When Companies Lie

Companies are made up of people (Mitt Romney got that part right), and people are, well, people.

And we know this about people — we are capable of being generous and doing wonderful things for others. We are also capable of lying and research shows that we do it on a regular basis.

Self-esteem as one of the biggest reasons for lying, according to psychologist Robert Feldman, author of The Liar In Your Life: The Way To Truthful Relationships.

“We find that as soon as people feel that their self-esteem is threatened, they immediately begin to lie at higher levels.”

Pretty Baby, Lunch with Elon

Sometimes we tell a deliberate untruth to smooth things over in our relations with others. We may think of these as small, little white lies, designed to avoid conflict.

“No, dear, you do not look fat in that dress.” (When she is busting out the seams.)

“Oh what a pretty baby.” (I am reminded of the Flip Wilson joke: And maybe we can find a banana for your monkey.)

Sometimes we tell ties to inflate our importance with others. Here’s one that I have yet to try out. It’s still in the formative stage.

“I was having lunch the other day with Elon Musk. Bright guy, but he wanted to get my ideas on a few things that he was working on. So during our lunch, Warren Buffet kept calling me on my cell phone and leaving messages. I finally got back to him later in the day. It was about a company that he was considering buying. You know, Warren really didn’t need my advice on that. ”

Bombarded Daily

Lies are no stranger to business and commerce. You could rightly argue that we are barraged every day with a multitude of misleading, deceptive messages from companies wanting us to buy this product or that service.

Occasionally the Federal Trade Commission will come down hard on a company whose claims go too far, a late-night info-commercial having you believe that mixing Siberian mud into your food will shed pounds off your body. (I’m making this up.)

In December 2015, LifeLock, an identity theft protection company, agreed to pay $100 million for violating an FTC order that prohibited the company from engaging in deceptive advertising regarding the security of consumer data, among other things.

The FTC said LifeLock falsely advertised that it would send alerts “as soon as” it received a report of identity theft and that it used the same high-level safeguards used by financial institutions to protect consumer data. Both of these claims were found to be deceptive.

The Big One

One big fat lie played a major role in the late-2000s global financial crisis, sparked by mortgage fraud and predatory lending. Fraudulent financial instruments invented by investment banks on Wall Street, things called mortgage-backed securities (MBS) and collateralized debt obligations (CDO), ultimately brought about massive defaults and a subprime mortgage crisis.

The result was the worst global recession since World War II. Nearly 9 million jobs were lost in the United States during 2008 and 2009, roughly 6 percent of the workforce. One estimate of lost output from the crisis comes to “at least 40% of 2007 gross domestic product.”

Strangely, no one went to jail for what was purposeful deceit, but Lehman Brothers Holdings Inc., the fourth-largest investment bank in the U.S., did not survive.

Recommendation: Watch the movie The Big Short, which I think explains how a housing bubble happened, and how it ultimately burst and wreaked financial havoc on just about everyone.

While its scope does not measure up to the Great Recession, the recent emissions-cheating scandal with Volkswagen will be one for the history books and it is playing out right now.

A Fraudulent Conspiracy of Epic Proportions

If you haven’t already heard, Volkswagen last week said it was taking an $18.85 billion charge against 2015 earnings, pushing the company to a record loss, to pay for all known costs associated with its emissions scam.

The deal gives U.S. customers the option of selling their car back to Volkswagen or having it fixed. We’re talking about half a million cars.

It is not clear whether the consumers behind the 600 class actions filed over the scandal will accept Volkswagen’s offer or choose to keep litigating.

Volkswagen has admitted to engaging in a 10-year secret effort to skirt vehicle emissions regulations by installing in 11 million diesel vehicles software designed to fool emissions tests.

By any measure, this is a fraudulent conspiracy of epic proportions, which is why the U.S. Department of Justice said its criminal investigation of Europe’s largest car manufacturer remains ongoing. A multi-state probe into consumer and environmental violations also continues, according to the New York Attorney General’s office.

