GSA Business, The Money Issue, 8.10.09

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THE BUSINESS JOURNAL FOR GREENVILLE, SPARTANBURG & ANDERSON spe c ial

summer

edition:

Dollars and

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INSIDE

Foreclosures: Potential profits for risk-savvy investors PAGE 15 Education: Universities have stimulus money to spend PAGE 16 M&A: Tax fears, retirements drive urge to sell companies PAGE 20

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Federal grant for tissue research opens new door for S.C., backers say by Mike Fitts mfitts@scbiznews.com

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record federal grant Executive will give South Carsummary olina an opportunity to be a national leader in Ten S.C. colleges the emerging field of tissue will be asked to research — and organizers cooperate in an say it will be a challenge to effort to lead the the state and the 10 institu- nation in human tions involved. tissue research. Clemson University, Furman University and Greenville Technical College are participants in the project. Christian Przirembel, Clemson vice president for research and economic development, said this project fits its biomaterials program perfectly. Clemson has been working on a biodegradable “scaffolding” around which new tissues and organs can be created, Przirembel said. The $20 million grant announced July 23 is to launch a collaborative program across South Carolina to fabricate working human tissue for transplants. The five-year project is the largest competitive National Science Foundation grant ever received in the state. If successful, the project would open the door to creation of donor tissues, or even internal organs, that are matched to the recipient. The grant is the culmination of a three-year effort, said Scott Little, state manager for the S.C. Experimental Program to Stimulate Competitive Research and Institutional Development Awards, a panel that works to increase research awards in the state. Although South Carolina can’t be a national see GRANT, page 23

(Photo/Provided)

States grease knuckles in fight for Boeing business by Molly Parker mparker@scbiznews.com

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outh Carolina officials are likely to roll out as much red carpet as they can afford to secure Boeing Co.’s second assembly line for the 787 Dreamliner, if early enthusiasm is any indication. After Boeing announced its planned acquisition of Vought’s North Charleston facility, politicians across this state rushed to blast out press releases singing praise for a deal that, at its core, is a break-even economic development announcement. Boeing plans to transfer Vought’s roughly 600 employees under its umbrella, and continue to manufacturer the plane’s rear fuselage section here. What’s generating all the excitement is the possibility

INSIDE

Upstate Innovation

Taps for Chad?

Top Upstate patent holders

Verizon Wireless takes over Alltel

Milliken & Co., Spartanburg Cryovac Inc., Duncan Jackson & Perkins Wholesale Inc., Hodges Clemson University, Clemson Poly-Med Inc., Anderson Kemet Electronics Corp. Greenville

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— it’s no where near a concrete deal — that the company could expand its massive Dreamliner production operation in South Carolina. “If I were a policymaker, if there was a company I would really want to pull out all the stops for, it would be a Boeing,” said Bill Youngblood, managing shareholder and CEO with McNair Law Firm in Charleston, which assists companies in negotiating economic development incentives. “It’s not just because it’s Boeing and the jobs and the ultimate tax base, but it’s this incredible supplier network that would service Boeing. One of the huge benefits of BMW is the supplier base of BMW.” Scott Fancher, Boeing’s vice president and general manager of the 787 program, said that the company had see BOEING, page 7

Moore School Home

Milliken tops patent list Page 17

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Federal, private funds make possible new building

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THE money issue

THE money issue

Leading off A q uic k read on local business U.S. News rates Greenville Memorial among top U.S. hospitals

Industrial vacancy rate continues rise in Greenville-Spartanburg real estate Vacancy rates for industrial real estate in the GreenvilleSpartanburg market continue to rise rapidly and likely will top 13% by the end of this year, Grubb & Ellis|The Furman Co. predicts in its second-quarter report.

The forecast also states: • It’s a great time to lock in long-term leases, but tenants are likely to remain more interested in short-term deals due to market conditions. • Continuing uncertain credit markets will make property owners wary of making costly improvements for tenants. On the bright side, Grubb & Ellis expects the additional manufacturing capacity being added to BMW Manufacturing near Greer to position the auto sector to rebound early in the next recovery. Consequently, the research firm says, auto suppliers in the region could soak up surplus industrial space. “If the availability of high quality buildings, the completion

of BMW’s expansion and the turn-around of the national economy are all perfectly timed, the later half of 2010 could feature very robust growth,” Grubb & Ellis said. The report notes that Adidas finished the last of its east coast distribution center and BMW opened it paint shop expansion. “The two completions accounted for 1.1 million square feet of positive absorption in the Spartanburg West submarket,” the report states. “A new 900,000 square foot assembly facility is still under construction by BMW. Upon completion, industrial market activity among suppliers is expected to climb significantly.” Also, Grubb & Ellis said industrial properties being vacated during this recession are of higher quality than properties the market has historically had to offer. “When market growth returns, these newly vacated properties will allow tenants to secure high quality buildings at very competitive rates,” Grubb & Ellis stated.

Greenville Memorial Hospital has been ranked among the nation’s top 50 hospitals in five specialties in U.S. News’ 2009-10 publication of America’s Best Hospitals. Greenville Memorial, the flagship of the Greenville Hospital System University Medical Center, is ranked: • #25 – Diabetes & Endocrine Disorders • #30 – Digestive Disorders • #43 – Heart & Heart Surgery • #44 – Neurology and Neurosurgery • #49 – Orthopedics The report is accessible online at www. usnews.com/besthospitals and appears in the July 21 edition of the magazine.

Alltel’s Chad lingers as Verizon Wireless takes over territory Chad, the ubiquitous pitchman for the Alltel wireless system, has not gone quietly into the night since his company was purchased by Verizon Wireless. He continues to pop up in a transitional advertising campaign that focuses on his new corporate master. It remains unclear how much life Chad has left in him. “Efforts are currently under way to rebrand former Alltel markets and will be completed in the near future,” said Karen M. Schulz, public relations manager for the Carolinas-Tennessee region of Verizon. “Verizon Wireless will transition the Alltel brand including phasing out Chad so that we are focused on the Verizon Wireless brand. The transition will take place over the next couple of months.” And there’s a sticky problem of several pockets of Alltel service across South Carolina that the Federal Communications Commission did not allow Verizon to purchase, saying the combination would eliminate com-

petition in those mostly rural areas. In South Carolina, those Alltel properties are in the counties of Anderson, Oconee, Abbeville, Edgefield, Greenwood, Laurens, McCormick, Newberry, Saluda, Cherokee, Chester, Fairfield, Union, Allendale, Bamberg, Barnwell, Calhoun, and Orangeburg. The Alltel remnants in South Carolina are held by a trust until a sale to Atlantic Tele-Network Inc. of Salem, MA is concluded. That sale, which involved about 800,000 wireless subscribers nationwide, awaits federal regulatory approval, said Wesley Brown, an Alltel spokesman in Little Rock, AR. Atlantic Tele-Network hopes to conclude the transaction by the end of the year, officials said.

“Until then, we are going to compete aggressively in those markets,” said Brown. That could include the familiar advertisements with Chad humiliating his competitors, including Verizon. In a media market such as Greenville, that might result in viewers seeing both the Verizon transitional ads, and the bare-knuckles ads from Alltel. “As we move toward this transition, we will share more information as it becomes available. In the interim period, our customers will continue to receive the same great service they have come to expect from Alltel,” Brown said. “Also, Chad and Alltel’s My Circle are still very much present in our divested markets, and we will continue to roll out great products and services in the markets where we operate.”

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special edition: the money issue

(% of Change)

Aug. 10 - Aug. 30, 2009

9.7

5.0 0.1

2.3 1.8

5.6

5.6

5.2 2.7

4.8 0.3 1.1

8.2

7.8

8.7

9.9

9.6

9.1 4.8

5.6

7.3

7.4

9.2 3.9

0.7

1.0

2.5

2.6

decrease food tax to 0%

911 Attacks

6.9

12.0 7.0

6.1

6.2

4.7

-10

-1.8*

-3.1

“This has never happened before.”

-3.4

-3.1

-5

income tax cut

-0.1

0

decreased corp. income tax gradually to 5%

13.1

15.1

13.8 11.4

11.9

13.4 11.4

12.2 9.3

9.7

10

10.5

15.2

16.4

15

income tax cut

casual excise tax enacted @ 4%

11.8

20.1

minibottles act case tax on alcohol prepayment of sales tax

19.7

changed income tax brackets adding 6% & 7%

25

corp. tax increased to 6%

18.1

corp. tax increased to 5%

20

sales tax increased to 4%

EST. income tax withholdings

26.8

Percentage change in S.C. general fund revenues

30

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-12.8*

John Rainey, Chairman, Board of Economic Advisors

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53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10* Source: Board of Economic Advisors

State Fiscal Year

*FY 2009 & FY 2010 Projected

What’s missing from your accounting?

864.908.3062 info@ATLOCKE.com

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Aug. 10 - Aug. 30, 2009

AARP: Greenville enjoys ‘simple life’ Publisher - Lisa Jones ljones@scbiznews.com Editor - James T. Hammond jhammond@scbiznews.com Managing Editor - Francis B. Allgood fallgood@gsabusiness.com Staff Writer - Scott Miller smiller@scbiznews.com Production Manager/Art Director - S. Kevin Greene kgreene@gsabusiness.com Sales Manager - Salley Tyler styler@scbiznews.com Account Executive - Pam Edmonds pedmonds@scbiznews.com Marketing Coordinator - Elizabeth Feather efeather@gsabusiness.com Circulation Manager - Kathy Allen kallen@scbiznews.com • 843.849.3113 Circulation Assistant - Kim McManus kmcmanus@scbiznews.com • 843.849.3116

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Greenville is among the five best places in the country to live “the simple life,” according to the current issue of AARP magazine. The magazine cites the city’s low cost of living, short commute times, sunny weather, proximity to mountains and family-friendly fun, among other amenities. “Back in the late 1960s downtown Greenville was withering away, suffering the same fate that wiped out thousands of Main Streets. Now, thanks to 30 years of redevelopment — including a pedestrianfriendly Main Street, a performing arts center, condos and the stunning Liberty Bridge — what was once a desolate stretch of offices is now a vibrant town center,” the magazine states. Other cities on the list were Tucson, Ariz.; Mont- The Peace Center for the Performing Arts adds to Greenville’s quality of life, the AARP says in pelier, Vt.; Logan, Utah; and Ames, Iowa. the current issue of its magazine. (Photo/James T. Hammond)

Moore School to get new Innovista home The University of South Carolina took an entrepreneurial approach to paying for a new, $90 million home for the Moore School of Business in Columbia’s Innovista. The university will pay for the new building in part with revenue generated by a new agreement to lease the CloseHipp Building to the U.S. Department of Justice for 20 years. The Close-Hipp Building is the current home of the Moore School. When the new business school is finished in 2013, and the Close-Hipp Building receives a $25 million upfit for the Justice Department, the federal agency will pay USC $5.3 million a year under a 20-year lease agreement. That will produce $106 million in lease revenue over 20 years. USC also closed the deal with benefactor Darla Moore to match a gift she proposed five years ago with strings attached. She would give USC $45 million for the business school that carries her name if the university would match $30 million with other private gifts. Three days before the Aug. 3 deadline on that matching gift, USC said it had raised $42.4 million in cash, pledges and in-kind gifts to qualify for Moore’s gift. The new business school site is at Greene and Lincoln streets, on what the university refers to as Foundation Square. Moving the business school out of the University Hill neighborhood and into the evolving Innovista campus would dramatically change the focus of the university in Columbia. USC controls considerable land be-

tween Assembly Street and the Congaree River, providing space for continued growth. The estimated $90 million cost of the new business school will comprise $65 million in bonds to be repaid by lease revenue; $15 million pledged to the Moore School as a match to Moore’s gifts; and $10 million in other private gifts already held by USC. Another $25 million in university funds will be used to renovate the Close-Hipp Building for the Justice Department, said USC Chief Financial Officer Ted Moore. Design work has not begun, but previous concept drawings of a new business school have shown two buildings — one for the undergraduate program and a second for the graduate school, which includes the No. 1-ranked international business graduate program. John Parks, who heads Innovista development for USC, said it has become clear that the engineering and scientific research in Innovista needs to be linked with the new emphasis in the Moore School on entrepreneurship. USC President Harris Pastides made clear that companies considering locations in Innovista want that proximity to the business school’s resources. U.S. Sen. Lindsey Graham said the relocation of 250 employees from Washington, D.C., is part of the ongoing decentralization of the federal government since 9/11, an effort to make federal agencies less vulnerable to attack in the nation’s capital.

