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County leaders eliminate small business development center to pave way for Duotech expansion

North Carolina Governor Roy Cooper announced Tuesday afternoon that Duotech Services, LLC, an engineering company specializing in the repair and maintenance of legacy defense equipment based in Macon County, will be expanding its operations in Macon County. The expansion is expected to create 95 new jobs and involve an investment of $6.5 million in Franklin.

“Duotech’s growth is another reason why North Carolina is the most military-friendly state in the country,” said Governor Cooper. “We welcome the expansion of this nimble and innovative company that’s supporting the defense of our country and its allies while creating great jobs in western North Carolina.”

The night before Governor Cooper’s announcement, the Macon County Board of Commissioners unanimously voted to approve the sale of the county’s small business development center to a private company for a price of $797,000. Because economic development project negotiations are considered confidential in North Carolina, it was not until the Governor’s announcement on Tuesday that the public learned that Duotech was the company that purchased the business development center.

The concept of a business development center was approved by the Macon County Board of Commissioners in March of 2008. The project was started as a collaborative effort between Southwestern Community College, Advantage West, and Duke Energy with the goal of facilitating economic development in the county by helping institutions and individuals in the six far-west counties. The idea was championed by former President of SCC Dr. Cecil Groves and was launched using a $250,000 grant from Duke Energy.

In the 16 years it has operated since, Macon County’s small business development center has been credited with being responsible for helping launch locally owned small businesses like Luxury Therapeutics and Harmony House Foods by providing rental space at a reduced rate, allowing the business to invest their capital in business growth. The current tenants of the business development center will be displaced following the closing of the real estate transaction between Macon County and Bernhard Capital Partners, the private equity management firm whose portfolio Duotech belongs to.

Duotech was established in 1982 and relocated to Macon County in 1986, where it has operated continuously ever since. Duotech has become a major supplier of maintenance and repair support services to components of the U.S. Government, and the company offers major OEMs repair and sustainment services for large scale electronics equipment. Duotech also designs, develops, and manufactures products such as advanced radars and radar warning receivers for commercial and military applications. Bernhard Capital Partners was established in 2013 and is not based in North Carolina and has approximately $3.4 billion of gross assets under management.

Despite both Duotech and Bernhard Capital Partners’ international success, Macon County Commissioners did not only vote to sale the county property to facilitate the expansion, they also voted to provide $100,000 in tax payer funding as an incentive grant for jobs created as part of the private company’s expansion.

The North Carolina Department of Commerce led the state’s support for the company during its site evaluation and decision-making process.

Although wages will vary depending on the position, the average salary for the new positions will be $91,271. The 95 jobs to be added by Duotech’s expansion are unlikely to serve existing Macon County residents, as they are specialized roles such as Aerotech engineers. However, the expansion is expected to have a positive impact on the local economy and further solidify North Carolina’s reputation as a hub for aerospace and defense industries.

Duotech’s project in North Carolina will be facilitated, in part, by a Job Development Investment Grant (JDIG) approved by the state’s Economic Investment Committee. Over the course of the 12-year term of this grant, the project is estimated to grow the state’s economy by $416.8 million. Using a formula that takes into account the new tax revenues generated by the new jobs, the JDIG agreement authorizes the potential reimbursement to the company of up to $845,100, spread over 12 years. State payments only occur following performance verification by the departments of Commerce and Revenue that the company has met its incremental job creation and investment targets.

Because Duotech chose a site in Macon County, classified by the state’s economic tier system as Tier 2, the company’s JDIG agreement also calls for moving $93,900 into the state’s Industrial Development Fund – Utility Account. The Utility Account helps rural communities finance necessary infrastructure upgrades to attract future business. Even when new jobs are created in a Tier 2 county such as Macon, the new tax revenue generated through JDIG grants helps more economically challenged communities elsewhere in the state.

The sale of the MCBDC marks the end of an era for Macon County’s small business development efforts, but it also signifies a new chapter of growth and opportunity with Duotech’s expansion.

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