September 2007 NC Business Feature

A NEW CEO TOPS PAY RANKTNG
B
}-IO RTH
TE$
CAROLINA
COVER
S
T
O
R
Y
FOUI WEflTHER
Economicforcesgsng up to form o pertect storm
thot could destroy the stste's working wotertront.
By EdwardMartin
F
U
u
l
ising over his shoulder, the sun tints the sky
eastof TeachesHole the color of ripe peaches. Skirting OcracokeInlet Bill Evans points
his24-foot skiff toward Portsmouth Island.
Evans,38,has done this sincehigh school,
but he never tires of mornings like this.
Playing nature's lottery, a fisherman never
knows what swims beneaththe glassygreen
surface.Today,he'Il net about 800pounds
of Spanishmackerel,blues and slippery
little butterfish.
In the afternoon haze,he ties up in Silver Lake, the tiny harbor encircled by the
village of Ocracoke.The dock leads to the
SEPTEMBER
2007
53
COVER
STORY
z
F
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o
fish house, a two-story building with a store
where customers buy seafood - fi473,000
worth in the year ended in ]une. In a room
in back, he tosses fish, most headed to
wholesalers, into baskets according to size
and kind. Like an apparitiory in the doorway behind him appears an egret, a regular
when fishing boats come in. "He gets his
belly full every day," Evans says. Buck,
fishermen call him, short for buddy in the
old-English brogue that persists here.
That dialect is fading before an onslaught of newcomers. With it, eventually
may go Evans and his kind, the several
dozen watermen who still set to sea from
this village that has been synonymous with
Tar Heel coastal life since Edward Teach
- Blackbeard - prowled here in the early
1700s.Forty years ago, on a good day, fishermen might unload 50,000pounds in the
half-dozen fish and crab houses that ringed
Silver Lake. Now there's only Ocracoke
Seafood Co. Then named South Point
54
BUS]NESS
NORTH
CAROLINA
Market, it closed in 2005 but reopened last
year after the Ocracoke Working Watermen's Association - stubborn islanders
such as Evans and volunteer organizer
Robin Payne - scrambled to raise nearly
a half-million dollars in cash and promises
to buy and upgrade it. The effort went over
the top this summer when the N.C. Rural
Economic Development Center awarded
a $325,000grant to repay a loan obtained
when it appeared South Point would be
soldto developers.
Ocracoke Seafood isn't alone in its precarious hold on North Carolina's working
waterfront. From Calabash on the South
Carolina line to Currituck, more than 300
miles north near the back bays of Tidewater
Virginia, marine industries have flourished
nearly 400 years. A UNC Chapel Hill study
found more than 3,500 such businesses,
most in 20 coastal counties. Virtually all face
a rising tide of tribulations. "Fishermen are
nervous," says Billy Carl Tilletf 57, afosrthgeneration waterman at Moon Tillett Fish
Co., named after his 77-year-old father,
on Roanoke Island. It runs two trawlers,
a fish house and freezing and processing
operations. "We don't know what our
future is. Or if we have one." For good
reason, others say.
'A hundred years ago, if I were
talking
about Carteret County industry, the focus
would have been commercial fishing and
boating," saysDavid Inscoe,director of the
Carteret County EconomicDevelopment
Council in Morehead City and a member of
a GeneralAssembly-appointed committee
to savethe working waterfront. "Today it's
barely on my radar. Lessthan 3% of.our
marine industry comesfrom commercial
fishing." In1995, the state seafoodindustry
already was reeling from coastaldevelopmenf ballooning regulation and competition from imports, but it ranked 1Othin the
nation.A decadelater,it was 14th.Annual
saleshad plummeted from $L09million to
$65million" a tiny fraction of the $2 billion
Tar Heelsraked in raisinghogs.
"Things that are big here, like shrimp,
have beendecimated,"saysScottCrossory
socioeconomicsprogram manager of the
N.C. Division of Marine Fisheriesin Morehead City. "In inflation-adjusteddollars,
shrimp is lessthan it was in1970.In Brunswick County, you canbuy shrimp from
Vietnam for $3.50a pound. That's not worth
taking your boat out."
Fish houses,dockside markets where
fishermen sell their catc[ are falling like the
barometer in a hurricane. From her home
in tiny Gloucester,anthropologist Barbara
Garrity'!14Le, a member of the study committee, set out to tally them. From 2000
through 2006,39of 1,17closedor were about
to. More have since."At one time, there
were sevenor eight here on Harkers Island.
Now there are zero." Local craftsmen,including her husband, are known for the
skipjacksand skiffs they build, working
boats suited for the shallow sounds. "A lot
The fleet's end? "Fishermenore
nervous, we don't know what
our future is. Or if we hove one."
