get ready for a kayak eco-tour with a Black River Outdoors Center guide Paul Laurent. (Photo/Black River Outdoors Center)
country, where people are sparse and snakes, alligators and birds thrive. “Fifteen minutes out of downtown Myrtle Beach and into a kayak, people can experience a world completely untouched by development or traffic,” Richard Laurent said.
The Laurents want to share their passion for South Carolina’s ecosystem, wetlands and wildlife with tourists and residents, particularly kids. “In today’s world, kids don’t spend enough time outdoors,” Richard Laurent said. “This is a way to get kids outdoors and get them excited. You wouldn’t believe the change you see in a kid when they get in their own boat.” For the Laurent family, ecotourism is a way to make a living, but it’s also a way of life. They want to spread awareness and share experiences of the natural ecosystems that exist in South Carolina so that others can enjoy it and care about protecting it, Richard Laurent said. “There are so many wetlands here that have not been disturbed and that is so, so rare,” he said. “South Carolina has preserved so much wilderness, yet many people do not get out to experience it.”
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hen Richard and Frankie Laurent’s son was diagnosed with Type 1 diabetes at age 9, they decided to shake things up. The family started traveling all over the world — taking adventures and booking ecotourism trips in Antarctica, Argentina, the Falkland Islands and Costa Rica, to name a few. Their love for the outdoors eventually drew the North Carolina couple to leave their jobs in the technology sector and start their own ecotourism business in Pawleys Island. They bought Black River Outdoors Center about five years ago. Richard and Frankie Laurent co-own it and their son, Paul Laurent, is the chief kayaking instructor. The center offers guided kayak eco-tours that include fishing, birding and hiking. Kayakers can leave behind the city and enter the rivers, marshes and swamps of the Low-
The foldable kayak manufacturer was founded in London in 1933 and moved to New York City two years later. In the 1950s, the plant was moved to 4209 Pace St. in Charleston, where it has remained ever since. Today, six employees manufacture the kayaks by hand in a 6,000-square-foot space. It takes three weeks to manufacture one kayak. It takes less than 10 minutes for users to assemble them. Thome said the company is implementing lean manufacturing processes to decrease build time to less than 10 days. He hopes to market the kayaks to residents and tourists alike by showing them how kayaks offer a different perspective. “Here in South Carolina we are sitting on an incredible bed of natural resources and amazing outdoor assets that draw people to live here and visit here, and they want to be a part of it,” Thome said.
Natural Economy
Eric Thome, Scott Peckham and Bill Turner
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S.C. DELIVERS
Ports, Logistics & Distribution
Timber in Williamsburg County was damaged by the mid-February ice storm. (Photo/S.C. Forestry Commission)
Ice storm disrupts forestry supply chain By Chuck Crumbo, Staff Writer
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ebruary’s ice storm, which damaged 1.5 million acres of South Carolina forestland, promises to disrupt the supply chain of the state’s $17.4 billion forestry industry.
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The storm, striking just before Valentine’s Day, left a 170-mile-long,
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70-mile-wide trail of timber damage through 21 counties, extending from the Savannah River to the North Carolina border, the S.C. Forestry Commission said.
