Picking up speed

After decades of decline in manufacturing and years struggling to recover from the Great Recession, Southwest Virginia’s economic revival made big strides in 2013.

The Roanoke and New River Valley regions saw a year full of economic development announcements, and activity continued into the opening weeks of 2014.
“It was a wonderful, busy and successful year as far as economic development announcements go,” says Aric Bopp, executive director of the New River Valley

Economic Development Alliance. “We’ve laid the groundwork for a busy 2014.”

Beth Doughty, executive director for the Roanoke Regional Partnership, says that although she still hears complaints from the business community about the “tepid recovery,” the partnership’s economic development activity grew 39 percent last year. It did especially well generating investment in real estate, machinery and equipment.

The Milken Institute’s 2013 Best Performing Cities report saw Roanoke leap 47 spots to achieve its highest ranking ever, 95th out of 200 large metro areas. The same report saw the Blacksburg region advance from No. 32 to No. 21 among 179 small metro areas.

“That seems to indicate things are looking up,” Doughty says. “Job growth is improving, and this region in particular made a big leap in the past year.”

In the Roanoke area, there’s a clear driver behind that growth. “Manufacturing has led the way out of the recession,” Doughty says.

The Roanoke region’s year was highlighted by the August announcement that the Luxembourg-based food-packaging company Ardagh Group would invest $93.5 million to retrofit the former Hanover Direct distribution center in Roanoke County, creating 96 relatively high-paying jobs.

The deal generated an immediate spinoff announcement, with The Netherlands-based Canline Systems announcing it would invest $1 million and create 25 jobs in developing a facility manufacturing conveyor systems to supply Ardagh. (See related story.)

For job creation, however, the region’s biggest news was Red Sun Farms’ decision to build greenhouses and a distribution facility on 45 acres at the New River Valley Commerce Park in Dublin, creating more than 200 jobs. Red Sun Farms is a Mexican subsidiary of Canada-based JemD Farms. The announcement marks two major firsts: It’s Red Sun’s first high-technology greenhouse facility in the United States and the Commerce Park’s first tenant.

Construction on the greenhouses was delayed by heavy rain, but Red Sun Farms Director of Operations Jay Abbott says the steel structure is going up now, and the company hopes to plant its first crops in July.

Red Sun Farms will grow and distribute hydroponic tomatoes, further building its status as one of the largest organic vegetable producers in North America. It’s a potential game-changer in the regional food industry, which has seen rapid growth at the local level but nothing of this scale from a national or international company.

The Red Sun was the first of four major economic development announcements for Pulaski County.

In August, Falls Stamping & Welding Inc., a metal stamping company, announced it would invest $5.7 million and create 112 jobs in a facility that will supply assemblies to the Volvo Trucks plant in Dublin.

That was followed a month later by word that Korona S.A., a Polish company that is one of the largest candle manufacturers in the world, would build its first U.S. production facility in Pulaski County. Korona will invest $18.3 million and create 170 jobs.

The momentum carried into the new year: In early January, firearms manufacturer Alexander Industries said it would invest $2.88 million to expand its operations and relocate from the Radford Arsenal to Dublin Industrial Park in Pulaski County.  Virginia competed against South Dakota and Texas to land the project, which will create 64 jobs.

Bopp says 2013 was a “wonderfully robust” year in terms of announcements for the New River Valley.

“When I meet with people, I tell them we work with 75 to 100 projects a year,” Bopp says. “Twenty to 24 come and physically visit, and in an average year, we’re lucky to get one or two companies new to the area.”

Success hasn’t been limited to Pulaski County, either.

The New River Valley’s burgeoning tech sector was highlighted by the expansion of Rackspace Hosting, which offers cloud and IT services. It’s investing $5.4 million to expand its facility in Virginia Tech’s Corporate Research Center, creating 100 jobs.

While Rackspace drew headlines for its large-scale expansion, the New River Valley’s tech sector is bubbling over with a steady stream of small entrepreneurs and startups. “The tech sector is an incredible economic engine,” Bopp says.

In August, Blacksburg’s Harmonia and Christiansburg’s CCS Inc. were featured in Inc. magazine’s list of the top 5,000 fastest-growing companies in America.

Recent advances in broadband technology and offerings may accelerate the growth of the technology sector regionally. Last year marked the completion of two projects that began with 2009’s American Recovery and Reinvestment Act (also known as the federal stimulus) and resulted in nearly 300 miles of new fiber-optic cable in Roanoke and the New River Valley.

