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byline: Mason Adams

Crossing the line

A city famous for birthing country music and straddling the Virginia-Tennessee state line, Bristol, Virginia, has spent the last decade struggling to recover from the Great Recession and the coal industry’s steep decline.

However, a new surge of economic life is reenergizing Bristol as it enters the 2020s. More visitors are flocking downtown. A new college prepares to reopen a once-closed campus. And new industries seek to add new elements to the regional economy while reviving the shuttered     Bristol Mall.

“Over the last 10 to 15 years, you’ve seen a great transformation in Bristol,” says Beth Rhinehart, president and CEO of the Bristol Chamber of Commerce, which represents the Virginia and Tenn-essee sides of the border. (Sometimes referred to as the “twin cities,” Bristol is neatly divided into Virginia and Tennessee cities, both named Bristol, both with their own governments. The iconic  Bristol Virginia-Tennessee sign looms over State Street downtown, demarcating the state line and proclaiming it “A GOOD PLACE TO LIVE”).

Rhinehart was talking largely about the revitalization of Bristol’s downtown district into a destination for food, drink and culture, but an even bigger transformation may be in the offing if Bristol, Virginia, voters decide this November to allow a long-proposed casino to be built in the city.

Gambling on gaming

During its 2020 session, the Virginia General Assembly legalized casinos to operate in five economically challenged localities,  including Bristol. Only one casino is allowed to operate in each locality. Gov. Northam indicated in early March that he intended to sign the casino legislation. However, it would still require approval by Bristol voters in a local referendum, to be placed on the ballot in November’s presidential election. 

So far, the only casino project proposed for the city is the $400 million Hard Rock Casino Bristol, helmed by local businessmen Jim McGlothlin, CEO of The United Co., and Clyde Stacy, the president of Par Ventures LLC, both of whom have longtime ties to the coal industry and have been friends since high school. Hard Rock International, which would operate the casino, is an equity partner in the venture, which McGlothlin says would include a 100,000-square-foot convention center, 600-room hotel, and dozens of retail shops and restaurants.

This November, Bristol voters will likely vote on a referendum to approve the proposed $400 million Hard Rock Casino Bristol, which would be built on the site of the now-closed Bristol Mall. Rendering courtesy Alliance Group
This November, Bristol voters will likely vote on a referendum to approve the proposed $400 million Hard Rock Casino Bristol, which would be built on the site of the now-closed Bristol Mall. Rendering courtesy Alliance Group

If approved, the Hard Rock Casino Bristol will be built on the site of the former Bristol Mall, which opened in 1976 but closed in 2017 after losing anchor tenants such as JCPenney and Sears.

The Bristol City Council and School Board have both passed unanimous resolutions supporting the project, which would generate $130 million in revenue annually and create more than 1,000 direct jobs, according to a November 2019 study by the state Joint Legislative Audit and Review Commission (JLARC). McGlothlin says Bristol is struggling, even though it was removed from the Virginia comptroller’s list of fiscally distressed localities in 2019. The coal industry has significantly declined, hurting not just local companies in that sector, but also the stores and restaurants that benefited from miner families in nearby counties who patronized businesses in the region’s biggest metro area. Other major regional employers like Bristol Compressors Inc. have closed in recent years, and the city is mired in debt from investing heavily in The Falls, a retail project that’s struggled to attract big-name tenants.

“Virginia needs something to help this city,” McGlothlin says. “If we can build a resort here and have the engine powering it being a casino, it would be a win for everyone.”

The Hard Rock Casino Bristol proposal came under fire from Steve Johnson, a regional developer who has previously feuded with the Bristol, Virginia, city government. A former pro football player, Johnson developed The Pinnacle, a destination retail center just across the state line in Tennessee. Construction on The Pinnacle began in 2013, and Bass Pro Shops, its first anchor tenant, opened the next year. Its success inspired Bristol, Virginia, to launch The Falls shopping center — with outdoor retailer Cabela’s, a Bass Pro competitor at the time, as its anchor. But The Falls has largely fallen flat, with Cabela’s closing after it was acquired in 2017 by Bass Pro Shops.

