MARKET FOCUS: NORTH CAROLINA - North Carolina balancing actTechnology, healthcare, banking, retail and tobacco anchor NorthCarolina PR. Sherri Deatherage Green reports

Historically an underdog among Southern coastal states, North

Carolina has pulled itself up by its educational and industrial

bootstraps to become an economic center attracting the attention of

national PR firms.



In colonial days, North Carolina's rocky shoreline smashed ships and

diverted settlement to the more welcoming beaches of South Carolina and

Virginia. Tobacco, textiles and furniture delivered the Tar Heel state

from obscurity, but as those industries lost ground to health concerns

and cheap foreign labor, technology, healthcare and banking took up the

slack.



More than half the 6.6 million residents live in the state's urban

clusters.



Technology leads the economy in the Research Triangle Park (RTP) area,

which includes Raleigh, Durham and Chapel Hill. Bank of America and

First Union make Charlotte a financial powerhouse. Winston-Salem and

Greensboro hang on to the more traditional textile and tobacco

industries. Nearby High Point still reigns as the nation's furniture

capital, bringing the world to North Carolina for massive trade shows in

April and October.



Last year proved, however, that North Carolina has some economic hills

left to climb. The state lost about 20,000 manufacturing jobs last year

- more than any other state, according to the US Bureau of Labor

Statistics.



The statistics also show the technology and transportation sectors

slowing.



On the up side, business and professional service segments provided a

few new jobs.



From the PR perspective, few firms admit taking hits from dot-coms, but

Price McNabb president Thomas Eppes reports that more resumes than usual

are crossing his desk these days.



Household names near NC's households



Hi-tech's biggest names are among the state's largest employers - IBM,

Nortel, Ericsson, Cisco and Motorola. But as is the case in relation to

many midsize markets, these behemoths make management and PR decisions

from distant corporate headquarters. Both Nortel and Motorola announced

massive national layoffs this year, but it remains unclear what impact

that will have on North Carolina.



Federal Express still plans to open a shipping hub at Piedmont Triad

International Airport near Winston-Salem in 2005, despite local

opposition.



Winston-Salem's James A. Fyock & Associates is helping the Memphis-based

company with public affairs.



RTP focuses more on research and development and less on commercial

applications in telecoms, computers, biotechnology and

pharmaceuticals.



A host of dot-coms blossomed and wilted in North Carolina last year, but

as a hi-tech late bloomer, the state was not affected as badly as some

other regions by the industry's bitter harvest.



Tech and PR grown at home



The SAS Institute and Red Hat are the state's best-known homegrown

technology companies. Two of Red Hat's 700 employees handle PR; and the

open-source software developer relies heavily on assistance from

Schwartz Communications in Waltham, MA.



SAS has billed itself as the world's largest privately held software

company, but last year it indicated that it might make an IPO in

2001.



The company's 30-person corporate communications staff launched a major

branding campaign focused on globalization. After a national search, SAS

chose Raleigh's Howard Merrell & Partners for advertising and some PR

work. 'We realized we could do everything working with an agency that is

right here in our own back yard,' says spokesperson John Dornan.



Few old-economy companies share Dornan's view, but many turn to local

firms only for limited projects. Lowes Home Improvement Warehouse, based

in North Wilkesboro, has a long-term retainer relationship with

Golin/Harris in Chicago. But it works with Capital Strategies, a leading

PR and public affairs firm in Raleigh, on 'smart growth' issues, i.e.

the resistance of some communities to accept big-box retailers, says

Lowes' PR director Chris Ahearn.



Like several other big-name North Carolina companies, Lowes' 20-member

corporate communications division is large enough to constitute a small

agency. R.J. Reynold's Tobacco, SAS and First Union employ even larger

internal staffs. RJR doesn't have an agency of record but frequently

seeks strategic counsel from Shandwick's Washington, DC office and is

working with Greensboro's Quixote Group on a grant program sponsored by

the Doral brand, says RJR communications VP Maura Payne.



The apparel division of Sara Lee, based in Winston-Salem, oversees Bali,

Playtex, Leggs, Hanes, Champion and other brands. With 11 in-house

communicators, the company matches its brands with several New York

agencies, like Marina Maher, Fleishman-Hillard and Lippe Taylor. The

company is using a local firm, Ralph Simpson & Associates, to head a

national PR road trip for Just My Size, says product PR director Laura

Burrows.



