A Conversation with Secretary of Commerce, Joe Taylor

MidlandsBiz:
Where were you born and raised?

Joe Taylor:
I was born at Providence Hospital right here in Columbia, South Carolina.  I was raised here, went to Wofford College, came back home and went to work for my dad.

MidlandsBiz:
When did your dad start Southland Log Homes?

Joe Taylor:
My dad was not a strong believer in handing out an allowance to his children; he always put us to work each summer.

One summer, I went to work for one of my dad’s rental businesses out in the North East.  The business was struggling a little and I hired a young entrepreneur who was making a name for himself around town named Don Tomlin to help turn things around.  I was 18 years old at the time.

Don brought in two guys to close the deals.  Long story short, one of those two guys had entered into the log home business and he told me that he would pay $500 commission for anybody that I found that they could sell a log home to.  Back in around 1976, $500 was a whole lot of money – more than a whole semester of college spending money.

It just so happened that my dad walked into the room at the time and told me that he was developing a project up in the mountains of North Carolina and wondered whether we could be the dealer for these log homes in both North and South Carolina.  It seemed like a good deal and that became the early beginnings of Southland Log Homes.

I never did receive my $500 commission on my first deal!

MidlandsBiz:
Southland Log Homes was headquartered right here in Columbia, wasn’t it?

Joe Taylor:
Yes, my dad put the business together with financing from a couple of his friends.  When my dad suggested that we put the business right on Interstate 26 in Irmo, we all thought he was crazy, but he insisted on having a drive-by Interstate presence.  I was raised in Arcadia Lakes and had been out to the Irmo/Chapin area maybe four or five times in my life.  As we expanded the business, the strategy of locating our businesses on Interstate highways really became our trademark.

By the time I was 26 years old, I had bought out the stake of the other guys and was running Southland Log Homes.

MidlandsBiz:
What challenges did you face in building Southland?

Joe Taylor:
We pretty much faced every conceivable challenge that a business owner will face in trying to grow his own business.  First off, in 1980, log homes were a relatively new concept and we had to convince the bankers to loan money for mortgages on these homes.

We went through a recession, as any business will do if they are to succeed long-term.

Any business will face a totally different set of challenges at each stage of its lifespan: starting, developing, and surviving.  The systems and people that you put in place to get you to $5M in sales will not necessarily get you to $60M in sales.  That’s the hard part!  The two biggest challenges for any business are starting up and then passing through the $10M mark.

MidlandsBiz:
What were the sales of Southland at the beginning of your time and what were they at the end?

Joe Taylor:
When I became CEO of Southland sales were around $600,000.  We built it to over $50M a year.

MidlandsBiz:
It was a growth through expansion strategy that you employed, wasn’t it?

Joe Taylor:
Yes, we built our own sales offices throughout the Southeast.

MidlandsBiz:
What did you do between the time you sold the business and the time you become Secretary of Commerce?

Joe Taylor:
It was really only about 9 months before the Governor, Mark Sanford, called me on the last day of duck season and asked if I would consider the position.  I was wondering what I was going to do until next duck season; three duck seasons later, here I still am.

Southland was actually sold twice.  In 1999, I sold a majority of the business to a large investment banking firm out of Connecticut called Dubin Clark.  I stayed on as CEO and continued to grow the business until the company sold again in 2005. I remained CEO for six months until a successor was hired.

I began investing in businesses that had cool ideas and in entrepreneurs who were willing to work hard at achieving their goals. I started looking for people who had great ideas and a great work ethic, but who were not familiar with how to structure a bank deal or did not have the cash available to pursue their dreams.  Sometimes people have great ideas and they can’t afford to risk all the cash that they have. Champion Concrete was a very successful business that we invested in here locally.  I also invested in many local real estate deals.

MidlandsBiz:
What about potential conflict of interest of investing in deals while still Secretary of Commerce?

Joe Taylor:
I have put a self-imposed ban on doing any deals while I am at Commerce.

MidlandsBiz:
How has the role of the Department of Commerce evolved over the past decade?

Joe Taylor:
The single most important event that has affected this office over the past decade is 9/11.  After 9/11, foreign-direct investment (FDI) into the state, and the country for that matter, stopped.

After 9/11, we needed to reassess the role that Commerce played in the state.  The agency had become too cumbersome with too many departments.  Bob Faith, my predecessor at Commerce, was an extremely bright guy with a Harvard MBA and probably does not get nearly enough recognition for the contribution that he made to to the state, and also to the reorganization of this state agency.

Historically, the Secretary of Commerce had been a figurehead position.  We have had some pretty great Commerce Secretaries, but they did it for $1 a year.

When Governor Sanford called me up and approached me about the job, I told him that I would be willing to do it for $1 a year, but he said that this should be a full-time, paid position with the accountability that comes with it.

MidlandsBiz:
What is the job description for the Secretary of Commerce?

Joe Taylor:
We oversee governmental programs that are designed to enhance the economic opportunity of the citizens of the state.  We try to make sure that our citizens have access to opportunities, that they are not overly regulated, and that the opportunities that exist here in the state are just as good if not better than anywhere else in the world.

On a more basic level, I am the chief salesman for the state of South Carolina.

MidlandsBiz:
How well is South Carolina doing?

