Virginia’s If-You-Don’t-Build-It-They-Won’t-Come Economic Development Strategy

Kevin Costner bet the farm in “Field of Dreams.” But “build it and they will come” is not a sound economic development strategy.

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.

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14 responses to “Virginia’s If-You-Don’t-Build-It-They-Won’t-Come Economic Development Strategy”

  1. smoretva Avatar

    Site selection primarily is about site elimination. Anything that is expected to take more than 12-18 months to prepare a site (e.g., an access road, rail spur, and/or utility infrastructure) often will eliminate that site from consideration. And 18 months probably is on the high end. That reality is as true for mega sites as for smaller and medium-sized sites. Virginia is most deficient with larger sites, but many regions are deficient with smaller and medium-sized sites, as well.

    I have not seen all the big sites referenced in the article, but the ones I have seen (e.g., Berry Hill and MAMaC) have real potential. Unfortunately, each of them also have at least one long lead time infrastructure item that holds back development. For example, Berry Hill needs a connector road (or at least the ROW and design for one) and MAMaC needs sufficient natural gas capacity.

    Virginia’s smaller metro and rural areas largely fallen behind in attracting manufacturing and distribution projects due to a lack of site preparedness, marketing, custom workforce solutions, and competitive incentives. With support from the governor and GA, we are now making progress on those things. At the same time, there is much left to be done.

    “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.” I expect that we will be successful, with accountability, but we will need to be competitive on incentives for the highest quality projects. There are a limited number of such projects each year. We just have to assemble all the pieces needed to succeed.

    “Maybe some lucky region will hit the jackpot…” I think more than one region will do so, if we put all the right pieces together.

    1. Hopefully, your inventory will document all the infrastructure deficiencies — access roads, natural gas availability, transmission lines, whatever — so we can at least target our investments wisely. Still strikes me as a long shot, but if we can improve the odds from 20-to-one to 15-in-one, that’s an improvement!

      1. smoretva Avatar

        “Hopefully, your inventory will document all the infrastructure deficiencies — access roads, natural gas availability, transmission lines, whatever — so we can at least target our investments wisely.”

        That’s exactly the idea. It won’t be perfect, but it definitely will be the most comprehensive assessment of our sites portfolio completed in Virginia to date. Having that information in hand also will increase the marketability of the sites.

      2. Reed Fawell 3rd Avatar
        Reed Fawell 3rd

        I am more hopeful about Virginia’s future than I have been in decades. The key ingredient here is that future success, instead of failure or stagnation (which equals failure), is now plainly at last in Virginia’s hands, to win, by doubling down.

    2. Smoretva how about all the crap told to us in Chesapeake for the Frank T Williams space? I had 50 pages of dont trust the money wasters. Dollar Tree doesn’t give a crap about helping schools here, basically a bad “neighbor”, and after all the millions it cost Virginians for Dollar Tree to move to Chesapeake, they’ve gotten some of the largest settlements for gender discrimination around. There is low low unemployment here, to the point where the ones who are unemployed don’t have the skills for jobs. How many other pipe dreams should we pay for businesses rather than our own infrastructure AND schools?

  2. I am supportive of making Va. more attractive for business development. How we best do that…I am open, but Stephen Moret ideas are good for me.

  3. Indeed Virginia may succeed in making these sites more attractive to businesses that thrive on a quick turn-around to get going. But will they be businesses that really give a boost to the local economy through employment and dollars spent locally on goods and services? I’ll tell you one sector that is going to watch closely whenever unused transmission capacity is constructed “on spec” for empty industrial sites and the like: the solar power generation business. Boy oh boy, getting quick grid access without a long wait or paying for incremental grid improvements is bread and butter in that business! But is an industrial park covered with solar collectors and employing (after construction) maybe only a dozen maintenance workers the sort of business you are hoping to attract? Of course not. But that’s what I see in your future.

    1. Reed Fawell 3rd Avatar
      Reed Fawell 3rd

      Another very astute observation by Acbar. Virginia is going to have a band of western style Goat Rodeos coming its way unless it gets a handle on these circus acts quick.

      Unfortunately, Virginian’s have a deeply ingrained cultural knack for crapping up its roadsides and countrysides with litter. So now I fear the litter will be metal solar panels and spinning noisy steel wind towers. all of which fall apart into miles and miles of toxic junk every 20 to 25 years, unless we run these slick talking herders and their goats out town before they despoil all the beauty and history the state has now got left. We are in for a fight, and a costly one at that.

      1. RF, I’m in your camp when it comes to abandoned wind generators, but less worried about the solar panels. Those panels may be unsightly while in use (that’s largely a question of the authorities demanding adequate screening when they are built), but they are not toxic and they are easy to remove, leaving the unpolluted land readily returned to agriculture. And they have sufficient value (value in salvage for the minerals in the panels themselves, value in scrap steel and/or re-use elsewhere for the frames) to reasonably assure that they won’t be abandoned and left in place. Also I’d give them more like a 50 year life than 20.

        1. Reed Fawell 3rd Avatar
          Reed Fawell 3rd

          I agree, Acbar, up to a point, as we’ve discussed before, although now I am trying to get a grip on things I never appreciated before, as to stability, reliability, and collateral impacts, that we did not discuss. But yes, solar holds much promise, if it is done right, as you know best around here.

  4. LarrytheG Avatar

    I’m a skeptic on these sites because manufacturing is very different than it used to be and cheap rural labor is still not cheap enough to overcome overseas labor and robots.

    Most factory work today is smaller factories that are highly automated and they basically want to locate where there is a highly educated workforce.

    Young educated workers don’t want to live out in the middle of “rural” nowhere.. and local rural workforces are not usually educated to the level
    that modern plants want/need.

    I don’t think we should abandon rural Va but it really is up to them to take advantage of whatever the State is offering to help – and work it. No one is going to come in and set up shop if the sites are not “ready” and even then if the workforce is skinny and not well educated.. it’s not the best.

    Mr. Moret is a committed and competent guy but he does have his hands full with RoVa…

  5. LG, it seems to me that what industry is left in this country is a shrinking but not yet negligible pie, and if Virginia can out-compete the rest of the nation in terms of infrastructure and trained workforce and quality of life for a slice of that pie, so be it. But that other discussion on out-migration also shows the Virginia slice of the pie is not big enough today — God only knows where they are moving to that has any greater opportunity for manufacturing jobs — and it’s tough to fight the downward trend nationally.

  6. Problem is, those idiots are promising crap to Chesapeake for the Frank T Williams site. The Port of Va. CEO lied on record. They were all down here for the dog and pony show.

  7. TooMuchRegulation Avatar

    Many rural counties don’t have the skilled labor pool for these mega factories. Nor, do they have good access to interstates. Even if they did land a large, well paying manufacturer, the new manufacturer would suck employees away from existing business. Better to focus on smaller manufacturers, including existing manufacturers. Unfortunately, this doesn’t give politicians the big job announcement political points

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