The Strategic Link to Successful Global Distribution & Assembly Manufacturing Centers In North Carolina North Carolina: The Best Site Location for Global Distribution Center & Assembly Manufacturing Expansion North Carolina chosen by Site Selection magazine as top state for business climate for last 7 out of 8 years The 10 Best Reasons for Locating Global Distribution & Manufacturing Facilities Near North Carolina Ports Comprehensive Sea/Air/Land Transportation Network The state offers a modern, efficient deepwater container port at Wilmington with expansion capacity at the future North Carolina International Terminal, and two breakbulk/bulk facilities at Wilmington and Morehead City, extensive highway system, five major airports (two with direct international air service), a 3,600-mile rail network. Low Tax Impact / Financial Incentives North Carolina’s per capita state and local tax rates are among the lowest of the 50 states. Other financial incentives include NC Ports Tax Credit, Job Creation Tax Credits, Investment Tax Credits, Research & Development Credits, Free work force training, site enhancements, job development grants. Large and Productive Labor Force Our Manufacturing work force of over 580,000 is one of the best in the nation. Work Force Training and Exceptional Education Facilities North Carolina’s nationally acclaimed community college system offers customized skill training to new and expanding industries at little or no cost. Low Construction and Energy Costs North Carolina maintains efficient, economical utility services. Electric rates for industrial, commercial and residential customers are below national average. Excellent Labor Environment North Carolina is a right-to-work state, with the lowest unionization rate in the nation. North Carolina offers low workers’ compensation insurance rates, while providing some of the highest benefits. Strategic Access to Major Global & Domestic Markets North Carolina’s central east Coast location puts the state within a 700-mile/1,100 km radius of more than 170 million U.S. and Canadian consumers. NC Ports put North Carolina within reach of the world. A Government that Works for Business State government enforces sound fiscal policy through a constitutionally mandated balanced budget. Professional Development Assistance North Carolina Ports – Distribution Services & Economic Development Department, Business/Industry Development Division of the North Carolina Department of Commerce and seven regional economic development partnerships provide personalized assistance in all phases of a prospective company’s relocation or expansion process A Great Place to Live North Carolina’s mild Sunbelt climate allows outdoor recreation at many of the nation’s finest golf courses, ski resorts, beaches, and at numerous state and national parks. Enjoy professional sports from the NFL, NHL, NBA to minor league baseball. North Carolina’s Ports are Part of an Integrated Transportation Network NCIT Highways Ports • Nation’s 2nd largest highway network with over 98,000 highway • Modern, expanding deep- miles water container port at Wilmington and NCIT(future) • Seven Interstate highways including I-26, I-40, I-73, I-74, I-77, • Two breakbulk/bulk facilities at I-85, I-95 Wilmington and Morehead City Airports • Five major airports (two with direct • Two inland terminals at international flights) Charlotte and Greensboro • Global TransPark- multi-modal transportation park Foreign Trade Zones Rail • NC Ports – Wilmington • NC Ports – Morehead city • Over 3,600 miles of track • Global TransPark • Charlotte • Service by over 20 carriers • Piedmont Triad including Norfolk Southern and • Raleigh/Durham CSX Transportation North Carolina Ports’ Mid Atlantic Position Is Ideal to Support Access to U.S./Canada Markets and one of the Fastest Growing Regional Markets Market 95 Accessibility Boston Buffalo Within 700 miles/1,110 Milwaukee Detroit km of North Carolina’s Cleveland 95 New York Borders Are: Chicago 700 Miles Washington, DC 170 million U.S. and 1,110 KM 75 Richmond Canadian St. Louis 500 Miles 77 consumers 800 KM 300 Miles 85 500 KM 65 of the country’s top 100 Nashville 40 metropolitan areas Charlotte PORT OF Memphis 40 MOREHEAD CITY 85 77 74 58.2% of total U.S. retail PORT OF 20 sales Atlanta 95 WILMINGTON NCIT (FUTURE) Central East Coast Jackson location Mobile 75 New Orleans North Carolina Population Growth 95 Miami U.S. Census Bureau predicts