Using software and on-board sensors, the deception allowed VW cars to automatically recognize lab test conditions and run in full pollution control mode, so limiting the level of emissions. Driven on the road, the system turns off, resulting in actual levels of pollutants that can be 40 times higher than allowable U.S. limits.

Inside observers now say that not only was the emissions cheating allowed to go on for years, but cultural problems at VW appear to have gone far beyond a distain for regulations. VW’s culture was one of top-down arrogance, which demanded conformity, discouraged divergent thinking, and punished failure rather than learning from it.

But Wait, There’s More

In Japan, Mitsubishi Motors Corp. last week admitted that it manipulated fuel-economy tests to mislead consumers.

Also last week, Daimler AG confirmed that it had been asked by the U.S. Department of Justice to investigate the certification process of its cars. The internal probe follows U.S. class action suits that allege Mercedes-Benz clean-diesel models contain a device that turns off a system meant to reduce polluting nitrogen oxides in its exhaust.

Daimler AG Chief Executive Officer Dieter Zetsche is now saying that carmakers have to be more transparent about how they certify their fuel economy and emission ratings.

“You can only be transparent and if there’s any shortfalls anywhere, fix them and move forward,” Zetsche told Bloomberg News.

Bringing It Closer to Home

Lying is not a good long-term proposition for a company. Customers can and frequently do check the facts for themselves. They can root out lies.

Years ago, when I was the business editor of The Birmingham News, business people in after-hours situations would ask me how to “handle” the press. I would say something like this:

“Look, you don’t have to talk to a reporter who comes calling. It may or may not be in your best interest to do so. If you do choose to talk, you are entitled to put your spin on the story, to tell it from your perspective.

“But never, ever lie to a reporter. Because if you do, and we find out that you lied, then you have lost all credibility with us here at the newspaper. That’s just the way it is. Again, you don’t have to comment or answer every question, but don’t lie, because it will come back to bite you.”

Fast forward to today. Today, I am a consultant serving companies on corporate site selection and incentive negotiations. I also take economic development organizations as clients to help them on matters of direction and competitiveness.

To my corporate clients, I would say that if incentives are at all important to you, even if they are not the driving factor (and they shouldn’t be) in a process of selecting an optimal location for future operations, then it is in your best interest to be considering multiple locations.

To have leverage with finalist communities, they must understand that they are competing with other communities to win your project. We cannot lie and say we are considering other locations. We really have to be considering other locations. Understood?

To economic development organizations, I would say leverage your community’s strengths, but admit to its shortcomings when queried about them. Don’t ever try to cover up, because we will find out. Credibility is all you have.

Actually, credibility is all that any of us have in business. We may have a better mousetrap or a better way of doing things, but if our customers have found reason not believe us, well, we’re in a very bad place.

Which is why I’m not inclined to buy a Volkswagen anytime soon.

I’ll see you down the road.

Dean Barber is the president/CEO of Barber Business Advisors, LLC, a location advisory and economic development consulting firm based in Dallas. He can be reached at dbarber@barberadvisors.com or at 972-890-3733.

I’ve Been Everywhere, Man

Other countries, many of them are fine places, and I’ve had the pleasure of visiting more than few. And some are, in the words of Lyndon B. Johnson, “pissant.”

But this country truly is an extraordinary country. And the more I see it, the more it continues to intrigue and surprise me. And I’ve seen a lot of it.

I have ridden a mule 30 miles from the nearest paved road in Montana. I have sat around a campfire with friends in Tennessee drinking moonshine and have wandered around lost in the high desert of Utah with no water wondering just how stupid I could be.

I have plied the sidewalks of Manhattan, snorkeled in the Florida Keys, motorcycled in the Black Hills of South Dakota and stood over corpses as a police reporter in Columbus, Georgia.

In Bloody Lane

I have drank 20-cent draft beer in Milwaukee, hiked portions of the Appalachian Trail in multiple states, spent a spooky night alone in Fort Gaines on Dauphin Island, Alabama, and driven around in Pittsburgh with absolutely no sense of direction.