S.C. Delivers www.scbizmag.com
The weight of ice on needles and branches broke pine trees in half like toothpicks. Above right: Josh Holt, 3, surveys damage to his family’s land in Williamsburg County. (Photos/S.C. Forestry Commission)
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Roughly 11% of forestland suffered direct or intermediate timber losses, the commission said. The industry, which employs 90,000 workers, suffered $360 million in damages. That figure doesn’t include growth loss due to tree canopy damage and reduced residual tree value due to stem damage. “The raw material supply chain for our
state’s largest manufacturing sector has suffered from this natural disaster,” said State Forester Henry E. Kodama. “The storm has impacted hundreds of thousands of individual forestland owners and multiple corporations.” About 25,000 to 30,000 acres of forests will have to be salvaged and replanted, the commission said, adding that the loss to the
timber industry was the worst since Hurricane Hugo raked the state in 1989, causing about $1 billion in damage. Ironically, most of the damage from February’s storm was inflicted on pulpwood size trees between 15 to 25 years old, many of which were planted to make up for the loss caused by Hugo. The trees, 7 to 9 inches in diameter, are used mostly by pulp and paper mills, and to make oriented strand board. Tim Gammell, editor of North American Wood Fiber Review, a trade journal that tracks the timber industry, said in an email there may be a lot of pulpwood available, as well as the tops of trees and branches that could be fed to S.C.’s biomass power plants. Four biomass power plants in the areas where much of the damage occurred could absorb much of the pulpwood that will be salvaged. Those include Ameresco’s alternate fuels plant in the Aiken County town of Jackson, EDF’s two 18-mw plants in Allendale and Dorchester counties, and Sonoco’s co-generation unit in the Darlington County town of Hartsville. “Higher value saw logs will normally find homes quickly. It is usually the lower quality, smaller and damaged material that is a problem,” Gammell said. “Biomass plants and other facilities using this woody biomass for power or steam generation can use it.” Gammell doubts there will be any shortages of products because damaged timber tends to increase short-term availability. “The real limitation is the number of logging contractors available to gear up,
“The raw material supply chain for our state’s largest manufacturing sector has suffered from this natural disaster. The storm has impacted hundreds of thousands of individual forestland owners and multiple corporations.” Henry E. Kodama State Forester
Crawford said. “It’s obvious that there’s a lot of supply right now, so you’re not going to get top dollar.” The upside, though, is that an increase in general construction and homebuilding will absorb damaged timber that can be shredded and used for OSB, a particle board
that’s used as sheathing in walls, flooring, and roof decking. “Had this happened in 2008-2009 at the worst of the recession, it would have been devastating because there wasn’t much of a market,” Crawford said. Wes Godbee, area procurement manager for Georgia Pacific, which has seven manufacturing facilities in South Carolina, said the company has been receiving both damaged and clear-cut wood. “We are currently buying wood from the ice-damaged areas as long as it meets our specifications, and it will be utilized by all of our forest products mills in these areas,” Godbee said. He added that some of the wood is too small or broken into shorter pieces to be used. Georgia Pacific’s facilities include OSB plants in Allendale and Clarendon counties, and sawmills in McCormick and Newberry. “We are working with area loggers to clean up as much as possible because with warmer weather approaching, the material will begin to degrade and become unusable in our process,” Godbee said.
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change plans and concentrate on removing the material while still servicing their normal contracts with customers,” Gammell said. “South Carolina has a pretty good infrastructure of contractors and plants that have experience in finding markets and handling logistics.” Gov. Nikki Haley’s signing of a temporary order allowing larger loads to be carried by logging trucks — up to 90,000 pounds gross per vehicle versus the usual 80,000-pound limit — should ease a bottleneck of trucking capacity to get salvaged material to the mills (pulpmills, saw or stud mills, biomass plants), Gammell said. “It will also ease any price increases for pulpwood. Salvaging is nearly always more expensive than straight harvesting, but the trucking rate may decrease due to higher load allowances, and thus compensate to some extent,” Gammell said. Landowners can expect to receive only 15% to 20% value for the timber that will be salvaged, said Cam Crawford, president of the S.C. Forestry Association. “It gets back to supply and demand,”
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S.C. Delivers
International Commerce
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By Chuck Crumbo, Staff Writer
Columbia firm spans the globe to serve clients
