Tom Mitchell's Summary - Carteret County

Carteret County is located in the Crystal Coast region of North Carolina and is the gateway to the southern tip of the outer banks. Home to the state’s second largest port, Morehead City, much of Carteret’s economy revolves around the water both in terms of production and tourist industries. Carteret has eleven municipalities separated by a winding road network, inland waterways, and income disparities. The permanent residential population is 62,436, with a seasonal influx of as many as 140,000 additional people per year, with both groups growing at 20 percent or greater over the past ten years[1].

While Carteret is a geographically desirable location, with the environment and maritime culture as two of its greatest assets, it must balance the growth of coastal real estate development with its community and economic development. Clusters in the marine trades and sciences offer the promise of innovative growth and development, and additional competitive advantages are found in tourism/hospitality industries and health care. The economic development challenge lies in the ability of county administrators and the Economic Development Council (EDC) to cultivate networks of business and civic groups to define common goals and pursue unified strategies.

According the Dave Inscoe, Executive Director of the Carteret County EDC, the county’s three largest assets are the environment, military employment, and the large number of vacation and second homes. With regard to the environment, Carteret has an abundance of coastline. This extensive water access and the port facility make Carteret a hub of commercial and recreational marine activities. It is home to almost 12% of North Carolina’s marine trades[2] and has a growing cluster in this sector[3]. Another important cluster is located in the marine sciences since Carteret is home to three university marine science research facilities and one government station.

The presence of the large seasonal population spike is correlated to these water assets, yet at the same time is driving the pace of real estate development. To insure sustainable benefits from its environment, Carteret must address the challenges of beach erosion on Bogue Banks Beach (source of 42% of property tax revenue)[4], the conversion of commercial and recreational waterfronts to private condominium developments, and the reduction in federal funding for maintenance of the Intracoastal Waterway.

The military is the greatest source of wage income in Carteret even though no bases are located within the county. Residents that commute to Cherry Point account for $161 million in payroll, which is over 23% of county wages[5]. According to Dave Inscoe, the importance of the military is overlooked by most citizens but is crucial to the county’s tax base due to its high median salaries. People leaving the military before retirement also are a potential pool of skilled labor in the growing marine trades cluster and professional services industries.

Carteret has enjoyed tremendous growth in both population and real estate development, most of this is due to the increase of retirees moving in and others building second homes. Dave Inscoe refers to this group as OPALS, or Older People with Active Lifestyles. This population increases the tax base without straining the need for services like schools. It also is a source of people who have talent and time for making positive contributions to civic and commercial activities, as many of them still have a yearning to use their skills and abilities. The other side of this equation is that the population is aging more rapidly with the increase in retirees, while it the population of 18 – 34 year-olds decreased by more than 20% from 1990 – 2000 which indicates a brain drain from the local labor force (See Appendix 1).

The number of second homes, estimated to be 1 in 3 homes in Carteret[6], also contributes to the tax base without straining the capacity of services. While these homeowners and vacationers do not necessarily participate in the labor force, their seasonal expenditures drive many of the retail and tourism revenues. The construction of new homes has also led to strong performance of the construction industry, with a location quotient (LQ) of 2.25 and almost 70% growth between 1994 and 2004 (see Appendix 2). At the same time, there are tensions that arise from this trend. The dichotomy between the wealthier new residents in the Emerald Isle area and the poorer residents in the eastern part of the county is visible in the political and economic arena. There is also a sense that permanent residents are being priced out of real estate that is proximate to their place of employment, a phenomenon that is not unusual in rural counties.

An analysis of 3-digit NAICS data from 2004 indicates 32 different industries with an LQ greater than 1 (see Appendix 2). The following industry sectors have both high LQs and significant proportions of private sector employment. Tourism-related industries account for over 33% of county employment, but have relatively low wages. Wood product manufacturing is strong, with an LQ of 5.05 and 462 employees, of which almost 300 work at Atlantic Veneer. Health care services combine for 8.4% of county employment, and derive their strength from the presence of Carteret General Hospital and the growing population of retirees. Real estate has enjoyed a growth rate of 727% between 1994 and 2004. The various retail industries combine for over 20% of employment to join tourism as one of the largest employment opportunities in the county, but it also has a lower average wage (See Appendix 3 for employment and wage comparisons, and Appendix 4 for potential competitive advantages in terms of LQ vs. wage).

