By the Economic Development Partnership of North Carolina
North Carolina has long offered companies a cost-effective place to do business, broad access to markets, skilled workers and the training and research resources that keep companies well-staffed and successful for years to come.
That’s why the state consistently ranks at the top of the most respected business rankings. For example, North Carolina has been ranked Site Selection magazine’s most competitive state for new and expanded corporate facilities for three years in a row. In addition, North Carolina is the only state to appear among the top five on Forbes “Best States for Business” list for all 12 years of the highly-regarded annual ranking.
And in 2017, North Carolina is continuing to find ways to keep earning rather than simply relying on its business-friendly reputation.
Improving On a Good Thing
On the tax front, this year North Carolina reduced its corporate income tax rate from four percent to three percent – the lowest rate among all 44 states with the levy – and cut the personal income tax from a flat rate of 5.75 percent to 5.49 percent. Under recently passed legislation, those rates will go down even further in 2019. The state’s corporate income tax rate will drop to 2.5 percent and the individual income tax rate will decrease to 5.25 percent.
North Carolina is also completing its three-year phase-in of another tax change that will support growing companies – fully implementing single sales factor apportionment for multi-state corporations. Effective Jan. 1, 2018, the state will determine how much of a corporation’s income is subject to state tax based solely on its revenue from North Carolina sales. It will no longer factor in a company’s property and payroll in the state.
The single sales factor approach encourages corporate expansion and job creation because it doesn’t penalize companies for hiring or investing in facilities.
The state has also significantly increased funding available from its flagship incentive program, the Job Development Investment Grant (JDIG). And some of those changes target landing large-scale manufacturing projects, such as an automotive assembly plant.
For example, projects that invest at least $500 million and create at least 1,750 jobs can receive a grant worth up to 100 percent of the personal income tax withholdings associated with the new jobs – for up to 20 years vs. the typical 12 years. In addition, so-called “transformational” projects (those that invest more than $4 billion and create at least 5,000 jobs) aren’t subject to the state’s cap on JDIG awards. Those projects can receive grants that reimburse up to 100 percent of the personal income tax withholdings associated with new jobs for up to 25 years.
North Carolina also has four assembled megasites, ranging in size from 1,400 acres to 2,300 acres, to meet the needs of mega-manufacturers.
Some Recent Project Highlights
Over the past two years, high-profile employers ranging from insurance to IT, pharmaceuticals to food processing, automotive to aviation manufacturing have relocated to North Carolina or significantly expanded their operations here. A look at just two industry sectors – automotive and information technology – offers a very small slice of that growth.
Thirty-four of the top 150 automotive parts manufacturers in North America have significant operations in North Carolina. The state’s diverse automotive cluster includes heavy-duty truck manufacturing, body and trailer manufacturing, engine and transmission manufacturing, seating and interior trim manufacturing, brake system manufacturing and more. Employment in the state’s automotive manufacturing cluster grew a robust 22 percent between 2012 and 2016, and now encompasses more than 26,000 people working for 290 companies.
Recent and significant automotive sector expansions in the state include:
- UK-based GKN Driveline, a global leader in all-wheel drive (AWD) technologies whose U.S subsidiary last year announced plans to invest $179 million and add more than 300 new jobs at its locations in Alamance, Catawba, Lee and Person counties in North Carolina. The announcement came only 15 months after GKN Driveline completed a $100 million expansion of its Newton, NC plant.
- GKN is shifting its production into a higher gear to meet market growth fueled by an expected 21 percent increase from 2016-2020 in the production of AWD vehicles in North America. “North Carolina is an important part of our strategy, with strategically located facilities and an outstanding workforce,“ GKN Driveline CEO Phil Swash says.
- North Carolina’s workforce resources, as well as its proximity to leading Southeast U.S. automotive plants, were significant factors when GF Linamar chose Henderson County for its $271-million aluminum diecasting plant. The plant is scheduled to open in October and ultimately employ 350 people. GF Linamar, a joint venture of Switzerland-based GF Automotive and Canada-based machining specialist Linamar Corp., will supply lightweight automotive components to the North American automotive industry.
- Other recent and significant automotive sector expansions in North Carolina include Bridgestone Americas, which is investing $344 million in expanding and modernizing its roughly 2.5 million-square foot facility in Wilson, N.C., so that it can increase production from 32,000 to 35,000 tires a day and meet increased global demand for higher rim size tires; KSM Castings USA’s 80-job, $80 million expansion in Cleveland County; Keihin Carolina System Technology’s 42-job, $13 million expansion of its Edgecombe County automotive electronics assembly operation; automotive seal maker KACO USA’s 100-job, $8.4 million plant expansion in Lincoln County; and Magneti Marelli Powertrain USA’s 76-job, $12 million plant expansion in Lee County.
North Carolina is a leader in industries such as software, computer and electronics, and data analytics. Industry giants such as SAS Institute, Red Hat, Cisco, IBM, Lenovo and Citrix Systems have major operations in the state. And smaller niche companies flourish in North Carolina as well.
Software company Citrix Systems says the Raleigh region’s rich talent pool persuaded it last year to choose the city over competing sites in Florida, Georgia, California and Texas for a 400-job, $5 million expansion. Not only is Raleigh among the fastest-growing metro areas in the U.S., its density of top-tier universities, including Duke, North Carolina State and the University of North Carolina-Chapel Hill, feeds a well-educated pipeline of local tech talent.
Citrix is part of a North Carolina information technology sector where employment surged by a whopping 28.4 percent from 2010 to 2015. That’s the fastest five-year growth in IT jobs among U.S. states and twice the national average increase, according to a report issued earlier this year by the North Carolina Technology Association.
And blockbuster projects such as Credit Suisse’s recently announced expansion of its Durham tech hub suggest the pace won’t be slowing anytime soon.
The global banking giant currently employs 1,500 at Research Triangle Park (RTP). Its planned $70.5 million facility will add 1,200 more – one of the state’s 10 largest job announcements in a decade. Roughly 40 percent of the new jobs will be in IT.
RTP, the largest research park in the U.S., is one of seven major research parks across North Carolina. Others that serve the information technology industry include the Wake Forest Innovation Quarter in Winston-Salem, Gateway University Research Park in Greensboro, and the Charlotte Research Institute in Charlotte.
It’s not just the largest companies that are growing in North Carolina. The state appeals to niche-market innovators such as Trilliant Enterprises, which provides smart-grid software solutions for utilities and energy retailers. Trilliant recently moved its global headquarters from California’s Silicon Valley to North Carolina’s Triangle region – anchored by Raleigh, Durham and Chapel Hill.
The company will create 130 new jobs in the Triangle, which offered Trilliant less costly real estate than Silicon Valley in a region with comparable and more affordable tech talent and an existing large concentration of clean-tech companies. “The Research Triangle is a globally-recognized technology community of more than 350 clean-tech companies, and offers some of the brightest and most innovative talent for a high-tech company like us,” said Trilliant CEO Andy White.
Interested in locating or expanding in North Carolina? The Economic Development Partnership of North Carolina can help identify available buildings and sites across the state, navigate incentives for relocation or expansion, find workforce solutions and more. Call (919) 447-7744 or email firstname.lastname@example.org.
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