Johnson is proposing a partnership with the North Carolina-based Eastern Band of Cherokee Indians to develop and open a $500 million casino resort complex on 350 acres next to The Pinnacle in Washington County, northeast of the city. The project would include a water park, a hotel, a gravity-powered mountain coaster and 100,000 square feet of retail.

The problem for Johnson is that the General Assembly’s casino legislation didn’t include Washington County in its list of eligible localities for casino development. The Cherokee can’t pursue a casino in Virginia through the federal Indian Gaming Regulatory Act, either; only the Pamunkey Indian tribe can do so in Virginia.

That leaves Gov. Ralph Northam as the last hope for Johnson’s casino proposal. Northam told the Bristol Herald Courier in March that he was “open-minded” to discussing it with Johnson. But opening the door to a Washington County casino would require Northam to amend or veto the already-passed casino legislation and send it back to the General Assembly for further consideration when the legislature reconvenes on April 22, a scenario that observers say may not be too likely.

Back to the ‘big bang’

Beyond the prospect of a casino, Bristol is seeing other transformations.

One of the biggest changes, says Rhinehart, has been a shift in where people spend their recreational time. Previously, they traveled to other communities for restaurants and nightlife. Now, they’re staying downtown.

Rhinehart works downtown in the chamber’s offices, but the resurgence snuck up on her. Driving downtown on a recent Thursday evening, she was surprised at the level of activity.

“There were people everywhere — people walking across the street, in every direction,” Rhinehart says. “You felt the energy of downtown that had been building and building.”

“The museum has created community pride in a way that hadn’t been there before for the city,” says Birthplace of Country Music Museum spokeswoman Charlene Baker. Photos by Earl Niekirk
“The museum has created community pride in a way that hadn’t been there before for the city,” says Birthplace of Country Music Museum spokeswoman Charlene Baker. Photos by Earl Niekirk

Much of that energy has come from Bristol’s focus on tourism, developing attractions such as the Birthplace of Country Music Museum, which opened downtown in 2014. The museum builds on Bristol’s legacy as the location for the pivotal 1927 recording sessions of The Carter Family and Jimmie Rodgers, now known as the “big bang of country music.” The Bristol sessions were prominently featured in Ken Burns’ 2019 “Country Music” documentary on PBS, which generated another round of publicity and visitors. Birthplace of Country Music Museum spokeswoman Charlene Baker says that history has become a rallying point for city residents.

“People recognize history and buy into it,” Baker says. “The museum has created community pride in a way that hadn’t been there before for the city.”

The museum has helped to make downtown an attraction that dovetails with other destinations such as the Bristol Motor Speedway, which hosts two major NASCAR weekends each year, as well as other races and events.

“The tourism economy has been that steady thread when a lot of other things have waxed and waned,” Rhinehart says. “I credit that in large part to marketing efforts, but also that we have the assets to market: the Birthplace of Country Music, Bristol Motor Speedway and a very vibrant downtown with a lot of microbreweries, distilleries, shopping and great restaurants.”

New boutique hotels opening in the downtown district offer a different style of lodging than the chains located along Interstate 81. Scheduled to open at the end of March, the 70-room, $20 million Sessions Hotel is housed in three historic buildings that have been renovated by Roanoke-based Creative Boutique Hotels and MB Contractors. The Sessions will build on Bristol’s music heritage by incorporating indoor and outdoor stages for live performances. It will also include a spa and barbecue restaurant.

The Sessions joins the $20 million, eight-story Bristol Hotel, a 100-year-old renovated building that was re-launched last year, as well as the Tenneva Hotel, a Holiday Inn-branded lodge just across the state line that broke ground in 2019.