(,
(9
f
are doing other things - painting houses,
construction,fishing elsewhere."
Piers,which provide blue-collaraccess
to the seaand a market for baitfish,have
succumbedto stormsand condominium
and luxury-home developers.Of the 36 in
1980,thereare fewer than 20 now. Public
boat ramps and accessto beachesare vanishing behind multimillion-dollar houses
and no-trespassingsigns.In Marshallberg,
a fishing and boat-building village with
fewer than 600permanentresidentson Core
Sound, developershave filed plans for more
than 350residentiallots. One bought land
around the town harbor and is trying to
shut out the public, saysKaren Armspacher,
whose grandparentsmoved here in the late
1800s."Our community club has raised
more than $80,000.
We're not going to give
it up without a legal fight."
Many, of course,say the changeis inevitable and not all bad. A relatively new
industry, building upscaleboats,is thriving,
Fishermenand fish-houseoperators- the
averageage is 60 - are getting record
pricesfor their property. "Fishermendon't
have 401(k)s,"saysMercedesTabano,a
56
BUSINESS
NORTH
CAROLINA
real-estateagentin the Outer Banksvillage
of Duck and presidentof the 1,000-member
Outer BanksAssociationof Realtors."This
is their retirement.A lot of sonsdon't want
to go into fishing or fish houses.There're
betterjobs in construction."
Visit the waterfront of Beaufort,called
Fishtowneuntil it adoptedits modern name
- in-1723."Private / members only," signs
on docks warn. On a Sunday afternoory the
public boat ramp is jammed.Talescirculate
of developersoffering $10,000a foot for
water frontage.A stone'sthrow away, rusting smokestacksloom over a half-dozen
metal buildings and storagetanks.From
here, steamersonce set to seato scoopup
tons of menhaderya bony, unsavory little
fislu and bring them back to be squeezed,
baked and ground into oil, livestock feed
and fertilizer. There oncewere eight menhadenplants in town. In a good year,Beaufort Fisheriesgrossed$5 million and employed 80.Developers,new arrivals and
recreationalfishermen complained about
the smell, noise and interferencewith sport
fishing. Three years ago, Beaufort Fisheries
closed,the last fish factory in the state.
elicans loaf on faint
breezes, then plunge
into Pamlico Sound
for fish. From the
bridge of a boat, Hatteras emerges from the
mist. North along twolane N.C. 12, sand dunes creep onto the
pavement. The Atlantic wades ashore in
knee-keep breakers. There are myriad reasons North Carolina's working waterfront is
vanishing. In Outer Banks villages such as
Rodanthe, Salvo and Avon, where houses
routinely sell for more than $2 million, soaring real-estateprices are only one element
creating the perfect storm.
It doesn't begin here. Bump along puddled back streets of coastal villages to small,
neat houses where rusting pickup trucks
and aging work boats roost. Crosson, the
socioeconomist, surveyed watermen to find
that many make less than $25,000a year
and, depending on location, a third to twothirds wouldn't call themselves full-time
fishermen, having to supplement that with
other maritime work and construction jobs.
"When you take over a business from your
parents, you find yourself working 65 hours
a week and making $30,000 ayear," says
Courtney Hackney, chairman of the N.C.
Coastal ResourcesCommission. "Or you
can sell the property for development and
make $10 million overnight. It doesn't take
many people too long to figure out what to
do." With watermen worried about their
futures - a third to nearly 60/n, depending
on where they live, told Crosson they don't
expect to be in the occupation 10 years
hence - rising land values tip them into
selling and punish those that resist.
Armspacher considers herself and her
husband lucky. On the mainland where
they live in Marshallberg, across Core
Sound from Harkers Island, their taxes
merely doubled after the last eight-year
real-estate appraisal bumped their home's
value to $250,000.Her 78-year-old mother's
waterside house - three bedrooms, one
bathroom and 1,400 square feet - jumped
to $500,000."When this buying-and-selling
SEPTEN,IBER
2047
fever hit a year or two ago, she began getting letters every day. Three or four development groups were trying to buy up
Harkers Island."
Few counties or towns discourage loss
of the working waterfront. They usually
follow the siren song of swelling tax bases
and boast of rapid growth. Brunswick
County's population has mushro omed 76%
since 1990 - that of Currituck, Pender and
Dare doubled - while the state as a whole
grew only 31%. "If they didn't think it was
in their best economic interests to let this
happen, it wouldn't be happening," Hackney says. "But they see a fish house that's
worth $150,000converted to condominiums
worth $5 million." In many places, a boat
slip - dock space with an electrical hookup
COVER
STORY
- costsas much as a house did 20 years
ago. "You're paying $150,000for a hole in
the water," Hackney says.That has led to
dry-stackslips,where boatsare suspended
to make room for more. Somenear popular
Morehead City developmentssell for
$100,000."You're buying a piece of air,"
saysInscoe,the local economic developer.
