North Carolina Economic Overview

INTRODUCTION  Thriving Raleigh With a population of some 9.4 million, North Carolina has become one of the fastest-growing states and most dynamic economies in the country. Its 2008 gross state product (GSP) was $400.2 billion, or $35,719 per capita, ranking it ninth in the nation. Agriculture remains an important industry, along with banking, textiles, furniture manufacture, research, and technology. Nonfarm employment stands at about 3.9 million, and unemployment is within a point of the national average. The dominant industry in the western mountains and along the coast is tourism. Forbes magazine has rated the state the nation’s third-best for doing business. ECONOMIC HISTORY In colonial times, the region now known as North Carolina was settled by Virginia colonists seeking new farmlands. The early economy of Tidewater, North Carolina, was dominated by slavery, while smaller, non-slaveholding farms were more common in the west. The state's first cash crop was tobacco. By 1860, census figures showed that one-third of the state population consisted of slaves. Shipping was concentrated around the port cities of Wilmington and Edenton. Early manufacturing began as English-bred artisans fanned across the state in the late 17th century and produced furniture on a small scale. Furniture manufacturing continued to grow over the next three centuries until, by the end of the 1980s, the city of High Point came to be known as "the Furniture Capital of the World." Since then, although much furniture production has moved to Asia, North Carolina remains an important North American center for the industry. AGRICULTURE Rows of Tobacco North Carolina is the eighth largest agricultural state in the nation, generating products with a total market value of $10.3 billion, of which 75 percent is poultry, livestock, and dairy products and 25 percent is crops. Agriculture contributes $3.9 billion to the GSP. North Carolina remains the nation's leading producer of tobacco and the second largest producer of poultry, hogs, and Christmas trees. Other leading agricultural products are soybeans, corn, cotton, wheat, and sweet potatoes. Most of the crops are grown on the coastal plain. The vast majority of farms in the state are small holdings of one to 179 acres. Agriculture has declined in the Piedmont region, which is becoming increasingly suburbanized, with rapid population growth. BANKING AND FINANCIAL SERVICES Financial Center of Charlotte After a period of rapid growth, finance is the third largest sector in the North Carolina economy. It is home to 106 banking institutions, which together hold an estimated $2.23 trillion in assets. Employment in the industry stands at approximately 200,000. Among the 24 banks headquartered in the state, industry giant Bank of America, as well as other national banks located in area, help make Charlotte second only to New York City nationally in assets headquartered in a city. Other centers of finance are the Asheville, Triad, and Triangle metropolitan areas. COMMUNICATIONS Telecommunications revenues in the state total approximately $8.8 billion, or 2.92 percent of the total nationally. Approximately 39 percent of this total is for interstate communications. Internet penetration is growing for both urban and rural residents, with usage gaps between the former and latter, as well as between whites and minorities, shrink substantially. Although rural users remain more likely to have narrowband connections, broadband penetration is growing throughout the state. Raleigh and Charlotte have been named two of the top 20 most "wired" cities in the nation by Forbes magazine. CONSTRUCTION Construction contributes $16.6 billion to the gross state product. Construction accounts for approximately 196,800 jobs across the state and a total payroll approaching $9.3 billion. Annual pay for construction workers averages approximately $38,900. More than 90 percent of construction employment is with firms of 20 or fewer employees. The construction sector suffered as a result of the recent global economic crisis, with a loss of employment of some 23 percent. EDUCATION The Chambers Building at Davidson College in Davidson North Carolina is home to several renowned centers of higher learning and student athletics, chief among them the venerable University of North Carolina in Chapel Hill and Duke University in Durham. Nevertheless, it ranks only 42nd among the states in terms of citizens with a bachelor’s degree or higher, 23.4 percent. Expenditures for primary and secondary education, at $8.8 billion, rank 13th in the nation. North Carolina leads the country is attaining certification by the National Board of Professional Teaching Standards, with over 15,000 certified