I posed for Japanese tourists standing beside my 1969 Cadillac convertible at the Four Corners Monument. I have attended art shows in Miami, a black rodeo in Mesquite, Texas, and industry car shows in Detroit.

I have ridden horseback on the Gettysburg battlefield, slept on the ground as a reenactor at the Shiloh battlefield, stood in the bloody lane at Antietam, and was with my grandfather when he stooped down and picked up a union coat button on property adjoining the Murfreesboro (Stones River) battlefield.

Hopped a Freight

I’ve been to the Little Big Horn, the Alamo, Valley Forge, the Golden Gate Bridge, the Hoover Dam, the Grand Canyon, and I soaked in hot sulfur pools (probably illegally) in a remote spot in Yellowstone National Park.

I bicycled over the Brooklyn Bridge (which was no fun at the time) and hopped a freight train for a few miles in Georgia just to see what it felt like.

I’ve eaten Tex-Mex in El Paso, soul food in Harlem, low-country boil near Savannah and Charleston, steak in Omaha, pizza in New York, hotdogs in Chicago, cheesesteak in Philadelphia, chili in Cincinnati, Copper River salmon in Alaska, barbecue ribs at Dreamland in Tuscaloosa, Ala., and barbecue brisket at Smitty’s Market in Lockhart, Texas.

I’ve drank craft beer in Duluth, Minn., enjoyed turtle soup in the Garden District in New Orleans, and ate raw oysters in Apalachicola, Fla.

I’ve been to juke joints in Mississippi, Broadway plays in New York, and church services in Washington, D.C.

FedEx Moose, the Klan, Clifftop and Nellie’s

I’ve watched moose amble about in a FedEx parking lot at the Anchorage International Airport, and I’ve hula danced in Maui to the hoots and howls of friends. I covered a Ku Klux Klan rally one night in rural Georgia as a newspaper reporter. No friends there.

I camped for 10 days at George Washington Carver State Park in West Virginia, playing banjo and guitar at the Appalachian String Band Festival, commonly known as “Clifftop” among aficionados. (I plan to go back this year.) And I’ve performed with old-time string bands in Texas, Tennessee, and Alabama. (See theLone Star String Band.)

With my brother, I’ve hunted for coyote, wild boar and deer, and shot pool on a sawdust floor, all in rural California of all places.  With my father, I fished in the Missouri Ozarks, baited trotlines in Watts Bar Lake in Tennessee, dipped for smelt in the Great Lakes, set crab traps in Chesapeake Bay, and raked clams in Delaware Bay.

Both my dad and my brother have since passed, and I miss them  still.

I once got into mud wrestling match with an acquaintance at a festival in Russell County, Ala. I remember him throwing me around like a rag doll. That fellow would later be convicted as a serial killer.

I remember seeing a night sky like I have never seen before while camped at the bottom of Palo Duro Canyon in the Texas Panhandle. A canvas of stars and coyotes yipping in the night. It was truly wondrous.

And I once drank a can of Budweiser beer in the wee hours of the morning in a nondescript frame house in Natchez, Miss. The place was called Nellie’s and it was a long-time protected institution.

A can of beer is all that I got there that night. No, I take that back. I got a purple T-shirt, too. It said, “Follow Me to Nellie’s.”

The place later burned down and Nellie Jackson, who I remember as a kindly woman, tragically died in the fire, which was deliberately set.

Before and After Jobs

Before college, I worked in restaurants, on dairy farms shoveling manure, on factory assembly lines, and in a foundry smashing my fingers and toes, which convinced me to go to college to study business and journalism.

After college, I was a newspaper reporter and then a business editor, and then an economic developer, and now a consultant, which seems to suit me just fine.

Looking back, some of the things that I did, especially in my younger days, were foolhardy, indiscrete, dangerous and downright stupid. (I am still capable of doing stupid things. Just ask my wife.)

I’ve learned that what doesn’t kill you makes you stronger. Except for bears. Bears will kill you.

What Companies and Communities Want

A good portion of my travels have come about because of my consulting practice. For those who do not know, I do corporate site selection, location analysis for companies. I also do economic development consulting for communities.  I enjoy both.