by 2030, North Carolina will be the 7th most populous state (currently 10th). From 2000 to 2020, North Carolina’s population is expected to surge by 55%, increasing by an additional 4.4 million people, according to government projections. The At-Port of Wilmington Distribution Center & Assembly Manufacturing Model: The Best Site Location for your Company’s Global Supply-chain Distribution Center Testimonials "Since Furniture Brands International has several major Brands headquartered in NC, i.e. Thomasville, Broyhill, Drexel Heritage, Henredon, the Port of Wilmington is a vital link to our import containers from Asia. The Port of Wilmington has positioned itself for tremendous growth in the future with recent infrastructure improvements, excellent business development support, and potential DC sites." Davy Whittington Director of Distribution/Logistics Furniture Brands International “Being located near a port, and the talented workforce and outstanding community leaders are tremendous assets that add much value to our company and make Wilmington an ideal location for our site” Bill King, Wilmington Site Manager INVISTA “We’re close to I-95 and I-40, so we can get north, south, east or west.” Jim Konneker, Plant Manager Goodyear “Community colleges in this region have a very good reputation and provide industry with qualified candidates. Economic development efforts here are very proactive, and it is a good location based on current trend of population shift from North to South.” Stodd McEwan, Director of Distribution Champion USA, a Hanesbrands International brand “The Port of Wilmington provides QVC with an alternative to the Port of Norfolk for our all water east coast sailings from Asia. We currently have 2 weekly sailings that call at the Port of Wilmington. Any expansion that would provide additional sailings from Asia would give QVC additional container capacity.” Dan McDermott, Vice President Supply Chain QVC NC Ports Is Supported by Superior East/West Interstate and Highway Capacity Wilmington’s east/west Highway Capacity is Superior to Hampton Roads, Charleston and Savannah Supported by $229,036,000 in Highway improvements since 2004 Traditional Distribution Model: Existing Distribution in North Carolina placed where Manufacturing Sites were located • More than 100 existing facilities in the North Carolina Corridor • All Facilities well-served via Port of Wilmington and the future North Carolina International Terminal • NC/SC/VA Distribution Center clients served by the Port of Wilmington Significant Impact of Distribution on the Global Supply Chain "Companies that employ strong supply chain competencies tend to have 7 to 26 percent higher market capitalization than competitors who do not. For such high cap enterprises in many a sector, a reduction of even 5 percent in total distribution cost can have the same impact on profit as a 30 percent increase in sales.” Karen E. Thuermer, Supply Chain Survival Guide, Part II, World Trade Magazine, September 2008 The At-Port Distribution Model can provide up to 33% savings in inland delivery cost of goods. Source – Dr. Walter Kemmsies Chief Economist Moffat & Nichol, March 2009 Benefits of At Port Distribution Can provide up to 33% savings in inland delivery cost of goods. Source – Dr. Walter Kemmsies, Chief Economist, Moffat & Nichol, March 2009 •Container Carrier equipment returned promptly: greatly improves asset utilization for carriers •Eliminates/reduces container per diem charges to importer •Allows Container Carriers to deliver high volume of containers to one consolidated port location. •Reduces empty truck miles - environmental sustainability NC Ports Launches At-Port of Wilmington DC Website For the most current listing of sites and facilities available, visit our website At-Port of Wilmington Distribution Center Infrastructure Development Reaches Significant Milestones BPG Development’s Planned Near Port Facility At-Port of Wilmington Distribution Center Infrastructure Development Reaches Significant Milestones BPG Development’s Planned Near Port Facility Site Development Grows Rapidly within At-Port of Wilmington DC Model International Logistics Park of North Carolina First Planned Distribution Park Has Significant Incentive Basis • Site of Future 1,100 acre International Logistics Park of North Carolina • Joint Two-County /Private Partnership Development provides highest benefit for Job Development Investment Grants