The City of Emporia, one of Virginia’s poorest cities, has poured $25 million into the 1,600-acre Mid-Atlantic Advanced Manufacturing Center. To date the industrial park has yet to attract a tenant. Over the past decade, Virginians have sunk more than $100 million into land acquisition and development for industrial “megasites” in the hope of luring major manufacturing investment, reports the Associated Press. So far, the Old Dominion has little to show for it.
The push to create megasites began in 2004, when several manufacturers were looking for locations in the Southeast, according to Tim Pfohl, grants director for Virginia’s tobacco commission. The commission, an independent board created to use national tobacco settlement money to promote economic development in tobacco-dependent areas, allocated $100 million to buy land and bring in infrastructure.
Nearly all of that has been spent on eight sites in the state’s south and southwest, and even more money has been sunk into the sites by other grants and local governments.
Governor Ralph Northam has proposed spending an extra $20 million in taxpayer money to improve infrastructure at the state’s megasites. And, as Steve Haner reports in the previous post, the House Commerce and Labor subcommittee is considering a proposal that would have electricity rate payers subsidize construction of electric transmission lines to empty megasites.
If Virginia doesn’t invest, economic developers say, then it can’t play the game. When manufacturing companies are ready to expand, they want to move quickly. They don’t want to wait for state and local governments to allocate funds, get permits, and install utilities. Time-to-market is crucial, and a fully built-out industrial park is far more attractive than one that’s a patch of land with a promise of roads and utilities.
“We have to have prepared sites or we’re going to lose,” Stephen Moret, CEO of the Virginia Economic Development Partnership (VEDP), told the Associated Press.
Moret has established what he calls “five transformational goals” for Virginia, which include boosting the rate of economic growth and job creation, and ensuring that “every region wins.” To promote rural economy development, Moret’s plan includes ubiquitous broadband coverage, a robust marketing program that extends to Virginia’s rural areas, a turnkey, customized workforce development program, and “an expanded prepared sites inventory.”
The economic development chief did concede that Virginia could do a better job marketing its megasites. Incredibly, the state doesn’t know exactly what it has to offer companies. The state’s online database of available sites is missing critical information, like what kind of utility infrastructure is available. The VEDP is working on a detailed inventory of sites 25 acres and better. Moret told the AP that it is to soon to say whether public money has been spent on a site that will have to be written off. “I truly don’t know.”
Bacon’s bottom line: It is utterly brainless to invest tens of millions of dollars in industrial parks, then fail to property market them properly. Such short-sightedness is typical of politicians spending other peoples’ money, of course. They have no skin in the game, and they lose nothing if the money is wasted.
Fortunately, Moret knows how the pieces fit together. He’s updating the database and he’s lobbying for more marketing money, so at least failure is not guaranteed. But the odds still are long that Virginia will land a major employer when competing against states willing to spend millions more on manufacturing subsidies, and with less accountability, than Virginia is prepared to do.
Southside and Southwest Virginia have invested extraordinary resources on a gamble — a losing gamble so far — that an industrial megasite can attract a transformative corporate investment. Maybe some lucky region will hit the jackpot, in which case I’ll happily eat crow and congratulate the winner. Until then, I far prefer the “Strong Towns” philosophy of making small bets, collecting feedback, and then making more small bets guided by what works. The payoff from small bets may be smaller, but the odds are so much better.There are currently no comments highlighted.