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rom his office in downtown Columbia, Mark Williams runs a company that has done projects for a range of corporations around the world. The client list includes firms like Bridgestone, Tupperware, British Petroleum and Commercial Metals Co. as well as Japan-based automotive suppliers ASMO and JTEKT. Other clients include cities and counties looking to recruit these big corporations to their neck of the woods. “We don’t often toot our horn so to speak,” said Williams, president and founder of Strategic Development Group. “But we do business around the world from Columbia, South Carolina.” While Williams’ company may not be on the radar of many locals, it stays busy offering a range of services for firms looking to expand or even move their operations. In the past three years his company has worked on $1.5 billion of capital investment in South Carolina and the Midlands, said Williams, who Southern Business and Development magazine labeled one of the top 10 site consultants in the South, and one of the top 3 in the state. Being a site consultant wasn’t what Williams, 54, was planning when he graduated from the University of South Carolina. “I had a hybrid degree in engineering and marine science,” said Williams, who grew up in Maryland near the Chesapeake Bay. “I went to work for a coastal engineering firm.” While working for the engineering firm Williams became “entranced” with the site consulting business. “I just loved the concept of consulting firms and how they got work, how they did work, how they made a profit, how they made a loss,” Williams said. After four years with the engineering firm, Williams returned to USC and pursued an MBA. While at USC, a professor “hooked me up with a consulting opportunity for site locations,” Williams said. During graduate school, Williams worked
on projects from a desk in his living room. When graduation approached, Williams had to choose between launching his company or finding a job that offered a steady paycheck. Williams opted for the latter, working for the S.C. Department of Commerce during the administrations of Govs. Carroll Campbell and David Beasley. Williams was S.C. Commerce Secretary Bob Royall’s chief development officer. During his stint at the agency, Williams worked on a range of projects, including the second phase of BMW’s expansion at Greer. He also directed the state’s domestic and global business recruitment activities, including the operation of Commerce’s international offices in Frankfurt, Germany, and Tokyo, Japan. After nine years at Commerce, Williams left and founded Strategic Development in February 1999. Strategic Development’s full-time staff totals five, including Williams.It is augmented by contract workers, with teams formed to fit the needs of various clients. While the bulk of the work Strategic Development handles involves site location and development, the company also has crafted economic development plans for local entities like the city of Columbia and Myrtle Beach. Over the years, technology has changed the way business is conducted, Williams said. In 1999, Williams said the site selection process involved contacting various locations and requesting information, which usually amounted to a hard-copy brochure that
Mark Williams (Photo/Chuck Crumbo)
was mailed. “Today, Google Earth is readily accessible and we can buy real-time satellite photographs,” Williams said. “It’s great to have a picture of a site from the air, that’s something we never had before.” Another change is the speed at which business is conducted or what Williams calls “speed to market.” Stories abound among those in the local economic development business about clients who need to move into existing facilities within just a few months. In today’s global world of business, there’s a need to move fast, Williams said. “If you’re going to invest in a billion-dollar carbon fiber plant and you have competitors who are going to make those same kinds of investments, then you need to get yours on the ground first,” Williams said.
By Chuck Crumbo, Staff Writer
Trade
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ov. Nikki Haley will lead a 10-day investment and trade mission to India — her family’s homeland — this fall. The Haley-led delegation of “six to seven” state officials aims to introduce South Carolina to Indian companies, build trade ties and encourage domestic investment by Indian companies, S.C. Commerce Secretary Bobby Hitt said in announcing the trip. Right now, Haley is expected to travel along with a staff member, Hitt said. No decision has been made on whether any of her family members will go along. The state also hopes to capitalize on Haley’s ties to India, Hitt said. The governor’s parents, Ajit Singh Randhawa and Raj Kaur Randhawa, are immigrants from Amritsar District, Punjab, India. Haley, who was born in Bamberg
County, visited India when she was about 2 years old, Hitt said. “This will be a special trip for her,” he said. Haley, whose 2010 election as governor grabbed headlines in India, is expected to attract media attention on the Nov. 11-22 visit, Hitt said. The S.C. delegation will travel around India, stopping in New Delhi, Punjab, Mumbai and Chennai. Besides attracting investment in the South, India could be a market for S.C.-made products, Hitt said, noting that the country ranks No. 16 as a trading partner with South Carolina. The trip, Hitt said, aims to introduce the state to Indian companies and develop
relationships with those firms. A handful of Indian companies already have investments in the state, including: • Divatex Home Fashions, operator of a warehouse-distribution center in Spartanburg and Greenville counties. • SarlaFelx, a textile manufacturer in Colleton County that is investing $13.8 million and creating 100 jobs. • Hi-Choice Inc., a packager of private-label personal hygiene products in Clarendon County.