Hitting a stride

As downtown Bristol is reinventing itself for a new era, the same thing is happening at the former Virginia Intermont College. The four-year private college lost its accreditation in 2013 and closed in 2014. Its former campus was bought in 2016 by Chinese businessman Zhiting Zhang and his company, the U.S. Magis International Education Center, which soon began the process of establishing a new college. The newly rechristened private Virginia Business College has received provisional approval by the State Council of Higher Education for Virginia and hopes to begin classes in August 2020.

Scheduled to begin offering classes this fall, Virginia Business College will operate on the former Virginia Intermont College campus and will offer a variety of undergraduate business degrees, says VBC President Gene Couch.
Scheduled to begin offering classes this fall, Virginia Business College will operate on the former Virginia Intermont College campus and will offer a variety of undergraduate business degrees, says VBC President Gene Couch.

VBC President Gene Couch says the college will offer bachelor’s degrees in business, with seven concentrations: accounting, business analytics, entrepreneurship, human resources management, information technology management, management/leadership and marketing. It will market itself as a four-year residential college, targeting students who live within a 90-minute drive of Bristol.

“One of the things we’re selling, especially to prospective students in the coalfields, is Bristol itself,” Couch says. “Bristol is unique: one city in two states. In addition, you’ve got South Holston Lake, motorsports with NASCAR here, and then the downtown area of breweries and art scene and theater and entertainment. We see students coming here to experience Bristol while they’re learning.”

And while Bristol officials are waiting for voters to decide whether to reinvent the Bristol Mall site into a Hard Rock casino, the mall is currently home to Dharma Pharmaceuticals.  Backed in part by Clyde Stacy, it is one of five companies approved by the Virginia Board of Pharmacy to produce pharmaceutical products from cannabis.

The company opened last year in the shuttered mall’s former JCPenney location and has invested between    $4 million and $10 million in the medical marijuana production facility. The company issued a news release last fall saying it would move to a new location if voters clear the way for the Hard Rock casino to be built at the mall site.

“Dharma Pharmaceuticals has a twofold mission,” says CEO Shanna Berry.  “No. 1 is safe access to marijuana medication, and No. 2 is to create economic development and a really strong workforce in the area. We’re all native Virginians and have lived in the region our whole lives.”

The company was launched by Berry, who has worked in the real estate industry for 20 years, along with a real estate title specialist and a pharmacist.

“We saw a need,” Berry says, “based on where we’re at in the heart of the opioid crisis, to be able to make a small impact in an economically distressed city and simultaneously improve lives of people going through cancer, Parkinson’s and a multitude of chronic conditions that cannabis helps. To be able to do … those things simultaneously is very rewarding for us.”

Dharma Pharmaceuticals will grow cannabis plants, extract cannabidiol and THC-A oils, develop them into products and dispense them to customers through its pharmacy.

Dharma Pharmaceuticals, Virginia Business College, the boutique Sessions Hotel and the proposed Hard Rock casino all are parts of an emerging economy that Bristol leaders hope will propel the state-line metro hub into a new era of prosperity.

“Bristol was the most financially distressed city in all of Virginia two or three years ago, and they have made great strides to recover from that,” Rhinehart says. “Southwest Virginia is gritty in a good kind of way, in that we look out for one another. We know we have to bind together for economic development success.”

“Bristol has always been ‘The Little Engine That Could’ in a lot of ways,” says the Birthplace of Country Music Museum’s Baker. “It’s pretty magical. We’ve started to hit our stride.”

Shentel installs residential fiber optic across valley

A growing number of Shenandoah Valley communities are seeing more competition among broadband providers.

Edinburg-based Shenandoah Telecommunications Co., or Shentel, founded more than a century ago by farmers seeking improved telecommunications services for their rural communities, is still focused on that mission, though these days it’s a little more high-tech than it was in the days of candlestick telephones.

Shentel is laying fiber-optic lines for residences in Harrisonburg, Staunton, Winchester, Front Royal, Salem and Lynchburg. The company started offering residential fiber-optic service in a handful of Harrisonburg neighborhoods in October, with Staunton following in the first quarter of 2020. Shentel expects to begin offering service in the other cities later in 2020.