Dave Inscoe points to the poor highway infrastructure and connectivity as Carteret’s greatest threat to development. Highway 70, the quickest route to the Triangle region, has 71 traffic lights between Morehead City and Raleigh. Highway expansion, or the construction of more bypasses, would lower transportation costs to Carteret. On the other hand, it may also invite more real estate development, which could exacerbate the loss of commercial and recreational waterfronts[7].

There is a disturbing trend of marinas and public access points being purchased by private entities. There are currently 71 marinas in the county, but 14 of them have been acquired in the past year by private developers. It remains to be seen whether they will continue to offer slip rentals and basic services (i.e. showers and fuelling) to the public, or just to condominium owners[8]. The problem is two-fold. First, there is no economic development entity that can bid for land at market prices. Second, county administrators are not unified or organized around zoning policies. When a property is re-zoned from commercial to residential, it is difficult to track through the public records[9]. Though boaters and economic developers are speaking out on the issue, the lack of administrative cohesion is an indicator that the issue of waterfront preservation has not escalated to the larger public sphere.

Carteret relies heavily on state and federal funding for replenishing its beaches and maintaining the Intracoastal Waterway[10]. The beach at Bogue Banks requires several million dollars a year in maintenance and is also is the source of 42% of county tax revenues. Reduction in federal and state funds will increase the burden on the county to maintain this resource. The Intracoastal Waterway needs continuous dredging. According to Dave Inscoe, deep draft commercial ships are currently unable to carry full freight due to shoaling in the waterway. The AIWW states the Federal government is only providing $3 million of the needed $11 million for waterway maintenance[11].

Political instability is a challenge to cohesive and consistent economic development policies and strategies. In five years, Carteret has had five different county managers. The county commissioners also have a high turnover rate, so there is no unifying vision or common understanding of what the county should do. This creates challenges for allocating public funds to economic development initiatives and/or meeting the challenges above.

Carteret County published a comprehensive plan in 2002 that includes a general statement about economic development; however, it pays little attention to strategic economic development. It focuses primarily on the recruitment of retail firms and other exogenous strategies, without seeking to leverage Carteret’s existing assets[12]. Strategic direction comes from the Carteret EDC and its efforts to synthesize and apply research and strategic recommendations from sources such as consultants, universities, and the Eastern Region Partnership.

Carteret EDC is the most active institution that promotes unified and focused strategies for economic development. The EDC provides assistance to entrepreneurs and existing or expanding businesses, as well as prospective companies considering Carteret County for a relocation or expansion. It is a membership organization that is incorporated as a public-private partnership, and receives the majority of its funding from Carteret County through annual appropriations. The EDC mission includes recruitment, retention, workforce, and infrastructure development[13]. Despite a small staff, the EDC is fairly effective at networking amongst industry, government, civic groups, and outside agencies.

Carteret Community college (CCC) works closely with the EDC on economic development initiatives and is a major supplier to the local labor force. Some of its programs include the Center for Marine Sciences and Technology, in partnership with NC State, which hosts Associate in Science and Aquaculture Technology degree programs. The Hotel and Restaurant management program supports the tourist industry. CCC recently completed two new buildings that will expand the Business Technologies and Health Science programs. The North Carolina Marine Training and Education Center (NC MARTEC) is an innovative facility that is dedicated to cultivating a skilled workforce for the marine trades. Along with several million dollars in infrastructure investment from the state, CCC has successfully raised two rounds of funding from the Golden Leaf Foundation to help purchase diagnostic tools and develop training programs for high end boat production and repair training[14].

The Eastern Region Partnership has contributed important research and strategic planning resources, as well as helping facilitate relationships between other county EDCs in the region. Additional partners in economic development include the numerous business and historical associations dispersed among the eleven municipalities. Another state asset is the Small Business and Technology Development Center (SBTDC) network, which manages The Marine Trades Services (MTS) program from its Wilmington office. MTS is a statewide market development service supporting business and employment growth for the state’s marinas, boatyards, boat dealers, boat builders, marine construction firms, and product/service providers[15].

