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Tuesday, March 9, 2010

Foreign Firms Making Charlotte, NC Their Business

Charlotte Observer
Region targeted for airport, location, quality of life and more

The process, part of a positive economic development trend in the Charlotte region, took just a few months.

Executives from German manufacturer Teupen Maschinenbau, looking for a location for a new U.S. headquarters, narrowed their search to a few states. Then they whittled that list to North Carolina, partly for its reputation as a good place to do business and the strength of Charlotte and Raleigh real estate. They visited each. And they chose Charlotte, citing its direct flights to Germany, proximity to major clients and the fact that employees wanted to live there.

"You have everything you need," said Florian Buescher of Teupen USA Inc., which opened off Westinghouse Boulevard in July.

As the economy plummeted, Charlotte-area economic developers have found new hope in foreign-owned firms - which are increasingly considering the U.S. because of the weak dollar - and the Charlotte region for its airport, location, talent pool, lower costs and quality of life.

Many of those companies have brought high-paying jobs in engineering, energy, biotechnology and other emerging fields. And experts say their presence alone could make the region more attractive to similar businesses - meaning the influx of international firms could play a crucial role in reinventing and revitalizing the local economy.

"We're trying to be very aggressive about it," said Kenny McDonald of the Charlotte Regional Partnership, which sends recruiters around the world to drum up interest in the Charlotte area. "It's a very important part of our program, and it probably will become more important in the future."

There are about 850 foreign-owned firms in the region, employing more than 50,000 workers, a recent Charlotte Chamber report found. That's up 13 percent from last year and 34 percent from 2005. Most of those firms have settled in Mecklenburg County. And most have come from Germany, followed by the United Kingdom, Japan, Canada and Switzerland.

"What I think has changed is that global awareness of Charlotte has increased," McDonald said.

To be sure, foreign-owned firms in Mecklenburg County employ just about 8 percent of jobs in the county, based on the chamber's counting, or about 32,800 workers. And some deals come with strings attached, such as hefty incentives packages from state and local officials.

But economic developers hope to see those jobs and that investment in the region grow as the economy recovers.

Notable growth among international businesses began about 20 years ago as foreign firms sought to capitalize on North Carolina's booming textile industry. Soon, the leaders of other firms followed their friends and families to the area.

Interest has grown as the economy slumped, even if anemic consumer demand has halted some expansions and relocations in their tracks, McDonald said. That's because the weak dollar has made it profitable - even mandatory - for foreign companies to establish U.S. operations.

These days, the pool of talented workers - widened as banks and other businesses laid off thousands - is yet another reason to move to the area, said Harry Bowen, a professor of international business at Queens University of Charlotte.

"I look at this as part of a long-term ... change in the economic structure of North Carolina," he said.

Now, the Charlotte area has two or three times as many foreign-owned firms as other similarly sized cities, McDonald said. And that has helped lift some spirits in a region that has lost 62,000 jobs since the recession began.

Some of the region's major job announcements last year came from international firms. They ranged from Toshiba America Nuclear Energy Corp., a Japanese nuclear power plant engineering and construction company, to Biotage LLC, a Swedish company that manufactures instruments used in life science research.

Electrolux - the Swedish giant of kitchen appliances, announced in December it was moving to Charlotte, creating more than 700 jobs. A few weeks later, outdoor power equipment manufacturer Husqvarna - another Swedish company - followed suit, saying it would bring 160 new jobs to the area.

For Teupen, which makes lifts that hoist workers into high spaces in hospitals, churches, stadiums and other buildings, the decision to move to Charlotte capped about two months of research as company officials looked for a location accessible to major dealers and clients.

Buescher, who works in business development and marketing in the Charlotte office, initially liked Raleigh. But once he visited Charlotte, he liked the city, the fact that many Teupen customers had representatives there, and that the company's mechanical engineering focus seemed to fit in better than in the high-tech Triangle area.

Teupen moved about six employees to the U.S. headquarters and will ultimately expand the facility to about 15 or 16, Buescher said.

For Aragon Nutraceuticals, a New Zealand company that distributes nutritional supplements for animals such as race horses and pet glucosamine, the move to Charlotte was influenced by connections. Company officials knew business people in Charlotte who played a part in convincing them to expand into the U.S., said Melda Gilson, business manager at the south Charlotte office.

"It became an easy decision," she said.

Last year, the company opened new manufacturing operations in Rockwell - about 40 miles northeast of Charlotte - to take advantage of the fact that the weak dollar has made it cheaper for foreign-owned companies to do business in the U.S., Gilson said.

That trend of expanding operations into the U.S. will likely continue as foreign companies find it increasingly cost-effective, said Dana Hicks, Charlotte's honorary Canadian consul and managing director of the Perlitz Strategy Group. That organization consults foreign companies thinking about moving to the area.

The airport is a draw, he said, but so is the attitude toward business and international executives.

"People get the impression that they're welcome here," he said.

Economic developers say the future lies in Charlotte's foreign-owned firms. Many of those companies excel in science, energy and health care, which are expected to lead growth in the region and around the country as the economy recovers.

"These companies are important, as they create jobs," said Justin Hunt, the chamber's vice president of economic and European development. "But they also help us by bringing new ideas and new influences."