“This is huge for the city and, more importantly, for the citizens to be able to have competitive choices now in broadband services,” says Kurt Plowman, Staunton’s chief technology officer.

Shentel, which employs 1,000 people and sees about $600 million in annual revenues, is expanding upon a fiber backbone that extends along Interstate 81.

“We had a new chief operating officer, David Heimbach, come in about 18 months ago,” says Chris Kyle, Shentel’s vice president of regulatory affairs. “He started looking at all these capabilities in this area and started a conversation as to why we weren’t taking what we were proficient in and rolling it out to a residential market. We had to spin up that expertise — it uses the same technology but some different business principles. That was the nexus of what we have been doing.”

Harrisonburg and Staunton made sense as places to begin expansion into the residential market.

“We wanted to be part of the growth that Staunton is creating,” Kyle says. “Broadband can be one important piece of that. We were seeing all the new businesses along U.S. 250. Clearly, we felt like we were adjacent and in that area already.”

Shentel reached franchise agreements with Staunton in 2018 to install fiber optic lines, marketed as Glo Fiber, in the city. Last May, the city also granted Shentel a franchise for video services, providing customers with an alternative to Comcast. The fiber build will take years, but Kyle says the service gets “turned up” — Shentel’s term for coming online — as each neighborhood is completed.

Previously, “if people wanted a choice in TV service and didn’t like Comcast, they had to go to a satellite provider or streaming service,” Plowman says. “Up until last year, we didn’t think anyone would offer competition.”

Customers probably won’t see much of a change in prices for cable television and internet, but Plowman is glad city residents are getting more choices.

“I’m excited also because we’ve got increased competition,” Plowman says. “It makes Staunton even more of a cool place to live.”

Projects vie for federal abandoned mine grant funds

Every year, Virginia receives $10 million from the federal government for projects to redevelop land that was home to abandoned coal mines.

This fall, 18 different projects applied for funding — all seeking to become models for coalfield communities recovering from the industry’s slow collapse. The applications received by Virginia’s Department of Mines, Minerals and Energy (DMME) suggest a variety of paths forward, ranging from agriculture and outdoor recreation to expansion of broadband internet and job training.

“We’ve gotten some pretty innovative applications,” says department spokesperson Tarah Kesterson. “Tourism is popular, as well as infrastructure and industrial development.”

The 2019 applications include a plan to build ATV trails connecting different Southwest communities, as well as proposals to grow industrial hemp, erect a 50,000-square-foot greenhouse, build outdoor adventure destinations, expand broadband and other utilities, and more. Numerous proposals seek to use development of former mine sites to build tourist attractions, whether by expanding lodging options or making the attractions easier to access.

Virginia first participated in the pilot program in 2017, when it received 15 applications, five of which were selected to receive portions of the state’s $10 million share of funding provided by the federal Office of Surface Mining Reclamation and Enforcement. In 2018, the state funded 10 projects selected from 19 applications.

The 2018 winners included nearly $500,000 to expand the off-road, ATV-oriented Spearhead Trails in Wise and Russell counties, including $222,000 for the trail between St. Paul and Coeburn and another $269,000 to redevelop a community site in the coal company town of Dante and link it to the ATV trail network.

Russell County Supervisor Lou Wallace says the award will be layered onto a $215,000 brownfield grant from the Virginia Department of Environmental Quality and the Virginia Economic Development Partnership to remove an asbestos-laced school building, mitigate lingering coal waste and reconstruct the site as a campground that’s tied into the Spearhead Trails system.

“This DMME money will add ATV trails to connect Dante to almost 100 miles of trails to St. Paul and Coeburn,” Wallace says. “We’ll be able to showcase the rich cultural history of the whole region.”

Kesterson says the 2019 applications will be vetted by DMME’s abandoned mine land team, selected by an advisory council and approved by the federal Office of Surface Mining before they’re announced by the governor this spring.