and Tax Credits • Facilities Available as early as 2010 • Potential build out of approximately 8 million sq. ft. • Land prices are a fraction of those at competing port locations. Site Development Grows Rapidly within At-Port of Wilmington DC Model Mid-Atlantic Logistics Center Site Development Grows Rapidly within At-Port of Wilmington DC Model • Located only 10 miles from the Port of Wilmington • 150 +/- buildable acres, with contiguous acreage for expansion of park • U.S. Hwy 421 frontage, with only minutes to I-140, both leading to major east/west distribution corridors of I-40 and U.S. Hwy 74/to I-74, less than 10 minutes truck travel. One hour truck travel time to major north/south distribution corridor of I-95. Site Development Grows Rapidly within At-Port of Wilmington DC Model Brunswick Industrial River Park • 900± acres • 9.7 miles from the Port of Wilmington • Fast access to US Hwy 74/76, I-140, I-40, I-74 leading to I-95 Comparison of Distribution Facility Costs in the Mid to South Atlantic Port Range Buildings 100,000 square feet or Greater Area Sales Price Range Lease Price Range Wilmington, NC Area $8-$22 per SF $1.50-$3.80 per SF Savannah, GA Area $10-$25 per SF $1.60-$4.25 per SF Charleston, SC Area $10-$37 per SF $1.50-$4.25 per SF Hampton Roads, VA Area $12-$40 per SF $3.80-$4.65 per SF Industrial Sites Area Average Asking Price Wilmington, NC Area $45,000 per Acre Savannah, GA Area $73,000 per Acre Charleston, SC Area $85,000 per Acre Hampton Roads, VA Area $79,000 per Acre Source: October 2008 Survey NCSPA North Carolina Ports Expanding Container Cargo Services Infrastructure & Overview Wilmington’s Container Port Facilities… Port of Wilmington • Size – 284 Acres • 225,000 TEU Annual Thruput Capacity • 42-foot navigation channel (Deepened in 2004 – now same depth as the Port of Savannah, Ga.) • 3 Berths, 8 Cranes including 4 new post-Panamax Cranes, Sidepick Operations • Fast, Efficient: Vessel/Truck Turnaround Crane Productivity Gate Productivity • NC Ports employees perform terminal operations …Are Expanding to Meet Demand Wilmington Container Terminal - $190 Million Expansion Wilmington has experienced 15% CAGR in container thruput between 2005 and 2008 Terminal Plan - December 2009 •2650’ of Upgraded Berthing for Panamax and Post Panamax vessels (Berth 9 Complete, Berth 8 Improvements underway) •8 Cranes (Complete) •4 x 100’ Gauge •3 x 50’ Gauge •1 x 32’ Gauge •New Terminal Operating System (Complete) •100+ Acres of Container Storage (Scheduled for 2009) •On dock rail ICTF (Complete) Increases thruput capacity by 100% to total 500,000 Annual TEU Port of Wilmington Sets Container Move Record As Printed in Seaports Press Review Port of Wilmington Sets Container Move Record Monday, November 2, 2009 (WILMINGTON, NC) - A record of 46.3 crane moves per hour set on the Independent Accord at the Port of Wilmington on October 22 lasted less than a week, when a new record of 46.8 crane moves was set on the Independent Concept on October 29. The Wilmington container team includes Ports Authority employees, the International Longshoremen's Association, stevedoring management provided by SSA Marine and the shipping company, Independent Container Line. In a letter of congratulations to the Ports Authority crane team, SSA Cooper vessel superintendant Tony R. Thompson wrote, "We're impressed by all of your efforts on our behalf....Without your dedication and efficiency in performing your various jobs we would not have been able to achieve a production of this magnitude." ICL executive vice president/COO Dale Ross added, "ICL is pleased with the sustained growth in volume since moving to Wilmington. The support from North Carolina shippers has been impressive and validates our decision to call the Port of Wilmington." ICL began weekly container service between Wilmington and the United Kingdom and Northern Europe in March 2009. "The Port of Wilmington TEAM works relentlessly to deliver the highest quality service at the lowest cost," said NC State Ports Authority Chief Operations Officer Jeff Miles. "As a port community, we take great pride and satisfaction in knowing that our best-in-class production contributes significantly to the success of ICL in this market." Miles added that container vessel operations at Wilmington for the Maersk Line service to Central America and CKYH transpacific vessel calls October 23, 24 and 25, consistently averaged near 40 moves an