Economic impact of HB2 mushrooms in the Triangle

Deutsche Bank in Cary, N.C., located at 3000 Centregreen Way announced on Tuesday, April 12, 2016 that it will not add an additional 250 jobs at this location over North Carolina’s adoption of House Bill 2.
Deutsche Bank in Cary, N.C., located at 3000 Centregreen Way announced on Tuesday, April 12, 2016 that it will not add an additional 250 jobs at this location over North Carolina’s adoption of House Bill 2.

The economic impact of the state’s controversial House Bill 2 continued to mushroom Tuesday, as Deutsche Bank announced it was freezing plans to create 250 jobs in Cary and a top Wake County economic development official said that five companies since early last week have canceled or postponed efforts to bring jobs to the county.

“We’ve had some companies choose to suspend their site selection search in North Carolina and consequently in Wake County,” said Adrienne Cole, executive director of Wake County Economic Development. “Some have said they’re taking North Carolina off the list, others have said they’re postponing things to see what happens.”

The economic development projects included an IT company and a clean energy company and ranged in size from 75 jobs to one that could have brought 1,000 jobs to the Triangle, she said.

Cole said that, after Deutsche Bank’s decision, she’s also worried about economic development projects that the area has already secured. The German bank in September announced plans to add 250 jobs in Cary by the end of next year.

But it halted that expansion Tuesday, saying in a statement that HB2 “invalidated existing protections of the rights of gay, bisexual and transgender fellow citizens in some municipalities and prevents municipalities from adopting such protections in the future.”

“We take the commitment to building inclusive work environments seriously,” said John Cryan, Deutsche Bank’s co-CEO. “We’re proud of our operations and employees in Cary and regret that as a result of this legislation we are unwilling to include North Carolina in our U.S. expansion plans for now. We very much hope to revisit our plans to grow this location in the near future.”

Cole said the county worked last year to secure Deutsche Bank’s commitment. The bank’s DB Global Technology subsidiary is eligible to receive as much as $3.38 million in state incentives over 12 years if it achieves its job targets. The town of Cary also promised the company $104,000 in incentives. The new jobs were expected to pay an average salary of $85,600.

Deutsche Bank is the second major corporation to halt expansion plans in North Carolina because of HB2. Last week, PayPal scrapped plans for a new Charlotte operations center that would have employed 400 people. Two other companies, Red Ventures and Braeburn Pharmaceuticals, have said they are re-evaluating expansion plans because of the law.

“We’re seeing drawbacks on things we’ve already achieved,” Cole said.

‘I don’t have any worries’

In 2009, Deutsche Bank decided to locate its global technology center in Cary, where the company has 900 employees. The center tests software that the company uses at sites around the world for functions such as trading, managing orders and processing transactions. The bank has said it plans to invest up to 1 billion euros on digital initiatives over the next five years.

Deutsche Bank said it is committed to sustaining its existing presence in Cary. A bank spokeswoman said Tuesday that the company would have no comment beyond its statement.

The Cary Town Council has not taken an official position on HB2. Two council members, Don Frantz and Ken George, said Tuesday that they believe the council is unlikely to do so.

Frantz, who is unaffiliated, said the council tends to focus on “issues that are in our direct control.”

“I think some (businesses) will continue to come and some might choose to do business elsewhere,” he said of HB2’s economic impact. “I believe that the regulation of discriminatory practices to be a state and/or federal issue and that rules shouldn’t be different city to city.”

George, a Republican, said he does not have a position on HB2 and is not concerned about businesses not coming to Cary because of the law.

“I don’t have any worries at this point,” he said. “I think Cary stands on its own. I believe that Cary is a great place to live and work.”

Two Democrats on the council, Mayor Harold Weinbrecht and council member Lori Bush, said they are worried that the legislation will continue to harm the local economy.

“This is extremely disappointing, and it does make you worry about other businesses and other potential businesses that we may not even have heard about,” Weinbrecht said. “ … Hopefully they realize that what we have to offer is greater and will overshadow anything else and anything that’s done by the legislature.”

Impact could grow

The potential economic impact of HB2 in the Triangle could grow if other financial firms follow Deutsche Bank’s lead. The region has become a major hub for financial services firms, including Fidelity Investments, MetLife and Credit Suisse.

The legislation also has led some municipalities and states to ban nonessential employee travel to North Carolina. The Greater Raleigh Convention and Visitors Bureau released a report Monday saying that Wake County had lost out on an estimated $732,000 in economic benefits after four groups canceled plans to hold events in the county.

Cole said the business leaders she has talked to about HB2 are concerned about their ability to recruit the talent they need in North Carolina and how the specific legislation will affect their companies.

Instead of talking about Wake’s cost of doing business, talent base and quality of life, Cole finds herself spending more time emphasizing the county’s welcoming culture and passion for diversity and inclusion.

“We’re certainly facing headwinds when it comes to telling the story of Raleigh, Wake County and the state of North Carolina,” she said.

Staff writer Kathryn Trogdon contributed to this report.

David Bracken: 919-829-4548, @brackendavid