A new vibe

When Norfolk Southern Corp. announced plans early last year to shutter its administrative offices in downtown Roanoke, the move marked a symbolic moment for the area’s economy.

The arrival of the railroad in the early 1880s launched Roanoke as a modern city, and it shouldered the regional economy well into the 20th century. By 2015, however, Carilion Clinic had long surpassed Norfolk Southern as Roanoke’s biggest employer. The departure of the administrative jobs dealt a blow to the Roanoke Valley, but it was one that was long expected and could be absorbed by an increasingly diverse regional economy.

A year and a half after Norfolk Southern’s announcement, the valley’s economic metrics look more robust than at any point since before the Great Recession. In May, the Roanoke area’s unemployment rate stood at 3.5 percent. In 2010, by comparison, the average jobless rate for the year was 7.6 percent.

Credit that improvement to many factors, including a shift in economic development strategy and a messaging campaign that’s transformed the community’s perception of itself.

In 2010, the Roanoke Regional Partnership launched its Roanoke Outside campaign to emphasize the valley’s outdoor amenities and quality of life, with the goal of making the region seem hip to young professionals looking for places to hike, bike and spend time outdoors.

Incorporated with more traditional business attraction tools — such as reliable infrastructure, graded economic development sites close to transportation corridors and competitive incentives — the marketing shift resulted in a series of wins, especially in the still-growing craft beer sector.

After near misses, two wins
After near misses with Sierra Nevada Brewing Co. in 2012 and Stone Brewing in 2014, the Roanoke area has attracted two major breweries this year. Bend, Oregon’s Deschutes Brewery and San Diego’s Ballast Point Brewing and Spirits announced they would build East Coast production facilities with restaurants in the area.

In addition to promising new jobs, the brewery announcements also have built confidence in the growing number of Roanokers who see the Star City as a hip outdoors mecca. Over the last decade, craft brewers have become closely entwined with the culture of outdoor recreation. The connection extends from craft beer tents becoming a regular feature at the finish line of bicycle and foot races, to breweries using outdoor imagery as a focus in marketing, to the location of production facilities and pubs in communities pegged as “outdoor cities.” Roanoke’s success in attracting Deschutes and Ballast Point not only solidifies its growing national reputation as an outdoor town, but also reinforces the community’s perception of itself as such.

“The transformation of messaging of this region, from an old railroad town to a livable outdoor-oriented community, has had an impact,” says Beth Doughty, executive director of the Roanoke Regional Partnership. “People feel more of a sense of pride and understanding of the community narrative. They’re ambassadors for the community narrative. Also, this outdoor narrative is being monetized by attracting businesses like [outfitter and gear consignment shop] Roanoke Mountain Adventures, and it’s attracting companies like Deschutes. If we hadn’t documented this outdoor branding, we wouldn’t have been a good match for Deschutes.”

In fact, finding the right cultural fit was a top priority for Deschutes, says Michael LaLonde, the company’s president and COO. The brewery, which plans to build an $85 million facility and hire 108 workers, assigned a group of the  co-owners — its employees share ownership in the company — to look at various East Coast cities.

“We wanted them to think about how to translate our culture to an East Coast facility,” LaLonde says. “We invited them out to take a tour of each city and give us an opinion of where to locate.”

During the multiyear process, news leaked that Roanoke had made Deschutes’ short list, along with Charlottesville and Asheville, N.C. That led Michael Galliher, a local government employee and beer enthusiast, to start a social media movement. Residents and companies around the region filled social media with positive images of Roanoke, branded with Galliher’s hashtag, #Deschutes2Rke.

Two months later, Ballast Point announced it would invest $47.8 million and create 178 jobs in Botetourt County.