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Aug. 10 - Aug. 30, 2009

BOEING, continued from page 3

looked to the Charleston region during the 2003 site selection process that landed the assembly line in Everett, Wash., and will eye opportunities here again. McCallum Sweeney Consulting, a site selection firm in Greenville, helped Boeing select the Everett site from a host of options in 38 states, said Jeannette Goldsmith, a principal with the company who served on that team. North Charleston was on the short list, she said.

“South Carolina did extremely well as a state,” Goldsmith said. “There were issues that arose over the course of that year that just made the Everett plan make more sense.” Goldsmith said she’s bound by a confidentiality agreement from discussing those issues. Scott Hamilton, with Seattle-based Leeham Co. LLC, a consulting firm that provides news and analysis on aviation matters, said it makes sense that the company would look to South Carolina for its second line. Doing business in Washington, he said, can be expensive, and the union has been a consistent thorn in the company’s side. Hamilton said it is his understanding that North Charleston is on a short list of potential sites that also includes Everett, Wash., and San Antonio, Texas, where Boeing currently operates a small 787 finishing facility. These same places reportedly topped the list six years ago. Long Beach, Calif., also is rumored to be on that list, Hamilton said. Boeing currently produces the Air Force’s C-17 Globemaster III there, though it’s unclear whether Congress will continue to fund production beyond next year. Other analysts also seemed bullish on the chance that Boeing would build its second assembly plant in the Charleston area for the so-called “dash-9” model, which would carry between 250 to 290 passengers. J.P. Morgan’s Joseph Nadol, who covers the aviation sector, recently wrote that the Vought buyout allows Boeing to “kill three birds with one stone.” It reduces the company’s supply chain risks, gives it a head start on investment required for the second 787 line, and provides Boeing the opportunity to “reduce its dependence upon union labor that has been both expensive and disruptive,” Nadol wrote in his July 6 report. But the conversation has spawned

special edition: the money issue some odd revelations. Several Washington politicians, including the governor, have reportedly said that Washington’s chances of securing the second line hinges on Boeing’s ability to convince the Machinists union there to stop walking out on the job over contract squabbles. Boeing has a history of uneasy relationships with its unionized work force, and in the fall, workers went on strike for two months. “The whole thing comes down to, can they get a long-term agreement with the union, with a no-strike clause,” U.S. Rep. Norm Dicks, D-Bremerton, told The Seattle Times. “I think if they get this agreement, they would stay.” Meanwhile, Washington business leaders have set about a full-court press to ensure Boeing doesn’t stray from the ranch, calling the Vought deal a “wakeup call.” But Richard Aboulafia, vice president of Fairfax, Va.-based Teal Group, said Boeing may just be skillfully playing its upper hand. The company pushed back its scheduled June test flight after a stress test indicated weaknesses in the plane where the wings attach to the fuselage. Boeing’s Fancher said the company’s decisions are based on the “package deal,” though he hinted that union issues may come into play. “I think any large company with a large production system wants to diversify its risk and its exposure to opportunities for disruption and that often leads companies to looking at different geographic areas to do work,” Fancher said. “So certainly that’s a factor here as well.” Complicating the labor discussion is the fact that South Carolina’s Vought plant is represented by the same Machinists union as the workers in Washington. Paul Nisbet, an analyst with Sarasota, Fla.,-based JSA Research, an aerospace investment research company, said the Machinists union here would probably be less aggressive because of South Carolina’s right-to-work laws that forbid unions from forcing membership. But Jim Gray, a human resources consultant in Mount Pleasant, said that may be underestimating the union’s local power. In a widely controversial move, about a dozen Vought employees voted in November to unionize the work force in North Charleston. The decision surprised Vought, and came just before the company publicly announced that it would be slowing down production and furloughing employees for several months because of strikes against Boeing. Fancher said Boeing will not challenge the validity of the union. But an employee at Boeing’s newly acquired North Charleston operation has filed a request with the National Labor Relations Board seeking a decertification election that could disband the local Machinists union. The petition was filed July 30, the same day Boeing completed its purchase of the plant from Vought Aircraft Industries for $580 million.

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Strong Teamwork Is Part of our Culture Each year, Greenville Hospital System University Medical Center (GHS) provides sports medicine services to more than 20,000 student athletes in 50 upstate locations. Our network of on-site certified athletic trainers – the third largest in the country – have teamed up with our orthopaedic doctors from the prestigious Steadman Hawkins Clinic of the Carolinas. Together, the seamless coverage they offer is one more way that GHS is improving community health and access to care. ghs.org

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special edition: the money issue

Aug. 10 - Aug. 30, 2009

Advance America’s CEO investigated by SEC

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he president and CEO of Spartanburg-based Advance America is the subject of an ongoing investigation by the U.S. Securities and Exchange Commission. In a regulatory filing last month, Advance America said it received an SEC Wells Notice that the commission may file a civil injunction action charging President and CEO Kenneth Compton with insider trading of company stock in 2007. According to the filing, SEC staff

connects Compton to “alleged insider trading involving approximately $20,000 in losses avoided by third parties selling company stock during 2007.” The SEC had not Compton filed charges at the time GSA Business went to press. In the company’s filing, Compton denies “making any improper trades or

engaging in any wrongdoing or other improper activity” and says he has “meritorious legal and factual defenses.” Compton had no further statement, said company spokesman Jamie Fulmer. Advance America, meanwhile, is not being investigated, Fulmer said. “From what we know, it appears to involve a small number of trades in 2007. It does not affect current business operations,” Fulmer said. “We understand that the company is not a part of the investigation, based on the Wells Notice.”

Advance America’s Board of Directors formed a special committee of non-management directors to review the allegations and related facts and circumstances. “The special committee and the other disinterested members of the Board of Directors have determined unanimously to continue their strong support of Mr. Compton in his roles as president, chief executive officer and director and remain confident in his leadership,” the SEC filing stated. “The Special Committee will continue to monitor this matter as it progresses.” Compton has served as the company’s president and CEO since August 2005. He also serves on Advance America’s Board of Directors. Compton previously served as president of Milliken & Company’s global automotive group, also based in Spartanburg.

Advance America reports earnings Advance America, Cash Advance Centers Inc. reported net income dropped 28.4% in the second quarter of 2009. The Spartanburg-based lender posted a profit of $6.6 million, or 11 cents a share, compared to $9.3 million, or 14 cents a share, a year ago. Total revenues for the quarter decreased 7.4% to $150.1 million, compared to $162.1 million for same period in 2008. These comparisons include the results of operations in Arkansas and New Mexico, states Advance America exited in 2008. In a conference call, President and CEO Kenneth Compton said the company continues to monitor pending state legislation across the country that could negatively affect lending activity in many states. This year, Advance America has monitored 173 bills in state legislatures across the country that address consumer lending, Compton said. While profits are down, Compton said the company’s financial results “validate our products and services in a competitive marketplace and underscore the importance to consumers of having viable, cost-competitive alternatives to choose from when they encounter short-term financial challenges.” In the second quarter, Advance America increased its provision for loan losses. The company said its provision for doubtful accounts as a percentage of total revenues was 22%, compared to 18.6% in 2008. In addition, Advance America sold $2.2 million of written-off receivables during the quarter, compared to $0.5 million during the same period in 2008. So far this year, the company has closed 165 centers in 26 different states. As of June 30, Advance America had an operating network of 2,635 centers and 78 limited licensees in 33 states, the United Kingdom, and Canada.

Dollarsand

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Where’s the money in today’s flat economy? by James T. Hammond jhammond@scbiznews.com

hat’s a question many business leaders have been asking about their industries and the economy at large for a year now. Commerce slowed to a trickle last winter. In the spring, optimism seemed to bloom, as Congress passed a $750 billion stimulus, and threw lifelines worth hundreds of billions more to banks and auto makers. But it quickly became apparent there was no silver bullet, and the recession likely will be long and deep, perhaps stretching beyond 2010. Despite the bitter evidence of economic decline, there are signs of life in the business and financial world. The stock market has been rising recently. Deals are being made, for real estate, service companies, and manufacturing. Some banks are reporting profits again, albeit on one-time factors. In any crisis, there is money to be made. Foreclosed homes mean bargains to be bought by someone. Distressed banks shed valuable assets that other banks often can buy cheaply. Robert Bach, chief economist for Grubb & Ellis, pointed out re-

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cently that the Conference Board’s index of leading indicators increased 0.7% in June, its third consecutive monthly gain and the sharpest three-month rise since 2003. The index is a weighted average of 10 key variables designed to forecast economic conditions six to nine months in advance. “The latest reading is a clear sign that the recession is drawing to a close,” Bach predicted. Other signs that the financial panic has subsided include banks repaying TARP funds to the federal government, and home sales in the local market showing steady increases for five consecutive months. No doubt there is more economic pain ahead. Office and industrial vacancies are high and rising. And state economists fear the already high unemployment rate – the third-highest in the nation – could resume its climb after a recent two-month plateau. But money will be made, even in these troubled times. And slowly but surely, profits and jobs will return. This special issue of GSA Business will show you examples of companies and individuals that are finding gold amid the carnage of the current economic downturn.

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special edition: the money issue

Fuji bets there’s gold in images on coffee cups, in scrapbooks wo years ago, printing personalized images on items such as coffee cups, Christmas tree ornaments and scrapbooks was a $300 million industry. Today, it’s worth $1 billion and growing, and Fujifilm USA Inc. is creating 185 jobs in Greenwood to capture a large portion of that market. The marketing subsidiary of Fujifilm Corp. of Tokyo is re-outfitting a plant that once made x-ray film. That market has gone digital, as has amateur photography. With the demand for its traditional photo film down 80% from its peak, the company had to be nimble to transition to the digital age. “In response to the rapid growth of the personal photo products market, we’re designing the new Fujifilm Greenwood lab from the outset with digital fulfillment as its primary purpose,” said John Prendergast, vice president of the Printing Services Group at Fujifilm U.S.A. Inc. “We will begin operations in the fall of 2009 initially producing personal photo gifts for both retail delivery and direct mail to consumers.” Fujifilm Printing Services supports many retail stores including Wal-Mart, and online photo Web sites, and serves consumers directly through its Fujifilm SeeHere.com photo Web site. Fujifilm’s Greenwood complex is the largest Fujifilm manufacturing operation in the country and the largest Fujifilm distribution center in the world.

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Capturing the specialty photo imaging market 2007 – $300

million Today – $1 billion and growing

John Prendergast

Capital Confusion: Adapting to a Changing Real Estate Market The Sanctuary at Kiawah Island, September 14-15, 2009 Join ULI South Carolina at a unique 1 1/2 day program that will bring together nationally renowned speakers and regional experts to share their global and national outlook. Hear from a series of speakers on the capital market outlook, current trends in the real estate industry and lending practices during this time of highly restructured financial systems. National Keynote Speakers Steve Blank, ULI Senior Fellow, Finance, Washington, D.C. John Levy, John Levy & Company , Richmond, VA Arthur Margon, Rosen Consulting, New York, NY Regional Banker’s Panel Discussion Jim Muir; Executive Vice President, Wells Fargo Linda Woodside; Senior Vice President - Real Estate Banking Group, Bank of America Luncheon Presentation Tom Beckett, Parsons Behle & Latimer “A Borrower’s Perspective: Stories from the Trenches” Round Table Discussions; With Key Expert Leaders Breakout Session Topics Include; Asset Valuation, Capital Availability & Equity, & Workouts

Discounted Golf Contact ULI South Carolina to set up specially-priced rounds of golf for you and your colleagues on the renowned OCEAN COURSE and other premier courses at Kiawah Island Golf Resort. Half-Price Rooms Discounted room rates at $250/night. To book your room, please call The Sanctuary at: 1-877-683-1234 and reference the Urban Land Institute or Group #7738 by August 15, 2009.

