The state of manufacturing in the Valley

The Top Story by Chris Graham

It was around the turn of the new century that David Kleppinger first picked up on what has since become the new trend in economic development.

“It became apparent to me at that point in time that something was happening that hadn’t been really noticeably happening before that – and that was that not only were we losing manufacturing-sector jobs, but there weren’t manufacturing-sector prospects out there to be found,” said Kleppinger, the executive director of the Rockbridge Partnership, which coordinates economic-development activities in the Greater Rockbridge area.

Looking back, Kleppinger said, the trend to that effect started in the boom times of the 1990s – as manufacturers commenced taking steps to better position themselves in the growing global economy.

“That’s when we started losing manufacturing-sector jobs – when companies either more fully mechanized their operations to cut back their payroll costs, or packed up and went overseas,” Kleppinger told The Augusta Free Press.

As the manufacturing sector began to decline in the Shenandoah Valley, across the Commonwealth and across the country – from 1998 to 2004, according to the Bureau of Labor Statistics, the Valley experienced a net loss of 3,500 manufacturing-sector jobs, a 12 percent decrease over the six-year time period, while Virginia lost 90,000 manufacturing jobs (23 percent) and the United States lost 3 million manufacturing jobs (17.5 percent) – it became obvious to more and more people in local economic-development circles in particular that they might have to adopt a new way of thinking regarding how they went about their business.

“The market is dictating that that analysis take place,” said Robin Sullenberger, the executive director of the Shenandoah Valley Partnership, which provides marketing and business assistance to localities in the Central Shenandoah Valley region in relation to their economic-development activities.

“We are in fact discussing that with regularity within the partnership – and are shifting our focus to areas where we know that there is a significant amount of activity,” Sullenberger told the AFP.

The response of Augusta County leaders along these lines has been to step outside the economic-development strategies adopted in the 1990s that focused on small- and medium-sized industries to include efforts that could bring a major manufacturer to the Central Shenandoah Valley.

“We’re looking at things like manufacturing jobs being lost in the county – and we’re looking at jobs being lost in the region,” said Wendell Coleman, the chairman of the Augusta County Board of Supervisors, which worked with the state on a plan to attract an auto manufacturer to a megasite in the Weyers Cave area.

That the plan seems to have fallen short of the target – county administrator Patrick Coffield said last week that negotiations with the owner of the largest parcel of property that was being looked at for the development of the megasite had broken off – does not necessarily mean a return to square one as far as the still-evolving strategy is concerned.

“Obviously these large employers without question have some notion of what they’re looking for – and lots of those that they’re looking for exist in Augusta County. We’re at the intersection of two major interstate highways. We’ve got two rail lines. We’ve got an airport. We’ve got two electric companies. We just happen to be in a place that these things exist,” Coleman said.

“We’re on the radar screen. People know that we’re here. So we can expect that this kind of opportunity might present itself again,” Coleman told the AFP.

Critics of the strategy are wondering aloud whether or not it makes sense to go in this new direction – considering the impact that a large-scale manufacturer like Toyota, which was said to be interested in the Weyers Cave megasite as the location for a new auto-assembly plant, could be expected to have on the semirural Valley.

“The great thing about economic development here in the Valley is that we can be very selective with our broad-based economy – from higher education to agriculture to tourism to small business and retail. We’ve got it pretty good here, so we can be pretty selective about what we want – and we can wait for the right fit,” said Del. Chris Saxman, R-Staunton, who serves on a legislative subcommittee studying the future of the manufacturing sector in the Old Dominion.

“If we have some opportunities pass us by that we might need in the future, that’s hindsight. But right now, the people in this area are here for a reason – they come here for a reason, they stay for a reason, they like it for a reason. And that’s the great quality of life – and they don’t want to see that eroded by short-term thinking,” Saxman told the AFP.

Del. Steve Landes, R-Weyers Cave, who serves on the board of directors of the Center for Rural Virginia, said rural economies are better served by development efforts focusing on small- to medium-sized manufacturing “and more niche and specialized high-quality manufacturing.”

“That goes back to – what do you want to have a mix of? I don’t think the state does a good job of promoting that and advocating that. They do a good job of working to get the big facilities and larger-scale operations. I think that’s fine – but there ought to be a two-tiered strategy. They ought to be looking for those kinds of facilities and also looking for small- and medium-sized businesses as well. I don’t think we have a good strategy at the state level to do that,” Landes said.

“We also need to look more at promoting existing businesses. If you look at the numbers, most of the growth in the economy has been expanding existing businesses – and a lot of that is small business,” Landes told the AFP.

Sullenberger said local economic developers have been putting more of their attention on the expansion of existing companies – “We have seen significant expansions with some of our marquee companies Hershey and McKee in Augusta County and Merck and Coors and White Way Foods and others in Rockingham County. We’re seeing that throughout the region,” Sullenberger said.

The trend there, though, is “that we are seeing significant capital investment in low job numbers – based on improvements and dramatic changes in technology and automation in the manufacturing sector,” Sullenberger said, pointing as an example to the recent multimillion-dollar expansion at the Coors plant in Elkton in Rockingham County that will add only a handful of jobs to the Valley labor market.

“There’s a positive side to that, of course – and that is job retention. We are, as a result of these changes, we are not losing jobs. Any time we have an expansion, even if it doesn’t create a significant number of new jobs, it does retain the existing jobs,” Sullenberger said.

The bigger issue, Sullenberger said, “is that we are seeing very few inquiries with low and medium job numbers in the manufacturing sector.”

“That is not to say that there are huge numbers that are large potential facilities – because there aren’t a lot of them, either. But from the perspective of what many people have indicated – that the preference should be for the smaller- and medium-sized manufacturing facilities – basically the situation is that we are getting very few inquiries, and are able to make few marketing contacts,” Sullenberger said.

Now to the $64,000 Question – what does this all mean to the future of public policy regarding manufacturing in the Shenandoah Valley?

“The first thing that you have to keep in mind is that the Valley is not immune to the changes that are occurring nationally and internationally. I think what’s happening in the Valley represents most of those economic changes,” John Noftsinger, a professor of integrated science and technology at James Madison University, told the AFP.

“You’re seeing consolidation of industries. You’re also seeing the outsourcing of manufacturing jobs. You’ve got the impact of NAFTA. The Shenandoah Valley is indeed affected by those national phenomena,” Noftsinger said.

“It’s certainly appropriate for elected leaders and government officials to be looking toward the future and how to best maximize the economic opportunities given the changing environment – both internationally, nationally and at the state level,” Noftsinger said.

(Originally published 07-03-06)

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