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Another wake-up call for South Carolina

First Posted: 4:03 am - October 19th, 2015

John Warner - Contributing Columnist



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Proterra is a world leader in the design and manufacture of zero-emission vehicles. In 2011, we were excited when Proterra announced it was moving its corporate headquarters and manufacturing to South Carolina.

Proterra announcements last week should also have been exciting news for South Carolina. Ryan Popple, Proterra’s CEO, observed that, “The U.S. is in the midst of a complete reinvention of how we transport people and cargo.” The company said it “expects to find new opportunities for collaboration with other transportation innovators… (to) extend its market leadership by taking greater advantage of the region’s innovation culture.”

There is a huge problem with this announcement. The company won’t be reinventing transportation by finding new collaborations in South Carolina’s innovation culture. The company will find all this by relocating its corporate headquarters to California.

We should have seen this coming long ago. I had dinner with Ryan Popple a while back and asked him when this would happen, because almost inevitably it does, and so this announcement was predictable. Highly innovative companies like Proterra leave South Carolina for better access to capital and talent.

Unfortunately, this isn’t the only recent announcement of this kind. A year ago, Sealed Air announced it was relocating its South Carolina R&D facility to North Carolina where it would have better access to talent.

Earlier, Proterra announced it was building a West Coast manufacturing facility in California to complement its East Coast manufacturing in South Carolina. The economic development culture in South Carolina is focused on recruiting the next branch manufacturer, and so when Proterra came, almost all the incentives it received were for its manufacturing facility.

While we were scouring the world for the next branch plant to locate here, we ignored headquarters and R&D facilities like Proterra and Sealed Air. Now we have ended up with exactly what we asked for — manufacturing facilities.

The higher value-added parts of these companies, along with the high-wage executive and professional jobs that go along with them, have now left for places that value these activities more. This has real consequences for South Carolina. For the past 15 years, per-capita income in South Carolina relative to the rest of the nation has fallen.

The annual reports of economic development agencies will celebrate all their successes during the year. There is no economic development organization in South Carolina whose annual report will reflect that Sealed Air and Proterra are now gone. It’s like watching a baseball game and only keeping score of the home team.

How many of these wake-up calls will it take for South Carolina to get serious about developing a comprehensive economic strategy that moves beyond recruiting the next branch manufacturing plant to the state? Butch Kirven, a Greenville County councilman and chairman of its economic development committee, was quoted by the Greenville News as being disappointed “because I thought Proterra had made a strong commitment to Greenville to remain and grow in Greenville and we were doing all that we could to help them do that.” Well hello!

The most stinging statement about Proterra was from a spokesman in California’s Governor’s Office of Business and Economic Development that, “Proterra’s new headquarters further demonstrates an auspicious future for advanced transportation in California.”

Who is responsible for ensuring an auspicious future for advanced transportation, or any other industry, in South Carolina? No major organization is. Not the S.C. Department of Commerce. Not the South Carolina Research Authority. Not Clemson, the University of South Carolina or MUSC.

Let’s be clear not to demonize any of the individual professionals working in these organizations. Many do an outstanding job of delivering what they are charged to deliver. No individual doing his or her job every day can fix this problem alone. This is a systemic problem we have as a state. We have a very fragmented economic development approach focused primarily on recruiting the next branch manufacturer.

What we have are awesome global relationships with major corporations with connections to South Carolina. We have invested in the past decade in enhancing our research universities, attracting preeminent scholars in some areas who also have strong global reputations and relationships.

What we don’t have is a comprehensive economic strategy that builds on all these assets to leverage our manufacturing relationships to attract their R&D facilities and corporate headquarters. We have successfully done this before with Michelin, attracting Michelin manufacturing, then the Michelin Americas Research Company, and then the Michelin North American Headquarters. We can replicate the Michelin model with thousands of other companies we have relationships with.

This will require visionary leadership. Where will that come from? I don’t know. Maybe, hopefully, Proterra’s announcement will inspire someone running a major organization in the state to step up and provide the leadership we need.

Syndicated columnist Phil Noble occasionally asks guest columnists to share his space. This column is written by John Warner, CEO of Concepts to Companies, which partners with academic researchers and other technologists who have compelling business ideas but do not have the experience or the desire to start companies alone. Email him at johnwarner@conceptstocompanies.com.

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John Warner

Contributing Columnist

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