“We didn’t target Virginia specifically in the beginning,” says Hilary Cocalis, Ballast Point’s vice president of marketing. “Really the reason we picked the location that we did came down to a number of factors. The folks in Virginia at the state and county levels were great to work with. The site itself checked all the boxes we were looking for in terms of infrastructure. We checked off other items on our list: quality of life, quality of water, things with the actual site and building, freight location, all of that. It was a perfect storm.”

Part of the region’s success in winning Deschutes and Ballast Point stems from its close call with Sierra Nevada four years ago. After that, the Roanoke Regional Partnership began targeting breweries and showcasing the valley’s water quality and wastewater capacity.

Deschutes will build at the Roanoke Centre for Industry and Technology, an industrial park along U.S. 460 on the city’s east side. Ballast Point will locate north of Roanoke in Botetourt County, in a 240,000-square-foot building on an 81-acre site in Greenfield, a business park and government center north of Daleville.

Greenfield also attracted Eldor Corp., an Italian auto parts manufacturer that is building on a 53-acre site in the park. The company expects to invest $75 million and create 350 jobs during the next five years.

Colleges’ role
A key element of Roanoke’s pitch to the breweries and Eldor were the region’s colleges and universities. Virginia Western Community College’s mechatronics program stands as one example of business partnering with higher education to produce skilled, employable graduates ready to go to work.

Mechatronics incorporates mechanical systems, electrical systems and information technology into one career path. VWCC’s program includes a high-school component through the Regional Academy; a two-year certificate or associate degree through VWCC; transferability to four-year degrees at Old Dominion University and Purdue University Calumet; and Siemens mechatronics systems certification, which is highly sought by employers, especially in manufacturing.

The one-two shot of Ballast Point and Eldor gave first-year Botetourt County Administrator Gary Larrowe a memorable start on the job. If there’s a dark lining to be found in the silver cloud, it’s that Ballast Point and Eldor occupied the two largest parcels at Greenfield. The next largest vacant site is only 13.5 acres.

Botetourt, however, already is moving to develop new sites to attract business. It’s marketing a building on U.S. 220 previously occupied by Lumos Networks.

Nearby, the interchange at Exit 150 on Interstate 81 is undergoing a dramatic makeover to improve the traffic flow at a major stop for tractor-trailer trucks. Larrowe sees the potential for development of destination retail, which he says generally is lacking on I-81 between Abingdon and Winchester.

“If done correctly, we will end up being able to get folks off of the interstate, as well as being an entry point not only for Botetourt but for folks on U.S. 460 and people in Roanoke,” Larrowe says. “There are endless possibilities. A lot of commercial is what I’d anticipate: destination retail, services, entertainment, anything and everything that would actually try to make that a special location.”

Botetourt’s success in attracting prospects to large, vacant parcels in an industrial park points to the importance of site availability in economic development. Other business parks in the region have filled over the years, some to capacity.

On the other side of Roanoke, Franklin County has invested nearly $11.2 million to acquire and prepare roughly 554 acres for a business park between Boones Mill and Rocky Mount. The county estimates it will attract $320 in private investment and create 2,200 jobs during the park’s lifetime.

Regional authority
Additionally, Botetourt, Franklin and Roanoke counties and the cities of Roanoke, Salem and Vinton are working together through the Western Virginia Regional Industrial Facility Authority to identify and develop more potential sites for industrial and commercial development. The authority also allows members to form individual agreements to share costs and revenue at sites.

That gives landlocked cities, for instance, the ability to assist and benefit from developable open space outside their boundaries. Meanwhile, localities also are making individual investments to upgrade their schools, libraries and other quality-of-life amenities.

Roanoke also has taken strides to shake up land use in neighborhoods near downtown. It has used historic tax credits as incentives for developers to reinvent vacant warehouses and office buildings. The city also is seeing results from nearly 20 years of investment and planning in its South Jefferson corridor. There it used land swaps and the power of eminent domain to acquire properties that now are being redeveloped. The Virginia Tech Carilion School of Medicine and Research Institute are driving spinoff growth, including The  Bridges, a 23-acre, $150 million mixed-use development on the Roanoke River.