Cluster development is an important part of the long-term strategy of the EDC, and holds great opportunity for both integrating Carteret into the new economy and providing quality jobs outside of tourism and retail. Carteret is the hub of two growing clusters in the Eastern Region, the marine sciences and the marine trades. Carteret EDC and the marine science and trade communities are in various stages of creating crucial processes by which to develop these clusters.

The marine sciences were identified as a vital cluster for driving innovation and high-end economic development, with the presence of marine research facilities of UNC Chapel Hill, NC State, Duke University, and the National Oceanic and Atmospheric Administration (NOAA) Center for Coastal Fisheries and Habitat Research concentrated in Morehead City and Harker’s Island. To harness the full potential of the cluster, local officials established the Marine Science and Education Partnership (MSEP) in 2003. The MSEP is made up of nine member institutions including three university centers, NOAA, the North Carolina Maritime Museum, and the North Carolina Aquarium at Pine Knoll Shores[16]. Its first official action was to commission an economic analysis study to try and quantify the impact that their cluster had on the local economy. The UNC-Chapel Hill study estimated that the cluster provides around $127 million dollars worth of economic output annually, approximately 8 percent of Carteret’s total economy[17].

Outcomes of recent collaboration efforts include Duke University Marine Laboratory and the NOAA working together to work on storm water runoff challenges, the lending of UNC facility lab space to researchers at N.C. State, and the sharing of high-speed Internet access by N.C. State with its partners. There is also greater communication on research, development and discovery. For instance, UNC scientists have discovered a biostatin within a mollusk that may have medical properties for treating Alzheimer’s disease. The aquaculture capacity of CMAST could provide a solution for mass production the mollusks for further development[18]. The gap in this cluster is the lack of technology transfer resources in Carteret, and this need must be addressed to take full advantage of the R&D capacities of the institutes. While the MSEP enables members to draw from a deeper base of skills and resources to promote their regional performance, the crucial gap is a lack of organizational funding and leadership to coordinate efforts.

Carteret marine trades are an important growing cluster for the county and region. Stuart Rosenfeld labeled regional marine trades a “wanna-be” cluster in 1997. He elaborated that “their potential is not fully realized, generally because the social fabric that promotes interaction among workers and employers is weak, and the businesses neither share a vision of the future nor think of themselves as a cluster” [19]. Two of the key challenges for evolution of this cluster are increasing the space available for commercial waterfronts and increasing the supply of a skilled labor force. The establishment of NC MARTEC and a private developed marine industrial park by Jarrett Bay Yachts[20] may elevate the marine trades to “latent” cluster status in Rosenfeld’s typology, as results within the county are attracting more attention and resources to the cluster.

The Jarrett Bay Marine Industrial Park epitomizes the synergies that Carteret EDC is seeking to infuse into the cluster. Jarrett Bay purchased 178 acres of waterfront property, of which 38 acres are dedicated to Jarrett Bay production and maintenance facilities. The remaining space was either leased or sold to other marine trades companies, and has boosted the production capacity in Carteret. The EDC worked closely with Jarrett Bay to provide assistance and connect Jarrett Bay to the real estate development community to launch the project.

The EDC would like to see an expansion of the Jarrett Bay facility, and establish another marine industrial park in the county. Policy 6.3 of Carteret County’s Land Use Plan aims to cooperate with private developers and property owners to acquire additional properties contiguous to the existing Jarrett Bay Marine Industrial Park, extend water and sewer service to the acquired properties, and construct new roads to serve the expansion[21]. This goal is a good way to ensure that commercial property will continue to be available on the water. The critical gaps for land to be purchased and developed, however, are political will and available funding.

