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Rural Virginia Vies for Automotive Manufacturers
Major initiatives and incentives help rural Virginia
compete for global auto manufacturing plants.
By Jennifer LeClaire
As global auto manufacturers begin to settle in the South,
the state of Virginia-and its most rural communities-are revving
up their competitive engines with 21st century initiatives
designed to attract large-scale automotive projects.
Of course, Virginia is no stranger to the automotive industry.
The Ford Motor Company began construction of the Norfolk Ford
Assembly Plant in 1925. The facility has since cranked out
more than 7 million vehicles and in 2001 the automotive giant
increased its production capabilities with a $375 million
plant expansion to manufacture its popular F150 truck.
The state has announced $2.1 billion worth of automotive
investments that have led to 117 automotive plant expansions
and new facilities to create more than 10,000 jobs in the
last 12 years. Overall, the automotive industry in Virginia
employs more than 25,000, with nearly half of those workers
added in the past decade.
More recently, Governor Mark Warner in July announced four
new automotive expansions - Teleflex Automotive, Standard
Motor, Siemens VDO Automotive, and Schrader Bridgeport International
Inc. - that total more than 400 new jobs and $58 million in
capital investment across the state.
Today there are more than 30 automotive manufacturers and
suppliers with operations in Virginia. State economic development
officials, however, are still hungry for more. In particular,
Gov. Warner is targeting the rural Southside as an automotive
manufacturing hub with a unique strategy that leverages tobacco
settlement funds to build the necessary utility infrastructure
for industry.
"As we retool for the 21st century jobs, we are launching
broadband initiatives to get our rural communities connected,"
explained David Hudgins, director of economic development
at Old Dominion Electric Cooperative (ODEC), a wholesale electric
supplier serving nearly a half million customers in some of
the Mid-Atlantic's fastest-growing areas. "This initiative
prepares us for 21st century companies that are very service-oriented
as our manufacturing sector is in decline."
Broadband Initiatives
With tobacco fields under attack by health lobbies, coalmines
in jeopardy from environmentalists and manufacturing job losses
in apparel, textiles and furniture, Virginia's strategy to
attract automotive manufacturers is a must.
Indeed, the E-58 Initiative, one of several broadband campaigns
across the state, was birthed out of necessity. The state
is building a high capacity, high-speed data-voice-video system
along U.S. 58. The goal is to link rural areas along the highway
with high-tech telecom services in urban areas and to revitalize
poor regions that suffer high unemployment rates by gaining
new high-paying jobs.
The Tobacco Indemnification and Community Revitalization
Commission is largely funding the project. The commission
was created in 1999 by the state's General Assembly to distribute
the Commonwealth's $4.1 billion share of the national tobacco
settlement, some of which the governor has earmarked for stimulating
the local economies in southern Virginia.
"High speed, low cost broadband is a necessity in today's
economy and, for rural business in Virginia, is as important
as rural electrification was in the '30s and '40s," Virginia's
Secretary of Commerce and Trade Michael Schewel told the Southside
Economic Development Summit in a recent speech. "Better
infrastructure will increase the productivity of private businesses
located in Southside. It will also affect the location decisions
of companies considering Southside as a place to do business."
Moreover, the Mid-Atlantic Broadband Cooperative, a strategic
partnership with AT&T, the Virginia Tobacco Commission
and the Economic Development Administration, is also working
to build an advanced, open-access fiber optic network to provide
rural communities access to competitive broadband telecommunication
providers. With its various broadband initiatives, Virginia
will offer manufacturers a reliable telecom network from one
end of the state to the other.
"Automotive manufacturing is one of the few active industries
that has a proven record of locating in rural America,"
said Hudgins. "How can you attract automotive manufacturers
if you don't have the communications capability of moving
engineering files and design files effortlessly in a timely
manner? Rural Virginia communities couldn't offer this service
before, but we can now."
Incentives for Auto Manufacturers
The E-58 initiative should bear fruit within the next 12
months, according to economic development consultant Glynn
Loope. In the meantime, ODEC's Hudgins is working to assemble
incentive packages, provide technical assistance and marketing
support, and facilitate interagency cooperation at the state
level so that electric co-op-served areas can compete for
the type of automotive projects that have been so successful
in other portions of the South.
Existing incentives in Virginia include six general purpose
Foreign Trade Zones and subzones designed to encourage global
auto manufacturers to participate in international trade by
effectively eliminating or reducing customs duties. Numerous
subzones are designed to enhance the trade capabilities of
specific companies. The state also features a streamlined
environmental permitting process using federal minimum standards.
Virginia offers some of the broadest sales and use tax exemptions
in the country with a stable, competitive corporate tax rate
of 6 percent that has not increased in 30 years. Furthermore,
Virginia does not tax intangible property, manufacturers'
inventory, manufacturers' furniture, fixtures, or corporate
aircraft.
Reliable energy sources at competitive rates are also attractive
to automotive manufacturers. The average industrial electric
rate is less than 4 cents per kilowatt-hour. The state is
also home to the Virginia International Raceway, the Langley
Full Scale Wind Tunnel and the Smart Road project at Virginia
Tech.
Loope said Southside is one of the most prime locations because
it is in the heart of rural Virginia, yet is still within
60 miles of Richmond and Norfolk labor markets. "Virginia's
transportation system links the state to the northeastern
and "Rust Belt" States where the auto industry has
traditionally flourished," Loope noted. "Companies
in those states can now look to Virginia to maintain their
easy access to the heart of the automotive industry, while
avoiding the premium costs of doing business in the Northeast."
An Auto-Ready Labor Force
Virginia is known for its hardworking labor force, which
is considered one of the state's greatest business assets.
More than 375,000 Virginians are currently enrolled in more
than 100 institutions of higher education and nearly 20,000
doctoral scientists and engineers reside there. The Virginia
Community College System, through its 23 colleges, provides
occupational and technical training programs, many of which
have been designed specifically to meet the needs of the automotive
industry.
"The labor force in rural Virginia is very acclimated
to the manufacturing environment," said Loope. "Just
because you are a coal miner doesn't mean that mining coals
is all you know how to do. Mining coals requires skills that
are applicable across multiple disciplines. The Virginia labor
force has proven itself to be very adaptable to change."
Virginia features "at will" and "right-to-work"
employment practices and offers nationally recognized state-funded
customized technical training and recruitment programs to
meet labor needs and timelines of the automotive industry.
The average worker's compensation insurance premium is the
fifth lowest in the nation and the average unemployment insurance
cost is the lowest in the nation.
With high unemployment, rural communities in the state have
a readily available and trained work force. According to a
recent report by Chmura Economics and Analytics of Richmond,
southern Virginia is still trying to recover from the loss
of more than half its 13,000 coal mining jobs over the past
decade. The region also has lost more than 10,000 manufacturing
jobs over the past 10 years, mainly due to the demise of sewing
factories and mining manufacturing plants.
"It's an interesting commentary that as manufacturing
has declined in so many Southern communities, projects in
the automotive sector continue to flourish," said Hudgins.
"The scale spans from the major projects that cover a
bumper to bumper assembly, and those projects that focus on
production of critical components. Rural Virginia is ready
to offer the right sites with the right amenities and the
right incentive packages to serve automotive manufacturers."
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