The city has extended its “downtown” designation down Jefferson Street to the Roanoke River, suggesting a direction for growth south from the city’s thriving market district, which has been given an infusion of new energy by the construction of a new Hampton Inn on top of a parking garage and the construction of a new amphitheater in a redeveloped Elmwood Park.  The new motel is slated to open this summer, and the amphitheater has attracted acts such as Sheryl Crow, Old Crow Medicine Show, Blondie and Huey Lewis and the News.

NRV seen as a hot spot
The New River Valley has weathered economic challenges to score some wins of its own. After two announced expansions in two years, Volvo Trucks announced layoffs of more than 700 employees in 2015. That number eventually dwindled to 500, but then a second round was announced in late spring.

Despite that, employment in the New River Valley remains strong. The jobless rate was 4.1 percent in May, down from a yearly average of 8.3 percent in 2010.
There have been smaller companies and smaller expansions around the region helping carry the load,” says Charlie Jewell, executive director for the NRV Economic Development Alliance.

Examples so far this year include the attraction of Polymer Solutions Incorporated, a plastics and rubber test lab, creating 19 jobs; and the expansions of avionics parts manufacturer VPT Inc., creating 16 jobs; tech troubleshooter Ozmo App, creating 55 jobs; and tech firm Java Productions, creating 20 jobs.

In June, Area Development magazine ranked the NRV Metropolitan Statistical Area as 30th out of 394 among the hottest places for new and expanding businesses. Of midsized metros with populations between 160,000 and 600,000, it ranked 12th.

Expanding the spotlight

Bristol knows its way around the national spotlight.

During the summer, its residents, businesses and tourism boosters will gear up for the inaugural Battle at Bristol, a nationally televised football game between Virginia Tech and Tennessee hyped as “College Football’s Biggest EVER.”  (See related story.)

Bristol’s history with national attention, however, far predates September’s football game. Bristol Motor Speedway opened in 1961, and as NASCAR’s brand of stock-car racing achieved mainstream popularity in the past 20 years, the track’s August night race attained cult status as the hottest ticket in the sport. It had 55 straight sell-outs until 2009.

“When Bruton Smith bought the track in 1996, he had the vision to know within 10 years or so, he would essentially take the facility down to the ground and rebuild it into 150,000 seats,” says Jerry Caldwell, general manager of Bristol Motor Speedway. “What’s happened since then has solidified Bristol [in NASCAR lore].”

Before the speedway, Bristol had another history-making moment: the 1927 “Bristol sessions”— a series of recordings made by Victor Talking Machine Co. producer Ralph Peer during a Southern field tour — resulted in what is now known as the “big bang of country music.” The recordings launched the careers of the Carter Family, Jimmie Rodgers and others, while helping to make country music a commercial product.

Hard time for coal
Bristol was settled by pioneers in the 1760s, and it became an important supply stop for those venturing further into the Appalachians. It was home to an iron foundry that became Bristol’s first industry. In 1856, the railroad reached the area, turning Bristol into a key coal hub and launching its entry into the industrial age.

Coal remains an important part of Bristol’s economy today. Its boom-and-bust nature, however, has proven to be double-edged. The most recent downturn has been steep and prolonged, and it could prove transformational as Appalachian coal communities try to diversify their economies. Bristol isn’t as directly affected as those localities that produce coal, but it long has served as the corporate and retail headquarters for Southwest Virginia.

Bristol-based Alpha Natural Resources, a Fortune 1000 company, filed for  Chapter 11 bankruptcy in August and has closed many coal mines. Power companies have shuttered many coal-fired plants in response to federal environmental regulations, driving down the cost of steam coal.  Demand for metallurgical coal, which is used to make steel, also has fallen as economic growth in many foreign countries has slowed dramatically.

That trend has affected not just coal companies, but also railroads, equipment manufacturers and retailers who attract customers from the coalfields.

