Charles Gerena

English

Research Papers in Economics

LOSING POWER
Duke Power
Struggles with
Textile Load Loss
D
uke Power’s roots are in-
tertwined with those of
the textile industry in the Car-
olinas. Duke’s first power
plant was built on the Cataw-
ba River in 1904 to supply
electricity to a cotton mill.
Textiles in the region flour-
ished throughout most of the
20th century, as did Duke
Power, providing low-cost
electric power crucial to the
industry’s success—and shar-
ing in its prosperity.
Earnings and employment
in the Carolinas’ textile busi-
ness have declined dramati-
cally. Textile manufacturing
employment in the Caroli-
nas has fallen by 44 percent
just since 1997. And Duke
Power has suffered a sharp
drop in sales as a result of tex-
tile plant closings and cur-
tailed operations. Its kilo-
watt-hour sales of electricity
to textiles firms have tum-
bled 37 percent since 1997.
But sales to residential and
commercial customers have
risen, helping to offset the
decline in industrial sales.
Duke wants its industrial base
growing again and is aggres-
sively pursuing opportunities
to bring new industrial firms
to the region. Since growth
prospects in textiles are slim,
the company has turned to
other industries.
“We want to reverse the
loss of manufacturing,” says
company spokesman Tom
Williams. “We are expanding
our economic development
efforts and focusing on the
manufacturing sector.” Such
efforts have led to identify-
ing and targeting industries
that have the best potential
for growth in coming years,
such as pharmaceuticals, plas-
tics, paper products, and motor
vehicle assembly and parts.
Manufacturing is believed
to create more jobs, spinning
off employment in other sec-
tors, including services. Duke
cites BMW’s automobile as-
sembly plant in South Car-
olina as an example. Accord-
ing to research conducted at
the University of South Car-
olina, 4,327 jobs were creat-
ed at BMW’s manufacturing
plant and 16,691 total jobs
were added in the region as
a result of the investment.
Manufacturers also have
attractive electric load char-
acteristics, using lots of elec-
tricity during off-peak peri-
ods when it’s easier for electric
systems to handle the loads.
Industrial customers also con-
sume a lot of electricity.
Despite the textile indus-
try’s contraction, Duke still
sells massive amounts of power
to textile firms. (Sales to the
sector represented 31 percent
of the company’s industrial
sales in 2003.) There’s also
reason to believe that the 
decline in the industry may
be slowing, and that the firms
left are more specialized and
thus more competitive.
Diversifying can’t hurt,
though. It would mean high-
er industrial sales growth and
less risk for Duke Power.
—ROBERT LACY
ASIAN IMPORT
Testing the Bay
Waters
T
he Suminoe oyster is at
the center of proposals
to revive the Chesapeake Bay.
This Asian import promis-
es to supplement native East-
ern oysters that clean the bay
and support the livelihoods
of fishermen in Maryland
and Virginia. But public of-
ficials, the seafood industry,
and researchers are wran-
gling over how to introduce
a nonnative species into the
bay without sparking a de-
structive invasion.
Commercial landings of
Eastern oysters in the Chesa-
peake Bay have rapidly fallen
over the last century to a frac-
tion of historic levels. Two
deadly diseases, MSXand
dermo, and overfishing are
widely considered the culprits.
In 1995, Virginia lawmak-
ers asked the Virginia Insti-
tute of Marine Science (VIMS)
to evaluate the introduction
of nonnative species as a way
to reverse the bay’s decline.
Their first tests focused on
Pacific oysters, which thrive
off the West Coast and other
fisheries worldwide. The oys-
ters didn’t respond well to the
bay’s environment and they
didn’t taste as good as the
Eastern oyster.
SHORTT AKES
Duke Power’s Marshall Steam
Station is located near
Charlotte, N.C. Duke is
working to attract
manufacturing customers to
offset declines in its sales of
electricity to textile firms.
D
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8 Region Focus • Summer 2004
Region Focus Summer 04.ps - 7/12/2004 3:52 PMField and laboratory tests
of Suminoe oysters by VIMS
and the Virginia Seafood
Council were far more suc-
cessful. The nonnative or-
ganism grew to market size
two to four times faster than
native oysters and resisted
MSXand dermo. And the
meaty oyster tasted good.
This excited aquaculture firms,
commercial fishermen, and
government officials in bay
communities looking to im-
prove the regional economy. 
Suminoe oysters could be
ecologically beneficial as well
as commercially so. They could
improve water quality in the
Chesapeake Bay by feeding
on algae, whose massive
blooms deprive fish of oxy-
gen and block sunlight from
nourishing underwater sea
grasses, promoting dead zones