Aug. 10 - Aug. 30, 2009

Venture capital still up for grabs by Scott Miller smiller@scbiznews.com

our venture capital firms still have millions in statesponsored money to invest in South Carolina companies. Plus, these firms often bring outside investors with them to complete deals, meaning even more dollars coming to South Carolina, said Harry Huntley, executive director of Invest SC Inc., the quasi-state agency created to help South Carolina startup companies gain access to capital. Invest SC stemmed from the S.C. Venture Capital Investment Act of 2004. The act allowed Invest SC to take out a $50 million line of credit, secured by state tax credits, from Deutsche Bank. The corporation, which manages the money for the S.C. Venture Capital Authority, committed investments to four private equity firms: • Nexus Medical Partners of Boston, $20 million; • Noro-Moseley Partners of Atlanta, $10 million; • Azalea Capital of Greenville, $10 million; • Frontier Capital of Charlotte, N.C., $8 million. Since then, Invest SC has committed an additional $8.5 million to Azalea. Noro-Moseley and Frontier haven’t used any of their combined $18 million yet. Both have made offers to South Carolina companies but for whatever reason, partnerships never materialized, Huntley said. “They’re responsible to all of their investors,” Huntley said. “Even though South Carolina is an investor in their funds, we may be less than 10% of their funds so they have a lot of investors that they have a fiduciary duty to.” Neither firm returned calls to comment. “There’s still plenty of time left,” Huntley said. “You’re usually looking at about a five-year period to put the money to work in venture capital, and we’re only two years into it.” It’s unclear exactly how much Azalea and Nexus have left to invest. Azalea recently helped a management group finance the purchase of Milliken & Co.’s auto body cloth division, which includes facilities in Abbeville and Spartanburg. Azalea also has supported Spartanburg-based Spartan Foods of America Inc. since 2005. Nexus has been the most active of the four firms and has been successful in pairing its state-sponsored investments with dollars from other venture capital firms.

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Nexus invested $2 million – along with an additional $2 million from its affiliate, Medicis Capital Partners of Germany – in a British medical device company called Deltex Medical, which in turn established its U.S. operations in Greenville. “So they’re already coming with proven products,” Huntley said. Nexus also recruited Sabal Medical to Charleston by leading a $2.6 million investment and was part of a $7.7 million see VENTURE, page 11

The following firms received statesponsored dollars from the S.C. Venture Capital Authority, and they still have millions to invest in South Carolina companies:

Nexus Medical Partners Background: Headquartered in Boston, Nexus funds medical and pharmaceutical companies. The firm typically works as the lead investor among a group of investors in a particular company. Commitment from S.C. Venture Capital Investment Authority: .......................$20 million Contact: Greg Zaic (617) 472-2805

Noro-Moseley Partners Background: The Atlanta-based firm invests primary in companies located in the Southeast with focuses in technology, health care and business services. Commitment from S.C. Venture Capital Investment Authority: .......................$10 million Contact: Kathy Harris (404) 233-1966

Azalea Fund Background: Based in Greenville, Azalea invests in Southeastern firms with established revenues and cash flows, as opposed to startup companies. Commitment from S.C. Venture Capital Investment Authority: ....................$18.5 million Contact: Pat Duncan (864) 235-0201

Frontier Capital Background: Frontier, headquartered in Charlotte, N.C., provides expansion capital to established companies in information technology, software, marketing, health care, outsourcing and communications. Commitment from S.C. Venture Capital Investment Authority: .........................$8 million Contact: Richard Maclean (704) 414-2880

Aug. 10 - Aug. 30, 2009

special edition: the money issue

Economy affecting employee benefits, Colonial Life survey finds

h

alf of employers say the economy has affected the benefits they offer employees, a survey of employers conducted by Colonial Life & Accident Insurance Co. of Columbia shows. Colonial Life surveyed more than 750 human resource managers and benefits administrators at the Society for Human Resource Management Annual Conference in New Orleans in July. Employers reported making the following changes to benefits plans because of the recession: • 26% increased contributions from employees • 12% eliminated benefits • 12% offered employee-paid voluntary options

• 10% added benefits • 9% increased employer contributions “Today’s economy is forcing employers to make tough decisions regarding their benefits plans,” says Tom Gilligan, senior vice president for Colonial Life. “They’re trying to strike a delicate balance between meeting employee needs and controlling costs.” “These findings reinforce what employers have been telling us for a while and validate last year’s survey findings,” says Gilligan. “Employers recognize that employee benefits have a profound impact on morale and job satisfaction. However, they don’t have the resources or time to effectively educate employees about their benefits. Making benefits communication a strategic business priority is a real challenge.”

Other findings: • Nearly 42% of employers are considering changing their benefits packages in the next 12 months. • Nearly 90% of employers think having one-to-one meetings between a benefits counselor and each employee would significantly improve their employees’ understanding of their benefits. • More than 60% of employers say they would consider adding employee-paid voluntary benefits to enhance their benefits plans.

the way it has slowed this down,” Huntley said. “Most of your venture funds investment that brought Myconostica have had to really drop back and really Ltd., a medical company based in the analyze the companies they’d already United Kingdom, to Charleston. invested in and make sure they’re in Still, the recession has stalled good shape. I think that might have a lot of venture capital intaken their eyes off the road vesting. for a little while. Right now, In the second half of there’s not a lot of appetite 2009, venture capitalin the market for risk.” ists invested $3.7 bilThat doesn’t mean lion nationally in 612 money isn’t available, from deals, according to THE money issue Invest SC or elsewhere. the most recent MonThe MoneyTree report eyTree Report from the said life sciences, which National Venture Capital includes biotech and mediAssociation and Pricewacal device companies, remain terhouseCoopers, a global popular with venture capitaladvisory firm. That’s a 15% ists. increase from the first quarter but “Right now one of the hot buttons still as low as investing has been since is anything that’s green (green energy, the mid 1990s, the report said. green technology) and management “Two years ago when (Invest SC) of health care records,” Huntly said. started, I don’t think anybody antici- “Those are the two areas gaining a lot pated the depth of this recession and of attention from venture capital.” VENTURE, continued from page 10

www.gsabusiness.com 11

Steadman Hawkins Clinic at GHS expects to become major medical destination he Steadman Hawkins Clinic in Vail, Colorado puts 100 orthopedic patients in beds every night, and half are from outside the Vail region. Family or friends often accompany patients who come there for the clinic’s surgical skills, spending money in the region’s hospitality industry. Already, the Steadman Hawkins Clinic of the Carolinas, at Greenville Hospital System’s Patewood campus, is attracting 10% to 15% of its patients from outside the hospital’s traditional service area. “I believe that could grow to 50%,” said Jim Silliman, president of Steadman Hawkins of the Carolinas. “That’s the future we would like to have.” Silliman compares the growing practice to big names in medicine. “Is it going to be like the Cleveland Clinic, or the Mayo Clinic?” Silliman asks rhetorically. “I don’t know, but the medical care here is second to none. This hospital is rated in the top 1% in the country in customer satisfaction.” One of the clinic’s founders, Dr. Richard Hawkins, now lives and conducts research in the Upstate. And the University of South Carolina recently announced the creation of an endowed chair in orthopedic research to be based at the Patewood campus.

T

12

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special edition: the money issue

Aug. 10 - Aug. 30, 2009

Affordability could drive uptick in home sales wning a home in the Upstate is within reach of more residents than ever, data show. Michael Dey, Executive Vice President of the Home Builders Association of Greenville, said the affordability index — median household income compared with median home prices — is very favorable in the Greenville market. “In our market, 81% of houses that are on the market can be bought with the median income,” Dey said. Joseph C. Von Nessen of the Division of Research at the Moore School of Business, states in the S.C. Housing Market Report that housing affordability is the highest it has ever been in South Carolina. “Since July 2006, housing affordability has increased by 34%,” Von Nessen writes in the quarterly report. “South Carolina’s housing market is in a strong position relative to the rest of the nation.” Median price of homes Von Nessen cites Federal Housing Fisold, June 2009 nance Agency figures that show the Spartanburg MSA ranks sixth in the nation in housing appreciation, and South Carolina ranks 20th overall. “Although builders will have to make significant adjustments, there will still be demand for over one thousand housing starts a month in South Carolina for the remainder of 2009,” Von Nessen states. “The builders who successfully adjust to the new market conditions will be the ones Median household who capture shares in this market.” income in S.C., 2007

O

$139,000

$52,913

The Palmetto Bank of Greenville opened their downtown headquarters earlier this year. (Photo/S. Kevin Greene)

Commercial property

looms in bank losses by Scott Miller smiller@scbiznews.com

evalued commercial real estate loans could push bank losses even higher in coming quarters. That’s the expectation of The Palmetto Bank of Greenville. The bank lost $17.9 million in the second quarter, a $22 million swing from the same period a year ago and the first loss the bank has suffered in this recession. Anticipating defaults on commercial real estate loans, Palmetto Bank increased its loan loss provisions and asked shareholders to authorize 2.5 million preferred shares in an effort to boost capital. The bank even applied for government funds, after advertising last year that it would not do so. “Conditions have worsened since then,” said President and CEO Sam Erwin. The South Financial Group, also of Greenville, expects its losses to continue through the end of the year and into 2010, though it said losses should begin to lessen in the fourth quarter. The parent company of Carolina First bank and Mercantile Bank in Florida reported a $111.5 million loss for the second quarter, or $1.23 a share, compared with a $16.8 million loss, or 23 cents a share, during the same period last year. President and CEO Lynn Harton said losses on real estate in the Carolina coastal and mountain regions should worsen in coming quarters, but the Florida real estate market may have hit a bottom, or is getting close.

D

That could lead to a decline in credit losses in the fourth quarter, Harton said, also warning that similar predictions could have been made last year. “The question mark in my mind is what happens in the broader economy. It kind of feels to me like it did at the same time last year. We had taken the brunt of losses in Florida … And then of course the whole world changed in September and October,” he said. “We’re starting to see stabilization. We’re starting to see liquidity in the market. We’re starting to see more (consumer) confidence. But I’m not going to say it’s not still fragile.” Profitable banks are proceeding with caution too.

Rising loan losses BB&T Corp., the third-largest bank by deposits in South Carolina, and Bank of America Corp., the second-largest, both have increased their provisions for loan losses and repaid millions to the federal government. “Difficult challenges lie ahead from continued weakness in the global economy, rising unemployment and deteriorating credit quality that will affect our performance for the rest of the year and into 2010,” said Kenneth D. Lewis, Bank of America president and CEO. Bank of America, based in Charlotte, N.C., reported net income of $3.2 billion in the second quarter. It posted creditloss provisions of $13.38 billion in the quarter, about double year-ago levels. Meanwhile, Winston Salem, N.C.based BB&T reported that second quarter net income was $208 million. The see LOSSES, page 13

Aug. 10 - Aug. 30, 2009

special edition: the money issue

Banks pay special fees to supplement FDIC

tain public confidence in the banking system. The final rule establishes a special assessment of five basis points on each ank failures are depleting FDIC-insured depository institution’s the Federal Deposit Insur- assets, minus its Tier 1 capital, as of ance Corp.’s coffers, and June 30, 2009. South Carolina banks and others across The levy will collect $5.6 billion. the country are paying $5.6 billion to Right now, the fund has about $13.1 replenish them. billion in it, said FDIC spokesman DaThe South Financial Group of vid Barr. At the end of 2008, the FDIC Greenville, for example, paid a $5.7 set aside $22 billion from the fund to million special assessment to the FDIC cover the anticipated cost of bank failin the second quarter. ures in 2009. So far, it has spent about Columbia-based SCBT Financial $13.5 billion, Barr said. Corp. paid $1.3 million. With the special assessment, the Southern First Bancshares, FDIC projects that the fund the parent company of will remain low but positive Greenville First bank, through 2009 and then bepaid $300,000 and said gin to rise in 2010. the assessment was a However, FDIC Chairkey reason that secman Sheila Bair also cauond-quarter income tioned that given the inTHE money issue herent dropped from $862,000 uncertainty in these a year ago to $355,000. projections and the imporThese funds are in additance of maintaining a position to the FDIC premiums tive fund balance and reserve that banks pay each quarter. ratio, “it is probable that an ad“Basically, they’d already ditional special assessment will raised the base fee to the point that be necessary in the fourth quarter, it was costing us about $100,000 a quarter although the amount of such a special over what is was a year ago,” said Jim Aus- assessment is uncertain.” tin, executive vice president and CFO of “Assessments are a significant expense, Southern First. “Then on top of that they particularly during a financial crisis and hit us with the special assessment.” recession when bank earnings are under The Board of Directors of the Fed- pressure,” Bair said. “We recognize that eral Deposit Insurance Corporation assessments reduce the funds that banks voted in May to levy a special assess- can lend in their communities to help rement on insured institutions as part of vitalize the economy. On the other hand, the agency’s efforts to rebuild the De- deposit insurance provides a benefit for posit Insurance Fund and help main- which banks have always paid.” by Scott Miller smiller@scbiznews.com