What is almost a universal truth is that companies, whatever their industry group, want to be in places that best suit them in terms of efficient operations and profitability. And communities want quality of life and good paying jobs.

Making the Fit

My job typically is to match and marry the wants and needs of Corporate America with that of Main Street America. Making the fit right both for company and community is a primary concern and a win for all.

Companies hire us because they rightly understand that site selection/location analysis is not a core strength for them. If they attempt it on their own, they will make a royal mess of it. (See Why Companies Should Outsource Site Selection)

Economic development organizations hire us because they often cannot see the forest because of the trees, and they are in need of a plan. I always liked the saying by fame oilman T. Boone Pickens: “A fool with a plan can outsmart a genius with no plan any day.”

My advice to communities that want to be an active player in economic development:  Get a plan.

With All Due Respect, Governor

If I were advising the governor of any state on matters of business climate, I would urge that he or she double down on education, especially vocational education, to ensure that a pipeline of talent is available and ready for the jobs of the future.

Education and workforce development go hand in glove. And it is the lifeblood for all communities, big or small. People are a resource.

I would also urge any governor of any political persuasion to take a long hard look at the regulatory climate in his or her state. Red tape, unnecessary regulations, truly is a cost burden on American businesses, and it is detrimental to our nation’s competitive position in the world.

The same goes with taxes. Certainly taxes are needed to fund and operate government. But tax rates should not be so high as to make U.S. businesses want to escape one jurisdiction for another. Witness GE leaving Connecticut. Witness the U.S. with tax inversions.

Finally, if I were advising any governor in any state, I would say to be watchful for and vigilant against any legislation that would disenfranchise any citizens of their civil rights.

I would base that recommendation partly on the sentiments of millennials, who will take over the reins of power, and partly of that of Corporate America, which is looking to millennials as their main focus in terms of workforce and buying power.

As I wrote in my blog last week (and the week before), discrimination is bad for business and it certainly is bad for attraction and retention of talent. Bigotry is a lost cause, but some still cling to it. Amazingly, some are state legislators.

There is a chance that Missouri and Tennessee could join North Carolina and Mississippi in the Dumb and Dumber Club by passing “religious freedom” bills into law that would essentially sanction discrimination against gay people.

I don’t think that would be a wise move, but I have come to believe what Abba Eban, an Israeli politician and diplomat, said: “Men and nations behave wisely when they have exhausted all other resources.”

So in the end, I am an optimist. From Maine to California, from Canada to Mexico, I see strength and wisdom in the American people. Never bet against this country. We will get it right, even if it is a bumpy ride at times.

I’ll see you down the road.

Dean Barber is the president/CEO of Barber Business Advisors, LLC, a location advisory and economic development consulting firm based in Dallas. He can be reached at dbarber@barberadvisors.com or at 972-890-3733.

The Dumb and Dumber Club Just Got Bigger

He described himself as a “simple cotton farmer.” But he was far more than that. He was a very perceptive and adept businessman, and he was the chairman of a local economic development organization.

In meeting with companies that were considering his community as a location for future operations, he would say this, words that have stuck with me over the years:

“What is important to you is important to us.”

I have taken those words to heart in my consulting business. What matters to my clients matters to me. It’s how I can better serve them.

And who are they? More and more, they are diversity-minded companies that have determined, correctly I believe, that discrimination is not good for business. And it’s certainly not good for employee retention and attraction.

And they’re not going to sit idly by and keep quiet. Not now. Not anymore.

People Are the Biggest Asset

You see, these companies are smart. They are looking forward, and they are on the right side of history. And I plan to be there with them.

For those who do not know, I do location analysis for companies. My job, my specialty, is to help companies find optimal places from which to operate. Some would call me a site selection consultant.

And do you know what’s almost always at the top of the list for companies engaged in a site search? It’s talent. Human resources. People.

21st century companies know that people are their biggest asset. Consequently, they want to go where the talent is.

Talent, especially millennial talent, has little patience and tolerance for backwardness and bigotry. They are not attracted to such places and how can you blame them?