hour. North Carolina International Terminal Provides Future Growth Capacity • Greenfield Site • Purchased by NC Ports in April 2006 • Funding and Planning underway • Minimum 4,000’ of berthing capability • 4 miles to open sea • Target operating channel depth of 52’ • First phase complete by 2018 • Full build-out in 2030 • Projected multi-million annual TEU capacity • Will create 16,500+ jobs • Support 477,000 jobs statewide • Generate $1.1 billion in state/local revenues Regularly Scheduled Container Services at the Port of Wilmington, North Carolina West Bound East Bound from Vessel Frequency Base Ports to Wilmington Wilmington Capacity Trans- Liverpool 12 Days 15 Days 4 Ships at atlantic 1,440 TEU Every Average Thursday Antwerp 15 Days 11 Days Capacity North Bound South Bound Vessel Frequency Base Ports to Wilmington from Wilmington Capacity Santo Tomas 2 Ships at SAE 4 Days 8 Days de Castilla 1,200 TEU Every Average Friday Puerto Cortes 5 Days 7 Days Capacity East Bound West Bound Vessel Frequency Base Ports to Wilmington from Wilmington Capacity Pusan 24 Days 23 Days 8 Ships at AWH Shanghai 26 Days 28 Days 4,500 TEU Every Ningbo 28 Days 27 Days Average Saturday Capacity Qingdao 29 Days 25 Days East Bound West Bound Vessel Frequency Base Ports to Wilmington from Wilmington Capacity Kaohsiung 30 Days 25 Days 8 Ships at AWY Hong Kong 28 Days 26 Days 4,000 TEU Every Yantian 27 Days 27 Days Average Sunday Capacity Pusan 24 Days 30 Days August 2009 NC Ports Business and Economic Development Department NC Ports Showcases Environmentally "Greener" Port Ops and Sustainability On Tuesday, September 22, 2009, the NC State Ports Authority showcased its commitment to environmental stewardship, and greener and more environmentally-friendly operations at the North Carolina Ports of Wilmington and Morehead City, and for the NC International Terminal. A news conference and demonstrations at the Port of Wilmington featured some of the latest technology for diesel emissions control. Attendees got a firsthand look at the newest technology in diesel/electric hybrid terminal tractors, the Pluggable Hybrid Electric Terminal Tractor (PHETT®), plus receive the latest information about ongoing emissions control programs for the NC State Ports operating equipment, including biodiesel fuel and biobased / biodegradable lubricants. The Ports Authority has been working for several years to reduce its environmental footprint by using ultra low sulfur diesel (USLD) as its primary off-road diesel fuel, transitioning to a blend of 20% bio-product/80% USLD in port operating equipment and utilizing readily biodegradable lubricants in the port equipment pool. These practices are estimated to reduce overall diesel consumption by 20% annually. Estimated reduction for emissions of particulate matter, hydrocarbons, carbon monoxide, carbon dioxide and sulfur dioxide are as much as 20%. Three biodiesel storage tanks, funded through an NC Clean Air grant and Ports Authority revenues, are being installed at the Ports of Wilmington and Morehead City. The Ports Authority will also be retrofitting cargo handling equipment and machinery with diesel emission control devises to reduce air emissions from a grant by the NC Department of Environmental and Natural Resources. To complement its four electric 100-foot gauge container cranes, the Authority will continue to explore grants to replace other specialized cargo handling diesel equipment with all electric units. NC Ports and North Carolina State Financial Incentives & Economic Impact Overview NC Ports Tax Credit Program Businesses who use the North Carolina State Ports at Morehead City and Wilmington and who are subject to payment of North Carolina income taxes can apply and qualify for a tax credit. The 2008 NC General Assembly extended the state income tax credit for customers of North Carolina’s Ports at Morehead City and Wilmington for five years. The 60-month extension is the lengthiest in the tax credit’s thirteen-year history. Tax Credit Application Example A company imports or exports containers of products via carriers serving the Port of Wilmington. The company has a corporate income tax liability to the state of NC. During the current tax year, these shipments totaled 2,000 containers with an average cargo weight of 30,000 lbs. per container. Tariff rates for container receiving and wharfage are applied according to the Wilmington port tariff to determine the fees per