Friday, April 28, 2017

Military town markets: Why a catastrophic natural disaster, that would wipe out most of Fayetteville, North Carolina, would be for “Fayettenam’s” own good.

A 2015 New Yorker article by Malcolm Gladwell -- and several other publications -- suggested that the destruction of New Orleans by Hurricane Katrina in 2005 culminated in an ultimate, net benefit to many of those affected, and evacuated from the city following the storm.

Why? Because life in New Orleans was already so dysfunctional for so many of those people, and opportunities were so scare, to begin with – even before the storm – that they were better off nearly anywhere they could have been sent. The only reason they hadn’t left already was because even if they could afford to move to another city, they could never have imagined that things might be better somewhere else.

Many of course decided to stay wherever they happened to be evacuated as a result of the storm (Houston, Texas, in a lot of cases, which is above-average in terms of where your chances would be best, if you wanted to go to a strange big city, start your life over from scratch, and seek your fortune), and New Orleans permanently lost a lot of its population.

The only place they could have been sent, where they would have been worse off, the article noted prominently, would have been . . . Fayetteville, North Carolina.

Congratulations, Fayetteville. 

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Not too many cities in the country – not even Detroit – can claim that the best thing that could happen to so many of the people of who live in them would be to be displaced by a catastrophic natural disaster. Fayetteville, like New Orleans prior to Katrina, is overpopulated. 

It could be said that they literally need to run off some people.

Military recruitment advertising and promises notwithstanding about how, if you're at military age and sign up for a few years, you get vocational training that you can take into a well-paid civilian job after you compete a hitch; there are a lot of people who – for whatever reasons (they didn’t want to make a career of it, they didn’t adapt well to the military lifestyle and it didn’t work out for them, they’ve had their fun with it and want to do something else but they don’t know what, they need something where they can raise a family and not have to worry all the time about deployment or relocation) – leave the military with little or no transferable job skills.

Not that many people in the civilian world have the need to hire guys to jump out of airplanes so they can shoot people as soon as they hit the ground; and while being an Airborne Ranger assigned to the 82nd Airborne is a high status assignment within the Army, it’s not much use on the outside.

These guys get out of the Army (or in Jacksonville or Havelock, N. C.; the Marine Corps, or in Norfolk or Portsmouth, Va.; the Navy), without a whole lot of job skills, figuring they’ll take what they can get. But much of the time, half the reason they joined to begin with (besides the vocational training), is that they didn’t have a lot by way of prospects in their hometown, if they even had much of a hometown. 

So they figure, if they're discharged at Fort Bragg (where 50,000 active duty military personnel are stationed), they have nowhere else in mind to go, there’s a lot of people living in Fayetteville (metro population, 377,193)  and they already know their way around: they'll just settle in the area.

But all that’s there for too many of them is low-wage joe jobs that hundreds of other guys like them compete for, and they’re just one more body in terms of what they can offer an employer (who’s only interested in a number of bodies and not mindful of the potential for individual contribution).

Some (like my dad back in his day, who after getting out of the Army at Fort Bragg fortunately went to work for a company that transferred him elsewhere) get it, and move elsewhere forthwith. Some literally get stuck in the area – they’re underemployed if they’re even working at all, they can’t afford to move even if they had a place to go; and as jobs become available, there are more recently-discharged veterans moving off the base and settling in the area to compete for them.

All of this happens, of course, on an economy that’s priced to the middle income levels of soldiers and civil servants for food, other goods and services, and decent off-base housing. If poverty comes upon them – well, in a lot of cases, they’ve seen it before, before they signed up, they grew up with it, they think they can handle it, they’re resigned to it, it doesn’t scare them, and they don’t imagine life would be different or better anywhere else.

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The scramble and competition for survival sets in, and it causes a lot of social problems in the area as well (Not the least of which are those with a below-average moral compass, who contribute to the crime rate. And someone's got to manage and staff those bars, massage parlors, strip joints and other 'adult' businesses,). Too many recently-discharged veterans, being put out the gate every month with little or no transferable job skills, and nowhere else to go. Too many people competing for too little to be had, without a whole lot to offer in return for it. The Hunger Games.

Fayetteville, and most military towns, are literally overpopulated, and such people are the reason why. 