Rocky Mount-based Market Opportunity ResearchEnterprises analyzesreal-estate
trends. It tracks prices by township - only
part of a township might be on the water but increasingvaluescan still be startling.In
many, they tripled between 2001and 2006.
ShallotteTownship, south of Wilmington, is
crisscrossedby tidal creeks.A residential lot
averaged$56,481in 2001.In2006, the price
had risen to$!33,756.Using a common formula in which a lot representsabout a fifth
of a home'svalue, a new housewould typically sell for about $560,000.
In Harnett
Township, which includes Wrightsville
Beach,residential lots that averaged 970,269
in 2001reached 91,82,777
in2006, indicating
new-home value of more than $900,000.
Riseslike that have led to flipping, in which
speculatorsattempt to resell lots quickly at
inflated prices, and sight-unseensales.
Coastalreal-estateagentsadvertise that they
can handle sales,including closings,without the buyer's presenceor even surveys.
Once shunned, real estateon sounds and
coastalrivers, traditionally the baseof
marine industries such as boat repair, has
been discovered and marketed as the Inner
Banks.Researcherssay more than 100subdivisions with 34,000residential building
permits have been approved on the Inner
Banks and await construction.
Thosenew residentsmay have scant
knowledge of local history and traditions
and even lessinterest in them. Armspacher
notesthat more than half of CedarIsland's
1,200electricbills are mailed elsewhere.
z
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o
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o
"Yo1)'reseeinga dramatic changeof culture
and heritage," adds stateSenatePresident
Pro Tem Marc Basnight,who grew up on a
dirt road in Manteo and whose support of
coastalprojectshas made him a hero to
many waterfront businessowners but
drawn criticism from inland politicians. He
coaxedthe Rural EconomicCenter to make
the grant OcracokeSeafoodneeded to stay
alive. "To this point, we've been totally
ineffective locally and from the stateand
federal perspectivein seeingthat there's
accessto the water for the public and the
fishing industry that was the reasonwe
settled here in the first place.Are we willing
to allow that to disappear?It certainly looks
like we're moving that way."
Another factor is the watermen themselves.They're frustrated. On a recent summer day in, docksbuzzed with news that
Watersport,a long-line fishing boat, had just
tied up, bringing in a 500-poundbluefin
z
tuna. Prized for sushi in japan, the species
can sell for as much as $100a pound. But
o
while its hands swabbedthe deck, Billy Carl
=
o
Tillett was shaking his head at Moon Tillett
Fish Co. "We handled one bluefin tuna a
few yearsback, and the paperwork was so
annoying, we swore we'd never pack another one." Tillett, whose 34-year-oldson runs
the business,is among fishermen who say
federal and stateregulations are driving
them out of business.On another day, a
fisherman in Ocracokehad counted off
eight regulatory agencieshe reports to.
"Hell," Tillett snaps/"I'm surprised there
weren't more than that.'{ Rules determine
While regulators can monitor what rethe kind of fish that can be caught, whery
pair shops spill in the water or what fishersize,types of equipment that can be used
men catch,the greatestfactor in the storm
and other factors.
that threatenswatermen is the most elusive.
Crosson,of the statedivision of marine
Imported seafoodhas a stranglehold on Tar
fisheries,is understanding but can promise
Heel prices, which trickles down into virtuno relief. "Commercial fishermen are sort
ally every aspectof the working waterfront
- engine repair to saleof oilskins. In the
of ornery and they're feeling pressurenow
from every quarter. But we're dealing with
retail market on the ground floor below the
an open-accessresource.We don't just imsteamy,knotty-pine-paneled office where
pose theserules randomly. It's our job to
Robin Paynepores over the books of Ocrapreservethe resourcesfor all different user
coke Seafood,shrimp is selling for $10.95
groups to make sure there's enough of the
per pound. Hours earlier, it was swimming
resourceleft to reproduce."
in Tar Heel waters. "Imports are generally
F
"Commerciol fishermen ore sort
of ornery ond tfiey're feeling
Pressurefrom everyquorter."
SEPTEMBER
2007
59
COVERSTORY
half the price local shrimp would
be," he says."They're smallerand
don't tastethe same,but restaurants
and grocerystoressell them, and
customersdon't know the difference."The nonprofit CarteretCatch
in MoreheadCity, founded in 2005,
touts restaurantsand seafoodmarkets that carry only North Carolina
products.Wholesalersand others
frequently dwell on food safety some seafood from Vietnam, China
and elsewhere has been yanked
from markets because it contains
illegal antibiotics and other contaminants - but price usually trumps
safety concerns. About 80% of the
nation's seafood is imported.
