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NC cancels incentives for two companies that missed hiring goals. ‘I can’t find folks.’

Prescient, a construction technology company based in North Carolina, has canceled an incentive agreement with the state that could have brought the startup up to $2 million if it hired more than 200 workers in Alamance County.

However, the company has struggled to find enough workers for its manufacturing facility in Mebane.

“The labor environment today is incredibly difficult,” Prescient CEO Magued Eldaief said in a phone call with The News & Observer. “We can’t find people to fill our open jobs. And I think that’s a challenge for a lot of companies in Alamance County.”

“I would be hiring,” he added. “I can’t staff a full shift because I can’t find folks.”

Prescient, one of the most valuable startups in North Carolina, is the maker of design software that enables developers to build large parts of apartment buildings off site, allowing for quicker build times. The company says it has helped build 63 apartment buildings across the country so far.

The startup came to North Carolina in 2017, after agreeing to a Job Development Investment Grant (JDIG) with the state. Its Mebane manufacturing facility is designed to build pre-fabricated framing for multistory apartment buildings that can then be shipped to construction sites.

At the same time, the company also moved most of its corporate functions to North Carolina, originally putting its headquarters in downtown Durham.

That office was destroyed by a devastating gas explosion that killed two people and decimated an entire city block. The company then moved most of those employees to Charlotte.

Eldaief declined to say how many people Prescient has hired in North Carolina to date.

But a 2020 report from the Commerce Department shows that, in 2019, the company had 85 employees that counted toward its JDIG goals.

Labor problems at the site began during the COVID-19 pandemic, Eldaief said. Many industries, from restaurants to manufacturing, have struggled to hire employees in the past year, as the economy started to reopen from COVID-related lockdowns.

“A lot of folks thought that it could be related to folks getting a lot of stimulus money (during the pandemic),” Eldaief said. “But I think it’s probably a fundamental shift in terms of what people want to do and feel like doing.”

“And it’s not for lack of offering good benefits, good wages and things like that,” he added. “It’s just people are reassessing the priorities and they have more choices.”

Commerce reported an average wage of around $47,000 at Prescient’s manufacturing facility in 2019.

However, Mebane has landed several large employers since the arrival of Prescient, many of which have higher average wages at their facilities. In 2020, both UPS and Chik-fil-A received incentives from the state to open distribution centers in Mebane, and the anticipated average wages for those projects were higher than Prescient’s, according to Commerce reports.

Amazon, which has boosted its minimum wage, also continues to hire people in droves throughout the region.

“If you get a buck or two more an hour (some workers) think that they will have it better,” Eldaief said of competition in the area. “But some of these jobs are at Amazon and some of them are seasonal as well. They aren’t long-term jobs.”

But workers, he added, are placing a large emphasis on flexible working hours at the moment, which is hard for Prescient’s manufacturing operations to offer. “It’s not an office job. It’s a manufacturing plant that needs to be running,” he said.

The struggles to hire in Mebane could lead to the company opening a new facility in a different part of the country, Eldaief said, though it hasn’t reached that stage yet.

“You ask yourself the question: Is this the right location for me? Or should I go elsewhere where there’s a more readily available pool of talent?” he said.

Arch Capital downsizes plans for Raleigh

In addition to Prescient’s incentive cancellation, the state also voided an agreement with the financial firm Arch Capital, which had planned to add more than 300 jobs at the Dillon tower in downtown Raleigh.

Arch could have been in line for more than $5 million from the Job Development Investment Grant it agreed to with the state, though none of those scheduled payments ever made it to the company.

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The Dillon in Raleigh’s warehouse district as seen from across South West Street where Union Station shuffles 12 trains in and out of town daily in downtown Raleigh. Juli Leonard [email protected]

Arch had signed an agreement to lease four floors of the Dillon in 2018, but after surveying its options during the pandemic, the financial firm has decided to give employees more flexibility about where they work, a spokesman for the company told The N&O.

“In light of COVID, Arch has adopted a more flexible work location policy that allows many of our employees to work remotely rather than in the offices full time,” Greg Hare, a spokesman for Arch, said in an email. “When reevaluating our commercial real estate strategy, it became apparent that we didn’t expect to achieve the staffing levels needed to obtain the grants related to the Raleigh office.”

Hare said that the company plans to maintain a presence in downtown Raleigh, though it will be scaled down. The company currently has 127 employees in Raleigh, a number that is short of the milestones it needed to meet to receive money from the state.

The company also has a large presence in the Triad, where it has nearly 600 workers in Greensboro.

This story was produced with financial support from a coalition of partners led by Innovate Raleigh as part of an independent journalism fellowship program. The N&O maintains full editorial control of the work. Learn more; go to bit.ly/newsinnovate

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Zachery Eanes is the Innovate Raleigh reporter for The News & Observer and The Herald-Sun. He covers technology, startups and main street businesses, biotechnology, and education issues related to those areas.



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