Joe Taylor:
Based on the numbers that have been shared with me by our economic development counterparts, we have outperformed our neighbors to the north and south.

We set out to change the tone of the debate about economic development and how South Carolinians feel about their state.

For too long we have featured things that are wrong, instead of the things that are right.  As I travel around the state now, business leaders are getting pumped up about what is going on here!  There’s some cool stuff happening!  Part of our strategy has been to recruit our share of world-renowned companies: Google, Monster.com, Starbucks, Freightliner, Adidas, Boeing, and DuPont.  The hottest companies in the country are choosing to locate in South Carolina.

But while those big name deals are great, one of the strategic changes that we have made over the past two years is that we no longer put a pre
mium on landing the mega-deal.  Every project is important to us.  We work just as hard for the $5M investment as the $500M investment.  Maybe that’s the small businessman coming out in me.

MidlandsBiz:
What are the challenges?

Joe Taylor:
The biggest challenge we are facing is getting the data to help us make good decisions.

Our responsibility at Commerce, and all levels of government for that matter, is to ensure that if you want to work there is a job for you.  But we can’t get timely information.  Take the unemployment rate, for example.  It’s remarkable the reluctance that I have seen from several agencies about giving out data.  As a businessman, I strongly believe that data helps keep everybody accountable and is necessary to make good decisions.

People think that there is a silver bullet out there that is going to help us get to the next level economically.  Well, there isn’t.  Most of the issues that we talk about aren’t statewide issues – they are local issues.  The causes of unemployment in Allendale County may be radically different from those of Greenville County.  The solutions are therefore local, and we need the data to help come up with those local solutions.  Change occurs when the local leaders get on board and decide that change needs to occur.

MidlandsBiz:
How well are we doing now at FDI?

Joe Taylor:
South Carolina has always been one of the leaders in the country when it comes to foreign direct investment.  You go back 30 years or so and you have the major announcements of BMW, Michelin, and Bosch.  Over the past five years, we have been on an absolute tear when it comes to FDI.  Our state always ranks number one or number two in terms of the percentage of the workforce employed by companies headquartered abroad.  FDI is an area where we perform well.  Commerce has four international offices in Europe, Asia, and Canada.

Here’s one of the things that has amazed me as Secretary of Commerce.  The reputation of South Carolina as a great place in which to do business is much better outside of South Carolina than it is inside of South Carolina.  The CEOs of major companies in other countries know about us!  The Port of Charleston is a huge asset for these companies and it is widely recognized as the number one customer-friendly port in the country.

MidlandsBiz:
What has been the most productive trip that you have taken outside of the country?

Joe Taylor:
The Governor and I just recently took a trip to Brazil that was very productive.  The Paris Air Show was a great success for us last year in terms of getting in front of major European decision-makers.

MidlandsBiz:
What levels of capital investment are you seeing?

Joe Taylor:
We are tracking this year for a third consecutive record breaking year.  Last year we brought in over $4 billion in capital investment; the year before that we brought in around $3 billion.  And unlike some other states, we do not count power plants in our capital investment numbers.  If we did, we would be looking at over $10 billion announced in capital investment last year.

MidlandsBiz:
What is your leadership style?

Joe Taylor:
It’s pretty hands on.  I am one of the first to arrive at work and the one of the last to leave every day.  Failure is not an option for me.

MidlandsBiz:
What leaders have inspired you?

Joe Taylor:
My dad.  He was a classic entrepreneur.  Growing up around him was the best business education anybody could ever have.

Every time I got into a jam at Southland Log Homes, I would call my dad and ask for advice.  The best thing he ever did for me was to say, Son, this is your company now; you’re going to have to figure it out.  Look at the facts, and make a decision.  At the end of the day I was forced to learn to make difficult decisions.

MidlandsBiz:
What additional advice would you give to entrepreneurs?

Joe Taylor:
Outwork everybody!  It takes 15 years to build a successful business.  It’s a long process and you have to be willing to work hard.  If you want to work an average eight hour day, you can expect to earn average wages.  Have you ever noticed wherever you go that it’s the people who arrive to work early and leave late who are the ones getting ahead in life?

I don’t think we are teaching our young people that.  It’s a very rare company that achieves overnight success.

MidlandsBiz:
Where do you see yourself after Commerce?  Where do you see yourself in ten years?

Joe Taylor:
I see myself going back to doing some of the deals that I was working on before I started here.  I have never planned 10 years out.  My philosophy is to really focus on tomorrow and to work in one year increments.

I also think I will get back to doing a little more hunting and fishing.

MidlandsBiz:
What book are you reading?

Joe Taylor:
A book I would recommend to anybody is Blink.  It’s about the importance of gut feelings in business decision making.  It really gets back to the idea that entrepreneurs need to make their own decisions and they need to make good ones.

The other book that I read recently was The Whole Truth by David Baldacci.  It’s a good read.

MidlandsBiz:
Any last comments?

Joe Taylor:
First, I would like to see more people get involved in government.  In the most recent Columbia city council election, we saw a 15% turnout.  We have got to do a better job at participating at the local level.  We need new energy at all levels of decision making of government; we can’t have the same people making the same decisions all the time.

Secondly, people need to sit back and reflect on what a great deal we have here in this state.  The good Lord has truly blessed us.  I’ve been all over the world, and from my perspective, there’s no better place to live than right here in South Carolina.