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Haley to lead trade mission to India
Gov. Nikki Haley (Photo/Scott Miller)
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S.C. Delivers
Port
By Liz Segrist, Staff Writer
Port looks to raise rates to support investments
The Panama Canal is being expanded to allow larger ships to pass through its waterways. (Photo/File)
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hipping lines can anticipate higher rates at the Port of Charleston later this year. The S.C. Ports Authority plans to increase costs and simplify contracts for its customers at the ports of Charleston and Georgetown during fiscal year 2015, which begins in July. Customers’ rates are likely to increase by about $25 on average, according to Jim Newsome, the ports authority president and CEO, who has long been advocating for an increase in rates. The shipping industry’s move toward bigger ships drives the demand for better port infrastructure. The ports authority is investing in a deeper harbor, bigger cranes, stronger wharfs and new terminals. Newsome said rate increases are needed to justify these investments. “Take a look at the top 10 container ports in the U.S. The Southeastern port rates stick out as being the lowest,” Newsome said. “Our view is that the product we provide is worth a reasonably modest increase in price given the large capital demands we have for new facilities and harbor deepening.” Southeastern ports’ rates are, on average, about 30% lower than Northeastern ports’ rates. The S.C. Ports Authority’s rates have remained stagnant since the recession, and
Newsome said raising the prices is crucial to upgrading its terminals and building new ones. The ports authority is working to complete a more than $700 million container terminal with rail access at the former Navy base in North Charleston. Phase one is on schedule to be operational by early 2019. The North Charleston Terminal was upgraded a few years ago. The ports authority plans to do the same for the Wando Welch Terminal over the next few years. The terminal, built in the 1980s, is designed for 4,000-TEU ships, but needs to be able to handle 14,000-TEU ships or bigger. The terminal needs taller cranes and stronger wharfs to manage the huge ships and their containers. “To be a top 10 container port, we need to invest in new facilities. ... And to get that return on capital, we have to have higher prices,” Newsome said. Ports are rebounding from the recession after weak trade conditions and lower shipments hurt the industry, according to IBISWorld. As the economy improves, major ports are expanding and profitability is increasing. Exports are on the rise, particularly to Asia. The Port of Charleston ranks No. 8 nationally among U.S. ports by export trade value with $24.4 million worth of exports passing through the Charleston Harbor in
2013, according to American Association of Port Authorities’ data. As the industry bounces back, the ports authority is not alone in investing hundreds of millions of dollars to upgrade facilities and expand capacity. Ports around the country have to invest in harbor deepening, related road and rail logistics and terminal facilities to remain competitive in the era of big ships. From 2012 through 2017, U.S. seaport agencies and their private-sector partners plan to invest a combined $46 billion to upgrade marine operations and other port properties, according to a survey by the American Association of Port Authorities. But the port industry has expensive barriers to overcome. Waterfront land acquisitions, channel dredging, berth construction, intermodal transfer facility purchases and other infrastructure projects cost hundreds of millions of dollars. Port authorities around the country are investing in these projects. But the association’s study showed that intermodal links — such as roads, bridges, tunnels and federal waters needed to access these facilities — need more state and federal funding for maintenance and expansion. “Infrastructure investments in America’s ports and their intermodal connections — both on the land and waterside — are in our nation’s best interest because they provide opportunities to bolster our economic and employment recovery,” said Kurt Nagle, the association’s president and CEO. As part of improving infrastructure, the ports authority also aims to deepen the Charleston Harbor to at least 50 feet. The 45-foot Charleston Harbor can currently handle ships drafting up to 48 feet at high tide only. The U.S. Army Corps of Engineers Charleston District is currently studying the environmental, economic and engineering aspects of the harbor deepening project. It plans to present its recommendations to Congress in September 2015.