Some go back into the military. (Growing up, I knew a man who, after each of two tours in Vietnam, took a discharge from the Marine Corps, and within a year or two, went back in -- both times. He finally put in his twenty years, earning retirement on half pay. My own father went back into the Army after having been out for ten years.) Those with prospects elsewhere eventually get it that it’s time to move elsewhere, if they can find a way to do so, but there’s always a backlog, a bottleneck, a choke point – and that bottleneck makes up much of the population of any military town.

For the others . . . like the folks in New Orleans displaced by Katrina, those who suck it up and stay just don’t understand the dynamic, and don’t get it that something better or different might be possible for them elsewhere. It's the context they live in, and the bad thing about context is you don't see it as context: to you, it's just the way it is. It's like trying to explain water, or life outside of water, to a fish: no fish has ever experienced life outside of water for any length of time and come back to tell about it, so it's something no fish would understand.

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And for those who have never been in the military – if they migrated there from elsewhere as a military spouse or dependent, or moved there for whatever other reason, or grew up and came of age in the Fayetteville area -- then they’re screwed, they can forget it, coming out the gate. North Carolina’s Employment Security law requires that any job listed with the state job service office be made available only to military veterans during the first 48 hours of the original listing. By the time 48 hours have passed and the job listing is available to a non-veteran – well, with that many veterans competing for it, it isn’t available to a non-veteran.

(I grew up eight miles outside the Cherry Point, North Carolina, main gate and attended Havelock High School. I know the feeling. Trust me, I’ve been there, I’ve experienced it. Today, Beechmont’s Non-Discrimination and Irrelevant Factors policy forbids discrimination or preference on the basis of prior military service or lack of prior military service, and Beechmont refuses to list its jobs with the North Carolina Division of Employment Security, in part, because of their 48 hours policy. I appreciate the service of those who served their country, too, but in some places, if you give preference to veterans in any area, they’ll take every bit of that area right over and leave absolutely nothing in it for anyone else except a list of their own grievances and unfulfilled entitlements.)

This would easily explain Fayetteville’s bottom-of-the-barrel performance on the Chetty-Hendren-Kline-Saez analysis in Mr. Gladwell’s article, and why Fayetteville, North Carolina rather than some even larger military town such as Columbus, Georgia or Killeen, Texas, or Norfolk, Virginia, would get the prize.

Drive through large parts of Norfolk and Portsmouth – or Fayetteville, or even Goldsboro, N. C. (home of Seymour Johnson Air Force Base) – and see what you see: the same thing. Large parts of the entire city look like a slum.

Newport News and Savannah get away with it to the extent that they do (but not completely) because they have an economy that can absorb more of these people. Because of its proximity of Seattle, Tacoma gets away with it nearly unscathed.

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"Fayettenam" was a nickname that Fayetteville picked up during the Vietnam era by Army draftees, who weren't exactly there because they wanted to be there. (And of course, the Fayetteville Police Department, back then, was known as the "Fayette Cong".) The appellation -- and all the roughness it evokes -- has enjoyed a more recent resurgence in notoriety thanks to rapper J. Cole, who is from Fayetteville. 

What does it mean for a hotel developer considering building or buying a property in a military town? Suffice it to say that for all the contributions that a military base makes to the local economy where the base is located. not all of them are good – indeed, they frequently take back with their left hand what they give with their right. Norfolk, Portsmouth, Augusta, and Columbus, by the way, are also some of the worst hotel markets that I’ve seen.

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Fayetteville is indeed a regional business, economic and educational hub within its region of the state, but the opportunities that that generates are out of reach of so many of the people who are there; and the participation in the local economy of many of the people who live there is limited. Military towns tend to have a disproportionately-sized underclass as part of their permanent population.

There is not enough light industry that pays low wages and requires relatively unskilled, low-paid full-time help to go around for all of them. They rent hotel rooms only when they have a date, or when they’re up to no good – or when they have no place else to go and need an SRO that they can pay for by the week.

They don’t draw visitors to the city that stay in hotels, and they don’t have anything on the ball that draws visitors to the city.

The population of a small city where a military base is located, and the apparent market size that goes with their presence, can be a bit deceptive to someone looking for any business opportunity, including a hotel. People go to a military town to launch a venture thinking that they’re going to make boocoodles of money off the base, and the guys stationed there, but they don’t know about, or take into consideration, that other part of it.