Additionally, Botetourt County, Roanoke, Roanoke County and Salem formed the Roanoke Valley Broadband Authority, which, along with the already established New River Valley Network Wireless Authority, seeks to bring less-expensive Internet service to Southwest Virginia’s businesses and households.

A report by Blacksburg firm Design Nine indicated the region is falling behind when it comes to broadband. Southwest Virginia, however, is taking steps to catch up. In addition to the stimulus-funded infrastructure, there is a crowd-funded Gigabit project in downtown Blacksburg and a $4.6 million investment by cable provider Cox Communications to upgrade its Roanoke-area services,

Virginia Tech’s Corporate Research Center saw two of its former tenants expand into new sites. Biotech firm TECHLAB will retain its research facilities in the center but purchased a 54,000-square-foot-building in nearby Radford for its manufacturing facilities. Another former CRC tenant, Aeroprobe Corp., which makes instruments and software used in cars, jets, wind turbines and other applications, is investing $3 million over five years into a new site in Christiansburg’s Falling Branch Corporate Park.

The New River Valley also saw expansions: Polymer Solutions Inc. is investing $2.9 million to expand its Montgomery County site, creating five jobs, and Floyd County’s Hollings-worth & Vose Co., which makes non-woven fabrics, is investing $6.1 million to expand its plant and create 17 jobs.

The Roanoke Valley and far Southwest Virginia are growing more diverse, too, but their 2013 growth came largely from its strengths in manufacturing.
Smyth County’s Liaoyang Ningfeng Woodenware Co. Ltd., which builds furniture components, announced in November it would invest $2.1 million and create 125 jobs. Scott County saw two expansions, with mattress and pillow manufacturer Tempur Sealy International and VFP Inc., which builds concrete buildings for cell towers, announcing deals last year that are expected to create 42 and 50 jobs, respectively.

Further north in Botetourt County, Capco Machinery Systems Inc. is investing $4.2 million to expand its facility manufacturing roll-grinding machines, creating 30 jobs that pay an average of $60,000 annually. Also, Altec Industries Inc. plans to invest $2.2 million in its plant and will create 96 jobs. The company manufactures truck-mounted mobile equipment.

The city of Roanoke’s Virginia Transformer Corp. anticipates the creation of 150 jobs over three years by moving a portion of its facility to a site in Botetourt. Virginia Transformer CFO Steve Nelson says the move will allow the company to ramp up production in Roanoke. It’s investing about $9 million in Roanoke and Botetourt facilities, and there’s more room to grow, which could create an additional 250 jobs during the next five years.

“It’s not a necessarily big deal in terms of numbers, but the idea that they have purchased a whole other facility in Botetourt County — their growth potential is huge,” Doughty says.

She sees even more potential to land and grow manufacturing companies. Last year Botetourt, Franklin County, Roanoke, Roanoke County, Salem and Vinton banded together to create the Western Virginia Regional Industrial Facility Authority with the idea that they can better cooperate when it comes to prospective businesses finding sites.

Major employers by number of jobs

Carilion Clinic
Roanoke, 11,300 jobs
 
Virginia Tech
Blacksburg, 8,000+ jobs
 
HCA Virginia Health System
1,000-2,999 jobs
 
Radford University
Radford
1,500-2,499 jobs

Kroger
Throughout region
1,000-2,999 jobs

Norfolk Southern
Throughout region
1,000-2,999 jobs

Volvo Trucks
Pulaski County
1,000-2,999 jobs
 
Wells Fargo Bank
Throughout region
1,000-2,999 jobs
 
Advance Auto Parts
Roanoke
1,000-2,999 jobs

MeadWestvaco
Clifton Forge
1,000-2,999 jobs

 
_{SOURCE: Roanoke Regional Partnership, New River Valley Economic Development Alliance}

Southwest Virginia’s recent deals

Red Sun Farms
Pulaski County
205 jobs

Korona S.A.
Pulaski County
170 jobs

Virginia Transformer Corp.
Roanoke
150 jobs

Liaoyang Ningfeng Woodenware Co. Ltd. (New Ridge LLC)
Smyth County
125 jobs

Falls Stamping & Welding Inc.
Pulaski County
112 jobs

Atlas, an Americold subsidiary
Roanoke County
100 jobs

Altec Industries Inc.
Botetourt County
96 jobs

Ardagh Group
Roanoke County
96 jobs

MTM Inc.
Pulaski County
66 jobs

Alexander Industries Inc.
Pulaski County
64 jobs

_{Source: Virginia Economic Development Partnership}