B

LOSSES, continued from page 12

bank reported a $701 million provision for credit losses in the second quarter, which resulted in an increase in the allowance for loan and lease losses as a percentage of loans and leases held for investment to 2.19% at June 30, compared to 1.94% at March 31 and 1.62% at Dec. 31, 2008. SCBT Financial Corp. of Columbia reported net income of $1.5 million for the second quarter, down from $6.1 million during the same period last year. During the second quarter, SCBT raised nearly $30 million through a stock offering during the second quarter and repaid the $64.8 million it received from the government’s Troubled Asset Relief Program. Still, the provision for loan losses nearly doubled to $4.5 million, and non-

performing assets as a percentage of loans and repossessed assets increased to 1.74%, compared to 0.39% a year ago and 1.34% for the first quarter of 2009, reflecting ongoing pressure in the real estate market. Southern First Bancshares Inc., the holding company of Greenville First Bank, announced net income of $355,000 for the second quarter compared with $862,000 for the same quarter in 2008. It boosted its provision for loans losses by $275,000 to $1.7 million, though its percentage of nonperforming assets dropped slightly to 1.77%. Nonperforming assets as of June 30 consisted of $8.7 million of nonperforming loans and $4.5 million of other real estate owned. “The economic recession and difficult banking environment continue to negatively impact our company’s earnings,” said CEO Art Seaver.

www.gsabusiness.com 13

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special edition: the money issue

school

ConstructioN Pickens School District sees construction costs fall Elementary school renovations and additions School Cost Estimate Actual Cost Savings Ambler $2,792,000 $2,213,278 $578,722 Central $2,888,000 $2,285,000 $603,000 Crosswell $735,000 $780,943 -$45,943 East End $700,000 $512,406 $187,594 Forest Acres $975,000 $533,651 $441,349 Hagood $1,660,000 $1,338,000 $322,000 Holly Springs $2,022,000 $2,447,929 $425,929 A.R. Lewis. $2,436,000 $2,137,792 $298,208 Total $14,208,000 $12,248,999 $1,959,001

General building contract for Anderson District One’s Powdersville High School

Bidders Base Bid Edcon, Inc. ............................................................................................$11,674,000 EMJ Corporation .................................................................................$11,790,000 Matrix Construction Co...................................................................... $11,813,084 Martin Engineering .............................................................................$11,820,596 Melloul-Blamey Construction SC Ltd...............................................$12,193,000 China Construction America of SC Inc............................................$12,480,000 LeChase Construction Services LLC ................................................$12,630,000 The Harper Corp.................................................................................. $12,650,000 Beam Construction Co....................................................................... $12,658,450 Contract Construction Inc. ................................................................$12,697,000 Yeargin Potter Shackelford Construction . .......................................$12,943,000 MB Kahn Construction executive Bill Myers sorts the bids for Powdersville High School. (Photo/James T. Hammond)

Aug. 10 - Aug. 30, 2009

For public institutions with money to spend, construction appears to be buyer’s market Amid keen competition for jobs, Pickens prepares to build 6 new schools by James T. Hammond jhammond@scbiznews.com

Construction is a buyer’s market these days. Pickens County’s school district has $365 million of new construction and renovations under way or on the drawing boards, including four replacement high schools and two elementary schools. The school district already authorized renovations and expansions at six elementary schools. The work had been estimated to cost $14.21 million. When all those bids were in, the total was $12.25 million, almost $2 million, or 14%, less than had been expected. That experience bodes well for the district to save some money on its new schools as contractors aim their bids to win work in a recession economy. The Pickens district has not yet sought bids for the high school projects, but Joe Tommie, director of construction procurement, acknowledged, “It’s a good time to build. We hope to see some buildings started by Christmas.� Officials at the district’s neighbor, Anderson District One, felt like it had struck gold when preliminary bids for the new Powdersville High School, estimated to cost $38 million to build, came in almost $10 million below that figure on July 1. The bids again illustrated the deep discounts construction companies are willing to give to win contracts in the current deep recession. The combined $450 million construction programs in the two school districts amount to a mini-stimulus program that

Powdersville High School (Photo/Provided)

has attracted bidders that might not have looked at the projects in fatter times. Other districts also have construction under way, including projects in Greenwood County and Oconee County. Thirteen contractors bid on the site preparation for Powdersville High School, a piece of the project already awarded, said Bill Myers, vice president of the construction management division at M.B. Kahn Construction Co., and project manager for the Anderson One program. In better economic times, Myers would have expected four to six bidders. The low bid was $1.4 million, a jaw-dropping 39% compared with previous estimates of $2.3 million, Myers said. Ten of the bids were below the earlier $2.3 million estimate, he said. Myers said he has mixed emotions about the savings being realized by the district. “As the owner’s agent, we’re really pleased for the owner,� Myers said. “But we’re also a general contractor, and I feel the pain.� Myers said he does not believe any of the winning contractors set out to lose money on a project. But he said they are bidding at or near their cost just to keep their employees and subcontractors working. “It trickles down to the people who sell the blackboards, or the bricks. Right now everyone is willing to lower their margins,� Myers said. “It’s a mystery to me how prices have fallen so low.�

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special edition: the money issue

Aug. 10 - Aug. 30, 2009

www.gsabusiness.com 15

Glover’s U.S. Open victory shines light on Upstate’s golf assets ucas Glover wasn’t the only winner when he survived a late advance from Phil Mickelson to claim a rain-soaked U.S. Open championship. His win reaffirmed the Upstate’s status as a great place to play a round, and that could lead to tourism dollars flowing into local restaurants, hotels and retailers and new memberships at local golf clubs. Memberships at the Thornblade Club – Glover’s home course – have spiked in the last few weeks,

L

said Kevin Schreel, head golf professional. “I don’t know if that’s directly related to Glover,� Schreel noted. “But considering the economic situation, we’ve done pretty well with new memberships.� Even Glover’s unlikely championship hasn’t attracted more tourists or increased memberships at Upstate golf clubs, “it has definitely inspired people to get back out and play,� Schreel said.

Investors see reward, risk in foreclosures by Scott Miller smiller@scbiznews.com

“

REO� could spell “bargain� for investors, if they have the cash, the time and the stomach to take the risk. As foreclosures increase, so does the “OREO,� or other real estate owned, that banks are trying to unload from their portfolios. The Greenville County Court reports around 100 foreclosure sales every month. Greenville, Anderson and Spartanburg counties had a combined 1,549 homes in foreclosure in the first quarter and 1,239 in the second, according to data from the national real estate tracking firm RealtyTrac. Six month totals show that South Carolina had a 33.32% increase in foreclosures in the first half of 2009 compared to the first half of 2008. “There are a lot of properties out there that are selling for a big discounted price compared to the appraisal,� said Nick Sabatine, CEO of the Greater Greenville Association of Realtors. “They’re buying them and probably flipping them, though to tell you the truth, this is not a good

O

time to flip a house either. Some of them may be sitting on them awhile.� Upstate banks report that local buyers – either investors or sometimes end users – are the majority of those placing bids on OREO, which includes commercial and residential property. By contrast, investors from all over the region and country have been buying bank notes, they said. In some cases, banks are now “bundling� properties together to attract investors, said Jim Blair, a real estate attorney at Nexsen Pruet’s Greenville office Real estate investing has slowed to a crawl, he said, because investors with money can’t stomach any more risk. “There are lots of deals to be had, but there’s not a lot of appetite,� he said. “There’s no question that there are some very nice pieces of real property both commercial and residential that could be bought right now at what most

people would consider a sale price. So the question remains, why is it not being sold?� Because the real estate market is risky, particularly now, he said. While the firm already did some foreclosure work, Nexsen Pruet formalized a distressed property group to handle the increase in business last October. “We’ve seen a lot of things over the last 24 months that you don’t normally see. We’ve seen groups of people pool money together in investment funds. People have actually created securities that they would be able to deploy as these (real estate) opportunities became available,� Blair said. “That seems like it slowed down a lot,� Blair added. “There was a lot

more activity in 2008, than there is in 2009. We have not had a new fund, I don’t think in this quarter. The problem that we’ve seen in the last bit of the cycle is the buyers who were doing deals, they have about all the nonperforming assets in their portfolio that they want right now. The problem is, once you get two or three or 20 or however many you can afford, then those aren’t selling.� Many of those speculators have taken all the risk they can stand, he said. Among many problems stalling real estate sales, foreclosed properties weigh down the values, or appraisals, of all other properties for sale. That puts everyone in a tough spot: the seller wants to recoup as much of the loss as possible, but the buyer can’t afford a larger down payment and banks don’t want to increase the loan amount beyond the appraisal price. And some times, foreclosed properties require a lot more work than an investor would want. “I’ve seen houses where the ceiling fans are removed, light fixtures, chandeliers, anything that a homeowner can remove before the bank takes the title,� Sabatine said.

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Aug. 10 - Aug. 30, 2009

Higher education gets boost for capital plans by Scott Miller smiller@scbiznews.com

espite budget restraints, higher education institutions have some money to spend on capital projects. Clemson University, for example, will receive $14.7 million in federal stimulus funds, part of which will fund renovation of Lee Hall. The university also has applied for a stimulus grant that would provide half the funding needed to construct the new $50 million life sciences building, said Clemson CFO Brett Dalton. Clemson already has hired the PazdanSmith Group and Thomas Phifer and Partners to handle the architecture and design work for the Lee Hall renovation, Dalton said. Construction will be put to competitive bid, he said. Collectively, state universities will receive some $84 million, which only includes the dollars that the state Supreme Court ruled that Gov. Mark Sanford couldn’t reject. Other money is available for universities through applications with local, state and federal agencies that received stimulus funding. The universities do not view stimulus funding as way to stop the bleeding from state budget cuts that have forced layoffs and program downsizing. “These funds are one time,” Dalton said. “What we lost from the state is recurring funding. In no way can that onetime funding replace the loss of $40 million from the state annually.” Other recipients agree. That means much of the money will be used to renovate space, build new labs or purchase equipment, said Robert Connelly, vice chancellor for business affairs at USC Upstate. USC Upstate expects to receive $2 million each of the next two years, he said. The University of South Carolina will receive about $24 million, including $4 million for the school of medicine. “Because stimulus funding will be for only two years, generally, the university will not use those funds for recurring expenditures. A good example of how we will use it is for laboratory equipment and instructional technology along with the hiring of post-doctoral associates and graduate assistants that broaden our reach in research and instruction,” said USC spokeswoman Margaret Lamb. “The key is that in all of our funding decisions, we will select the uses that have the greatest impact on our mission and stimulate the S.C. economy through local spending.” Clemson will spend about $10 million

D

Federal Stimulus funds for colleges, universities University of South Carolina (Columbia)...................... $23,945,887 Clemson University......... $14,691,917 Medical University of South Carolina............ $12,671,177 University of Charleston.... $4,692,447 South Carolina State University................ $3,253,587 Winthrop University........... $3,092,270 Francis Marion University....$2,588,272 Clemson Public Services Activities............. $2,500,000 Coastal Carolina University......................... $2,270,097 The Citadel....................... $2,161,240 USC Upstate..................... $1,959,567 USC Aiken........................ $1,469,806 Lander University.............. $1,440,348 USC Sumter......................... $575,463 South Carolina State University PSA..................... $500,000 USC Beaufort....................... $481,777 University Center of Greenville ....................... $364,440 USC Lancaster..................... $356,295 USC Salkehatchie................ $310,271 USC Union........................... $138,095

TOTAL

$84,154,873

Source: U.S. Department of Education

to renovate Lee hall and the rest will be used for operations, Dalton said. “Instead of putting faculty salaries on those dollars, it’s our hope that ultimately those funds will be use to purchase equipment,” he said. In addition to those funds, Clemson’s Public Services Activities division will receive $2.5 million. In addition, researchers are busy submitting grant applications to federal agencies that have stimulus funding to spend, Dalton said. “I would say hundreds of grants,” he said. “Some of them support physical infrastructure for research.” A prime example, Dalton said, is a grant for science research that Clemson could use to construct a new life sciences building, which has been put on hold. “We have submitted a proposal that would provide about half the funding needed to resume construction,” Dalton said. “That would be a really important move for Clemson University as well as the local economy. We won’t know about that proposal until October.”

special edition: the money issue

Aug. 10 - Aug. 30, 2009

www.gsabusiness.com 17

Most Innovative Companies Ranked by Patents Assigned in 2008

Most Recent Patent 2008

Roger Milliken, Dr. Joe Salley, Jim McNulty

Products/Services

Year Established Locally

Manufacturer of textiles, chemicals, carpets

1900B

7,468,144 December 23, 2008

Karl Deily, president Cryovac Food Packaging, Sealed Air Corp.