You no doubt by now have heard the uproar caused by North Carolina’s new “anti-discrimination” law last month curbing LGBT protections. I wrote about it in last week’s blog. I had no plans to revisit the subject until two things happened this past week.

And Those Two Things?

First, PayPal cancelled a project that would have created 400 new jobs in Charlotte, N.C. Second, Mississippi Gov. Phil Bryant signed a bill into law allowing individuals and institutions with religious objections to deny services to gay couples.

North Carolina Gov. Pat McCrory has said that he is not worried about companies leaving the state. That’s a calculated bet. He knows that it’s not easy for a company to physically pick up and move once a major capital investment has been made.

But it’s not so hard for a company to not consider a state for a future capital investment or cancel a project that has been announced. And it’s the latter that PayPal did last week.

CEO Dan Schulman said PayPal was scrapping its plans to build a $3.6 million global operations center in Charlotte and hire 400 people to work there. Schulman said the new law “perpetuates discrimination” and violated the company’s “values and principles.”

North Carolina lured PayPal with $2.7 million in economic development grants, but the state estimated that the facility’s payroll alone would have generated more than $20 million a year.

PayPal is among a litany of Fortune 500 companies, including Bank of America, North Carolina’s largest corporate employer, that have come out against the new law.

Braeburn Pharmaceuticals said it is now “reevaluating our options based on the recent, unjust legislation” whether to build a $20 million manufacturing and research facility that was announced last month in Durham County. At risk: 50 new jobs paying an average of nearly $76,000 a year.

Stupid Is as Stupid Does

Last week, I met with economic developers from Mississippi, some of whom were old friends. And they were embarrassed that their governor had signed a bill into law allowing individuals and institutions with religious objections to deny services to gay couples.

The economic developers knew what was to come. And it surely came – corporate condemnation.

Executives from eight major corporations including PepsiCo, General Electric and the Dow Chemical Company said recruiting and retaining talent in Mississippi would suffer as a result of the “Protecting Freedom of Conscience from Government Discrimination Act.”

The three companies joined Hewlett Packard, Hyatt Hotels, Choice Hotels International, Levi Strauss & Co. and Whole Foods in an open letter to Gov. Phil Bryant, Lt. Gov. Tate Reeves and House Speaker Phillip Gunn calling for the law’s repeal.

Add Another Barrier to Barriers

J.C. Hiatt, an app developer and CEO of Jackson-based Good Design & Code, toldThe Clarion Ledger , the state’s leading daily newspaper, that for Mississippi’s emerging tech industry to grow, that “we need people here,” and the new law will be a hindrance to that.

“By and large the tech industry are supporters of LGBT rights, social issues and humanitarian efforts. The industry is made up of a lot of millennials, and most of us are concerned with things like social justice,” said Hiatt. “A bill like this economically adds another barrier to barriers that were already there.”

Mississippi Newspapers Roar

Gov. Phil Bryant said the new law “merely reinforces” existing religious freedom rights, “does not limit any constitutionally protected rights or actions” and does not challenge federal law.

But Mississippi newspapers aren’t buying it. The Clarion-Ledger in an April 6 editorial, called the law “another permanent stain on [Mississippi’s] disturbing record with civil rights.”

The newspaper called the measure the state’s “latest Jim Crow Law,” saying it “displayed a sign for the world to see: Welcome to Mississippi. No gays allowed.”

Todd Stauffer, president and publisher of the Jackson Free Press, wrote that Gov. Bryant stands “with the bigoted governors of Mississippi’s past, firm in his determination to uphold the “freedom” of his perceived constituency to act publicly upon their biases and discomfort instead of showing guts and leadership by protecting the lawfully held civil rights of a minority in his state.”

“And he (Bryant) has locked arms with the forces of fear, judgment and isolationism that have driven Mississippi’s “best and brightest” from the state in search of more welcoming places that champion mutual respect, support self-expression and encourage understanding,” Stauffer wrote.

