In this podcast, the CLT Alliance's Adrienne Hua, PhD, lead principal researcher, and Antony Burton, principal researcher, discuss the growth in the Charlotte Region over the third quarter. Find out which companies contributed to $1.5 billion in capital investment. Plus, learn which industries are growing the quickest despite the delta variant.
You can see the Full Q3 Growth Report here.
In this podcast, the CLT Alliance's Adrienne Hua, PhD, lead principal researcher, and Antony Burton, principal researcher, discuss the growth in the Charlotte Region over the third quarter. Find out which companies contributed to $1.5 billion in capital investment. Plus, learn which industries are growing the quickest despite the delta variant.
You can see the Full Q3 Growth Report here.
CLT Alliance 0:00
Welcome to CLT Alliance talks, a podcast on business topics, information and tools focused on building an economy for all in the Charlotte Region.
Dr. Adrienne Hua, PhD, Lead Principal Researcher, CLT Alliance 0:11
Hello, everyone. My name is Dr. Adrienne Hua, and I am the lead principal researcher here at the Charlotte Regional Business Alliance. Today I want to introduce our special guests and my fabulous colleague, Anthony Burton, principal researcher at the Charlotte Alliance. Today we are going to be talking about one of our more recently published reports, the Quarter Three Growth Report. It gets published quarterly, and it gives a brief overview of how our region is doing. So Anthony, what are some big key takeaways from this report?
Antony Burton, Principal Researcher, CLT Alliance 0:42
First of all, I think one of the main takeaways is that strong investment really continued in the Charlotte region in the third quarter. So 25 companies announced expansions or relocations into the region. This represents about 1900 jobs and $1.5 billion in capital investment. And that $1.5 billion is actually the highest announced capital investments since the Charlotte Alliance started the growth report in 2019. So you know, I think it demonstrates a lot of momentum in the region. And these announcements are really leading indicators, because for the most part, these are jobs and capital investment that haven't been made yet. They're just companies announcing that they're going to make them. So it can be a good indicator for us to see what the economy will look like moving forward. A lot of times these jobs, for example, will be created over several years. So this is more of a leading indicator. Looking at the current indicators, and in terms of what happened in the last quarter, the Charlotte region added about 15,000 jobs, which is actually almost double any previous quarter in 2021. So there was stronger employment growth in the third quarter compared to the first two quarters. However, this was at a slower rate than the nation overall and slower than expectations. August was was a little bit difficult. On the employment front, there was actually a loss of jobs. And this was really kind of aligning with the height of the delta variant. I think it exposed still some vulnerability in the economy. When they're massive shifts or there are shifts in the pandemic, it still has an impact on the economy. We're looking at, you know, which industries did well in the third quarter. We saw continued growth of finance, and insurance, and transportation and warehousing. These are industries that have done fairly well since the pandemic started. They're both industries that are highly concentrated in the Charlotte region, and we think are poised for more continued growth. On the other hand, leisure and hospitality grew a little slower in the third quarter compared to the second quarter; they were the fastest growing in the second quarter really rebounded really fast, a slowed down some in the third quarter. And overall, the region has about 33,000 fewer jobs than we had before the pandemic. So this is a smaller share of pre-pandemic employment. And then the nation has lost but still, you know, still pretty substantial. So we still have a little bit of ways to go to make up for that for that loss. So I think that's kind of the the key takeaways from this quarter.
Dr. Adrienne Hua, PhD, Lead Principal Researcher, CLT Alliance 3:15
Hey, that's great to hear. So, you know, I was reading the report, and it talks about this continued pattern in investment from existing and new companies. And yet, we still have issues coming with the pandemic and the labor shortages. You know, in your opinion, what do you think is behind that continued growth?
Antony Burton, Principal Researcher, CLT Alliance 3:34
Well, you know, the problems facing businesses in the Charlotte region, like the talent shortages, like supply chain challenges, they're not unique to the Charlotte region. They're really issues that are happening across the U.S. and to some extent across the world. So on the talent front, you know, while we do see record number of open jobs in North and South Carolina, there is reason to be optimistic about our competitiveness in this area for a couple of reasons. So number one, people are moving here. That was true over the past decade, obviously the 2020 decennial census just came out and Charlotte was one of the top 10 fastest growing large metros during the past decade. So people are obviously moving here. And when you look at the growth between 2019 and 2020, Charlotte was actually the fifth fastest, large metro so the Charlotte region is really benefiting from larger demographic shifts. So people are moving to metros in the southeast and the west from metros in the northeast, Midwest and California. So you see a lot of growth in places like the Charlotte region and metros in Florida, Texas, Arizona. And, you know, if remote work increases, I think people will continue to come to Charlotte because it has a lot of the amenities that people want in a city. You know, with entertainment, good food, good drinks, professional sports teams, a great airport, but the cost of living is obviously a lot more competitive. The weather is nice; there's plenty of places to vacation nearby. So I think a lot of those preferences are still going to hold in a post-COVID environment. And then the second on the talent front, we just really have a great education system here in the region. And so we obviously have great pipeline for talent for industries like advanced manufacturing. We have advanced manufacturing training centers throughout the region, we have a region that really supports that industry. But we also have great talent training in engineering, computer science, finance, obviously, tech has become important to pretty much every industry. And a lot of people don't realize that Charlotte actually has the largest computer science program in the Carolinas. So we have a ton of tech talent coming out of this region; we have tons of people moving into the region. So whereas talent is really an issue for businesses across the US, we think that we're in a relatively good position for businesses to be able to staff.
