Law limiting LGBT protections could deter more companies, recruiters say

John McCabe, left, senior vice-president of Global Operations at PayPal, holds up a carved wooden bowl (made by an artist from a tree struck by lightning outside the state capitol), presented to him by Gov. Pat McCrory, right, after McCrory announced that PayPal, Inc. planned to open a Global Operations Center in Charlotte.
John McCabe, left, senior vice-president of Global Operations at PayPal, holds up a carved wooden bowl (made by an artist from a tree struck by lightning outside the state capitol), presented to him by Gov. Pat McCrory, right, after McCrory announced that PayPal, Inc. planned to open a Global Operations Center in Charlotte.

For economic developers trying to recruit businesses to Charlotte, the most telling sound in the wake of the state legislature’s passage of a law limiting legal protections for LGBT individuals might be silence.

That’s the silence of phones not ringing, as North Carolina and its biggest city risk finding themselves left out of consideration for corporate relocations, site selection consultants and economic developers said Wednesday.

Although PayPal announced Tuesday that it would cancel plans to hire 400 for a global operations center in Charlotte to protest House Bill 2, that sort of high-profile action is likely to be the exception.

“The biggest impact is the one that’s going to be, I think, impossible to measure,” said Mark Sweeney, senior principal at McCallum Sweeney in Greenville, S.C. “That’s the number of projects that, at the start, in the first meeting at the consultant’s office, the decision is made: No, let’s not put North Carolina on the list.”

“North Carolina will never know how many of those there are,” Sweeney said.

Sweeney has consulted with companies from Hertz to Mitsubishi to Nissan on where to locate major facilities worldwide. He said he’s been hearing concern about North Carolina’s law since it passed.

“In our business, it’s a big deal,” Sweeney said. “It matters a lot to companies. ... I’d be very surprised if North Carolina gets a major headquarters announcement in the next few years while this is on the books.”

You’ve got a big mess.

Mark Sweeney, a site selection consultant in Greenville, S.C.

Dozens of major companies, including Bank of America and American Airlines, have said they oppose the state law, which overturned a Charlotte city ordinance that would have added protections for LGBT individuals against discrimination in the city. Lionsgate pulled a Hulu show that was supposed to film in Charlotte, and Red Ventures, the Indian Land, S.C.-based marketing firm, has said it would “seriously reconsider” a Charlotte expansion.

Ronnie Bryant, CEO of the Charlotte Regional Partnership, was in New York City the day the legislation passed last month. His group seeks to recruit businesses to a 16-county area that includes Charlotte.

“I was in meetings with consultants, and that was the No. 1 discussion in all of the meetings,” Bryant said.

In the competitive world of economic recruitment, Bryant said any negative buzz could hurt Charlotte’s chances of landing a corporate relocation.

“There’s serious competition from all over the country. The slightest thing can be enough to take you off the list,” Bryant said. Corporate executives are uncertain what the new state law means, and have been seeing negative news about North Carolina on CNBC and elsewhere, he said.

“We have created an environment of confusion, to say the least,” Bryant said. He also said the biggest impact is likely to be behind the scenes, with companies quietly pulling Charlotte off lists: “You don’t know what you don’t know.”

To be sure, companies scouting new locations don’t focus only on social issues. Incentives, tax rates, available labor and quality of life also play into their decisions. North Carolina has long touted its pro-business climate, but the state’s economic developers faced hurdles last year when the legislature took months to replenish a tax incentives program used to lure companies.

Will South Carolina benefit?

The Charlotte area has long competed with border counties in South Carolina for business relocations and expansions. Economic developers in the region were unsure this week whether the North Carolina controversy would help or hurt South Carolina’s Upstate. While some companies could decide to expand there, others might skip the Charlotte area altogether, economic developers told The (Rock Hill) Herald.

Karlisa Parker, director of the Chester County Department of Economic Development, told the Observer that she hasn’t heard from any companies looking at the county because of the North Carolina law. As a member of the Charlotte Regional Partnership, the county wouldn’t go across the state line looking for companies to relocate, she said.

“If they came to us and said we’re interested in property, we would show them what we have available, but we’re not going to delight in their loss,” she said. Adrienne Fairwell, a spokeswoman for the South Carolina Commerce Department, said she couldn’t discuss any conversations the state might be having with prospective companies.

In a statement Tuesday, the Economic Development Partnership of North Carolina, a public-private venture that recruits businesses to the state, said it typically doesn’t comment on public policy matters but acknowledged some companies “have expressed reservations about doing business in North Carolina because of concerns regarding House Bill 2.”

The group, chaired by former Charlotte City Council member John Lassiter, said it’s confident that lawmakers and the governor will “work together to consider ways to best address the concerns of all parties affected by this legislation, and we encourage timely resolution of this matter.”

Parallels in Georgia, S.C.

One reason North Carolina’s legislation could be particularly damaging is that it runs counter to the image the state has cultivated nationwide as a more progressive, moderate Southern success story, said Sweeney, the consultant. He said the companies that Charlotte in particular is seeking to recruit – high-tech, financial and advanced manufacturing – need to attract and retain millennial workers who are especially sensitive to issues such as LGBT rights.

Another reason the North Carolina law stands out is that Georgia’s governor vetoed a similar measure last month. The business community applauded that decision, with the Metro Atlanta Chamber of Commerce issuing a statement commending Gov. Nathan Deal, a Republican, for “an outcome that preserves Georgia’s positive business climate, encourages job growth and sustains our quality of life.”

An official with the Metro Atlanta Chamber said Wednesday that it’s too soon to know whether the city will see greater interest from companies that might have considered moving to Charlotte instead, but the chamber is following the issue.

Sweeney said Charlotte and Atlanta are typically close competitors for corporate relocations.

“If we have Charlotte or Atlanta in a project, the other one’s in the running more than 50 percent of the time,” he said. “Now, there’s a dramatic contrast.”

He compared the North Carolina law to South Carolina’s resistance to removing the Confederate battle flag from the State House grounds in Columbia. That led to a boycott and pressure from the NAACP. Sweeney said he was working with a company on a possible relocation to South Carolina around the time the boycott started in 2000. The company’s CEO told Sweeney to take the state out of the running.

“I didn’t tell South Carolina why. The guy didn’t want to get involved in the controversy, especially since he wasn’t going there,” Sweeney said.

Ely Portillo: 704-358-5041, @ESPortillo

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