“Bryant’s decision is wrong. It’s bad for people, and it’s bad for business.”

Again, the economic developers from Mississippi that I met with agreed.

Will South Carolina Join the Club?

And now there is a move in South Carolina to join the dumb and dumber club. State Sen. Lee Bright, R-Spartanburg, has introduced legislation modeled on North Carolina’s controversial law prohibiting local LGBT nondiscrimination ordinances.

Gov. Haley, if you are reading this, I think you just might be the best economic development governor in the country. You showed great leadership and wisdom with the removal of the Confederate flag from the statehouse grounds.

Now please don’t mess up and sign this bill into law.

A Little History

While we celebrate religious freedom in this country (as we should), we also have a long history of justifying discrimination and oppression based on religious belief.

In the Old South, churchgoing, Bible-worshiping Christians justified the institution of slavery by citing scripture, including Ephesians 6:5, “slaves, obey your earthly masters with fear and trembling” and Titus 2:9, “tell slaves to be submissive to their masters and to give satisfaction in every respect.”

Then the Civil War came along, some would call it the “War of Northern Aggression,” and the South lost its “peculiar institution.” I don’t think slavery is being defended from the pulpit anymore.

Skunks Who Steal Gideon Bibles

Still, the bigots and hatemongers would not be denied. Identifying itself as a Christian organization, the Ku Klux Klan would dominate state and local politics and a series of Jim Crow laws would come into being that ensured that black people would remain subjugated and controlled and without civil rights.

Theodore Gilmore Bilbo, a Democrat who twice served as governor of Mississippi and later elected a U.S. Senator, Bilbo defended segregation and was a member of the Klan.

In 1934, Bilbo was elected to the Senate campaigning against “farmer murderers, corrupters of Southern womanhood, [skunks] who steal Gideon Bibles from hotel rooms.”

Bilbo based his racism on religious belief. In his book entitled Take Your Choice: Separation or Mongrelization, Bilbo wrote that “purity of race is a gift of God . . . . And God, in his infinite wisdom, has so ordained it that when man destroys his racial purity, it can never be redeemed.” Allowing “the blood of the races [to] mix,” according to Bilbo, was a direct attack on the “Divine plan of God.”

A Loving Couple

Bilbo was a man of his place and time. His Christian-identity politics were not out of step. Indeed they were codified into law in many southern states, prohibiting a white person and a black person to marry.

That would end in 1967 when the U.S. Supreme Court ruled in Loving v. Virginia that such anti-miscegenation laws as they were called were unconstitutional.

(The case was brought by Mildred Loving, a black woman, and Richard Loving, a white man, who had been sentenced to a year in prison in Virginia for marrying each other.)

Loving v. Virginia was cited as precedent in U.S. federal court decisions holding restrictions on same-sex marriage unconstitutional. The Supreme Court came to the same conclusion only last year.

In response, states, principally those of the Old Confederacy, are now coming up with “religious freedom” laws, allowing for discrimination against gay people.

It’s an old song, new verse.

Some Rules We Do, Some We Don’t

Of course, good “decent” Christians are free to believe what they want. Clearly we regard certain rules, especially those set out in the Old Testament, as no longer binding. We don’t stone people to death for adultery. That would be murder today.

Nor do we do sanction by law things today that the Bible would appear to allow, such as prostitution, polygamy, and the treatment of women as property.

(For what it’s worth, I see myself as a Christian, albeit a very flawed one. But who isn’t?)

I’m all for religious freedom, but I’m also against denying people their basic civil rights. The law of the land is that gay people have equal rights. Denying them such, which is what these state “religious freedom” laws are all about, goes against the grain.

North Carolina and Mississippi take heed. Listen to your corporate community and join the 21st century. As a Southerner, I know that you are better than this. Swallow your pride and prejudice and repeal these laws. Georgia and Arkansas refused to succumb to the dark side and so can you.

And taking it back to the business angle, which is what this blog has been about for years now, most 21st companies have concluded that discrimination does not make for good business. And it sure as hell is not good for finding and keeping talent.