Manufacturer of materials and systems for protective presentation and fresh food packaging

1955

Hybrid tea rose plant named `JACormag`

PP19,556 December 9, 2008

Charles (Chas) Fox, president

Roses, wholesale and mail order

1872

7 33

Surface plasmon induction in multiwalled carbon nanotube arrays

7,456,972 November 25, 2008

James F. Barker, president

Higher education

1889

Poly-Med Inc. 6309 Highway 187, Anderson, SC 29625 864-646-8544/864-646-8547/www.poly-med.com

7 13

Inorganic-organic melted-extruded hybrid filaments and medical applications thereof

7,465,489 December 16, 2008

Dr. S. W. Shalaby, president and director of R&D

Proprietary polymers and biomaterials technology

1995

Jacobs Chuck Manufacturing Co. PO Box 592, Clemson, SC 29633 800-688-8949/864-654-5001/www.jacobschuck.com

4 17

Chuck with spindle lock

7,455,302 November 25, 2008

Tom Warner, plant manager

Manufacturer of industrial chucks

1902

Kemet Corp. PO Box 5928, Greenville, SC 29606 864-963-6300/864-963-6322/www.kemet.com

4 27

Electrode compositions containing carbon nanotubes for solid electrolyte capacitors

7,348,194 March 25, 2008

Per-Olof Loof, CEO

Manufacturer of solid tantalum, multilayer ceramic and aluminum organic capacitors

1963

GHC Research Development Corp. 701 Grove Road, 3rd Floor, Greenville, SC 29605 INP/INP

3 1

Lytic peptide prodrugs

7,456,146 November 25, 2008

Susan J. Bichel, registered agent

Tax exempt research institute

INP

Para-Chem Southern Inc. PO Box 127, Simpsonville, SC 29681 864-967-7691/864-963-1241/www.parachem.com

3 INP

Trowel blade

D577,971 October 7, 2008

John W. Jordan, chairman/ CEO

Manufacture, sales, service of custom specialty coatings, emulsion polymers and adhesives

1959

Sassy Tails LLCD 1140 Woodruff Road, #106-129, Greenville, SC 29607 864-286-8103/INP/www.sassytails.tv

3 INP

Elastic ornamental hair band

D561,939 February 12, 2008

Kim Madden, president

Manufactures and sells hair accessories

INP

U.S. Patents: 2008/ 2005-2007

Description

Patent No./ Date Assigned

Milliken & Co. PO Box 1926, Spartanburg, SC 29304 864-503-2020/864-503-2100/www.milliken.com

39 170

Wash-durable, liquid repellent, and stain releasing polyester fabric substrates

7,468,333 December 23, 2008

Sealed Air Corp. PO Box 464, Duncan, SC 29334 864-433-2000/INP/www.sealedair.com

11C 47C

UV- or heat triggered low oxygen packaging system employing an oxidizable polymer resin and a peroxide

Jackson & Perkins Wholesale Inc. PO Box 5002, Hodges, SC 29653 800-545-3444/800-826-5700/www.jproses.com

9 INP

Clemson University 201 Sikes Hall, Clemson, SC 29634 864-656-4233/INP/www.clemson.edu

Company Address Phone/Fax/Web Site

Top Local Official

INP = Information not provided. NR = Not ranked. N/A = Not applicable. Source: U.S. Patent and Trademark Office. Although every attempt is made to ensure the accuracy and thoroughness of GSA Business lists, omissions sometimes occur. Please make additions at www.gsabusiness.com by clicking on the Resources tab. Go to Lists & Leads and then click on Add Data. 11900s 2Assignee listed as Cryovac Inc. (Duncan, SC) 3Filed a voluntary petition for liquidation under Chapter 7 in the U.S. Bankruptcy Court for the District of South Carolina, Spartanburg on December 8, 2008

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Most Innovative Companies Ranked by Patents Assigned in 2008 Company Address Phone/Fax/Web Site Add-On Timer LLC 409 Magnolia St., Spartanburg, SC 29303 INP/INP/www.aotrx.com

Most Recent Patent 2008 Patent No./ Description Date Assigned

U.S. Patents: 2008/ 2005-2007

Top Local Official

Products/Services

Year Established Locally

2 INP

Add-on timer for medicine container

7,382,692 June 3, 2008

William K. Hildebrandt

Add-on timer for medicine container

2006

Contec Inc. PO Box 530, Spartanburg, SC 29304 864-503-8333/864-503-8444/www.contecinc.com

2 1

Mop head including contoured tubular fluid retaining strand elements

7,389,559 June 24, 2008

Jack McBride, CEO

Clean room wipes, chemically treated wipes for automotive and industrial surface preparation, distribution

1988

Hartness International Inc. PO Box 26509, Greenville, SC 29616 864-297-1200/864-297-4486/www.hartness.com

2 19

Apparatus for diverting a stream of articles

7,413,072 August 19, 2008

Sean Hartness, COO/VP

Packaging solutions

1940

Head Ornamentals Inc. 2375 Blue Ridge Blvd., Seneca, SC 29672 864-882-5060/INP/www.gardendebut.com

2 1

Leucothoe plant named `HOWW`

PP18,396 January 1, 2008

Bob Head

Breed, develop and patent new plant materials under the Garden Debut name

1999

J. Kirk Leaphart, Jr. and C. Mark LeaphartB 201 E. Curtis St., Simpsonville, SC 29681 864-228-3888/864-228-3886

2 3

Compressed air drain opening device

7,340,783 March 11, 2008

INP

INP

INP

Marjen Inc. 2131 Woodruff Road, Suite 2100-115, Greenville, SC 29607 864-281-1011/INP/www.marjeninc.com

2 3

Vehicle identification card with removable key tag

7,373,749 May 20, 2008

INP

Vehicle key tags

INP

Professional Tool Products LLC PO Box 3664, Greenville, SC 29608 864-834-6662/864-834-6653

2 14

Housing for a rotary tool

D568,131 May 6, 2008

Martin Huguet, president

Wholesale industrial equipment and hardware

2000

Prym Consumer USA Inc. PO Box 5028, Spartanburg, SC 29304 864-576-5050/864-587-3353/www.dritz.com

2 4

Handle

D566,515 April 15, 2008

Johan A. Starrenburg, president/CEO

Largest manufacturer and distributor of sewing, quilting and craft-related notions in North America

1959

Reliance Electric Technologies LLC 6040 Ponders Court, Greenville, SC 29615 864-297-4800/864-281-2487/www.reliance.com

2 1

Electric motor

D576,941 September 16, 2008

Joseph D. Swann, president

Manufactures small electric motors

1904

Span-America Medical Systems Inc. PO Box 5231, Greenville, SC 29606 864-288-8877/864-288-8692/www.spanamerica.com

2 3

Shear reducing chair cushion

7,444,707 November 4, 2008

James D. Ferguson, president/CEO

Specialty solutions for pressure management and patient positioning

1975

Super Duper Publications PO Box 24997, Greenville, SC 29616 864-288-3536/864-288-3380/www.superduperinc.com

2 2

Acoustic feedback headset

D573,131 July 15, 2008

Thomas and Sharon Webber, founders

Educational and therapy materials

1986

Woven Electronics LLC, a TSI Company PO Box 189, Mauldin, SC 29662 864-963-5131/864-963-1761/www.wovenelectronics.com

2 2

Fiber optic security system for sensing the intrusion of secured locations

7,402,790 July 22, 2008

Scott Chandler, VP of business development; E.J. Mondor, president

Analog and digital custom-engineered, patented interconnect solutions

INP

INP = Information not provided. NR = Not ranked. N/A = Not applicable. Source: U.S. Patent and Trademark Office. Although every attempt is made to ensure the accuracy and thoroughness of GSA Business lists, omissions sometimes occur. Please make additions at www.gsabusiness.com by clicking on the Resources tab. Go to Lists & Leads and then click on Add Data. 1DBA 2L Products Inc.

Researched by Elizabeth Feather

Left to right: R. Charles Eldridge, Jr., President and CEO and David L. Beard, Executive Vice President

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The bank class of 2005-07

BankGreenville

by Francis B. Allgood fallgood@gsabusiness.com

Carolina Alliance Bank

Part I: Deposit growth and lending practices

n one of the worst economies in one of the most competitive banking markets in America, five banks founded in 2005-2007 face heightened demand for credit quality and deposit acquisition. With 45 banks in the Upstate, seven control about 68% of the market. The start-up bank class of 2005-2007 combined represents only about 2.4%. But they represent the ongoing evolution of the region’s banking sector, which has traditionally been fertile soil for new bank formation. Now more so than ever, capital is king. While Congress is encouraging banks to loan more, regulators are urging caution. “I understand both positions, but the bottom line we, as bankers, have to make that decision on where in that whole continuum do we need to be,� said John Poole, president of two-year-old Carolina Alliance Bank in Spartanburg. “We’ve grown our loan portfolio every month and have been a little more conservative, and any prudent businessman would say that it makes sense to do that.� All banks have been hurt by land, commercial real estate, and acquisition and development loans as real estate prices suffer. Some were more heavily invested. CommunitySouth Bank and Trust has raised more than $384.7 million in assets since 2005, but in the first quarter the bank attributed $1.3 million in loan loss provisions. “We think it’s prudent to go ahead and put money in the loan provision,� said Allan Ducker, CEO. “Yes,

I

I would say our real estate (portfolio) is pretty heavy, but at the end of the day you have collateral. I would rather have to liquidate real estate than receivables or inventory even in this environment.� Pinnacle Bank is having its best year, said David Barnett. The bank is currently expanding its headquarters in Greenville, adding 4,500 square feet. “We’re making money,� said the bank’s president and CEO. “Our profitability is ahead of our projects and I think that’s because we’ve taken a real conservative approach.� Barnett admits it would be tough to raise $18.5 million in assets on a $12.5 million goal like the bank did in 2006. Pinnacle Bank has more than $112 million in assets today. “The biggest benefit for us is we did not have a huge investment in residential real estate,� he said. “We didn’t do a lot of A & D (acquisition and development) lending. All of those things have helped us to be healthy right now.� About nine months ago, Independence National Bank changed its strategy and deleveraged its balance sheet, according to Larry Miller, president and CEO. “Lending is down,� he said. “Banks aren’t loaning as much money due to regulators and the general state of the economy.� On an 80% loan-to-value, for example, banks may have offered in the past up to 85% to a qualified or preferred client, Miller said. While the client is the same, regulators may frown upon that transaction today. “If that’s going to be the case, that’s going to be detrimental to the organization, so I have to hold (the borrower) to a higher standard,� Miller said. “If something unthinkable happens, that 5% shortage on the down payment may turn out to be a 10% or 15% shortage given the real estate values.�

A steady, conservative growth model has worked well for BankGreenville. “That’s good for the economy we’re in,� said Paula King, chief financial officer. “Having said that, we don’t have the luxury of a bank that’s maybe 10 years old with $500 million (in assets) sitting back during this period and saying, ‘We’re going to stop the growth.’ � The start-up banks have seen success in raising capital and growing deposits. From March 2008 to March 2009, Carolina Alliance and Pinnacle Bank had deposit growth of more than 35%. CommunitySouth raised $4.3 million at the end of 2008 through a supportive debt offering. “The fact that our client can walk in, kick the tires and talk to the management team, there’s a sense of knowing who you are working with that offers some reassurance in this sort of difficult environment we have,� said Russel Williams, BankGreenville’s president and CEO. In the first four and a half months since Independence opened its Simpsonville location, the branch has collected $4.5 million in deposits. BankGreenville and Carolina Alliance have only their headquarters, Greenville-based Pinnacle Bank has a second branch in the Powdersville area, Independence National has three locations in Greenville County, and Easley-based CommunitySouth has additional branches in Anderson, Greenville, Greer, Mauldin and Spartanburg. CommunitySouth and Pinnacle Bank locations are leased, not owned. CommunitySouth has put its seventh branch on hold to be located in West Spartanburg. The bank still plans to eventually build at that location. Read more in this two-part series about the bank class of 2005-07 in the Aug. 31 edition.