teachers. Education accounts for $3.4 billion of GSP. All education, training, and library professions employ 257,000 people, with average annual pay of $39,860. ENERGY North Carolina is the nation's leading consumer of electrical energy per capita. With five nuclear reactors, it ranks fifth nationwide in nuclear power generation, which accounts for about one-third of total power generation. Approximately 60 percent of power generation is from coal-fired plants. Hydroelectric power is also generated at several rivers in the western and central parts of the state and, together with natural gas, provides the remainder of the state’s electric power. The state is seventh in the consumption of gasoline; at the same time, it ranks high in the adoption of alternative fuel vehicles. The terminus of the Dixie Pipeline in Apex, North Carolina, is a major distribution point for propane to the Southeast region. ENTERTAINMENT NASCAR Hall of Fame in Charlotte The entertainment industry contributes some $3 billion to North Carolina's GSP. The state began working to attract the film industry in the early 1980s. Now, led by the EUE Screen Gems Studio in Wilmington, it is home to seven production facilities with 29 stages, as well as numerous locations popular for onsite filming. Television has become an important part of the local industry, with such series as Dawson’s Creek and One Tree Hillfilmed in Southport. In addition to a temperate climate and lower-cost labor than other U.S. film centers, the industry has been supported by government incentive programs. INSURANCE There are some 10,860 insurance companies employing more than 9,000 agents in North Carolina. The state's insurance industry has assets of some $49.3 million, but most policies are distributed by bank holding companies (BHCs), which earned about $11.80 billion in insurance brokerage fees in 2008. The state’s insurers paid in more than $122 million in premium taxes the same year. In 2009 the state legislature passed the Beach Plan Insurance Reform Bill, which insures 170,000 properties valued at nearly $74 billion in 18 coastal counties. The law guarantees indemnification to homeowners for damage caused by hurricanes, just one of which can cause more than $7 billion in damage. MANUFACTURING The manufacturing sector contributes $78 billion to North Carolina’s GSP and employs approximately 438,200 workers. Losses in manufacturing employment, such as the year-over-year loss of 57,600 jobs from 2008 to 2009, have been the result not only of globalization, but also of increased labor productivity, according to research conducted by the regional Federal Reserve Bank. Traditionally, the leading manufacturing industries in North Carolina have been textiles and furniture. Furniture manufacturers, after a period of retrenchment under pressure from surging imports, have adopted new strategies for survival, including mergers to achieve economies of scale, focusing on higher-end markets, reducing costs, and devoting greater resources to branding, marketing, and retail efforts. Manufacturing in the state has also expanded to chemicals, electrical equipment, and paper and pulp products. The state is also a leading producer of automotive parts and a leading center for the production of trucks, buses, and heavy equipment. MINING AND EXTRACTION The total contribution of mining to the GSP of North Carolina is $553 million, or 0.2 percent. Total direct employment estimates range from 3,075 to 6,600. Total payroll is $144.4 million yearly, with average annual income of $64,000. Income and payroll taxes from all mining industry related income total almost $389 million. Approximately $990 million worth of mineral and fuel products are generated by the industry per annum. A large proportion of in-state extraction activity relates to oil and gas extraction. There are also significant non-metal mineral resource extraction operations in the state. The state does not have significant coal or metal mining activity, although North Carolina firms derive income from out-of-state extraction of these resources. NONPROFIT North Carolina Memorial Hospital (left) and North Carolina Children's Hospital (right), Chapel Hill There are more than 42,000 recognized charitable organizations in North Carolina; 65.6 percent are public charities. This sector provides nearly 213,000 jobs, about six percent of all jobs statewide, according to a study conducted by the Center for Civil Society Studies at Johns Hopkins University. Average wages in the nonprofit sector lag behind those in government and industry, but nevertheless total some $6.6 billion. Fifty-four percent of nonprofit employees work in health services, 18 percent in educational services, and 10 percent in social assistance functions, with the