Carteret is well positioned within the marine trades’ value chain with the majority of industrial assets located within production, distribution and storage and maintenance activities (see Appendix 5). Inputs to boat production, which are outside the region, are highly commoditized. Most of the value is captured in the manufacture, sale and maintenance of boats. Potential boat owners set a budget for purchasing a boat, where the purchase price is only 60 percent of the cost, and the remaining 40 percent is dedicated to accessories, insurance, upkeep and maintenance[22]. This indicates that Carteret can capture continuous revenue streams by insuring adequate supply of marinas and maintenance facilities. The key to success toward this end is creating more mechanisms for maintaining existing assets and competing with market prices for waterfront property.

MSEP – While the MSEP has taken the important step of shaping its identity, it needs dedicated funding and leadership to pursue longer-term strategies. The formation of a non-profit organization, with an experienced Executive Director, would help coordinate activities among the different institutions and provide a vehicle for pursuing state and federal funding opportunities. Such an organization would also appeal to resources such as the Golden Leaf Foundation as an economic development mechanism for better connecting research to the marketplace, and marine sciences to the local community.

Marine Trades - Because the key challenges facing marine trades are regional in scope, individual firms are limited in their ability to improve conditions. The marine trades must start the process of building collaboration by unifying themselves as an industry, and coordinating with local and state governments and training centers to target the industry’s regional challenges. The first step is to involve the industry’s business owners in group-centered strategies. This can help build the level of trust necessary to facilitate collaboration on a greater scale. Specifically, they should pursue a regional branding strategy as a group-building exercise. This would create a variety of positive outcomes: greater efficiencies in the use of local resources, improved effectiveness in marketing for individual firms and increased regional, state, and national awareness of the Carteret’s boat production and boat-related activities.

The next step is to establish a business association that broadly represents the interests of the Marine Trades industry. This can assist individual firms in a variety of capacities. It can coordinate with training centers, such as NC MARTEC to build the industry’s workforce. As a representative association, it can also give individual firms a stronger voice in local and state government policy decisions that influence waterfront accessibility.

Commercial Waterfronts – The issue must be prioritized by county officials who will work with local jurisdictions to make zoning changes requiring waterfront development to provide boat access for every minimum number of feet of waterfront, and a minimum number of public boat slips for every minimum number of residential units in subdivisions. They should begin a process of identifying and convening stakeholders with interests in pursuing a larger Jarrett Bay Marine Industrial Park or a second marine industrial park location. The list should include public, private, and non-profit sector interests and expand beyond the political boundaries of any one jurisdiction. This group can then begin to move forward identifying strategies for funding a project. There are a variety of sources for support in this endeavor including: the four research institutions and national parks to discuss if there is land suitable for public boat ramps; the North Carolina Department of Commerce for funding for further commercial site development; the North Carolina Park and Recreation Trust Fund for funding public access points; or the North Carolina Coastal Land Trust and private sector interests to discuss partnering to buy land or purchase development rights for a conservation easement[23]. They should also reach out to the taxpayers to gauge political and community will in the region for passing a general obligation bond for purchasing waterfront property for building more boat ramps.

Carteret has many assets to build upon in pursuing economic development strategies. Despite a heavy dependence on tourism and retail for jobs, it has unique environmental elements that can be leveraged to expand the marine trades and sciences clusters and continue to attract extra-regional revenues through smart real estate development. Forward-looking endeavors must aggregate political and financial capital to make decisions that can benefit the county as a whole, rather than distinct municipalities and income aggregations. The Carteret EDC is fluent in contemporary economic development ideas and thinking, but does not have the capacity to drive the strategies without greater collaboration from industry, government and the citizenry.

Carteret County – A comprehensive plan: A guide to promote quality of life and a sustainable development pattern over a twenty-year period from 2002 – 2022. Authorized by the Carteret County Board of Commissioners Administrative support by the Carteret County Economic Development Council

Luger, Michael. (2004). Economic Impacts and Opportunities for Marine Science Research and Education in Carteret County, North Carolina. Center for Competitive Economics Kenan Institute of Private Enterprise University of North Carolina at Chapel Hill.