By Bill Poovey, Staff Writer
Recruitment
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In March, two members of the South Carolina Commerce Global Business Division received the Rural Development Service Award, which recognizes the Commerce project manager or managers who have helped generate the most investment and jobs for rural communities that year. Over the past year, Tony Allen and Warren Darby have recruited nearly 2,500 jobs and more than $375 million in investment to rural South Carolina. (Photo/S.C. Department of Commerce)
from tier 1 that previously was designated “developed” and tier 4 that was previously designated “distressed.” “There are times when it could be easiest to put a project in a developed county,” Skipper said. “It is not always the best fit for the company. Our job is to find the best fit for the company.” Carter Smith, executive vice president of the Economic Futures Group in Spartanburg County, said the recent Toray Industries Inc. announcement of a $1 billion project that will create 500 jobs in rural Moore was not based as much on state incentives as availability of a site capable of meeting the advanced materials company’s utility needs in close proximity to Interstates 26 and 85. Smith said Spartanburg County has small communities but “we are not really rural or remote from a county standpoint.” He said economic development recruiters “were able to demonstrate that we could accommodate
the utility needs.” He said economic developers do not want to misrepresent what is the best possible location for any prospective business. He said tax and grant incentives linked to the tier system are helpful for a business “if you could take advantage of a rural setting.” “At the end of the day wherever that company locates, the goal is for that company to be successful,” Smith said. South Carolina offers financial assistance to counties for site development. The federal community development block grant program and the state’s Rural Infrastructure Authority help pay for site upgrades in less developed areas. The state also provides job training programs. Hitt is also chairman of the Rural Infrastructure Authority, which in three years has awarded about $10 million for more than 30 rural projects to help communities compete for jobs and investment and to develop environmental facilities.
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hen Gov. Nikki Haley spoke recently about her focus on creating jobs, she mentioned that the state is incentivizing Commerce Department employees to recruit jobs to rural areas. “We told the private managers who get paid commission for every project they close, we said for every project you close we will give you your commission but we will give you a higher commission if you close the project in a rural area than if you close it in a city,” Haley said. “And in fact it happened. Because all of a sudden when people would say…Charleston, they would say, ‘We are happy to show you Charleston but have you heard about Jasper? Let me tell you about Orangeburg. You should see Clarendon.’” It worked, Haley said, noting Commerce has made economic development announcements in 45 out of 46 counties. A state Department of Commerce spokeswoman said the department’s team of 10 project managers received differing amounts of performance bonuses that totaled $65,000 in 2013. That’s on top of their salaries. Haley said her administration has announced more than 44,000 jobs since January 2011, always aiming to “bring up all of South Carolina.” That includes “our rural and sometimes our poverty-stricken areas,” she said. Department of Commerce spokeswoman Allison Skipper said about 30% of the capital investment by relocating and expanding businesses and about a quarter of jobs created have been in rural areas. Skipper compared the $65,000 in added commission for rural recruitment to performance-based bonuses given in the private sector. She said the team has a “target for the annual investment and job creation and for tier three and tier four counties.” Among the state’s 46 counties, those with higher unemployment rates and low per capita incomes are rated by the State Department of Revenue in tiers, ranging
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State pays extra for recruiting jobs to rural areas
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1,000 WORDS
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From this strange vessel a butterfly will soon break free. The chrysalis of the variegated fritillary is a wondrous pearl color with spots and shiny gold spikes. All grown up, the shapely butterfly will have wings with scalloped edges and curved black lines on an orange background. This photo was made at Congaree Bluffs Heritage Preserve in Calhoun County, but you can look for the adult fritillary in open areas, pastures and fields across South Carolina. (Photo/Kim McManus)