Shift work: Jim Fain became commerce secretary as forces mobbed up to rob jobs from the state. Here's how it replaced them.

• Position: Interview

Jim Fain, a former banker, became the state's secretary of commerce in 2001--just as the economy was heading south. After nine years of gains, the state's private sector lost jobs and continued losing them until 2004. Last November, North Carolina had about 3.3 million private-sector jobs, up slightly from the November before he became secretary. What follows is an edited transcript of his discussion of the economy with Senior Editor Frank Maley at the end of last year.

BNC: How has the state economy evolved since you became commerce secretary?

Fain: It has continued to shift from manufacturing to service jobs. In the process, it has turned in a remarkable performance--replacing a net loss of 194,000 jobs in manufacturing. Since January 2001, our economy has added a net 28,000 jobs.

How do the wages of the new jobs compare with those lost?

In the segments where we're adding many of our jobs--financial services, business and professional services, and health and education services--wages are as attractive or more attractive than manufacturing.

Not all of those jobs gained were in higher-paying sectors.

Right. But more of the new jobs are in those areas I mentioned.

What other changes have you noticed?

We've seen job gains and substantial investment in sectors of manufacturing that are sustainable in today's highly competitive global marketplace--manufacturing that is capital- and technology-intensive. Because of the fundamental soundness and diversification of our economy, we've been able to overcome the simultaneous effects of the dot-com bust, September 11, a manufacturing-led recession and changes in trade policy that disproportionately impacted our industrial state. Other states similarly impacted have not recovered as successfully as North Carolina.

How was North Carolina able to do it?

In 2001, Gov. Mike Easley asked the General Assembly to continue to invest in education and work-force development in the face of a large budget shortfall so we'd be prepared to grow when the economy improved. It worked out that way.

How has it paid off?

It does two things. No. 1, you make sure you meet the needs of folks who are in transition or who are coming into the education system. The other piece of it is, our value proposition is that this state for 200-plus years has realized the importance of education and has consistently invested in education. If you took the path we took back in 2001, then it's easy to point to that choice and say, 'We really walk the talk.'

Given the rapid shrinkage of industries that had sustained North Carolina for a long time, how long can we expect 'sustainable' manufacturing jobs to last?

I don't think you can put a time frame on something like that. This is a dynamic process, and so continuing to have the best and the brightest workers and thinkers is important. So is a commitment to innovation, because you've got to continually innovate to extend product life or to create products or services that make sense in our economy...