(And the most bizarre thing of all about it, when you think about it; is, go to any military town and anyone there who you ask will tell you, they have the most healthy economy in the world. And they really believe it. Those who thrive in it know which side their bread is buttered on. Those who don’t, only know that they’re surviving, and can’t imagine doing more than just that no matter where they could live; and they get it that without the military nearby, they wouldn’t be doing even that well.)

In many of these military towns, there’s nothing but the base – the population of the city outside the main gate, and the number of retail outlets and service establishments, notwithstanding.

The fact is, the economy of a typical military town is about the most unhealthy economy you’ll find in any place that isn’t quite a burned-out voodoo hellhole ghetto town like Detroit, Newark or Camden.

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One of the things that I remember hearing a lot of emphasis upon in the part of the country where I grew up back in the day (Newport, N. C.), is the Marine Corps’ ‘contributions’ to the economy. If they weren’t there — obviously — there wouldn’t be an economy.

Well, yes . . . the economy is there. And the people who benefit from it, benefit nicely from it. While it lasts.

And forgive me if I sound a bit seditious, and heretical, and unpatriotic . . . but the economy in Fayetteville, and Havelock, and Jacksonville, is actually one of the most unhealthy local economies in the country.

It’s big. Too big. Yet it’s through and through, a company town. There’s no diversity in it at all. That’s never good.

If the entire 2nd Marine Air Wing were to deploy at once, Havelock becomes a ghost town overnight. The same goes for Jacksonville if the entire 2nd Marine Division ships out. (During Desert Storm in 1990, it actually happened.) When the 82nd Airborne goes, Fayetteville goes. And when that happens (and you know there's going to be a war and it’s going to happen sooner or later: otherwise, why do we have a Marine Corps or an Army?), your economy is gone, and you don’t know when it’s coming back.

There goes your jobs. There goes your ability to make your mortgage payments, or even pay your credit cards. Any dependents that are left behind are having to live on a government allotment. Unless you’re one of the fortunate few employed on the base, you’re screwed. Not even McDonald’s is hiring if there’s no one in line to buy Big Macs.

If a really bad war happens and they stay gone for a few years, you’ve got your Detroit starter kit, right there in place. Failed businesses. Limited employment opportunities, lots of empty buildings, and financial and even security problems for the families that remain behind.

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I don’t hate or resent the military, or even the local economic dependence on the government. I just think it would be better for all involved if the local economy in that area were diversified a bit, if the area wasn’t so completely dependent upon the government, and the military.

You really need other industry there, some activity in the area other than the military and the government, that brings in money from outside the area and provides decent jobs that will enable and incentivize people to live there on a permanent basis, put down roots in the community, and offer it continuing stability.

Even the servicemembers and their families should be able to understand that, and respect that, and even see some benefits to themselves and their own community in it. Do you guys want to live next to a town where it seems that all that the local inhabitants study is how to milk money out of the guys off the base and their families, like yourselves? Wouldn’t you like being able to come off the base and have something in your surroundings besides cheap crappy rental housing, marginal struggling retail, and typical-military-town beer joints and trailer parks?

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Havelock, N. C. -- There used to be a K-mart here.

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Court Street, Jacksonville, N. C. -- If you think empty storefronts are bad, you should have seen it thirty years ago, before they ran out all the bars. In 1981 when I lived there, it was pretty much a 'red light district' from up one end of the street to the other . . . and down where the bars ended, and you crossed the tracks, was where the neighborhood got really rough.

It's a memory, if when you were young and dumb, wild partying and debauchery was fun to think about, but it eventually had to go.

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Back in the day, Hay Street in Fayetteville had a similar reputation, and looked much like this. Like Jacksonville's once-infamous Court Street, it's since been cleaned up, too.

Let’s give these two Marine towns – and Fayetteville – credit for something: the housing sector is disproportionately large (which was the recipe for Vegas and Phoenix and many parts of Florida, circa 2008 — ‘Foreclosure City’ in each spot . . . banks actually foreclosing entire subdivisions whose homes had not yet sold from the developers who built them, then bulldozing over the brand new houses just to get them off the market), and you’re never going to have any light industry there to diversify it because there is no space, no available land unless you drive ten miles out of town, and that’s being snapped up.