{Established 2006} 2008 2009 Change Assets $65.5 $89.5 26.8% Deposits $47.3 $64.2 16.9% Capital + $10.1 $11.3 10.6% Troubled Asset Ratio:............................... 10.9%

{Established 2007} 2008 2009 Change Assets $116.6 $172.5 32.4% Deposits $91.2 $141.2 35.4% Capital + $24 $23.5 -2.1% Troubled Asset Ratio: ................................... 0%

CommunitySouth Bank and Trust {Established 2005} 2008 2009 Change Assets $382.2 $384.7 0.6% Deposits $310.5 $322.8 3.8% Capital + $35.8 $40.3 11.2% Troubled Asset Ratio: .............................. 45.5%

Independence National Bank {Established 2005} 2008 2009 Change Assets $122.9 $140.4 12.5% Deposits $93 $105 11.4% Capital $16.9 $16.1 -4.78% Troubled Asset Ratio: .............................. 14.9%

Pinnacle Bank of South Carolina {Established 2006} 2008 2009 Change Assets $75.5 $110.5 31.7% Deposits $53.3 $86 38% Capital $16.5 $17.1 3.5% Troubled Asset Ratio: ................................ 7.8% Information is in millions. Data is from March 31 in 2008 and 2009, and is provided by American University’s Investigative Reporting Workshop and MSNBC. The “troubled asset ratio� listed is from March 31, 2009, and is not an FDIC statistic. The percentage is derived by adding the amounts of loans past due 90 days or more, loans in non-accrual status and other real estate owned (primarily properties obtained through foreclosure) and dividing that amount by the bank’s capital and loan loss reserves. The national median is 11.7%.

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20

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Recession is crucible for restructuring economy by James T. Hammond jhammond@scbiznews.com

aby boomers eager to retire, a looming tax increase, and scarce operating capital could drive a wave of mergers and acquisitions in the months ahead, local investment bankers predict. For example, there are a hundred or more small businesses in the Upstate that specialize in outsourced staffing, says Reg Greiner of The Capital Corporation. He thinks that number will shrink Greiner by 20% to 30% when the recession’s credit crunch is fully felt. Meanwhile, many small business owners are nearing retirement, and seeing the value of their retirement nest egg shrinkGreen ing, says Devin Green, The Capital Corporation’s director of operations. They want to sell their businesses and recoup as much value as pos-

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sible from the sweat equity that went in to those businesses. In addition, many of the small businesses have seen their access to operating capital shrivel as banks adopt more conservative guidelines. Starved of access to borrowed funds, these small companies may see sale or merger as the only alternative to closing the doors. “The ground is shifting under our feet every day,” Green said. The momentum in such deals is shifting toward buyers, but sellers can still get full value for their properties, he said. They just may have to wait a while to be paid for it. In a different environment, an owner selling a business might expect a 100% cash payment when the transaction closes. In today’s environment, when buyers are more anxious about the ongoing value of a business, payments are more likely to be structured with a partial payment at closing, and the rest paid out over time. That’s the experience of Ranger Aerospace LLC, a Greenville-based owner and operator of aviation and aerospace companies. Ranger buys a company, operates it and grows it for four to five years, and then sells the company to a new owner who aims to operate it over the long term. “We don’t do bail-outs,” said Steve Townes, president, CEO and Founder of Ranger Aerospace. He said companies that Ranger buys have owners near retirement and seeking to cash out, or who want to remain an equity partner and need cash to grow the business. Ranger recently bought of CAV International Inc., a government-outsourcing contractor specialized in airfield services and logistics. Today, Ranger has about $30 million in annual revenue and an annual growth rate of 50%. It operates the largest air base logistics operation in the world in Kuwait for the U.S. Air Force. Another, similar, investment is pending, Townes said, which, if completed, would triple the size of the company by Labor Day. Since Ranger’s start-up in 1997, it has completed $340 million in transactions, chalked up a 51% return on investment on its best deal, and has created more than 2,000 jobs in the process. Townes and his partners say there are plenty of middle market companies interested in selling, but they all probably must downsize their expectations for a buyout. A seller today most likely must participate in the deal, by carrying a note for part of the sale; by structuring a payout over time that is pegged to the performance of the company; or by hold some stock in the new company. “A seller will have the same stake as I do,” Townes said. “But he’ll get a big bang at the back end of the deal.”

Ranger Aerospace executives Steve Townes (sitting), the CEO; CFO Jeffrey Hartman (standing, left), and operations chief Bill McLendon. (Photo/James T. Hammond)

Townes, Chief Operating Officer Bill Greiner agreed the window of opportuMcLendon, and Chief Financial Officer nity for both buyers and sellers to benefit Jeffrey Hartman participate financially in from deals remains open. the deals along with private equity partOne motivating force for well-inners, some of whom have invested in pre- formed sellers is the real possibility that vious purchases and sales of companies the Democratic majority Congress will with Ranger. Townes said he is personally increase the capital gains tax by 10-20 invested in the company “in the seven percentage points by the end of next year. figures range.” Deals that close before such an increase The current economic downturn has would leave more money in the pockets affected their business, they say. There’s of the seller. a recession-induced discount on the The sale of a business typically current value of companies. takes six to nine months, That’s the downside for sellers. Green said, estimating that But there’s also tremendous 90% of the potential sellupside potential for the ers he talks to don’t know sellers who agree to mainthat the tax on capital tain a long-term investgains will likely rise in the ment in the new company. THE money issue next 18 months. The Ranger team reAsked to suggest how mains fundamentally optithey’d approach investmistic about future economing $200 million in mergic growth. “We’ll surge back,” ers and acquisitions, Greiner Townes asserts. and Green had different ap“Sellers realize the market is proaches: down and they know they can realize Greiner would look at business some value now, and more gains later,” service companies versus asset-heavy said Hartman. “It’s a very attractive the- businesses, such as manufacturers. He’d sis.” prefer service businesses that can be And active management of the com- scaled up and down quickly with labor. panies they buy is key to future growth And he likes businesses that handle payand profits. ments and transactions. “We’re going to work with them to Green said he would not care about grow the company,” McLendon said. the business sector so long as the poten“We’re a services company. Operations tial acquisition has a good management add value to the company.” team. He wants companies with a diverse Ranger plans additional growth in- client mix, leaders with a proven track revestments and acquisitions in the air base cord of success, and an advantage in the logistic field. CAV has experienced more marketplace, such as technology that is than 50% compound annual growth rates protect by a patent. from 2005-08. “We know buyers with deep pockets The Capital Corporation’s Green and who share that opinion,” Green said.

THE money issue

at work who to k now and where to go around the upstate

Benner says adopt sustainable alternatives by Francis B. Allgood fallgood@gsabusiness.com

I

n January 2006, David Benner opened Mainstay Industrial LLC in Duncan. A lot has happened in three years for the distributor of industrial valves, fittings, pumps and mixers, including one of the worst economies in the nation’s history. Benner discusses being an entrepreneur, the financial market and the upcoming Industrial Facility Mainte-

David Benner Family: Allison, wife; Kirby, Judy, Lucy, daughters Education: Civil engineering degree from Greenville Technical College Hobbies: Attending live sporting events, fishing, yard work Favorite restaurant: Fuddruckers Favorite movie: Sound of Music Favorite book: “Good to Great” – Jim Collins Greatest business challenge: Business partnering leaving and having to continue on

nance Show along with the Association for Facility Engineering’s Annual Meeting to be held in Greenville in October. GSA: As an entrepreneur, what have you learned in your first three years in business? You said business has been down 20%, but activity and orders are picking back up. David Benner: Sometimes I think I should have been scared back then, and what I learned is I didn’t know everything about running a business. I’ve learned through reading various books and associating with other business owners. One particular group I work with is called C-12 Group. There are about 10 or 12 of us and we meet once a month and we go over key elements of our business. GSA: What are some of the things you are doing now to ensure you are making money? Benner: Our business model is becoming daily. What are our expenses we can trim? It’s learning what margin you can mark up that is a fair market value but you are maintaining so you’ll be here tomorrow. We’re also working with customers who are paying us slower because of their own difficulties and we are managing that cash flow. GSA: Your customers are manufacturers, and if they are not manufacturing

Photo by Francis B. Allgood

due to lower demand, do you look at different products to sell them? Benner: Yes. It helps us to increase our volume on the shelves with the same customer base. We have also teamed up with HM Craig in Greenville. Mike Clark may have a few products that overlap, but the majority we don’t. GSA: If you are looking to gain new customers, do you expand your circle? Benner: Yes. We’ve gone down along the coast of Georgia, parts of Charleston, Florence and other areas of South Carolina. GSA: In gearing up for the maintenance show in Greenville, I’m sure many of the folks you’ve talked to express to you about the difficulty of getting loans. What are you hearing? Benner: One particular retailer, who has multiple locations, had a commercial rental property as a security. The bank called in a line of credit and forced him to refinance because they said the market value around that area had changed so drastically. When they took him through that process, he had to pay all the closing costs, it took him away form doing his business, and in the process of that he discovered that an unlimited credit line with American Express was brought down to a limit, and that a Master Card and a Visa were declined. Their reason was because of the credit score due to the refinancing. Then the bank said because your available credit has dropped, affecting your score, we can no longer do the loan or we’ll have to change the terms. The stories we are hearing is there is pressure to drive existing lines of credit down. GSA: Tell me about the conference. Benner: This is a conference for manufacturers, but really anyone who runs a facility, from a hospital to big commercial buildings. I’m the AFE chapter president as well as the regional manger for the southeast. Our theme this year is “Sustainably Green, Financially Lean: Engineering Existing Buildings.” For example, as of March 1, our state regulatory commission on energy changed the rates. Up until that day the more you used in blocks of power the less you pay in kilowatts. It not only went away, it reversed. Your February sales and expenses could be the same and you go into March and you would see a drastic increase in your bottom line for doing nothing.

People in the News BANKING & FINANCE Jon Adam, assistant vice president and internal audit manager for First National Bank of the South, completed the Certified Community Bank Compliance Officer Adam program, sponsored by the Independent Community Bankers of America. Adam has more than eight years of internal audit experience, and he has been with First National since July 2007. see PEOPLE, page 24

News Briefs BMW donates to USC Upstate

BMW Manufacturing Co. has given $250,000 to the George Dean Johnson Jr. College of Business and Economics at the University of South Carolina Upstate. USC Upstate set a goal to raise $14 million in private donations to fund construction of the $30 million business school. So far, the university has raised $13 million. Pictured, from left, are Dr. Darrell Parker, dean of the business school, Bobby Hitt of BMW and USC Upstate Chancellor John Stockwell.

