Golden Leaf Foundation serves as “the closer” in many economic-development projects

Winston-Salem Journal

October 21, 2012

KERNERSVILLE –

Grants from the Golden Leaf Foundation have served as “the closer” in many of the 24 major economic-development projects that have been done in the Triad and Northwest N.C. since 2002. However, Golden Leaf and local economic officials stress that the economic impact is not limited to easing training expenses for large beneficiaries such as Caterpillar Inc., Deere-Hitachi Construction Machinery Corp., Ashley Furniture Industries Inc., Pittsburgh Glass Works and Honda Aircraft Co.

For example, Golden Leaf is providing $447,145 to Forsyth Tech for training equipment that Deere-Hitachi requires for new welders.

Forsyth Tech also provided a tour of its Caterpillar axle-assembly training facility last week, which is being operated in 5,000 square feet of leased space in Kernersville. The college also is providing machinist, welding, painting and quality-control training.

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KERNERSVILLE –

Grants from the Golden Leaf Foundation have served as “the closer” in many of the 24 major economic-development projects that have been done in the Triad and Northwest N.C.since 2002.

However, Golden Leaf and local economic officials stress that the economic impact is not limited to easing training expenses for large beneficiaries such as Caterpillar Inc., Deere-Hitachi Construction Machinery Corp., Ashley Furniture Industries Inc., Pittsburgh Glass Works and Honda Aircraft Co.

The production equipment being bought through Golden Leaf funding can also provide smaller employers in similar industry fields with vital training skills for high-demand manufacturing jobs, such as welding, machining and assembly.

For example, Golden Leaf is providing $447,145 to Forsyth Technical Community College to pay for training equipment that Deere-Hitachi requires for new welders.

Alan Murdock, vice president of economic and workforce development for Forsyth Tech, said the college hopes to have the welding equipment in place at its main campus by year’s end.

“There are many job openings for machinists and other production jobs with similar skill needs,” said Charles Skeen, a machinist instructor at Forsyth Tech.

“We are optimistic that the Deere-Hitachi training program will not only fill its hiring needs, but help fill the coming gap in the community for welders as more welders – and more people in the trades – approach or surpass retirement age.”

Deere-Hitachi confirmed Oct. 5 it will create at least 340 full-time jobs in Kernersville over four years, and retain 719 jobs, as part of a $97 million capital investment that will bolster its operations there by 60 percent.

Having the ability to train new welders was one key to Deere-Hitachi’s decision to expand locally rather than in China or Japan, according to company officials.

“The grant will help integrate state-of-art welding with other advanced-manufacturing curricula,” said Dan Gerlach, Golden Leaf’s executive director.

“There’s lots of demand in this space, so much so that we have a special funding cycle currently under way for mid-skills training.” That kind of training typically is aimed at the professional trades.

Leigh Cannon, manager of order fulfillment at Deere-Hitachi, said the Golden Leaf contribution was important for the company to know “that we would be able to get the additional skilled workers now and in the future.”

Setting up simulations

Forsyth Tech provided a tour of its Caterpillar axle-assembly training facility last week, which is being operated in 5,000 square feet of leased space in Kernersville. The college also is providing machinist, welding, painting and quality-control training.

The assembly training equipment is placed in a Caterpillar work station setting. The money for this equipment was paid by Duke Energy as part of its incentive package to Caterpillar to gain another large electricity customer.

During the training of up to 17 Caterpillar new hires, some are assembling components while others are taking them off as a prototype axle goes along the conveyor belts. The training has a timing monitor to track how the new hires are doing with each axle during a simulated eight-hour work day.

“They are taught each step of the Caterpillar way to efficiently and safely assemble these pieces,” Skeen said. He said Caterpillar has sent new hires to the Forsyth Tech training from as far away as Georgia and Pennsylvania.

Murdock said Caterpillar chose not to do the training at its Winston-Salem plant because even though there is 850,000 square feet of space there, “that would be 5,000 square feet that they couldn’t dedicate directly to production.”

Skeen said Forsyth Tech is ramping up its machinist training as Caterpillar hires for that portion of plant production. Caterpillar has said it will hire up to 120 machinists.

“We prefer five or more years in experience with machinery, along with computer skills and blueprint reading, but we will hire entry-level positions for those with a two-year associate’s degree,” Allen Unger, a human resources official, said at the Winston-Salem Urban League job fair in September.

Skeen said that while Forsyth Tech will offer specific machinist training to Caterpillar, the overall skills being taught, such as how to properly measure and how to apply the proper amount of torque, is available to any company.

Part of the challenge – and the opportunity – for training for advanced-manufacturing jobs is overcoming the perception that manufacturing “is hot, dirty, dingy, hard on your body work,” said Jennifer Coulombe, a Forsyth Tech official who works with the business and services industry.

“More settings are air-conditioned, using ergonomic-based equipment,” Coulombe said.

