Open Source: NC Chamber warns two GOP nominees could upset state’s business success

I’m Brian Gordon, tech reporter for The News & Observer, and this is Open Source, a weekly newsletter on business, labor and technology in North Carolina.

The largest business advocacy group in North Carolina issued a stark warning the day after this week’s primary election. In a blog post Wednesday, the NC Chamber deemed certain outcomes, specifically on the GOP side, “a startling warning of the looming threats to North Carolina’s business climate.”

The chamber, which tends to give money to more establishment candidates, identified two primary winners as particularly problematic. One is Michele Morrow, a homeschool mother who bested incumbent Republican Catherine Truitt in the race for State Superintendent of Public Instruction. Morrow attended the Jan. 6 rally to support then President Donald Trump’s unfounded claims of election fraud.

“We are here to stop the steal,” Morrow said in a video that she posted online while attending the protest. “We are here to ensure that President Trump gets four more years.”

The other candidate the NC Chamber cautioned against is Luke Farley, who edged out Jon Hardister in the primary for labor commissioner.

“Luke Farley, is a far-right candidate whose two main campaign platform items were banning vaccine requirements for employees and ‘Making Elevators Great Again,’” the chamber wrote.

But these platforms appealed to Republican voters. On X, formerly Twitter, Farley’s campaign spokesperson David Capen fired back against the chamber, saying, “There is nobody more qualified than @LukeFarleyNC to serve as Labor Commissioner.” Capen was commenting on an article from Business NC, which first reported the NC Chamber’s stance. He emphasized Farley had earned the support of longtime labor commissioner Cherie Berry.

In its post, the chamber said it fears having such polarizing, populist figures head the education and labor departments would dent the state’s sterling business reputation. CNBC has ranked North Carolina best for business each of the past two years.

At his primary victory party Tuesday night, Democratic gubernatorial candidate Josh Stein also warned that Republican nominee Mark Robinson “would scare away businesses” and “cost the state billions of dollars.”

The NC Chamber also more generally warned against polarizing candidates on both sides of the aisle. But only Farley and Morrow were identified. I asked the NC Chamber this week about its endorsement plans for the general election. A spokesperson said “it is too early to make determinations.”

Onto the rest of this week’s news:

Why did 63 workers lose their jobs without warning?

An entire Wake County warehouse abruptly shut down last Friday, which isn’t normal. Under federal law, plant closures affecting at least 50 workers typically requires the employer file a WARN notice at least 60 days in advance, giving employees time to land somewhere new.

So why weren’t the 63 workers at The Body Shop distribution center in Wake Forest warned?

The reason involves private equity and British insolvency procedures. In January, the UK-based Body Shop International was acquired by the German private equity firm Aurelius Group, and after selling certain parts of the ethically-tested cosmetics company, Aurelius sent The Body Shop into administration, a system for UK businesses facing debts they can’t pay.

Aurelius was not only the company’s owner but also its top secured creditor, which allowed it to appoint the administrators who would take control of The Body Shop’s finances. Aurelius picked the private firm FRP Advisory.

“It’s the administrators job to maximize the proceeds of creditors,” Julian Franks, a finance professor at the London Business School told me in an interview this week. “Their job is not to preserve employees.”

Believed to be the largest secured creditor, Aurelius is set to be paid back first as Body Shop assets are sold.

The Body Shop in the United States was a subsidiary of its UK-based parent, and they shared a centralized cash system. Starting in January, employees at the North Carolina warehouse began to hear from vendors who complained they weren’t getting paid. Then last Friday, The Body Shop in North America announced its parent company, controlled by UK administrators, had halted its funding.

On March 1, Wake Forest employees were called to an early morning meeting where they were told they’d be out of a job without severance.

“It’s just not fair,” said Nataly Guerra, an operations supervisor at the plant.

SAS keeps layoff number secret

SAS Institute made more job cuts this week as it confirmed layoffs in its retail solutions division.

The prominent Cary software analytics giant reduced its workforce by around 1% last year, and while SAS didn’t share how many employees lost jobs this week, a spokesperson reaffirmed the company has been “slowly shifting some divisional structures to better align” with “corporate priorities.”

How companies communicate layoffs varies. Some, like Red Hat and Epic Games, posted messages online after making large cuts last year. SAS in contrast has kept its reductions vaguer. It certainly isn’t the only business to do this, but the gap of public messaging has created a steadier drip of speculation.

The feud continues

Apple and Cary’s Epic Games are fighting again — if they ever really stopped.

The spat started in August 2020 when the North Carolina video game company briefly bypassed Apple’s payment system (and its 30% fees) to sell in-game Fortnite currency directly to players. Three years of court cases ensued.

Under the European Union’s Digital Markets Act, Epic was working to return the Epic Games Store to iOS devices on the continent. But Apple terminated the company’s developer account, Epic’s launch point into the EU, claiming the Triangle-based gaming company was “verifiably untrustworthy” and cited a past tweet from Epic’s co-founder/CEO Tim Sweeney that was critical of Apple.

Sweeney and Epic were incensed by the decision.

“This is a serious violation of the (Digital Markets Act) and shows Apple has no intention of allowing true competition on iOS devices,” Epic spokesperson Natalie Muñoz said in a statement Wednesday.

Short Stuff: Keeping it clean

Veep in Bull City. Vice President Kamala Harris visited Durham’s historic Black Wall Street district last Friday to announce $32 million in federal funding for North Carolina women- and minority-led businesses. The money will go to 10 venture capital firms who have women or minority leaders.

Spiffy getting busy. Research Triangle Park’s mobile cleaning startup Spiffy acquired the vehicle cleaning company NuVinAir Global, for an undisclosed amount. Spiffy CEO Scot Wingo, who also leads the Triangle Tweener Fund, said Spiffy now has a staff of 70 at its North Carolina headquarters.

National Tech Happenings

• The prices of Ethereum and Bitcoin are rising again, with each crypto coin up more than 50% since Jan. 1.

• A deepfake AI-generated image showing former President Donald Trump surrounded by not-real Black supporters has been circulating online.

• And in a story that would’ve seemed like futuristic satire a decade ago, Spain has banned an eye-scanning company headed by OpenAI founder Sam Altman that pays people cryptocurrency for their biometric data.

Thanks for reading!