Next to the government, the (distant) second most active contributor to the economy in Havelock is subdivisions. That's a relief for the area underemployed -- if they can get any kind of job, the rents aren't too high on older places. But it makes for a lot of urban decay.

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Generally, in military towns, retail suffers – a presence in town by a large number of retail and service establishments notwithstanding. They all show up, then they scramble for crumbs from the installation’s table like everyone else in a military town, and they underperform. And the reason why is the presence of the retail and service facilities on the freakin’ base. Local merchants have to compete with the PX facilities on the base, which only military personnel and their families are permitted to use.

And the town is run by people of great minds who are fully convinced that the biggest reason why is that military uniform regulations that forbid or restrict the wearing of fatigue, utility or working uniforms off the base, so a servicemember can’t go to Walmart and load up on items to purchase on his way home from work while wearing his cammies or BDUs. Nobody in town is responsible for anything other than whoever is responsible for the base.

They’re just not capable of seeing outside the context of the base. It’s that overwhelming.

I got into a discussion of that phenomenon a couple of years back. While other participants in that online discussion railed about the uniform regulations and blamed the problems in Havelock, North Carolina’s economy on the Marine Corps’ insistence on having them and enforcing them,

I began to wonder if perhaps someone should take on doing something about it that might work better than cursing the base commander and getting the Marine Corps to come around on its uniform policies. You can't fix the military. They're going to do whatever they do. You and I need to do what works for us.

Even if you privatized the PX facilities, turned the exchange, the commissary, the dry cleaners, the NCO clubs, the Hostess House (yes, military bases have one or more hotels on the base, too: some time back, the Army turned all of theirs over to IHG), all over to the management of private contractors, it would change nothing. They’re still located on the base, and the base is a secure facility not open to the public. Even if cake-eating civilians were allowed to shop at them without showing a military or dependents’ ID, they couldn’t get to them.

A large majority of the retail base of Fayetteville has access to the ones at Fort Bragg. Nearly all the retail base of Havelock and Jacksonville has access to the ones at Cherry Point and Camp Lejeune, respectively. People out in town who have no current connection at the base do not. It has nothing to do with the silly military working uniform regulations.

And since half or more of those people is that disproportionately sized underclass that we spoke of doesn’t have nearly as much money to spend, all of them taken together would barely be worth putting a Wal-Mart in town for, if even that. The city population doesn’t comprise nearly the retail base that Target, and Lowes’ Foods, and Food Lion assume from the population figures when they put that big store there; and those stores underperform. In many military towns, so do hotels.

And if you build or buy a hotel there, you’re going to encounter the same problem.

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What these cities need more than anything else is some diversity in their economy.

Havelock, home of Cherry Point Marine Corps Air Station, has the greatest potential in terms of the presence of some (but by no means all) of the necessary skill sets, but its geographical disadvantages are dismal.

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Imagine a five-lane boulevard running north and south (or roughly northwest to southeast) through a town of mostly cheap urban sprawl populated by 20,000 residents. A quarter mile, on average, to the east of that boulevard lies the Cherry Point Marine Corps Air Station, in addition to two of the base’s enlisted housing areas that are located, with significant frontage, on the boulevard. None of that property is for sale, or developable; and except for the base housing areas (where the presence of anyone who doesn't live there and isn't obviously the guest of someone who does would be noted and questioned by the base MP's) most of it can't even be accessed without a base pass. Three quarter of a mile to the west of it, give or take, lies most of 250 square miles of federally-owned land, Croatan National Forest – with enough of that land left over to completely surround the Cherry Point base. None of that land is for sale, or developable. That’s Havelock.

All of the space available for real estate development around Havelock, much of it outside the city limits, is going to occur along the thoroughfares, U. S. Route 70 and N. C. Highway 101. And much of that is being snarfed up for those subdivisions. If you wanted to build a good-sized electronics plant or light manufacturing facility there and had the wherewithal to do it, you’d have a bear of a time finding the space.

