McMaster Takes Hands-On Approach
Oct 02, 2017 11:15AM
By Emily Stevenson
By John McCurry
Photography By Stan Foxworthy of Foxworthy Studios
Sometimes it’s the little things that sway a company’s location decision. So maybe it’s possible a bulldog puppy had a role in South Carolina landing its biggest industrial prize of 2017. At least, Gov. Henry McMaster likes to think so.
South Korea-based multinational electronics giant Samsung announced in late June that it would locate a $380 million appliance plant in Newberry. This is by far the biggest economic development deal to date of McMaster’s governorship.
During the final weeks of the state’s aggressive recruiting effort, McMaster hosted a luncheon at the governor’s mansion for Samsung executives. The governor describes the luncheon as a “delightful” experience, but the best part of the gathering seems to have come at its end.
“At the end of the luncheon, my wife Peggy brought our brand new bulldog puppy downstairs,” McMaster recalls. “I really do think that did it. Everybody was smiling. Dr. [Dochul] Choi, their senior guy, every time I see him or talk to him on the phone, he asks how the puppy is doing.” Choi, a senior vice president at Samsung, is in charge of global business and technology strategies.
McMaster recently sat down with Greenville Business Magazine in his office to talk about economic development, the Santee Cooper nuclear plant issue, and other business topics.
McMaster says his role in economic development is usually to be the closer when the deal is nearly done. He called the Samsung project “a lot of fun.”
“At the end, companies want to talk to the chief executive, either face to face or on the phone. They want certain assurances and to hear a voice telling them that this is what we are going to do. More [industrial projects] are coming. We [South Carolina] have advantages that nobody else has.”
McMaster touted those advantages to anyone who would listen during the SelectUSA Summit in Maryland in June. The purpose of the annual event, hosted by the U.S. Dept. of Commerce’s International Trade Administration Trade Bureau, is to promote foreign direct investment in the U.S.
“I explained the assets we have, such as the port and our two inland ports,” McMaster says. “Nobody else has that. The Port of Charleston and the Port of New York and New Jersey will be the two dominant ports on the East Coast in the next 15-20 years.”
South Carolina has been among the leading states in attracting FDI for many years. McMaster believes the key to maintaining that momentum is to keep telling the South Carolina story, and attending the SelectUSA Summit is part of that effort.
“To have a governor—and there were a lot of us up there—to make that pitch is very important.”
South Carolina offers a competitive incentive package for companies that includes tax breaks. McMaster leaves those details to the state’s Commerce Dept. and instead zeroes in on the big picture items.
“What can be provided outside of taxes is what I focus on,” the governor says. “The good news is it’s a great story and nobody can beat it, especially when you add in the mountains and the beaches and college championship football, basketball, and baseball.”
Another asset is Apprenticeship Carolina, part of the SC Technical College System. The state is now trying to model the program after some of the high points of programs used by the 160 German companies operating in South Carolina.
“I spoke to the [U.S.] Labor Secretary Mr. [Alexander] Acosta and told him we want to change the way that apprenticeships are recognized. Right now, the Department of Labor in Washington has to recognize the apprenticeship in order for you to get the $1,000 tax credit. We want to shift that to have the state come up with our own standards. That’s something we are going to do that will help.”
There is a cultural shift underway in the state, McMaster asserts, which is resulting in young people and their parents having a better understanding of the value of technical jobs coming into the state. Jobs are requiring higher skills and training and that type of education can be found at the state’s technical schools, where upon graduation, students can find well-paying employment.
“We are in the forefront, ahead of the rest of the country, in providing that kind of worker, but we can’t produce enough to meet demand,” McMaster says. “We have to rev up our technical colleges.”
McMaster also touts ReadySC as a major recruiting tool.
“ReadySC will send people from a technical college to a manufacturing plant in Sweden, Germany, or China, or anywhere else, to see how they do it at their plant, and they will come back and design a curriculum at no cost to the company, if they make a major investment with good wages.”
South Carolina has an ease of doing business that is accentuated by trust, McMaster says. Many executives of international companies have told him that South Carolina is the only “handshake” state when it comes to deals.
The governor’s mansion is where many of those deals begin or culminate. In early August, McMaster hosted the consul generals of Israel, Mexico, Belgium, Germany, and Japan for a luncheon. He likens consuls as “economic development lookouts” for their respective countries. Subsequent to that luncheon, his office has been communicating with Japan’s Consulate General office in Atlanta to pursue the much sought-after Toyota-Mazda plant. South Carolina is one of about a dozen states pushing hard for the proposed $1.6 billion plant.
“As soon as we get a hint that someone is interested, we go into action,” McMaster explains.
Another recent luncheon at the mansion featured noted supply-side economist Arthur Laffer, who came to speak at the request of a friend of a friend. Attending were about 75 business people and academic types.
“We had big business leaders, university professors, all sorts of people. It was a delightful thing. He said South Carolina is in a great position, but we need to cut our taxes. He said we have to take them down if we are really going to prosper. That helps us, to have Arthur Laffer come meet with our business, academic, and government leaders.”
One tax going up in South Carolina is the gasoline tax. McMaster vetoed the bill that raises the state’s tax by 12 cents over six years. The Legislature overrode that veto in May. McMaster hasn’t changed his opinion on the tax. He still thinks it’s bad for the state, but says it’s got to be managed now because it’s the law and the money is coming in. He cites Laffer’s tax philosophy.
“My position was that I read Laffer’s stuff, and he demonstrates clearly in his last book that if you have high taxes, you have low economic development. The fact is that a lot of people make a living driving trucks, such as painters, plumbers, and carpenters. The gas tax is a big burden on them. If we have to burden them, it’s one thing, but if we don’t, why do we do it?”
McMaster notes that the new law gives the governor the authority to remove highway commissioners if there is a reason to do so.
“I don’t appoint anybody, but I can relieve anybody. That’s a new power that I intend to exercise. My goal is to manage it and make sure the money is spent properly.”
McMaster spent much of the last couple of months looking for a solution to Santee Cooper’s cancelled nuclear plant in Fairfield County. He made calls in August to the Southeast’s major utilities—Duke Energy, Dominion Energy in Virginia, and Atlanta-based Southern Company—to try to find a buyer or investor in the plant. He even called billionaire business magnate Warren Buffett, who said he had the money, but he doesn’t do nuclear.
The governor continues to hold discussions with energy companies, including at least one outside the U.S., according to spokesman Brian Symmes, who described the company as one of the “big players in the energy sector.” The state has signed non-disclosure agreements with potential buyers.
McMaster is known for being one of the first elected officials to endorse Donald Trump’s candidacy for president. That support hasn’t wavered, the president’s first nine tumultuous months notwithstanding. McMaster ascended to the state’s chief executive post after Trump appointed Nikki Haley as U.N. ambassador.
“He [Trump] has pointed the country in the right direction and has made it very clear it’s not business as usual,” McMaster says. “He’s trying to undo a lot of things that have been put into place over the years, including taxes. Art Laffer was talking about this. He is confident that federal taxes are going to be reduced. It might take a while, but they are going to be reduced.”