Building a new industrial sector in Waynesboro

Special Report by Chris Graham
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Waynesboro was once the envy of Western Virginia for its manufacturing economy. As recently as 1990, almost half of the city’s workforce was employed in manufacturing, whose rate of pay has traditionally been at least 40 percent and some years approaching 50 percent higher than the median income in the city.

The manufacturing interests in Waynesboro not only formed the basis of our economy. It was also the foundation of our way of life. Physicists at DuPont and engineers at General Electric demanded the kind of school system that could educate their sons and daughters to be just as productive in their adult years if not more so, and so our schools were also the envy of Western Virginia, if not the entire state.

The decline of manufacturing, from that 1990 measurement that had 4,400 jobs in the Waynesboro labor force to today, when the latest numbers from the Virginia Employment Commission, through the second quarter of 2009, has us at 1,619 jobs in manufacturing, has had myriad effects on the quality of life here.

Our standard of living has decreased, no question about it. Waynesboro still boasts a higher per-capita income than its nearest neighbor, Staunton, but in the past two years we’ve lost significant ground to a sister city just to our north, Harrisonburg, which actually has more manufacturing jobs than we do now, on an order to two to one, and has also made significant inroads in what I believe and others believe will be the economy of the 21st century, technology.

The Friendly City

In the early part of this decade, Harrisonburg began an effort that led to the development of what is now called the Downtown Technology Zone, Virginia’s first rural neighborhood technology zone. The development of the zone has come in a planned, phased manner, beginning with a foundation of incentives adopted by Harrisonburg City Council that offer technology businesses locating in the zone:

– Three-year business, professional, and occupational license tax/fee exemption.
– Water and sewer connection fee exemption. Partial exemption for certain rehabilitations, renovations, or replacements of structures no less than 25 years of age.
– Help tenants secure tax credits through federal and state assistance programs.

That is aimed at getting people there, and it is working. While preparing this report, I met with Justin Creasy, the cofounder of Immerge Technologies, a web- and software-development firm located in the Harrisonburg Downtown Technology Zone, to learn more about how his business landed in Harrisonburg. Creasy’s business partners were classmates with him at James Madison University in that school’s College of Integrated Science and Technology. I’m underselling them here a bit – they were together a group of award-winning technology students at the CISAT school who decided that upon graduation they were going to go into business together. They weren’t thinking Harrisonburg, but that’s where they are. “Basically the city recruited us,” Creasy told me. “The mayor at the time, Larry Rogers, met with us personally and told us that it was important to the city that our kind of business locate in Harrisonburg.”

Other tech firms have located in Harrisonburg due to similar recruiting efforts. Gravity Group, a media and marketing company in the Technology Zone, recruited itself, so to speak, locating in Harrisonburg after originating in Northern Virginia in the early 1990s. “When we first relocated here, we were using the model of the mobile office kind of before it was popular. Faxes were big then. E-mail definitely was not. We had a lot of clients in D.C. We were doing a lot of government work. A lot of consultancy there in D.C. itself. We also developed some national clients as well,” said Christian Perritt, a principal in Gravity Group. “We had some clients tell us, You’re making a big mistake moving to the Valley. What’s in Harrisonburg? And we said, Well, it’s not what’s in Harrisonburg, it’s more, where is Harrisonburg? It’s two hours from Richmond, two hours from D.C,” Perritt told me. “We kept all of our clients when we moved. We didn’t have a local client for our first two years, but gradually we built up a local client base, kept the clients that we had built up in D.C. and elsewhere, and built from there.”

Gravity Group is an anchor in the Tech Zone. Another is Rosetta Stone, whose commercials you have no doubt seen on TV at some point touting its innovative approach to helping people learn a foreign language. Rosetta Stone was born in Harrisonburg in 1992 as Fairfield Language Technologies and continues to conduct its core operations in Harrisonburg even as it flirted briefly with the idea of moving its operations center to its Northern Virginia office to be in closer physical proximity to its Washington, D.C., and Northeast client base.

“As a technology company, we need people with technology skills at the entry level, and they’re often here,” said Mike Fulkerson, the vice president of technology at Rosetta Stone, and himself a transplant from the company’s Northern Virginia office. “There is a talent pool for the company here, but we do tap that out, and we do need to bring in people from outside the area, even though we do hire a lot of local folks,” Fulkerson said.

That will probably be an issue for us regionwide as we transition our economy from the 20th century to the 21st century. The Shenandoah Valley Partnership is leading an effort to better integrate the local education system, K-12 and higher ed, to the new economic realities called, appropriately enough, Transitions. Waynesboro is represented on Transitions by Robin Crowder, the superintendent of public schools in Waynesboro. Workforce development will be key to efforts up and down the I-81 corridor to attract high-tech jobs to the Valley.

