Charlotte — By the end of this year, a tower built as a home for Wachovia will be the new headquarters of Duke Energy.
That switcheroo in one downtown building highlights a change sweeping Charlotte in the wake of the 2008 financial crisis. While the tidy North Carolina city of 730,000 people still counts itself as the nation’s No. 2 financial center and is looking to expand in a number of arenas — including health, motor sports and defense — the area’s energy sector is showing particular promise.
Such bright spots are hard to come by at a time when the nation’s unemployment rate is stubbornly locked above 9 percent. On Thursday, President Obama presented Congress a $447 billion bill to put Americans back to work, repeatedly urging, “You should pass this jobs plan right away.”
The travails of the financial crisis, punctuated in Charlotte by Wachovia’s near collapse and takeover by Wells Fargo, thumped Charlotte’s finance and insurance sector, which between 2008 and 2010 lost 9 percent of its jobs, a drop to 77,000. Bank of America, the other top-five bank in Charlotte, has moved some of its operations to New York.
And instead of regaining solid footing three years after the crisis, the financial sector is under siege again.
Bank of America rejiggered its management team last week as the giant finance firm grapples with a dwindling share price and new legal liabilities over mortgage deals. Warren Buffett has made a $5 billion investment in the bank. And a restructuring reportedly could cut as many as 40,000 jobs.
Meanwhile, since 2007 Charlotte has announced about 5,600 new energy-related jobs, taking the total to roughly 27,000 at 250 energy-oriented firms, according to economic development officials. About 2,000 energy jobs were added in 2010, with another 765 this year.
It’s not enough to replace finance jobs lost in the recession or to turn around local unemployment, which hangs at 11.2 percent. But local officials say it’s a start, and their bet is long-term. They must, they say, diversify the region’s economy.
Sure, cities such as Houston and Dallas command larger energy sectors, such as gas and oil, but Charlotte officials are unswayed.
“I think we are going to be the energy capital of the country before it’s all over,” Mayor Anthony Foxx said.
The goals, he said, stretch from corporations to consumers. In addition to luring energy firms, the city is expanding recycling, “smart” grid projects and public transit, with plans to add 10 miles of light rail and a commuter line in years to come.
“We’re just as aggressive” as the Texas hubs, said Ronnie Bryant, chief executive of the Charlotte Regional Partnership, an economic development outfit. The region could “be the epicenter of environmentally friendly energy practices,” he said. And instead of focusing on oil and gas, Bryant said, Charlotte could “dominate the market for nuclear engineering.”
In May, Mitsubishi Nuclear announced it would locate its main nuclear engineering office in Charlotte, adding 135 jobs in the next five years. The local Chamber of Commerce estimates that 1,000 of 9,000 engineers in Charlotte work in nuclear energy.
The energy business in greater Charlotte, a region covering 16 counties and 2.6 million residents, is built largely around electricity, rather than oil or gas, and is anchored by Duke, one of the country’s largest utilities. The company soon will be the dominant tenant in 21 floors of what was to be called the Wachovia Corporate Center.
Now, the 48-story, energy-efficient skyscraper — the largest building in Charlotte — is called the Duke Energy Center.
Of about 16 million square feet of commercial office space downtown, Duke will hold 1.3 million square feet — compared with Bank of America’s 7.6 million and Wells Fargo’s 3.5 million.
Still, it’s a big move up for Duke from its original headquarters, a nondescript, 1970s-era 13-story building in the heart of downtown. It also represents the lofty ambitions of Duke’s plain-talking and colorful chief executive and chairman, Jim Rogers, who has lobbied for cap-and-trade legislation and pushed for energy companies to address climate change and other environmental issues. Rogers, 63, was a Washington-based lawyer and energy official before he began his two decades at Duke.
In January, he launched a $26 billion ($13.7 billion not including debt) bid to buy Progress Energy, a pending deal that, if approved, would make Duke the largest utility in the country in nearly every category, including market capitalization (nearly $40 billion), number of customers (roughly 7.1 million) and power generated (a 57.2-gigawatt capacity).
“We hope to close it by the end of the year,” Duke spokesman Tom Williams said.
Duke and Cisco are teaming up to update 12 million feet of office space in 62 Charlotte office buildings with smart-grid technology, newer equipment and wiring that aims to reduce energy use in the buildings by 20 percent in five years. They are spending more than $5 million on the project, which will involve digital monitors and analytics so customers can track their energy use. Rogers wants the community to be the “most energy-efficient in the world.”
Rogers and other local executives are holding regular meetings to plan how Charlotte should build on its position in energy to combat its 11.2 percent unemployment rate, up from 5.8 percent in 2007.
“We have all the ingredients for creating a cluster city around energy,” said Rogers, pointing to start-ups in wind, solar, coal, gas and nuclear energy. He cites business strategy guru Michael Porter’s idea of “clusters” as Charlotte’s blueprint.
“We’re not as strong in banking,” Rogers said. “The vision here is to diversify and make this an energy hub for the number of people employed over time. We want to make up for what was lost.”
In 2010, 10 companies announced energy-related expansions in the area, and several more jumped in this year. Germany’s Siemens is adding 825 jobs, Switzerland’s ABB Group is adding 130 jobs. Celgard, a maker of lithium battery components, is adding 289 workers. SPX, which makes energy-related equipment and other products, is expanding its Charlotte headquarters and adding 180 jobs over the next five years instead of moving to South Carolina.
Siemens took over a 600,000-square-foot, $170 million power turbine service center outside Charlotte in 1997 when it bought assets from the bankrupt Westinghouse Electric Co. Wooed by $35 million worth of federal grants and local tax incentives, Siemens plans to boost its local ranks to 1,800 from 800 people over the next few years. Those jobs include positions shifted from Canada so Siemens can start making its most advanced power turbines on site.
“Generator orders are starting to pick up,” said plant manager Mark Pringle, giving a tour of the sprawling factory floors that are producing the massive pieces of energy equipment. The plant runs around the clock, and 80 percent of the equipment it builds is exported.
Pringle said that as heavy industry production from Siemens moves to Charlotte, smaller suppliers have set up shop nearby.
“It’s the largest industrial investment we’ve had here in a generation,” said Brad Richardson, economic development manager for the city of Charlotte. “It will ripple and spill over into the 16 adjacent counties.”
The city’s energy executives are building ties with the Research Triangle in the Raleigh-Durham area and with other energy-related work going on in the Carolinas — from Greenville, S.C., where General Electric makes energy turbines, to Wilmington, N.C., where GE makes nuclear-power products.
The group is also working with community colleges and the University of North Carolina at Charlotte to expand the training of energy engineers. Enrollment in the engineering college climbed 27 percent, to 3,049, from 2006 to 2010.
The university is building a $57 million, 200,000-square-foot building to house the Energy Production and Infrastructure Center, which aims to pool academic and industry research in partnerships with companies such as Duke Energy, the Shaw Group and France’s Areva.
“There’s a lot more emphasis in the city on diversification,” said Steve Patterson, director of the center at UNC-Charlotte. That means diversifying away from dependence on finance jobs and into more varied parts of the energy sector.
Many Charlotte residents fear the city grew too dependent on finance, which made up 27 percent of the region’s gross domestic product before the bust. “We did a ton of [catering] business for Wachovia and Bank of America,” said Ralph “Bubba” Miller, 59, a former banker who has owned in Charlotte since 1986. “They had to cut back severely because of the economy.”
Glader is a financial journalist based in Berlin and edits www.WiredAcademic.com.
new energy-related jobs in Charlotte since 2007
total energy-related jobs in Charlotte
Unemployment rate in Charlotte