States cannot regulate international commerce, and experts say
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'c()fi'
ACCr
te
g
till, somemarine
enterprisesthrive,
and successes
often take odd
turns. One is in
Manns Harbor,
population about
400,acrossCroatanSound from
RoanokeIsland.It is a village of
modesthouseswith neat yards,
many with stacksof crab pots, and
quiet streetswhere children play.
And a revolution brewing.
"Developerswere looking at
the waterfront, and we knew what
was about to happery" saysRobin
Mann, financemanagerand partner
with her husbandin Paul Mann
CustomBoats."One was a fouror five-storyprojectof $1 million
condos- and we'd alreadylost
a coupleof fish and crabhouses."
SomeresidentspressedDare
County to zone the unincorporated
community to prevent that. Zoning
in many small placesoften is regarded an unspeakableintrusion
on private-propertyrights. "You
could seethe fear in their eyes," she
says."'Oh nol The government's
not going to tell me what to do with
my property."' Bt)t aspeoplegot
wind of more development plans,
they changedtheir minds. In May,
Manns Harbor joined Wanchese
and Stumpy Point, two other Dare
County hamlets facing development, with regulations that permit
such businesses- often homebased- as welding shops,crabbing
I
Returnon lnvestment
Discover how Accrisoft
tariffs or quotas could trigger trade
wars that might hurt Tar Heel fishermen. "Our fishermen can make
fair money catching fish like t1trta,"
Crossonsays."I've seenthe big
]apanesesushibuyers rolling in
here in the fall. They're willing to
paybig." But, many watermen say,
not big enough.
Fl33431. s61.e88.2s16
le00NWcorporate
Blvd.. BocaRaton,
BUSINESS
NC
and fish housesand boat building
feet, will sell for more than $5 milhave their roots elsewhere.Brunsbut prohibit big condos,big-box
lion - at Paul Mann CustomBoats. wick Corp., a conglomeratebased
storesand strip malls.
which employs 44 craftsmen.Dare
near Chicago,recently announced
In Wanchese,another twist to
County alone has nearly two dozen
that it will build boats 45 feet and
conventionalwisdom is unfolding.
boat builders.A memberof the
longer at a former RampageYachts
On the gritty outskirts of the Roafamily the village is named for and
building in Navassa,on the Cape
noke Island village, a stateproject
a commercial fisherman until startFear River in Brunswick County.
oncederided as an ugly duckling
ing the businessin 1988,Mann carThe company said it will spend
hatchedby pork-barrelpoliticians
ries on the Tar Heel boat-building
$51million to upgrade the factory
has transformed itself into an ecotradition. But many newer builders
and hire 858workers.
nomic-development swan. WancheseSeafoodIndustrial Parlgbuilt
in the early '80sat a costof more
than $8 million, was intended to
lure fish canneriesand processors.
Legislatorsspecifiedthat it be used
only for commercial-fishingenterprises- at the exacttime commercial fishing beganits decline.In an
office on the 45-acrepark, which
Poyner & Spruill attorneys understand the needs of Eastern North
wraps around a placid 15-acremanCarolina businesses, both large and small. Together we can aim for a
made harbor,director Bob Peele
tracesits history. "Until about7994,
future of promise, and we'll be with you every step of the way.
it was empty. It was considered
kind of a failure."
The fix was an amendment
Fon advice on anything from benefits
allowing all marine industries.By
issues to mergers and acquisitionsto
thery developmentpressurehad bethe Family Medical Leave Act, Poyner
gun driving businessesfrom water& S p r u i l l a L t o n n e y sa n e h e r e t o a s Sti,
front locations.With its affordable
sist you.Contacl Sam Johnson at
leaserates- somewaterfront sites
'
to cneate a relation€52.972.7114
leasefor as little as 23 centsper
growing.
idffi atomrr
keep.on
squarefoot per year - the park is
now full with29 tenants,including
boat builders,enginesuppliersand
repair shops.Only three are seafood-related.
With nine companies
on his waiting list, Peelesays,"I
wish we had another40 acres."
Basnighthas vowed to push for
similar projectsin at leasttwo
other coastalcounties.
Few successstories,though,
equal the rise of the luxury-boat inATTOBNEYS.AT.LAW
dustry in North Carolina.In a shop
Chanlotte7 04.3 42.5250
that sprawls over nearly an acrein
R a l e i gSh1 S . 7 8 3 . 6 4 0 O
Manns Harbor, smells of juniper
and resin fill the air. Four sportFockyMount252.44E.2341
fishing yachts are in various stages
SouthemPines91 0.692.6866
of construction - the largest,at 81
,qir{,!
a:_.
,
.
POYNER#5trRUlLL.'"
SEPTEMBER
2007
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