Dr. Adrienne Hua, PhD, Lead Principal Researcher, CLT Alliance 5:59
That's really interesting here. So you know, one of the things that the report mentions also is is massive capital investment of $1.5 billion. Now, am I correct to say that is the largest investment that we've gotten since the Charlotte Alliance started the quarterly report? Great, so you know, what does that actually mean for our region?
Antony Burton, Principal Researcher, CLT Alliance 6:19
Yeah, well, you know, capital investment is one of the main metrics that people in economic development use. And the reason for that is at the local level, capital investment is a source of property tax revenue for local governments. Over 70% of tax revenue for local governments is through property taxes. So capital investment has a great impact on supporting all sorts of local services that make our communities great places to live. So from a regional perspective, that's great investment into our region overall. So seven counties had announcements in the third quarter. The region's largest announcement was in Cabarrus County, where Red Bull announced 633 jobs and a combined capital investment of $1.1 billion that was, you know, driving about two thirds of the capital investment in the third quarter. For those who've been in the region for a long time, this is at the old Philip Moore site in Concord. They'll be joining a Chinese furniture manufacturer, Golden Home and Carvana, who are already there. So you know, that's kind of a good example of a large capital investment, a large investment in the region. And obviously, that investment goes to support our local communities, help us to support all the services that we require as citizens. I think another thing I'd like to mention here is in terms of foreign direct investment, so obviously, during the during the delta variant during COVID, overall, it's been really challenging for foreign firms to be able to come over to the US to be able to do some investigation to see where they would like to invest in the US. But despite that, we've seen continued foreign direct investment in the Charlotte region. So in the third quarter, we saw investments from seven different countries, including Italy, Austria, Belgium, the Netherlands, Ireland, Australia, and China. And FDI actually represented over half of all investment in the third quarter. And why we care about foreign direct investment is because, one, it tends to be a signal to other foreign owned firms about the competitiveness of our region. So people see other companies coming to the Charlotte region, hopefully, you know, maybe from their own country, and they say, wow, you know, this is a this demonstrates the competitiveness of the region. They talk to that other company; they hear about how great the Charlotte region is, and it can be a signal to more investment in the future. Number two, foreign direct investment tends to be more export oriented than than other firms. So that allows the region to access new markets brings more money into the region. And then lastly, you know, a lot of FDI occurs through mergers and acquisitions. So, you know, some foreign direct investment just, it's just companies coming here from other countries, but a lot of it is through mergers and acquisitions. And those tend to focus more on r&d than domestic mergers and acquisitions, which makes those companies more innovative and more competitive in the marketplace overall. So you know, kind of in summary on the investment piece, you know, the capital investment is obviously really important from a revenue perspective. Obviously, it creates more jobs for local residents and entices more residents to move to the Charlotte region. And then, you know, getting investment from foreign owned firms, just helps the overall competitiveness of the region.
Dr. Adrienne Hua, PhD, Lead Principal Researcher, CLT Alliance 9:53
Anthony was all really great information. Could you also give us kind of like a couple of highlights about the main industries here in Charlotte?
Antony Burton, Principal Researcher, CLT Alliance 10:00
Yeah, absolutely. So manufacturing is one that we that we really care a lot about in the Charlotte region. It's a place where we are really competitive in about 10 of our 15 counties. And it's actually the largest industry. So it's certainly one where we see some potential for continued growth. So during COVID-19, during the past year and a half, we did see a hit in employment in this sector. We've recovered some of that continue to grow in the third quarter globally. But, you know, given the announcement by Red Bull, other announcements as well, which I think demonstrate faith in the Charlotte region in manufacturing, we can we expect that recovery to continue. Looking at transportation and logistics and finance, those are two industries that have really done well, during the past year and a half. By and large, there's obviously been sub sectors that it's been more difficult for. On the transportation and warehousing side, it's really been growing quite a bit along the distribution center, fulfillment center industries. So those are industries that grew rapidly and 2020 is everyone's preferences shifted towards ecommerce. So the Charlotte region grew about 60% in this sub sector in one year, which is dramatic, it was going at about 10% for the for the past decade, each year. So there's been a kind of a massive growth there. You know, I don't expect people to shift away from ecommerce; I think that's one habit that will stick somewhat in a post COVID environment. So I expect that industry to continue to grow. And then finance and insurance. This is a sub sector that has been, you know, what Charlotte has been known for a long time, and that growth has continued. So in from 2015 to 2020, we are actually the fastest growing large metro in financial services. So this is an area where we continue to grow. We see announcements from companies like Credit Karma, Robin Hood, Vero a digital bank that made a announcement in quarter three saying that they were investing in the region, as well. So this is another industry where we see a lot of strength. And then kind of a sister industry to some extent, the tech sector has been growing consistently as well. We have a really strong tech talent base, in part because of financial services because of some headquarters operations as well, that required a lot of tech talent. And so we have a lot of the skill sets necessary for you know, more core tech companies to come here. We certainly have some, but we see opportunity for continued growth because we already have the most important asset, the people here that have the skills. So that's another industry we expect to grow moving forward.
Dr. Adrienne Hua, PhD, Lead Principal Researcher, CLT Alliance 12:48
Well, then thank you for all that great insight, Anthony. You know, I'm really grateful that you took some time out of your busy schedule to share your knowledge with us and well we look forward to having you again for CLT Alliance talks. Thank you.
CLT Alliance 13:01
Learn more about the Charlotte Regional Business Alliance at Charlotteregion.com