Now if only state legislatures and governors would listen to their customers, the job creators.  I’ll see you down the road.

Dean Barber is the president/CEO of Barber Business Advisors, LLC, a location advisory and economic development consulting firm based in Dallas. He can be reached at dbarber@barberadvisors.com or at 972-890-3733.

Damn the Consequences: North Carolina and Florida Lawmakers Take Aim

I’ve longed believed that the best friends and worst enemies that economic developers can have are elected officials.

For the uninitiated, economic developers are those people charged with the herculean task of improving a business climate in a particular locale in order to foster job growth, capital investment, and wealth creation.

But they are not czars, and they are certainly not elected in their own right. So they have to, whether they like it or not, work in close concert with elected officials.

Some elected officials want to learn from professional economic developers in order to craft public policy, while others have peculiar if not preconceived ideas of what economic development is or should be. And then there are those who believe economic development is nothing more than an intrusion into the private market for the benefit of a chosen few.

It’s What They Do

No matter their political affiliation, elected officials come to office on promises. They vow to reform, protect, cut, enlarge, shake up, shut down, clean house, boost, shrink and on and on. It’s what they do.

Not so long ago, I wrote a blog called “Economic Development Under Assault,” in which I postulated that a there was a growing wave of ideologues coming into office that view economic development with great suspicion.

Many but not all are of the Tea Party persuasion, who see big government and big business in cahoots and needing to be knocked down a peg or two.

They see no justification for government rewarding a large corporation with financial incentives, for expanding in a particular place that it would have done otherwise. This notion of incentives as “corporate welfare” is generally subscribed to by the press and is where the hard left and the hard right meet.

Economic developers from across this country face this mindset every day.

For many of the ideologues who have come into office, economic developers are not the solution but part of the problem. They are shills for big business and their counsel should be viewed as such.

North Carolina and Florida Reload

In the last couple of weeks, it is apparent that the ideologues reign in both North Carolina and Florida.

While the stories are different, the common thread is that legislators have purposely acted in ways that will hamper and degrade economic development in their respective states.

In last week’s blog, I quoted Michael Hecht, president of Greater New Orleans Inc., about “the old Louisiana.” He said when the state “shot itself in the foot, it reloaded.” That is precisely what is happening in Florida and North Carolina today.

And I can tell you from personal interaction that some companies and industry consultants like myself are watching this shoot-in-foot scenario with great interest. It’s hard to ignore.

In the case of North Carolina, we are witnessing what The Washington Post so correctly termed as a “rush to bigotry.”

I have been watching North Carolina for some time now. What traditionally has been a stellar player in industry recruitment, the Tar Heel state has been wallowing in the mud for some time now.

Strike Three

For me, strike one was when state lawmakers there enacted tough voting rights restrictions on the guise of voter fraud, essentially designed (although they will deny it) to lessen the importance and impact of the black vote.

“It’s not a pretty time for democracy in North Carolina,” Bob Phillips, executive director of the nonpartisan government watchdog group Common Cause North Carolina, told The New York Times.

Lawsuits abound and this will certainly play out in the courts.

Strike two was the uncertainty over the state’s package of economic-development incentives during last year’s long legislative session. By the time state lawmakers approved new incentives programs in late September, North Carolina had lost sizable deals in the industrial arena, as well as regional headquarters.

Strike three – In a single day, the governor and legislature of North Carolina unveiled, deliberated, passed, and signed the nation’s first state law limiting the bathroom options for transgender people.

For reasons that I cannot fully fathom, legislators returned to the state house in a special session to overrule a local ordinance in Charlotte banning discrimination against LGBT people. The new law prevents any local governments from passing their own non-discrimination ordinances.

Reevaluating Our Options

Some companies are already reconsidering doing business in the country’s ninth-largest state.

New Jersey-based Braeburn Pharmaceuticals said it is “reevaluating our options based on the recent, unjust legislation” whether to build a $20 million manufacturing and research facility in Durham County. The 50 new jobs paying an average of nearly $76,000 a year were announced last month.