in the bay.
A 2004 report from the
National Research Council
was more cautious. “Intro-
ducing these nonnative oys-
ters in the Chesapeake Bay
is not a magic bullet for ei-
ther saving the oyster indus-
try or restoring the bay,” noted
Dennis Hedgecock, co-chair
of the 11-member team that
worked on the report. “But
contained aquaculture of in-
fertile nonnative oysters on
a small scale would provide
more information for indus-
try and policymakers to make
a sound decision on further
use of nonnative oysters.”
The report’s authors and
other researchers are con-
cerned that little is known
about the biology of Suminoe
oysters, making it difficult to
predict whether their net ef-
fect on the bay would be pos-
itive or negative. The non-
native species could invade,
spread throughout the bay and
crowd out Eastern oysters and
other native marine life. It
could also serve as a carrier for
nonnative pathogens. For ex-
ample, an earlier effort to in-
troduce the Pacific oyster in
the 1950s may originally have
brought MSX to the bay.
To fill the knowledge gap,
the U.S. Army Corps of En-
gineers and a team of state
and federal regulators are eval-
uating the introduction of
Suminoe oysters. Eight aqua-
culturists are testing large-
scale cultivation of Suminoes,
scheduled to end in April 2005. 
—CHARLES GERENA
RICHMOND RETAIL
Open-Air Centers
Compete for
Luxury Shoppers
R
ichmond, Va., is shopping
these days at two upscale
malls that opened within
weeks of each other in Sep-
tember 2003. Richmond’s two
regional malls were the only
two such centers that opened
in the nation.
Though unusual, it was
happenstance helped along by
competition between the two
mall owners, says Brian Glass,
vice president of retail bro-
kerage at the real estate firm
Grubb & Ellis/Harrison &
Bates. Forest City Enterprises
owns the new Short Pump
Town Center. Taubman Cen-
ters Inc. built its competing
mall, Stony Point, to comple-
ment its existing indoor mall,
Regency Square. Until the new
malls were built, Regency
dominated Richmond’s mall
landscape. “We ended up with
dueling malls,” Glass says.
Stony Point Fashion Park
and Short Pump Town Cen-
ter are outdoor malls, decked
out lavishly with fountains
and brick facades.
“[These] tend to be high-
er-end in the tenant mix and
inclusion of streetscapes and
entertainment,” says Patrice
Duker, spokesperson for the
International Council of Shop-
ping Centers. “Very atmos-
pheric.” The expensive stores
and boutique retailers are new
to Richmond retail. The gen-
eral manager of Stony Point
and Regency, Sid Welch, says
stores selling luxury items are
riding high, particularly Saks
Fifth Avenue. Stony Point is
99 percent leased and occu-
pied, according to Welch, and
many stores are exceeding sales
expectations, especially the
sporting-goods retailer, Galyan’s.
(Galyan’s has been acquired
by rival Dick’s Sporting Goods.)
“I think Richmond was
thirsty for upscale shopping,”
he says, adding Richmonders
had been driving to high-end
malls in the Washington, D.C.,
area or Norfolk’s MacArthur
Center. “Saks, for example,
could look at the zip codes
and tell you how many dol-
lars were being spent in North-
ern Virginia from Richmond.
There was definitely a hunger
for that upscale shopping that
didn’t exist in Richmond.
Hopefully we’ve captured the
majority of that.”
But one of the most chi-
chi tenants, Lord & Taylor,
never showed up at Short
Pump. Instead, the compa-
ny backed out and sent the
mall scrambling to find new
businesses that would gen-
erate comparable sales.
Whether Richmond can sup-
port luxury retailers such as
Louis Vuitton at Stony Point
and Nordstrom’s at Short
Pump is still a question yet
to be answered, Glass says.
But his informal retail survey
indicates that the restaurants
at both malls are faring es-
pecially well.
“It turned out that the
restaurants were the compo-
nents reaping the harvest –
Maggiano’s at Short Pump,
Flemings and P.F. Chang’s
China Bistro and Brio Tus-
can Grille at Stony Point,”
he notes, adding that the
Cheesecake Factory will re-
place Lord & Taylor at Short
Pump Town Center.
Summer 2004 • Region Focus 9
Compared to oysters native to the Chesapeake Bay, Suminoes grow
faster and larger, and they are more resistant to disease.
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Region Focus Summer 04.ps - 7/12/2004 3:52 PM10 Region Focus • Summer 2004
As for open-air mall shop-
ping, it’s popular because it
saves time for today’s desti-
nation-oriented consumer.
Shoppers spend an average
of 56 minutes at an outdoor
mall and 76 minutes in an en-
closed shopping center, Duker
says. These days, people like
to park nearby, shop at two
or three stores, and head home.
—BETTY JOYCE NASH
DEAL SOLIDIFIES
REGIONAL PRESENCE
SunTrust Enters 
the Carolinas
S
unTrust Banks Inc., of At-