“Some of the biggest obstacles can be parents and school counselors trying to steer students away from manufacturing even with internships and apprenticeships available.

“There are good job opportunities in the trades for people willing to train for the skills necessary,” she said. “The Southeast in general, and the Triad in specific, is a hot bed for advance manufacturing, and we expect that will only grow over time.”

$13.4 for projects

Golden Leaf was created by General Assembly to distribute a portion of the tobacco-Master Settlement Agreement money into parts of the state trying to transition away from an economic dependence on the crop.

In the past 10 years, the foundation has provided a combined $13.4 million to 24 Triad and Northwest North Carolina projects.

The largest is $2.5 million for production equipment to Davie County, which will lease the equipment to Ashley Furniture Industries Inc. for its campus near Advance.

Forsyth had the most projects at seven, including $1.3 million to Forsyth Tech for Dell employee training, $997,000 to the city of Winston-Salem to buy equipment that is being leased to Caterpillar and $500,000 to the Airport Commission of Forsyth County for infrastructure improvement that will benefit NS Aviation LLC, its largest tenant, which recently announced a major maintenance contract with United Airlines.

The foundation remains active in its “closer” role despite the General Assembly voting to transfer some of its annual settlement money toward the General Fund to help fill a funding shortfall.

As a result, Golden Leaf has become perhaps the most visible example of the legislative tug-of-war over how to best spend limited resources to bolster the economy.

Gerlach said the state budget for 2012-13 shifts $24 million that the foundation is scheduled to receive in April 2013 to the General Fund. Another $17.3 million was shifted from its April 2012 payment.

Gerlach said the funding transfer is “making it harder to do out-of-the-box grants, which is pivotal since many of the requests from communities negotiating with large corporations typically don’t fit neatly in a box.”

He said the foundation’s board of directors has not decided whether to spend any of the principal of its endowment, which exceeds $550 million.

John H. Boyd, a principal in The Boyd Co. Inc., a site-location consulting company, said North Carolina likely will continue to be competitive.

“The incentive money squeeze in North Carolina will not impact it nearly as much in those states that have little or nothing else to fall back on,” Boyd said. “North Carolina’s positive labor climate, low property taxes, attractive energy costs and deep skill sets in manufacturing make a compelling case for the state, incentives or not.

“Incentives played a role, clearly in signature deals like Dell, Caterpillar, Apple, but they did not carry the decade,” Boyd said. “The fundamentals did and will continue to do so.”

Gerlach said he’s aware the perception is that Golden Leaf is only concerned about the big projects because of the size of its grants.

“In those cases, there was a single company making a decision on where to expand or relocate and our assistance was necessary to help facilitate location in North Carolina,” Gerlach said.

But Gerlach points to the foundation’s Biotech initiative that begin in 2003 that has helped pay for facilities at N.C. State and N.C. Central universities and the BioNetwork initiative at community colleges that include a pharmaceutical center in Piedmont Triad Research Park in downtown Winston-Salem.

In 2010, Golden Leaf provided $5 million to education entities in four regions most ready to capitalize on aerospace-manufacturing opportunities. The Triad received $1.4 million of the total “given the significance of the industry in the region and the growth opportunities,” Gerlach said.

It has provided $100,000 to Winston-Salem Industries for the Blind Inc. to buy supply chain management software to better handle U.S. Defense Department contracts, $200,000 for water and sewer improvements to benefit The Village of Shelton Vineyards in Dobson, and $200,000 to Elkin to help pay for a water storage tank to benefit Hugh Chatham Hospital.

The latest Golden Leaf project involves an $8 million initiative to better connect private-sector employers with the job-training skills they need from new hires.

“This tie between evidence of private-sector demand and capacity to deliver on meeting demand is crucial,” Gerlach said.

Golden Leaf’s board of directors has 14 finalists for the funding, including a consortium of community colleges in Davidson, Forsyth, Guilford, Randolph and Rockingham requesting a combined $1 million. Forsyth Tech is leading that effort.

Gerlach said he expects the Golden Leaf board to make final decision of most, if not all, of the grant requests in December.

“Overall, community colleges have received $48.8 million to date from our grants-making, including scholarships,” Gerlach said.

More programs planned

Murdock said the need for mid-skill manufacturing training will only intensify if Caterpillar, Deere-Hitachi, HondaJet, Siemens, Timco Aerosystems and other advanced manufacturing expand local operations as projected.

“These companies’ need for producing product faster and more efficiently will play a major role in their future success, especially as they need to be more responsive to customers’ demands through the ups and down of the economy,” Skeen said.

Murdock said Forsyth Tech plans to add more certification programs for the trades that will make the employee more hirable if they move away from their current job.

“Heaven forbid that another major employer like Dell closes up or moves away,” Murdock said.

“But if that happens, the skills would remain here, and hopefully as Lenovo may be proving in Whitsett, other companies will find those skills attractive and want to open or expand operations here.”