On the agency side, four national firms have moved into North Carolina

with varying degrees of success, and one local agency, Richard French &

Associates, is burgeoning as a national player.



RF&A brought in about dollars 4 million last year with 37 employees at

its Raleigh headquarters and another 13 in New York, Nashville and

Tampa. French founded the agency in 1997 after heading the PR practice

at ad firm Rockett, Burkhead, Lewis and Winslow. A few clients migrated

to the new agency with French, including Greensboro's Wrangler, which

remains his biggest account. Other clients include Goodmark Foods and

Jack Daniels. French says he has resisted acquisition inquiries by

national firms.



Aside from RF&A, Capital Strategies and Epley Associates rank among the

state's largest independent firms. Founded in 1968, Epley is a founding

partner in the Worldcom PR group. With offices in Charlotte and Raleigh,

Epley serves companies with manufacturing interests in the state such as

John Deere, Corning Fiber Optics and Philip Morris, as well as Carolinas

Healthcare System, the state's largest hospital chain.



Based in the state capital, Capital Strategies is a full-service firm of

about 50 employees, 30 of whom work in PR or in the strong public

affairs practice. Clients include the NHL's Carolina Hurricanes and

North Carolina's Food Lion grocery chain.



National acts



Brodeur followed mega-client IBM to Raleigh nearly six years ago and now

employs 26 people there. The company serves four IBM divisions and other

technology clients such as Internet Security Systems.



Sister agency Porter Novelli opened a technology-focused Convergence

Group office in Raleigh in February 2000 and plans to expand into

biotechnology, healthcare and patient recruitment for clinical trials.

VP John Bornstein moved to North Carolina for personal reasons and

telecommuted to Boston for a few years before formally founding the

office. PN's five employees brought in more than dollars 500,000 last

year with clients such as MindLever, Nitronex, Intellon and Pliant

Systems.



Gibbs & Soell cut its staff from 25 to 10 last year after losing most of

its cornerstone Aventis Crop Science account to Rhea & Kaiser, an

integrated PR and advertising firm in Chicago, says client services

manager Ann Camden.



G&S is hanging on in Raleigh with clients Reichhold Chemical, Cargill

Dow and Marathon Innovations.



The 15-person Raleigh office of Ruder Finn (RF) earned dollars 1.5

million last year, up from dollars 1.1 million in 1999, says president

Joyce Fitzpatrick.



Clients include Thomasville Furniture and several museums. The staff is

working on a new retail project for Sara Lee and expects to assist RF's

New York office with its relatively new IR account for Bank of

America.



RF also has done project work for IBM and for pharmaceutical company

Glaxo Wellcome, until it merged with SmithKline Beecham in December.



PepperCom may be wedging its foot in the door of North Carolina PR

through a recently announced partnership with the University of North

Carolina at Chapel Hill's Kenan-Flagler Business School. Although no

money will change hands, PepperCom is partnering with the school on

conferences, research studies, and articles about business supply chains

and logistics.



Regional advertising agencies with large PR staffs include Trone and

Price McNabb, each with about 25 PR people. Trone's integrated campaigns

for UniRoyal, Michelin and Novartis include significant PR elements,

says Joe Gallehugh, who is moving from Houston to High Point as Trone's

new SVP and PR director.



Charlotte's Price McNabb handles the Starbucks account in the Southeast

and Midwest and works for Nucor Steel and Drexel Heritage Furniture,

among other clients. Eppes holds the unusual distinction of rising up

from the PR side to lead the integrated firm and says North Carolina has

a lot in common with other midsize markets.



'There's really not a great deal of difference between the midsize

agencies that you would see in regional markets anywhere,' Eppes says.

'I think midsize market agencies can compete in other markets against

midsize national firms, but it's hard to compete in New York or

Chicago.'



SELECT NC AGENCIES

PR firms with offices in North Carolina, ranked by number of PR

employees in the state:

Richard French & Associates 37

Epley Associates 32

Capital Strategies 30

Brodeur 26

Trone 25

Price McNabb 25

Ruder Finn 15

James A. Fyock & Associates 10

Gibbs & Soell 10

PR Street 7

Porter Novelli Convergence Group 5



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