lanta, has agreed to pur-
chase National Commerce
Financial Corp., of Memphis,
Tenn., the parent company of
Central Carolina Bank. The
$7 billion deal will fill in Sun-
Trust’s market with some 233
branches in the Carolinas,
pushing it to No. 3 in market
share in the Southeast. The
merger will rank SunTrust No.
7 in the United States, with
$148 billion in assets and $97
billion in deposits.
SunTrust’s branches stretch
from Maryland to Florida.
Until this deal, there was one
huge void in its service area:
the Carolinas. The bank’s new
branches will include signifi-
cant clusters in some of the
fastest-growing metropolitan
areas in the Carolinas: 71 in
Raleigh-Durham, 57 in Greens-
boro-Winston Salem, 47 in
Greenville-Spartanburg, and
36 in Charlotte-Gastonia.
Bank officials say branch con-
solidations will be limited.
SunTrust had attempted
to establish a presence in the
Carolinas in 2001 by acquir-
ing Winston-Salem-based
Wachovia Corp. But Char-
lotte-based First Union Corp.,
beat them, creating the fourth
largest bank in the United
States. (The consolidated firm
retained the Wachovia name.)
SunTrust hopes the acqui-
sition of Central Carolina
Bank will help it compete with
Wachovia and another south-
eastern rival, Bank of Ameri-
ca. The deal remains subject
to shareholder and regulato-
ry approval.
—AARON STEELMAN
MORE MONEY FOR MOORE
Donation To Fuel
USC’s Effect on
State Economy
F
inancier Darla Moore
made history last April by
donating $45 million to the
business school at the Uni-
versity of South Carolina.
Combined with her $25 mil-
lion contribution in 1998 to
the school bearing her name,
Moore became the nation’s
largest private donor to a busi-
ness school.
She explained the moti-
vation behind her generosi-
ty in a statement. “If our stu-
dents are prepared with
state-of-the art training and
a rigorous educational envi-
ronment, then they can add
fuel to the economic engine
of our state’s future, as well
as our nation’s.”
Her money will be com-
bined with matching funds
from the USC Board of
Trustees and donations raised
over the next few years to up-
grade the business school’s
decades-old facilities. It will
also augment the school’s $62
million endowment, posi-
tioning it to expand its role
as a source of talent and tech-
nical assistance for South Car-
olina businesses.
In today’s competitive
global economy, developing
human capital — the collec-
tive knowledge, skills and abil-
ities of a population that make
them productive — is essen-
tial for making a work force
responsive to change. Busi-
ness schools supply this cap-
ital through degree programs
and executive education for
working professionals. Each
institution finds its own way
to balance instruction on the
fundamentals of business and
economics with practical, spe-
cialized coursework to meet
the needs of employers. 
“It’s not just an academ-
ic enterprise in an ivory
tower,” says Philip Quaglieri,
dean of the College of Man-
agement at the University of
Massachusetts-Boston. “We
like to think of it as the human
resources department for
business and industry.” As
part of a workgroup of the
Association to Advance Col-
legiate Schools of Business,
Quaglieri examines how
schools contribute to met-
ropolitan area economies. 
In the case of the Moore
School of Business, only some
of its human capital stays in
South Carolina. Most stu-
dents leave the state after
graduation because of the lack
of challenging employment
opportunities and the de-
mand for MBAs elsewhere,
according to the school’s dean,
Joel Smith III. Still, Smith
views out-of-state alumni as
ambassadors who can raise
South Carolina’s visibility and
send new industry back home.
Business schools also offer
expertise to companies.
Moore’s research division
produces economic data and
analysis that help inform the
decisionmaking of business-
people. More directly, Moore
sends its faculty and students
into the trenches as con-
sultants. For example, the
Faber Entrepreneurship Cen-
ter pairs students with local
small businesses to assist in
accounting, marketing, and
other areas.
In  addition, business
schools support businesses via
incubators for startups, small
business development centers,
and research centers. The
Moore School’s Center for In-
ternational Business Education
The Moore School of Business will use its $45 million donation to
expand programs such as its Professional MBA, which offers
instruction at multiple classrooms via satellite.
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Region Focus Summer 04.ps - 7/12/2004 3:52 PMSummer 2004 • Region Focus 11
and Research studies how to
improve U.S. competitiveness
in the global economy. The
school also operates the South
Carolina Real Estate Center,
and the Center for Informa-
tion Management and Tech-
nology Research.