“Companies that come to us ask two questions. How do we get our workforce today and 20 years from now, and can you demonstrate that to me, that you’ve got a pipeline of workers and a pipeline in terms of an educational system K through 12, K through gray, as they say, that will give me my workers today and 20 years from now? And second, show me how to create innovation in my company so that I remain competitive in the global marketplace? Those are the two questions we’re being asked. Real estate is not as important anymore. Because companies can produce products or make services virtually anywhere,” said Liz Povar, the director of business development at the Virginia Economic Development Partnership.

We’ve seen that with the location of Gravity Group in Harrisonburg. Harrisonburg economic-development director Brian Shull also sees that regularly with the inquiries that he gets from defense-industry and other industries tied to the federal government in Northern Virginia who are looking for locations outside what is referred to as “the blast zone” in the event of a nuclear attack. “We are seeing activity from firms that want to be a hundred miles or more outside of D.C.,” Shull said. “A lot of times they have their home base in the Northern Virginia-D.C. metro area, but they can do their operations outside of that area, and they do want to have a presence outside that area for continuity purposes. So it makes good business sense for them to diversify. We’re seeing that from both private-sector and government entities.”

Time out

Let’s review what Harrisonburg has done and is doing to attract high-tech firms to the Friendly City. One, it laid out the boundaries of a Technology Zone in its downtown to bring a centralized focus in terms of location. Two, its city council created a package of economic incentives to get the attention of potential suitors looking to locate tech businesses. Three, it is working with its neighbors in the Valley on workforce initiatives to be able to provide a steady labor force that tech companies need. Four, it is actively working with companies big and small that are interested in starting or growing business in the Valley.

Economic impact

This is where the rubber meets the road. All of this effort would mean nothing if it wasn’t translating into positive economic results. My research indicates that this is the case in Harrisonburg, but with a caveat.

The caveat – I have been trying, to date unsuccessfully, to get a measure of sort of a gross domestic product impact of tech-related business in both Harrisonburg and Waynesboro, to no avail yet. The Virginia Department of Taxation has a great statistical breakdown of local economies that goes line-item by line-item, but it has been hard for me to decipher exactly where tech firms, with their various inputs and outputs, would fit in with any level of certitude.

It has been far easier to measure economic activity by looking at jobs numbers, so that’s where I’m going. Let’s start with Harrisonburg. The average weekly wage in Harrisonburg, according to data from the Virginia Employment Commission, is $678 a week, up $55 a week from where it was a year ago at this time. The Harrisonburg labor force is at just over 30,000 employees, according to the VEC.

I mentioned above that the manufacturing sector there is quite healthy. Actually, the number one employer in Harrisonburg is retail, with 4,800 employees, earning an average wage of $436 a week, down from the $453 a week that retail employees in Harrisonburg were taking home last year.

Manufacturing employs 2,900 people, down 200 over the previous year, at an average wage of $754 a week, down from the $766 a week manufacturing employees in Harrisonburg were taking home last year.

The tech and information sector in Harrisonburg employs 2,600 people in the Harrisonburg market at an average wage of $1,375 a week – more than double what the average wage earner brings home.

The average wage in the sector is up an astounding $500 a week over where it was last year.

Catching our breath from that, let’s head back down the road to Waynesboro, where retail, as in Harrisonburg, is the top employment sector, with just over 2,000 employees taking home an average of $374 a week, down $2 a week from what they were making last year.

The Waynesboro manufacturing sector lost 500 jobs, to 1,600, over the past year, but the good news is that those who kept their jobs saw their wages increase on average, from $855 a week last year to $913 a week this year.

The tech and information sector employs 900 people in Waynesboro at an average wage of $1,001 a week, up $80 a week over what the average wage earner in the sector made last year.

The average wage in Waynesboro is $604 a week, up just $4 a week overall from where it was this time last year. Tech-sector employees bring home 66 percent more than the average wage-earner in Waynesboro.

What do we see here?

One, our manufacturing jobs pay better than manufacturing jobs in Harrisonburg. Two, our retail jobs here barely pay what you could call a living wage, and that’s now our bread and butter, for better or for worse.

Three, we have the beginnings of a tech sector, but that’s all for now, the beginnings. And four, tech jobs have the potential to be the next manufacturing jobs in terms of their impact on the local economy.

 

The wave of the future

So tech jobs are good. And they’re the wave of the future. The Obama administration is talking about investments of $15 billion a year over the next 10 years to jumpstart research and development into the new green economy that will surely be a part of the tech revolution.