container for calculation of credit: Container Receiving Charge: $53.00 Wharfage at $3.55 per 2,000 lbs.: $53.25 Total Fees Per Container: $106.25 Total Yearly Fees (2,000 x $106.25): $212,500 Wharfage & Handling Fees 2006 2007 2008 -0- -0- $212,500 Annual Certification of tax credit application by NC Ports: 1995-1996 $470,657 2008 Fees = $212,500 1996-1997 $1,004,954 Divided By 3 Years = $ 70,833 1997-1998 $920,908 1998-1999 $745,156 2008 Fees Paid $ 212,500 1999-2000 $1,551,121 2000-2001 $382,416 Less Average Fees $ 70,833 2001-2002 $787,260 Tax Credit $ 141,667 2002-2003 $427,648 2003-2004 $1,982,918 Projected per container “value” = $70.83 2004-2005 $307,156 2005-2006 $2,183,331 2006-2007 $417,721 October 2008 NC State Tax Credit Program In July, 2006, the NC General Assembly passed legislation (House Bill 2170) 2. The average wage of all full-time workers employed by the taxpayer at that created a new tax credit program, Article 3J Credits. Article 3J provides the establishment during the taxable year must meet or exceed the three types of tax credits to eligible taxpayers that undertake qualifying applicable wage standard of the county in which the establishment is activities in North Carolina: 1) Credit for Creating Jobs, 2) Credit for located. Investing in Business Property, and 3) Credit for Investment in Real Property (tier 1 only). These credits may be combined to offset up to 50% 3. The taxpayer must offer qualifying health insurance for all full- time of the taxpayer’s state income and franchise tax liability, and unused positions at the establishment and pay at least fifty percent (50%) of credits may be carried forward for up to five years (15-year carry- forwards employee premiums. apply to the Credit for Investing in Real Property and 20- year carry- forwards exist for taxpayers that invest at least $150 million over a two- 4. The taxpayer must not have received any significant year period). environmental violations with the North Carolina Department of Environment and Natural Resources within the prior five years. Article 3J Credits should not be confused with William S. Lee Credits. Although these tax credit programs are similar, they are not 5. The taxpayer must not have received any “willful” or “failure to abate” the same. Article 3J is not a revision to the Lee Act; it replaces the serious OSHA violations at the establishment within the prior three Lee Act. The distinction is subtle, but significant. years. In general terms, Lee Credits are repealed for business activities 6. The taxpayer may not have overdue taxes. that occur on or after January 1, 2007 and Article 3J Credits take Credit for Creating Jobs ( 105-129.87) effect for taxable years beginning on or after January 1, 2007. Eligible taxpayers that meet a minimum threshold of new full-time However, taxpayers will have the option, after signing a letter of jobs created during the taxable year may claim a credit for each commitment with the NC Department of Commerce, to utilize Lee new job created. The credit is taken in equal installments over four Act Credits in place of Article 3J Credits for qualifying activity that years following the year the jobs are created. The job threshold takes place at a specific site in 2007. If the taxpayer intends to claim and the credit amount per job are determined by the tier Lee Credits for 2007 activity at more than one site, it must sign a designation of the county in which the jobs are created. separate letter of commitment for each site. Taxpayers should carefully review and understand the differences between Lee Credits and Article 3J Credits before electing to claim Lee Act County Tier Designation Credits for 2007 activity UPZ/AGZ 1 2 3 Letters of commitment must be submitted to the Department of Commerce prior to January 1, 2007. Job Threshold 5 10 15 5 County Tier Designations ( 143B-437.08) Credit per Job $12,500 $5,000 $750 +$1,000* The Department of Commerce annually ranks the state’s 100 counties based on economic well-being and assigns a tier designation *If the job is filled by a resident of the zone to each. The 40 most distressed counties are designated as tier 1, the or a long- term unemployed worker, add an additional $2,000. next 40 are tier 2, and the 20 least distressed are tier 3. This tier system is incorporated into various state programs, including Article 3J Credits, to encourage economic activity in the less prosperous Credit for Investing