With millions in new
funds, the Moore School of
Business will do more to in-
vigorate the state’s economy,
a mutually beneficial effort.
“We want to contribute to
the building of an economic
system in South Carolina that
provides greater opportuni-
ties for the graduates we are
producing in the process,”
notes Smith.
—CHARLES GERENA
ASPHALT ANTIDOTE
“Living” Roofs
Absorb Runoff
W
hile we are well aware
of the aesthetic and
ecological value of growing
plants and trees on lawns and
indoors, most people don’t
realize that growing plants on
a rooftop can drastically reduce
storm-water pollution.
Living roofs, also known
as green roofs, consist of mul-
tiple layers that promote plant
growth, provide proper water
drainage and filtration, and
prevent roots from growing
into a building—all while ab-
sorbing up to 100 percent of
rainfall. Living roofs have
been covering European in-
dustrial and office buildings
for more than a quarter 
century. But Chris Taylor, 
director of marketing and 
operations for Building 
Logics in Virginia Beach, Va.,
says such roofs have been slow
in coming to the United States.
“We’ve been doing this
now for three years, and it’s
a hot topic with architects
and designers,” Taylor says.
“I think you will find more
and more of it in the future,
but the practicality of it needs
to be demonstrated.”
Living roofs cost about 30
percent more than a con-
ventional roof, but the roofs
partly pay for themselves in
storm-water runoff preven-
tion, among other benefits.
Runoff is dirty water, full of
sediment, drippings from au-
tomobiles, and litter. It infil-
trates rivers and streams and
can be blamed for half of the
water pollution in the Unit-
ed States, according to the
U.S. Environmental Protec-
tion Agency.
Local government offi-
cials in Arlington County, Va.,
hope to show the benefits of
the green roof with Court-
house Plaza in Arlington. The
retrofit roof covers the 
original tar and gravel roof
making it pleasant to gaze on
from surrounding buildings,
says Joan Kelsch, an envi-
ronmental planner for Ar-
lington County. “The roof
also makes the building cool-
er, thus saving energy on air
conditioning. … The soil and
plants protect the water-
proofing layers so they last
up to two to three times longer
than a standard roof, which
saves significant amounts 
of money in the long run,”
says Kelsch. And, the roof
mitigates the impact of storm-
water runoff.
The structure of a green
roof is not significantly more
expensive than a conventional
roof, says Taylor of Building
Logics. “The additional layer
of a soil medium and the plant-
ing on top of that is where
the extra dollars come from,”
says Taylor.
The cost of living roofs
may decline as they gain ac-
ceptance and competition in-
creases, says Roger Schicke-
dantz, an associate partner
with the Charlottesville, Va.,
firm, William McDonough +
Partners. Agreen roof adds
about $11 to $13 per square
foot to the cost of a conven-
tional roof, he says. The Char-
lottesville firm designed the
world’s largest living roof on
the Ford Motor Company’s
renovated Rouge assembly
plant (see “Dollars in the Dirt”
in the Winter 2004 issue of
Region Focus).
Before he began special-
izing in green roof plants, Ed
Snodgrass, owner of Emory
Knoll farms in northern Mary-
land, discovered the value of
drought-tolerant perennials
while trying to make his farm
more sustainable. With a
background in environmen-
tal education, Snodgrass re-
alized that plant cover would
“become an issue with the ex-
plosion of the suburbs around
Washington, Baltimore, Rich-
mond, and Philly.” 
As farmland turns to as-
phalt and rooftops, green
roofs could play a big role in
storm-water prevention. Roofs
represent 15 percent to 30
percent of the total land area
in major cities. That’s a lot of
potential for green space.
But rooftop renewal won’t
happen quickly without 
incentives. “Having watched
the slow pace at which solar
panels are being accepted in
the United States, I wouldn’t
expect green roofs to fall into
place any faster,” Schickedantz
notes. “Both these tech-
nologies seem to flourish only
where there are incentives or
regulations in place.”
—JENNIFER SPARGER
Completed in October 2003, this retrofit living roof atop the
Arlington County Government Center is filling in quickly. The
county also plans to top a community center and a fire station
with sections of vegetative roofing.
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Region Focus Summer 04.ps - 7/12/2004 3:52 PM

More money for Moore : donation to fuel USC's effect on state economy

http://www.richmondfed.org/publications/research/region_focus/2004/summer/pdf/short_takes.pdf

More money for Moore : donation to fuel USC's effect on state economy

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Research Papers in Economics