The green line is the proposed route of the U.S. bypass around Havelock. Map: NCDOT

Havelock now has an opportunity, with construction beginning on a bypass around the city. Judicious zoning by local authorities of any land made available for sale on the bypass would encourage industrial park development, and discourage single-family residential. And Havelock has an additional advantage: you don’t have quite the underclass population that you have in cities more like Jacksonville and Fayetteville. As more of people who take their discharge from the Marines from Cherry Point tend to leave with more by way of technical skills, they tend to either find employment on the base, or leave the area altogether where those skills can be put to more lucrative use. Those who leave with not a whole lot by way of transferable job skills, who would form that underclass if it accumulated around Havelock, tend to disperse to outlying communities like Newport, New Bern, Morehead City, Beaufort, and the more rural areas of Craven and Carteret County,

How does one start a tech incubator? Something like that would seem a natural for Havelock given the skill sets available in the area, but the answers I got back when I asked the question indicate that there are still a few very important pieces missing, and putting those in place might be a bit of a challenge, if it’s possible at all . . . Still, a few of the pieces are in place.

Maybe we could get some people together on a specialized business accelerator for these areas; some organization that could do business development and capital sourcing for new businesses -- with the strict stipulation that they bring some diversity to the local economy, and create decent local jobs. We're not underwriting or getting involved with ventures that are just out to milk money off the base, or just want to open another lounge with four or five waitresses in revealing attire. There's too many of them already. There's too little but. We're out to change that.

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Jacksonville and Fayetteville don’t have quite the skill set and human capital that shows up in Havelock. Infantry Marines, and even 82nd Airborne paratroopers, as we've noted, don’t always leave the service with as much by way of transferable skills as do aircraft technicians. And each of those cities has a large population of underemployed displaced servicemenbers, accordingly.

But each of those cities has its own compensations.

Each has abundant surrounding land which could be set aside for light industrial use: neither is confined to a two-mile wide strip of developable land as is Havelock.

Each has a decent local airport that is underdeveloped and underutilized; unlike Havelock (which has to rely on the New Bern airport fifteen miles away, because the base at Cherry Point isn't sharing their airfield . . .).

Fayetteville, particularly, has an already-existing civilian community -- some diversity in its economy, but not nearly enough. It’s a regional business center for the southeastern quadrant and Sandhills region of North Carolina, and its proximity to Interstate 95 – and proximity to where I-40 intersects in Benson, a few miles north – make it a potentially attractive option for logistics-based businesses. (There's that Fayetteville Regional Airport again . . .)

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But for now, these areas are entirely too military dependent, and they’re going to have problems.

And most other military towns are the same way.

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You should keep this in mind with any planned, new hotel development – or any other development – in a military town.

If you’re doing it to get rich off the base, you’re going to have lots of competitors for that same business. And most of whatever else you find in that town is as likely to be competition for you – or for whatever you bring – as it is likely to be a market for it

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Please, don't take any of this the wrong way.

It's not a put-down of people in Fayetteville, or of people in the military, or of military towns, or of the people who live there (frankly, I feel for them -- I myself grew up in very similar circumstances -- and I'd like to think of a way we could help them with their problem, at least if they could get it they've got a problem that maybe something could be done about).

I criticize here only the structure of the economy in those towns. Any area, especially a heavily populated one, that is so heavily dominated by and dependent upon a single economic driver, cannot claim to have an altogether healthy economy, no matter how well you're raking it in on the dollars from the economy that dominates.

And the problem is not limited to military towns.

What if a hurricane hits and wipes out much of the completely tourism-dominated Myrtle Beach area out for a few years? (People who've lived there for a long time may remember Hurricane Hugo: Charleston isn't that far away . . .) There goes your tourism, and the entire area economy, for the year or two it would take to repair the damage and rebuild. (The Air Force closed Myrtle Beach Air Force Base and pulled out of Myrtle Beach years ago: they'd have nothing to do with it. We wouldn't be able to blame it on them.)

This year, after last fall's wildfires, ask anyone from Gatlinburg. (There's not a military base within a couple hundred miles of there. You can't blame it on them.)

And look at what Detroit has come to today because of its reliance, for years, solely on automobile manufacturing. (I don't think Michigan has any military presence larger than a few Coast Guard stations on the Great Lakes.)

Military towns are the most commonly seen examples, and the ones I'm most familiar with (I grew up near a couple of them), but the economy of any city that's solely reliant on a single economic driver is vulnerable. And unhealthy.

The more heavily populated the surrounding area is because of that single economic driver, the more vulnerable and unhealthy.

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