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Gateway
Region sticks to its roots
Area’s manufacturing
base bucks the trend
by
Donna C. Gregory
Virginia Business
January
2005
As
the nation shifts from manufacturing to a more service-based
economy, Virginia’s Gateway Region has become
an anomaly. The area, which includes the cities of Petersburg,
Hopewell and Colonial Heights, and the counties of Prince
George, Dinwiddie, Surry, Sussex, and part of Chesterfield,
has stuck to its roots in the chemical and metals industries,
and continues to see steady growth, contradicting the
belief that manufacturing is on its way out. “We
have been very fortunate that we have bucked the trend
and had very good success even when the economy was
down,” says Jay Langston, executive director of
Virginia’s Gateway Region, a private, nonprofit
economic development corporation that promotes economic
development across the area.
By
focusing its efforts on incorporating new technologies
and developing innovative, niche products, the Gateway
Region’s core industries have weathered the manufacturing
decline and, in some instances, even expanded their
market. “Our companies have transitioned into
new and emerging products that are high value-added
and cannot be located just anywhere in the world,”
Langston says.
A
manufacturing legacy
Manufacturing has nearly always been the foundation
of the Gateway Region. Dating back to the 18th century,
workers depended on the textile and tobacco industries
to sustain their families.
With the start of World War I, the chemical industry
first took hold in Hopewell when DuPont opened a guncotton
plant to support the British and French armies. With
demand, came jobs, lots of jobs. At its height, the
DuPont plant employed nearly 30,000 people, but when
the war ended, so did Hopewell’s heyday. The plant
closed, leaving thousands without work.
Since then, the Gateway Region has experienced similar
challenges. In 1985, one-time tobacco giant Brown &
Williamson Tobacco Corp. announced the closing of its
Petersburg factory. Just a decade earlier, the company’s
38 tobacco warehouses, which lined the railroad tracks
in the city’s northwest corner, employed 4,000
workers.
In recent years, Honeywell, one of the region’s
largest employers, has gone through a series of layoffs
at its Bermuda Hundred Road plant in Chesterfield County.
The plant is down to around 350 employees after employing
about 1,500 workers just five years ago.
Finding
a niche
Despite these setbacks, however, the Gateway Region
is making strides in building a solid economic base,
and it has been doing it by focusing on the region’s
strengths. “What we’ve found is, particularly
in a small region like this one, you can’t be
all things to all people,” says Langston.
The area has long been known for chemicals and metals,
and clusters of these industries dot the region, including
Honeywell, Hercules and Degussa/Goldschmidt in Hopewell,
TXI Chaparral Steel in Dinwiddie County, Service Center
Metals in Prince George County, and Watson Metals, Boehringer
Ingleheim Chemicals and Infra-Metals in Petersburg.
These clusters have led to increased interest by outside
companies looking to expand into an industry-friendly
locality, since the infrastructure and other services
are already in place to support their development. This
has resulted in a circular, self-supporting micro-economy
that’s created a strong sales pitch for the Gateway
Region. “The infrastructure here is very strong
because the companies are here, and the companies are
here because the infrastructure is strong,” Langston
says. Hopewell, for example, has one of the few wastewater
treatment plants in the country that can process raw
effluent. This means chemical firms save on costs, because
they don’t have to build a pretreatment facility
to process wastewater discharges.
The region’s other strong selling points are location
and access. In fact, that’s how the area became
dubbed the Gateway Region. “Our companies were
telling us access was why they were here,” Langston
says. With its proximity to major thoroughfares such
as Interstates 95, 85, 295 and 64, the Gateway Region
is within a day’s drive of two-thirds of the country’s
population. It also offers easy access to Virginia’s
port and railway systems. Companies have easy access
to business services, a large labor force, and higher
education opportunities because the region is near a
major metropolitan area. “Yet, for a company that
does not have to be in the middle of everything, they
can have all those things, and yet, not have the cost
by being in our area,” Langston says.
A
diverse community
From pastoral fields with grazing cattle in Dinwiddie
County to smokestacks along Interstate 95, the Gateway
Region is one of diversity. Urban, suburban and rural
landscapes all reside there, posing both an opportunity
and a challenge when marketing the area.
In recent years, there has been a push in the Gateway
Region’s rural counties to attract more industry.
Last year, California-based Windsor Mill announced the
opening of a new $6 million specialty lumber, molding
and millwork plant in Surry County, the first new manufacturing
project there in three decades. In this case, Surry’s
rural character was actually the deciding factor when
Windsor was scouting the area. “They didn’t
want a suburban or urban environment, because the costs
were too high,” says Langston.
Companies looking for rural sites are rare these days,
however, making the recruitment of firms to these localities
more challenging, since they often lack the infrastructure
and financial perks to lure new prospects.
In the cities, there’s a different challenge.
“We have limited parcels of land that are of size
for substantial industrial investment,” says March
Altman, Hopewell’s director of development. Hopewell
is 95 percent developed, leaving only three suitable
properties for any sizeable development. Because of
the land crunch, Hopewell has refocused efforts on helping
current firms expand and prosper, and in building its
residential housing stock.
Housing is also a challenge. “We have a lack of
what I would call market-rate housing,” says Altman.
“The majority of the housing here was constructed
in the late ’60s, early ’70s, and it doesn’t
meet market demand. It fills the niche for starter housing,
but it doesn’t meet the demand for move-up housing.
People move out and then we don’t see them ever
returning.”
Hopewell has consistently seen a 2 percent decline in
its population for several decades as families move
to more substantial houses in Prince George and Chesterfield
suburbs.
The city is also taking a new look at an overlooked
treasure — the Appomattox River. Plans are under
way to redevelop the former Patrick Copeland Elementary
School, which sits on a 10-acre site along the riverfront,
into a mix of residential, office and retail space.
As the city begins to show its age, local leaders have
approved a facelift for downtown, including streetscape
improvements and the construction of a new library.
Work is scheduled to start this year.
In Petersburg, a similar downtown revival is hoped for
as Richmond developer Robin Miller transforms the former
Seward Luggage facility on High Street into condominiums
and town homes. “I think [Petersburg] is a wonderful
town that’s a diamond in rough that’s been
sleeping for the last 20 years and is ready to wake
up,” says Miller. “Somebody has to go first.
We’re used to going into areas where we’re
the first people in and where everyone is saying, ‘What’s
he doing? He’s crazy,’ but we make it work.”
Miller chose Petersburg because of its proximity to
downtown Richmond and its more affordable real estate
market. The first stage of the Seward project will include
10 three-story town homes and 58 condominiums. The town
homes will be sold in the low-to-mid $200,000 range,
Miller says.
Petersburg is also seeing a revival along Crater Road,
stimulated by the opening of a Wal-Mart Supercenter
in 1999. Smaller retailers are bordering the well-known
anchor. A 40-acre site on Crater Road has attracted
Community Health Systems, which plans to build a 300-bed
hospital. It would replace Southside Regional Medical
Center. “The pending construction of that hospital
is generating considerable interest on Crater Road,”
says Vandy Jones, manager of Petersburg’s office
of economic development.
Looking
ahead
In the future, the Gateway Region’s development
team will continue to heavily market the area to the
chemical and metals industries, and plans to focus particularly
on emerging companies that might provide additional
support and supplies to existing firms. “We see
our future as building on our strengths here,”
Langston says. “I’m convinced manufacturing
will always be here in the United States. It will just
be the high value-added manufacturing,” Langston
says.
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