A group in Staunton is laying the groundwork on a project entitled Staunton Green 2020 to make the effort a regionwide effort aimed at attracting green jobs to the Central Shenandoah Valley.

“It’s not liberals sitting around in offices sipping coffee and pontificating. It’s jobs for blue-collar workers in this new economy,” said Erik Curren, one of the organizers of Staunton Green 2020.

“We feel like because of what is happening in Washington, because of what Gov. Kaine is doing, this could be a very promising source of jobs, good jobs, in Staunton. Jobs for blue-collar folks who may have been laid off from jobs in manufacturing. There’s going to be lots of work in blowing insulation, in caulking stuff, in installing double-glazed windows. We feel the city should help these jobs get going,” Curren said.

The base would be the local market. As businesses and home and property owners claw their way out of the economic slowdown, among the first things they’re going to want to do is retrofit their properties to cut on energy costs for the long term. You can almost bet on at least a short-term boom in that first level of greening in local economies across the country. A second wave is likely to come in the form of local and state government agencies doing the same once they emerge from their shortfalls back into having some working capital to use conservatively for future savings.

The longer-term trend is what we could call macrogreen – as changes brought on by systems engineering and basic architecture adjustments pave the way for the development of processes that meet the needs of the new green way of building buildings and homes and designing and paving roads and other public infrastructure both nationally and worldwide.

“I would see communities like Staunton and Waynesboro that are losing their traditional manufacturing jobs look at this as a way to replace those jobs,” Curren said. “I know here in Staunton we’ve had a pretty good run with tourism, but I’d like to see our city develop a clean energy capacity that we could export. You know, Toyota talked about bringing an assembly plant here a few years ago. Why not get BP Solar or GE to bring an assembly plant here to put together solar panels or wind-turbine parts?” Curren said.

“I’d love to see our economic-development folks make this a priority, that it shouldn’t just be about the old school and turning it into a senior center. That’s great. But what we need to do is get these dynamic industries in here so our young people can have jobs,” Curren said.

“We have capacity, and we have a workforce out there that’s ready for something new,” Curren said. “Whether it’s light manufacturing or something else. We’ve also got a lot of people in this area, particularly in Staunton, who are interested in the environment and interested in the economy. And by now everybody should know that those two things go together, that you shouldn’t have to choose one or the other.

“There’s a business opportunity out here for those who are willing to grab it. And if our area doesn’t grab it, somebody else will,” Curren said.

 

Strategies

Why can’t Waynesboro get itself ahead of the curve and become the center of economic activity in Western Virginia in the 21st century as we were for much of the 20th?

We have plenty of space available downtown and in our industrial park. We are ideally located at the nexus of two major interstates and at the natural hub linking Harrisonburg and James Madison University and Charlottesville and the University of Virginia.

We have an economy already in transition with layoffs in our manufacturing sector giving us a workforce of available employees – who might need to be retrained for 21st century jobs, sure, but we have education infrastructure in place with Blue Ridge Community College and the Valley Vocational-Technical Center to facilitate that effort.

What we need is an action plan to get ourselves ready to be a player in the market for these jobs.

Some ideas as we move in that direction:

– Empower the EDA: The News Virginian piece from a couple of weeks ago quoting several Economic Development Authority members questioning what they were even supposed to be doing was quite revealing. City Council has an asset in the EDA. Its members represent a diversity of business and industry backgrounds. The Council needs to give direction to the Authority as to what it wants to see it focus its attention on, then set it on its task. It is clear that the members want to get down to work.

– Hire an economic-development director already. Aug. 2, 2008. That’s when Meghan Williamson left the post of city economic-development director. How this has not been a priority in the midst of the worst economic decline this country has faced since the Great Depression is beyond comprehension. The director position is a key connection for the city to the Shenandoah Valley Partnership, the Virginia Economic Development Partnership, and serves as an initial point of contact for business and industry – local, regional and national and international. The director also serves as a conduit for the expertise and insight from the Economic Development Authority to get its ideas to City Council. Fill this job yesterday.

– Finish the infrastructure in the industrial park off Rosser and I-64. You may not be familiar with Hansen Transmissions. Hansen ended up in the industrial park in Augusta County after doing everything but signing on the dotted line to set up shop in Waynesboro. The reason Hansen didn’t end up here: the space in our industrial park that they were going to land in wasn’t pad-ready. Industrial-park space that is not pad-ready is worthless given the turnaround time that industry entities expect once they make a call on a location.

– Create a Downtown Technology Zone. We have a model for how to get ourselves moving in the right direction as far as the development of our tech sector up the road in Harrisonburg. It would do us well to learn and adapt what we can from their experiences and then get to work.


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