Moffatt & Nichol. (2005, November). Report on costs, benefits, and management issues related to maintaining North Carolina’s shallow draft navigation channels. Commissioned by the State of North Carolina General Assembly. Retrieved on February 15, 2006 from http://www.ncleg.net/etc/JLTOCFinalReport.pdf

Murray, Amy. (2005). Rural Carteret County, N.C. Builds its Marine Science Cluster.

Poole, Kenneth, Mark White and Edward Feser. (2005).“Cluster Industries Analysis for NC’s Eastern Region.” Center for Regional Economic Competitiveness, April 27, 2005.

Rosenfeld, S. (1997). Bringing Business Clusters into the Mainstream of Economic Development. European Planning Studies, Vol. 5, No. 1. Retrieved April 10, 2006 from http://www.cherry.gatech.edu/sim/refs/rosen.pdf

Synder, R. (2005). Working Waterfronts: The Land Trust Solution. Retrieved on April 1, 2006, from http://www.workingwaterfront.com/article.asp?storyID=20040230

Mitchell, T. (17 April, 2006). [interview with Dave Inscoe, Executive Director Carteret Economic Development Council].

Mitchell, T. (14 April, 2006). [interview with Mike Bradley, Director Marine Trades Services Program, NC SBTDC].

Bureau of Labor Statistics Data for United States and Carteret County retrieved from www.ncesc.com and www.bls.gov were retrieved on multiple occasions in March and April of 2006

Appendices [contact Dave Inscoe of the Carteret County EDC for copies of article with appendices - edc@carteret.cc.nc.us]

Appendix 1 – Population Change by Age Group 1990 – 2002. Source: US Census, Carteret Economic SWOT 2006.

Appendix 2 – Carteret Industries with Location Quotient greater than one in 2004, analyzed with NAICS codes at 3-digit level. Source: NC ESC and US BLS.

Appendix 3 – Comparison of leading employment sectors to average wages in 2004. Analyzed with NAICS codes at 2-digit level. Source: NCESC and US BLS.

Appendix 4 – Analyzing potential competitive advantages in Carteret County 2004. The graph shows Location Quotients plotted against average wages, and the county average wage of $21,114. The size of the bubbles represents the percentage of county employment in 2004. Analysis done with NAICS codes at 3-digit level. Source: NC ESC and US BLS

Appendix 5 – Analysis of Marine Trades cluster, comparing Location Quotients to Carteret County average wage in 2004. Analysis done with NAICS codes at 4-digit level. Source: NCESC and US BLS

[1] Carteret Economic Development, Demographics, online resource http://www.carteretedc.com/home.php?page=population accessed on April 18, 2006.

[2] Data available at www.ncwaterways.com, compiled by the SBTDC

[3] Poole, Kenneth, Mark White and Edward Feser. (2005)

[4] Carteret Economic SWOT, 2006

[5] Includes 930 active duty and 547 civilian employees, 2005 Demographics and Membership Report

[6] Figure provided by Dave Inscoe

[7] West, 2006

[8] M. Bradley, SBTDC, personal communication, April 14, 2006

[9] Reported by Rebecca Brown, UNC DCRP, during interview for PLAN 223 Workshop with Morehead City Planning Department, March 2006.

[10] Underfunding of Intracoastal Waterway, Atlantic Intracoastal Waterway, online resource http://www.atlintracoastal.org/, accessed April 23, 2006.

[11] Ibid

[12] Carteret County: A Comprehensive Plan 2002-2022, p. 4.

[13] http://www.carteretedc.com/home.php?page=aboutus

[14] http://www.carteret.edu/aboutccc/aboutccc.htm

[15] http://www.sbtdc.org/services/marine_trade.asp

[16] Powers, 2005

[17] Luger, 2004

[18] Powers, 2005

[19] Rosenfeld, S. (1997). Bringing Business Clusters into the Mainstream of Economic Development. European Planning Studies, Vol. 5, No. 1. p. 10.

[20] Jarrett Bay Marine Industrial Park, http://www.jarrettbayyachtsales.com/about/locations_beaufort.asp

[21] Land Use Plan available at http://www.co.carteret.nc.us/departments/planning/2003/default.htm

[22] Caswell, 1997

[23] Snyder, 2005