Belton plant to make parts for Florida solar energy facility A company based in Norway said it will make aluminum components for a Florida hybrid solar/fossil fuel energy plant at Extrusion Americas in Belton. A new Indiantown, Fla. unit of Florida Power & Light will use concentrated solar power technology to produce electricity. This process uses parabolic mirrors to capture solar heat, which produces steam that turns a generating turbine. The Belton facility performs extrusion, fabrication and finishing work on aluminum products. see NEWS BRIEFS, page 25

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World Acceptance prospers as other credit sources dry up

T

he weakened economy seems to be boosting the demand for short-term small loans. World Acceptance Corp., for example, reported that net income rose 29% for its first quarter ended on June 30, one of the few finance companies to post an increase in profits. The Greenville company offers shortterm small loans, medium-term larger loans, related credit insurance products, ancillary products and services to individuals who have limited access to other sources of consumer credit. The company states on its Web site that a substantial portion of its business is repeat business from the renewal of loans to existing customers and the origination of new loans to former customers. In the last full fiscal year, World Acceptance loaned $1.9 billion in 1.9 million transactions. At March 31, the company had about 732,000 customers. The company’s loans generally are under $3,000 and have maturities of less than 24

months. World’s average gross loan made in fiscal 2009 was $1,011, and the average contractual maturity was approximately eleven months. In the most recent quarter, World Acceptance posted net income of $14.6 million, or 90 cents a share, up from the $11.3 million, or 68 cents a share, for the same time period last year. “World Acceptance’s record first quarter benefited from increased loan demand, continued focus on expense control, continued close management of credit risks during the weakened economy, and a nonrecurring gain from the extinguishment of debt,” said CEO Sandy McLean. “Loan volume increased 20.1% compared with the first quarter of last year as more traditional financing sources became more difficult to obtain for some borrowers.” Total revenues increased to $100.2 million in the first quarter, a 13.4% increase from the $88.4 million reported last year. Gross loans outstanding increased 14.8% to $726.1 million at June 30, 2009,

up from $632.7 million at June 30, 2008. “We also have managed our credit risks during this recession by closely monitoring our loan portfolio,” McLean said, “which resulted in net charge-offs decreasing to 13.8% of average net loans on an annualized basis during the quarter

from 14.5% in the first quarter of last year. World Acceptance is a small-loan consumer finance company with 949 offices in 11 states and Mexico. It is also the parent company of ParaData Financial Systems, a provider of computer software solutions for the consumer finance industry.

GRANT, continued from page 3

making functional tissues and organs for transplants that help cure the sick and to help heal the injured,” he said. The lead scientist for the project, Roger Markwald of the Medical University of South Carolina in Charleston, emphasized the medical challenges being addressed. Now, efforts to construct tissue or organs for transplantation is limited by an inability to create bloodflow, he said. The goal is to build large organs, such as kidneys, livers or hearts, that include the genetic material of the patient. That can’t happen until a working network of veins can be constructed in tissue. “We are trying to build tissue and organs from the inside out, which is a different approach than anyone has taken,” Markwald said. “First, we want to create a three-dimensional vascular tree, and then the organ. This will allow us to develop the applications to build many different types of organs.” Unlike a donated organ, such a created piece of tissue would be a perfect ge-

netic match with the recipient and would not carry the possibility of transmission of a disease from the donor. The grant will establish an alliance among the state’s three research universities, three historically black colleges and four other educational institutions. The award should facilitate the hiring of 22 new faculty members statewide with needed expertise, the construction of a state tissue biofabrication center and community outreach to share the skills being perfected. The other colleges and universities involved are: • University of South Carolina in Columbia. • University of South Carolina-Beaufort. • Claflin University in Orangeburg. • S.C. State University in Orangeburg. • Voorhees College in Denmark. • Denmark Technical College. Haworth noted the broad collaboration inherent in the proposal. Students from many levels and backgrounds will benefit from the project, he said.

MUSC President Ray Greenberg said key infrastructure and cooperation helped bring this project to South Carolina. The level of cooperation among the state’s three research universities helped allow this grant to go forward, because it brings engineering and computing expertise from Clemson and USC to MUSC’s work on creation of new tissues. “The network has been laid, and now the opportunity is to leverage that for competitive advantage,” Greenberg said. The state’s endowed chairs program, funded with lottery proceeds, also has been vital, Greenberg said. One of the first endowed chairs works in this field, which he said showed the science foundation that the level of talent necessary to do such work was ready in South Carolina. “The recruits that come in have made us competitive for grants,” Greenberg said. Some of the researchers working on the grant projects, including Markwald, will work in a new bioengineering facility already planned at MUSC, Greenberg said.

leader across the board in science when matched with heavyweights such as California, Little said it can and should find niches in which it can excel — and tissue biofabrication offers one such niche. Such a project could have business spin-off applications in the same fashion as the Apollo moon program, Little said. “This holds the promise of raising South Carolina to national prominence in the field of human tissue biofabrication.” Jerry Odom, principal investigator for the award and executive director of USC Foundations, said at the grant’s announcement. W. Lance Haworth, director of the office of integrative activities at the National Science Foundation, highlighted the economic potential of the field, if a breakthrough can be made. “This research program has the potential to create a new industry, creating jobs and businesses based on computer-aided, layer-by-layer tissue and biomaterials, with the intention of

World Acceptance Corporation’s Greenville headquarters. (Photo/James T. Hammond)

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People in the News ACCOUNTING Dixon Hughes PLLC announced Lance Windley and Mike Trammell have assumed co-leadership of the firm’s construction and real estate practice. Trammell, a member in Dixon Hughes’ Spartanburg office, merged Trammell & Co. into Dixon Hughes in June 2006.

ADVERTISING & PR B2B Media added Michael Martin to the company’s sales team. Martin, who served as an accounts intern for B2B over the summer of 2008, graduated from Clemson University in May 2009 with a degree in business management. In his new role as account executive Martin will focus on the development of architectural graphics projects.

ARCHITECTURE Adam Roberts has achieved the Leadership in Energy and Environmental Design accredited designation presented by the U.S. Green Council. Roberts is a 2005 graduate of Clemson University with a degree in architecture. Michael Allen, architecture project manager with Goodwyn, Mills & Cawood Inc., has been chosen for the 2010 class of Leadership South Carolina. Leadership South Carolina proAllen vides South Carolinians an opportunity to advance their leadership qualities while broadening their understanding of issues facing the state. It is affiliated with Clemson University’s Institute for Economic and Community Development.

BANKING & FINANCE Gail Hodgden joined BankGreenville

Submit People in the News items by e-mail to news@gsabusiness.com. GSA Business reserves the right to edit for length, clarity and libel. Publication is subject to editorial discretion.

as loan officer assistant. Hodgden has more than 38 years of banking experience, having previously been employed as an assistant in the loan and wealth management areas of American Federal, CCB and SunTrust. Beth Mitcheltree has been promoted to loan operations nanager. Mitcheltree has been employed with BankGreenville since 2006. Cheryl Hayes and Katrina Morris of Ballentine Capital Management have completion the Series 66 examination from the Financial Industry Regulatory Authority Inc. Ballentine Capital is a wealth management firm in Greenville.

ECONOMIC DEVELOPMENT Greenville Chamber’s vice president of work force development and education Michele Brinn, and Lockheed Martin community relations manager Rob Gross, were selected by the U.S. Chamber of Commerce’s Institute for a Competitive Workforce to attend the Business Leads Institute. Selected for their leadership in the community, Brinn and Gross will join 36 other business leaders from around the nation to learn how the business community can utilize its assets to drive positive transformation in communities across America in education and work force training.

EDUCATION Pam Batson, Stacey Lemmond and Sheryl McAlister have been selected to attend the Women’s Campaign School at Yale University, July 14-18. Batson is a vice president, portfolio manager and wealth advisor with Morgan Stanley Smith Barney. Lemmond founded Ask & Receive Inc. in 1999. McAlister, who most recently served as the executive director of The Alliance for Women, retired in 2007 from Bank of America.

2009 | Market

Facts

Aug. 10 - Aug. 30, 2009

ENGINEERING SynTerra Corp. announced Martin Bowen received his professional engineers license in South Carolina. Bowen has four years of experience while working with SynTerra after graduating with a masters degree in civil engineering from Clemson University.

HEALTH CARE

Bostrom

Southern Eye Associates PA added Dr. Jake Bostrom to its practice. He recently completed his ophthalmology residency at the Dean McGee Eye Institute.

INSURANCE Ross Turner III, president of The Turner Agency Inc. of Greenville, was recently recognized for professional leadership and advanced knowledge by the Society of Certified Insurance Counselors. Turner received an award marking more than 15 years of as a designated CIC, which requires annual completion of advanced education and training.

LEGAL PROFESSION Roe Cassidy Coates & Price PA announced Fred Suggs III recently began his term as president of the Young Lawyer’s Division of the South Carolina Bar. Suggs, a partner with in the law firm, focuses his practice on medical malpractice defense, commercial litigation and personal injury litigation.

MANUFACTURING Richard Morris has been named assembly vice president at BMW Manufacturing Co., succeeding Barbara Bergmeier. Morris began his career with BMW Manufacturing in 1993 following almost

10 years in quality engineering positions with various automotive manufacturers in the United States.

MILITARY James Jonathan Leenman, a native of Greer, was recently named distinguished graduate of the 158th Detachment of the U.S. Air Force ROTC, headquartered in Tampa, Fla. Leenman was commissioned a Second Lieutenant in the Air Force on May 9, and was one of three graduates.

NONPROFIT Christina Miller joined as a major gift officer with American Leprosy Missions. She will work with foundations, churches and major donors to provide the necessary information to increase giving.

Miller

REAL ESTATE Terry Howe & Associates added Josh Capps as closing coordinator and Paula Powers as marketing and public relations coordinator. Capps joined the company in January as an intern. Powers, with 15 years writing, marketing and public relations experience, has been serving the architecture, construction and residential manufacturing industries for nearly 10 years.

SALES Ray Barry, president of Total Training Services and vice president of sales at Total Product Destruction in Spartanburg, has been invited to speak at the upcoming Professional Records & Information Services Management International and National Association of Information Destruction-Europe Joint European Conference. The three-day conference will take place in Rome, Italy starting Sept. 14.

Align Your Business with the Facts Facts and data critical to commerce in the region are now more important than ever. Market Facts provides a crucial reference guide your prospects will use all year long.

Take this opportunity to get an entire year’s worth of exposure by advertising in Market Facts.

Market Facts will also be available in a new interactive online version on www.gsabusiness.com

For advertising information call 864.235.5677 Publication Date: October 26, 2009 • Advertising Deadline: September 25, 2009

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Aug. 10 - Aug. 30, 2009

News Briefs

www.gsabusiness.com 25

Submit Business News items by e-mail to news@gsabusiness.com. GSA Business reserves the right to edit for length, clarity and libel. Publication is subject to editorial discretion.

Competition open for fastest-growing firms Nominations are being accepted until Aug. 17 for the fastest-growing companies in South Carolina. The program, in its eighth year, recognizes achievements of top-performing private and publicly held companies based in South Carolina. The Capital Corp. is working with the S.C. Chamber of Commerce on the 2009 South Carolina’s Fastest-Growing Companies program. The top 25 highest-ranking companies will be honored at the S.C. Chamber of Commerce’s annual summit Nov. 12 at the Wild Dunes Resort on the Isle of Palms. To enter, companies must meet several criteria: • Be headquartered in South Carolina. • Have been in operation for at least two full fiscal years. • Have reported revenues of at least $3 million or have $50 million in assets for financial institutions in the most recently completed fiscal year. Companies that have experienced any growth are encouraged to submit nomination forms, said Cristina Schleifer, marketing and communications director for The Capital Corp. “We want to tell business owners that if they had any growth at all in this economic environment, that is great and deserves to be recognized,” she said. “We want to highlight those companies that have weathered this economic storm and, despite the challenges, continue to prosper.” Companies can enter online at www.thecapitalcorp.com or download an entry form and submit it by mail or fax: S.C. Fastest-Growing Companies, c/o The Capital Corp., 84 Villa Road, Greenville, SC 29615. Fax: 864-542-1661

Southeastern Paper Group acquires Fulton Paper Southeastern Paper Group, headquartered in Spartanburg, acquired certain assets of Fulton Paper Co. in Atlanta. Fulton Paper is a distribution and supply chain solutions provider for the janitorial/sanitation, food service and industrial packaging markets. The company has locations in Atlanta, Albany, Ga., and Jacksonville, Fla.

Ranger Aerospace re-enters airfield services arena with buyout Greenville-based Ranger Aerospace LLC, a private equity consolidator that specializes in the aviation industry, has re-en-

tered the airfield services industry with the majority buyout of CAV International Inc. CAV is a government-outsourcing contractor specialized in airfield services and logistics. Ranger’s newest investment platform is called Ranger International Services Group Inc., which acquired a majority stake in CAV International in the first quarter of 2009.