in Business Property ( 105-129.88) areas of the state. Eligible taxpayers may claim a credit based on a percentage of the cost of capitalized tangible personal property that is placed in service during the taxable year, in excess of an applicable Urban Progress Zones (UPZ) and Agrarian Growth Zones (AGZ) threshold. This credit is taken in equal installments over four Municipalities with a population of at least 10,000 have the ability to years, beginning the year after the property is first placed in define qualifying areas of poverty as Urban Progress Zones. service. The credit percentage and threshold are based on the tier Counties that do not have a municipality with a population of at least designation of the county where the property is placed in service. 10,000, have the ability to define qualifying areas of poverty as Agrarian Growth Zones. Projects located within these zones receive County Tier Designation enhanced Article 3J Credits. UPZ/AGZ 1 2 3 Eligibility ( 105-129.83) To qualify for Article 3J Credits, the following eligibility requirements Threshold $0 $1 million $2 million $0 must be met: 1. The primary activity at the business Credit % 7% 5% 3.5% 7% establishment must be an eligible type of business, which includes: Credit for Investment in Real Property ( 105-129.89) aircraft maintenance and repair; air Eligible taxpayers that invest at least $10 million in real property within a courier services hub; company three-year period and create at least 200 new jobs within two years at an headquarters that creates at least 75 establishment located in a tier 1 county are allowed a credit equal to 30% new headquarters jobs; customer of the eligible real property investment. This credit is taken in equal service call centers; electronic installments over seven years, beginning the year after the property is shopping and mail order houses; used in an eligible business. To qualify for this credit, the taxpayer must information technology and services; obtain a written determination from the Department of Commerce. manufacturing; motorsports facility; This summary is not meant to be exhaustive. Taxpayers should review the Article 3 motorports racing team; research statutes prior to claiming credits. Taxpayers that are uncertain about their eligibility and development; warehousing; and or ineligibility to claim credits after reviewing the Article 3J statutes should consult wholesale trade. with the Department of Revenue. No application is required to claim Article 3J credits. NC Ports Economic Impact Milken Institute Review “Wilmington, North Carolina, is a new entrant into the upper echelon of performers, jumping from 59th in the previous index to 2nd for 2007. Unlike most areas of the country this year, Wilmington’s economy hasn’t lost much momentum. Port-related activity is booming after capacity was added with a new, deeper channel.” “Increased port activity was also a driver of economic growth. In Wilmington, North Carolina, port related activity contributed to growth in other sectors, such as business services and construction. The metro ranked 2nd on the 2007 index, having improved from 59th in 2005. Investments in port infrastructure have led to improvements in cargo capacity, creating more opportunities for trade linkages and port-related business.” “Several factors support expanding international trade in Wilmington. First, the decline in the dollar has boosted export traffic through the port. Second, with increased imports from China and the rest of Asia, capacity constraints clog West Coast ports, prompting shippers to seek additional points of entry to U.S.” Best Performing Cities, September 2007 “Of all the economic activities a state can have, ports have the highest multiplier. Every dollar spent importing or exporting through a port adds $12 to state income.” -Jim Smith, UNC Chapel Hill economist Business North Carolina, June 2005 Ports are the backbone of international trade. Deep draft ports accommodate ocean- going vessels which carry more than 99% of U.S. overseas trade by weight and 61% by value. Based upon information from US Department of Commerce NC Ports Economic Impact on the State North Carolina’s Port Operations support 85,000 jobs and $299 million in tax revenue annually Calculation Based on a Standard Nationwide Model Developed by MARAD Totals may not add due to rounding. “Other” represents jobs which cannot be clearly assigned to one region.