remainder in a variety of other positions involving civic and advocacy organizations, foundations, legal services providers, the arts, and recreation. RETAIL The retail sector contributes $25 billion annually to the GSP. It employs in excess of 767,000 workers in 48,000 establishments. Leading types of retail employment include restaurants and bars, employing 301,000; department stores and "big-box" retailers, with 300,000 workers; and 71,000 grocery and liquor store employees. Leading retailer Walmart employs 52,245 in 161 locations at an average full-time wage of $11.63 per hour. Walmart also expended $4.1 billion in the state for goods and services, resulting in over 88,000 supplier jobs, and collected $514 million in sales taxes, out of an estimated $5.5 billion in sales tax collected by the retail sector as a whole. TECHNOLOGY Levine Science Research Center at Duke University North Carolina is home to some 3,000 information technology companies employing over 100,000 workers in the state. Among the larger companies with a substantial presence in the state are IBM, Cisco Systems, Microsoft, Cree, Dell Computers, Google, Lenovo, Red Hat, and SAS. This sector draws upon the state’s excellent universities and research institutes both for a highly skilled workforce and as an incubator for ideas and technologies. It is concentrated in research and technology parks such as Research Triangle Park, the largest such park in the U.S., which includes campuses of three major universities, as well as R&D campuses of numerous technology companies. Each of these parks combines academic and commercial research presences in ways that benefit both. One unique focal point is nanotechnology, which is being developed by more than 33 research, development, and educational programs, as well as some 65 companies in the state. Another is biotechnology and life science, in which North Carolina ranks third in the nation, with more than 520 companies and research organizations employing over 56,000 workers. TRANSPORTATION The transportation sector contributes $9.3 billion to the GSP. Transportation and warehousing businesses employ some 118,000 workers with an annual payroll of $1.2 billion. State and local government expend approximately $4.5 billion on transportation annually. The state includes over 98,000 miles of highway, out of a total of 104,000 miles of public roads, including six interstate highways, over 3,300 miles of railroad track served by 23 rail freight carriers, and 1,152 miles of inland waterway. Shipping is handled by two major deep-water container ports and two inland ports. Freight shipments originating in the state total 47 billion ton-miles, with a value of nearly $294 billion. There are four major airports in the state, two of which handle international flights. Charlotte Douglas International Airport is the 24th busiest in the world, handling nearly 35 million passengers annually. TRAVEL AND TOURISM Cape Hatteras National Seashore The chief recreational area of the state is the coastal region, with its 300 miles of beaches, islands, and inlets, including the renowned Outer Banks and the Cape Hatteras National Seashore. Leisure and hospitality employment is estimated at 384,400 statewide. North Carolina hosts some 355,000 overseas visitors annually, making it the 17th most popular destination state and generating about $35 billion in annual sales. The total contribution of tourism to the gross state product is about $8.4 billion, or 2.1 percent. The largest areas of economic impact are in retail, restaurants, and seasonal real estate. Together they account for some $3.5 billion in yearly tourist dollars expended in the state and generate about $5.1 billion in taxes. SPECIAL INDUSTRIES Despite significant erosion in the face of lower-cost competition from abroad, North Carolina remains the leading textile manufacturing state in the nation and third in apparel production, as measured by employment. Over 1,500 facilities employ more than 180,000 workers, with a payroll of $2.8 billion. Textile manufacturers have adopted high-tech manufacturing processes and pioneered non-woven textiles and engineered fabrics, which alone account for nearly $3 billion in sales annually. The state is a leading developer and producer of specialized performance fabrics and interior fabrics. This sector has attracted foreign direct investment in the state by such firms as Freudenberg of Germany, producing nonwoven products using processes that were developed at North Carolina State University. Other international companies with textile development and production in the state are headquartered in Japan, Switzerland, and Israel. A related industry in the state is the manufacture of textile production equipment. -World Trade Press