AudIT3 LLC acquires ISO registration business AudIT3 LLC has acquired the registration services division from IT3 Engineering Inc. in Raleigh, N.C. As part of the transition, Greenville-based AudIT3 has also successfully gained accreditation through the ANSI-ASQ National Accreditation Board to offer certification services to the ISO 9001 standard.

Proforma acquires Nebraska-based business Greenville-based Proforma AdMark Solutions Group acquired Ballyhoo Bands of Omaha, Neb. Ballyhoo Bands provides silicone awareness bracelets. Made popular by The Lance Armstrong Foundation in 2004, awareness bracelets are used primarily to promote knowledge and education of products, services or causes around the world. Since January 2008, Proforma has acquired Golflocker.net, a provider of golf products, two promotional products distributorships and one print brokerage firm.

Menin sells parcel to Rooms to Go Menin Development Inc. completed the sale of a parcel to Rooms To Go Inc. within its Magnolia Park mixed-use project located in Greenville. Rooms To Go will be relocating its current store near Haywood Mall and constructing a brand new 35,000-squarefoot superstore, which will be a combination of Rooms To Go and Rooms To Go Kids.

Carbon Motors passes on South Carolina Carbon Motors Corp. chose Indiana over South Carolina and Georgia as the location for a $350 million auto plant that will employ up to 1,550 people. The Atlanta-based startup company, which has developed a concept car specifically for law enforcement, visited the Clemson University International Center for Automotive Research last fall and was considering locations in the Upstate for its car plant.

sodium most American adults should consume in an entire day. DeBenedetto is being supported by the Center for Science in the Public Interest, a nonprofit consumer advocacy group. Dennys says the lawsuit is devoid of substance or meaning.

Duke requests 12.1% rate increase Duke Energy Carolinas asked state regulators to raise its general rate for residential customers in South Carolina by 12.1%, though the rate industrial customers pay through September 2010 would actually be 0.6% lower. The general rate increases would be partially reduced, Duke added, by a refund of money collected from customers for past energy efficiency and demand side management programs. Duke also set a goal of cutting expenses by $100 million by freezing salaries and reducing capital expenditures.

Cazbah opens in Greer Station The Cazbah has opened at 308 Trade St. in downtown Greer Station. The restaurant has a staff of 35 employees and offers 1,600 square feet of rooftop dining. The menu changes quarterly and includes lobster cigars, beef Wellington, sesame-seared tuna, and tuna served with chopsticks.

Advertising in the GSA Business Event Planning Guide, is a delicious opportunity to reach both first timers and seasoned corporate planners – people seriously looking for what you offer, and what they need. • Packed with in-depth articles and lists of local resources, it’s the most sought-after tool for both companies and event planners in the Upstate region.

Clemson receives human body-modeling software A gift from California-based Ozen Engineering Inc. is enabling Clemson University researchers to create detailed computer models of the human body that could help make car seats more comfortable or hip replacements last longer. Ozen donated a package of software, training and support to researchers in Clemson’s mechanical engineering department. The AnyBody Modeling System allows researchers to create computer models of the human musculoskeletal system that measures internal body forces during daily activities, such as walking, running, standing and sitting.

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Denny’s sued for unsafe sodium levels Nick DeBenedetto, 48, of Tinton Falls, N.J., filed a class action lawsuit against Denny’s Corp. claiming the Spartanburgbased restaurant chain is serving meals with unsafe sodium levels. The lawsuit claims at least 75% of Denny’s meals contain more than the maximum amount of

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THE BUSINESS JOURNAL FOR GREENVILLE, SPARTANBURG & ANDERSON

THE money issue

viewpoint views , perspectives and readers ’ letters

Don’t cry for us, Goldman Sachs by Bill Settlemyer bsettlemyer@scbiznews.com

A

fter all the pot shots that have been taken at Goldman Sachs by national columnists recently, it might seem hard to “bat clean up” to their excoriation of what is arguably the nation’s (or perhaps the world’s) most power financial giant. But I’m willing to take on the challenge, because the story of Goldman Sachs is symbolic of some decades-long trends that are unraveling the long-held contract between the American middle class and what I’ll call, for purposes of this discussion, “Big Business.” My underlying premise is that many of the key players in American Big Business have lost any semblance of moral authority or responsibility in their relationship with ordinary citizens, either as customers, taxpayers or as fellow Americans. In essence, business has become a game whereby deception, political clout, and disregard for fundamental fairness and decency in the realm of commerce have essentially turned ordinary Americans into walking ATM machine for Big Business. What’s the drill? It’s pretty simple – grab the American consumer by the ankles, hold him upside down till all the cash and change falls out of his pockets, put him down and tell him to go make some more and then “come back to see us when you’ve got more to spend.” The particulars are far more complex. President Obama’s proposal to create a Consumer Financial Protection Agency is an obviously sensible response to the carnage of the last few years that has laid waste to trillions of dollars of consumers’ assets invested in homes and 401(k) plans. And as anyone who’s used a credit card knows, the issuers seem bent on confusing consumers and setting up traps and tricks that trigger rapid increases in interest rates and card balances, not to mention a host of hefty late fees and related charges. The idea of a separate agency that exists only to protect “the little guy,” (i.e., most of us) appears to have struck terror in the hearts of Big Business and an abundance of caution among their allies in Congress who fear the power of Big Business’s lobbying clout and political contributions more than the voters’ wrath at the ballot box. In the financial sector, Big Business has created a vast array of confusing and virtually incomprehensible financial products, including insurance policies, credit cards, mortgages, and exotic securities that find their way into the investment mix of ordinary Americans as well as corporate pension funds. We have seen

the consequences, and they are painful and ugly. But let us return, for the moment, to the saga of Goldman Sachs. Acknowledgment is due to Nobel prize winning economist and writer Paul Krugman for explaining the company’s conduct in his recent column titled, “The Joy of Sachs.” Most of us understand by now that Sachs and other financial giants made billions of dollars by helping to develop, package and resell toxic assets, such as subprime mortgages that no local bank or mortgage broker would have issued without being able to pass the risk of foreclosure on to some distant sucker in a market mediated by the likes of Sachs. But as Krugman points out, Sachs played both sides. With one hand they were generating huge fees selling toxic assets, while with the other they were placing financial bets that the assets were bad, so that when the house of cards collapsed, Sachs made a ton of money on those bets, too. Others columnists have spent time writing about the additional sins of the ultra-rich and their financial powerhouses. There’s a revolving door between Congress and the White House and these powerful firms that all but guarantees that federal officials will talk tough but ultimately soften or drop efforts to keep a tighter rein on financial markets. There’s no question that President Obama has a tiger by the tail in his effort to pass some form of credible health care reform. But when Republican Sen. Jim DeMint was quoted as saying that “If we’re able to stop Obama on this, it will be his Waterloo. It will break him,” that just proved that for Republicans, it’s still not about the public interest, it’s about winning or losing in the political arena. The President quickly, and too calmly for my money, pointed out that the issue was not about him, but about the American people, millions of whom are being “broken” every day by lack of access to affordable health coverage and decent health care. But aside from differences in political philosophy on this issue, there lurks the formidable political power of Big Business to call the shots and prevent reforms that would threaten their financial hegemony. Case in point: The big pharmaceutical firms (“Big Pharma”) have managed once again to have provisions included in health care reform legislation that prohibits the importation of cheaper drugs from Canada and prevents the federal government from negotiating Medicare drug prices directly with the pharmaceutical companies. God forbid that the government program providing healthcare to millions of seniors funded by taxpayer dollars should be allowed to use its bargaining power against the drug companies. What a travesty that would be! And in other news, The Wall Street Journal reports that, “The nation’s wealth gap is widening amid an uproar about lofty pay packages in the financial world. Executive and other highly compensated employees now receive more than one third of all pay in the U.S. accord-

ing to a Wall Street Journal analysis of Social Security Administration data—without counting billions of dollars more in pay that remains off federal radar screens that measure wages and salaries.” And yet, at the same time, news articles in the Journal and elsewhere report increasing nervousness among Democrats about proposals to finance health care for all through higher taxes on “the rich.” Yes, if you’re living in L.A. or New York on “only” $250,000 a year, I’m sure you don’t feel rich and may have trouble making ends meet. Just remember that many of the people you pass on the street are trying to raise families, cover health care, education, clothing, food and rent on less than $50,000 a year. Bill Settlemyer is the founder of the Charleston Regional Business Journal.

Collaborate on health care for small business There’s no doubting the crippling disparity reported by the Council of Economic Advisers between what small businesses pay for health insurance compared to larger employers. When a small business starts with 18% higher costs for health benefits, it prevents the companies that drive our economy from expanding and from competing on an even playing field for talent and other resources. Republicans and Democrats would do well to take a deep breath and make sure the right health care reform plan is in place so we know what we’re buying for future generations of Americans. The impact of those higher costs is stark: Fewer than 50% of employers with three to nine employees offer health insurance to workers. For companies with 10 to 24 workers, that number jumps to 78% that offer insurance, and that increases to 99% for companies with more than 200 employees. These numbers make the recent partisan infighting launched by U.S. Sen. Jim DeMint all the more disheartening because affordable insurance options directly affect small businesses. DeMint’s declaration in a conference call with GOP supporters that health care reform will be President Obama’s Waterloo and that “It will break him” shows the tainting effect of tribal politics whose motivation is blood sport and whose legacy is gridlock. We’re coming to the economic development table carrying some heavy baggage in South Carolina. Government numbers show that more than 15% of South Carolina’s population is uninsured and more than 12% of its work force is unemployed. So let’s stop the partisan bickering and craft the nation a good piece of legislation.

Aug. 10 - Aug. 30, 2009

special edition: the money issue

www.gsabusiness.com 27

The 2009 Series The most important reason not to skip breakfast.

DON’T MISS OUR NEXT EVENT: Understanding the Recession One tool to help survive the worst economic downturn since World War II is to have the best-possible information. Four Upstate men who have witnessed causes and impacts in the current crisis, from different professional backgrounds, will share their observations and expectations for the months ahead. Daniel T. Cooper has witnessed prosperity in his 18 years as a member of the S.C. House of Representatives. Now, as chairman of the budget-writing Ways and Means Committee, he’s charged with coping with the worst downturn in state revenues in a lifetime. As state representative from District 10 in Anderson County, Cooper presides over the tough choices being made in state government today. Cooper is vice president of Capstone Insurance Services LLC and lives in Piedmont. He has chaired the budget committee since 2005. He will have attended the Southern Legislative Conference just before his appearance at the Power Breakfast Series.

Cooper

John M. Jennings, an attorney and partner with Nelson Mullins Riley & Scarborough in Greenville, sees what businesses are doing to survive the worst recession in a generation. He practices in mergers and acquisitions, securities offerings and strategic transactions. He represented Coors in its $4 billion merger with Molson. He earned his law degree from Northwestern University School of Law, and an MBA from Northwestern’s Kellogg School of Management.

Lilly

Claude Lilly has spent a lifetime studying risk. He is dean of the College of Business and Behavioral Science at Clemson University, and a professor of finance. Previously, he was dean of the Belk College of Business at the University of North Carolina-Charlotte. His taught risk management and insurance at Florida State University, and was director of the Center for Insurance Research at the University of Southern California. Lilly earned his PhD at Georgia State University, where he majored in risk management and insurance. He is chairman of the board of directors of the Charlotte Branch of the Federal Reserve Bank of Richmond.

Jennings

Darrell F. Parker has a long involvement in economic development in the region. Currently dean of the George Dean Johnson Jr. College of Business and Economics at USC Upstate, he previously held the William Freeman Distinguished Chair of Free Enterprise and served as Director of the School of Economic Development at Georgia Southern University. He also previously was professor of economics at Winthrop University, where he was director of the Winthrop Economic Development Center, which he established. He received a Ph.D. in economics from Purdue University.

Parker

Thursday, august 20 | 7:30 - 9:00 a.m. USC UPSTATE | CAMPUS LIFE CENTER BALLROOM > to purchase ticketsCharter <

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Visit our Web site at: https://gsabusiness.com/networking/PowerBreakfastSeries/buytickets or call Elizabeth Feather at 235-5677.

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