Lionsgate, a California-based entertainment company, has decided to shoot its pilot episode for a comedy series in Canada instead of North Carolina. The company had been lining up hotel and equipment rentals and planned to hire more than 100 local workers. Not now.

Charlotte convention officials and the organizers of one of the world’s largest furniture markets say some customers have pulled out, also citing the new law.

A Duke University study in 2013 dubbed the furniture expo as North Carolina’s single largest economic event, drawing about 600,000 visitors and generating more than $5 billion for the state’s economy each year.

North Carolina Attorney General Roy Cooper said he won’t defend the new law in court, calling it discriminatory and a “national embarrassment.”

“We know that businesses here and all over the country have taken a strong stance in opposition to this law,” Cooper said.

Bad For Our Employees and Bad For Business

Charlotte-based Bank of America, the largest corporate employer in the state, is joining 90 other national companies in seeking repeal of the law.

“Such laws are bad for our employees and bad for business,” the company said in a prepared statement.

Other companies denouncing the law include Apple, IBM, Biogen, PayPal, Dow Chemical, Disney, Facebook, Red Hat, Lowe’s, Wal-Mart, Wells Fargo, American Airlines, the NFL, and the NBA.

Last week, Georgia Gov. Nathan Deal vetoed a bill that would have allowed businesses to cite religious beliefs to deny service to gay people. He listened to corporate concerns and did the right thing.

North Carolina Gov. Pat McCrory, well, he apparently doesn’t listen. You reap what you sow, governor.

And Then the Bottom Dropped Out

Unlike North Carolina, things were looking up in Florida. Enterprise Florida Inc., the state’s economic development organization, unveiled a promising $10 million branding campaign with the tagline: The Future is Here.

I was somewhat optimistic, and wrote a recent blog stating as much: “Florida: It’s not just for Fun Anymore.”

But I noted that state lawmakers had turned the governor down flat in his seeking to fund a $250 million, three-year trust to incentivize the most competitive business deals. When I say flat, I mean they gave him nothing.

Little did I know that the bottom would soon drop out. The refusal by the legislature to fund the Gov. Scott’s proposed enterprise fund would result in the resignation of Enterprise Florida’s CEO Bill Johnson.

Does Enterprise Florida Have a Future?

Gov. Scott then almost immediately announced plans for a major restructuring, leaving some to wonder whether Enterprise Florida even has a future.

“The Florida Legislature sent a clear signal this year that they do not want to fund competitive economic development incentive programs,” Scott wrote. “Clearly, we have no choice but to refocus the efforts and mission of Enterprise Florida. … The agency will be forced to become smaller and more streamlined.”

Scott told Enterprise Florida’s board of directors to make $6 million in cuts to its staff and office space. The agency has 90 employees and a payroll of $9 million.

Even before lawmakers rejected the $250 million fund, Scott said Enterprise Florida was “bankrupt” and that 277 separate deals and 50,000 jobs were in jeopardy of being lost.

An Intrusion into the Private Market

Not surprisingly, some of the legislators opposing the governor’s enterprise fund latched onto the “corporate welfare” theme. Incoming Florida House Speaker Richard Corcoran told the Miami Herald, “The enemy of Enterprise Florida is not the Legislature; it is an adherence to the free market.”

While Corcoran didn’t say it directly, the implication is that the awarding of financial incentives is simply a wrong thing to do, an intrusion into the private business market.

State Sen. Jack Latvala, chairman of the Transportation, Tourism and Economic Development Subcommittee on Appropriations, said a “backroom deal” between House leadership resulted in the “gutting” of Enterprise Florida.

“My fear is that we’ve got new legislators who are putting ideology first and their constituents second,” Latvala wrote for the Tampa Bay Times.

Well, what is done is done. Ideology has prevailed in both Florida and North Carolina and damn the consequences. But there will be consequences. Just you wait.

I’ll see you down the road.

Dean Barber is the president/CEO of Barber Business Advisors, LLC, a location advisory and economic development consulting firm based in Dallas. He can be reached at dbarber@barberadvisors.com or at 972-890-3733.