Retail growth
Despite coal’s hard times, many of Bristol’s economic metrics are improving. 

“To the extent that Bristol is a corporate headquarters for coal mining companies and a supply center for the coal mining industry, it has been affected, but the effects have sort of been overwhelmed by other positive economic developments,” say retired East Tennessee State University professor Steb Hipple. He is a research associate who produces reports on the regional economy for the university’s Bureau of Business and Economic Research.

In the fourth quarter of 2015, the unemployment for Bristol’s combined Virginia and Tennessee region was 4.9 percent, compared with 5.8 percent in 2014 and 6.7 percent in 2013.

Retail numbers look even better. Compared with 2014, third-quarter sales jumped 10.8 percent to $298 million. Sales were up in Scott and Washington counties as well.

“What’s driving the retail activity and tax collections for broader Bristol is the development of a new shopping complex on the Tennessee side of the line, The Pinnacle,” Hipple says. “Bristol, Virginia, has a competing shopping center [The Falls] that is maybe half a year behind in development, but it is now open itself and will be affecting the future retail data.”

The Pinnacle and The Falls represent a new wave of destination retail development.

The Pinnacle opened first, in 2013. Its first anchor retailer, Bass Pro Shops, opened in the fall of 2014, and by the next spring, nearly two dozen other retailers had opened, were under construction or had signed leases. Developer Steve Johnson, a former NFL football player, says that 700,000 square feet are open or under construction, creating 2,000 construction jobs and 2,000 part-time and retail jobs.

Up the road at The Falls, Lowe’s and Zaxby’s have followed Cabela’s, with more on the way, says developer Brent Roswall of Interstate Development. He pursues “category-killer” tenants, retailers that dominate in their fields.

“It’s about sales and producing the tenant with the highest sales,” Roswall says. “That’s what we have with Lowe’s and Cabela’s. We have the sales leaders.”

The combination of Bass Pro Shops and Cabela’s, large-scale outdoor retailers offering hunting, fishing and camping gear, draws customers from 100 or more miles away. They directly compete with each other, but Hipple says the data shows there’s still room to grow. “We don’t see any results of cannibalizing” so far, he says.

Additional attractions
Regional officials are working to encourage visitors to The Pinnacle and The Falls to explore other regional attractions and stay for longer periods of time. Often the goal is to get tourists to turn a day trip into a weekend, with the additional restaurant and lodging revenue that follows.

This isn’t a new strategy. Local businesses have long planned around NASCAR race weeks at Bristol, including an event in which downtown’s State Street is blocked off and drivers sign autographs. Additionally, Caldwell says, the speedway runs events 307 days during the year, including a slate of drag races.

Nonetheless, the region’s tourism strategy has taken on new dimensions as attractions have been added. Bristol has marketed its country music roots for decades, but the Birthplace of Country Music Museum’s move from a shopping mall to its own building in 2014 made it a new focal point. The site not only gave Bristol increased visibility on the popular Crooked Road Heritage Music Trail, but it also has contributed to a thriving music culture. The Bristol Rhythm and Roots Reunion festival attracts fans each fall to hear acts such as Del McCoury, Sam Bush, John Cowan and the Avett Brothers.

“The best thing that Crooked Road and ‘Round the Mountain [a network of crafters and artisans] have created are partnerships,” says Matt Bolas, executive director of the Bristol Convention and Visitor’s Bureau and vice president of the Bristol Chamber of Commerce. “They forge relationships for people to navigate through our communities. Someone from New York coming here wants to see the Carter Fold [the Carter Family music venue nearby Hiltons] because it’s genuine, it’s authentic.”

Downtown also has seen a revival in recent years, with the opening of three craft breweries, with more in the works. Two boutique hotels are under construction as well.

“Sometimes you have people who remember downtown in its heyday in the ’40s and ’50s,” says Bristol Vice Mayor Bill Hartley. “It’s not exactly like it was back then, but there’s a lot of activity. You have a lot of different things coming downtown, breweries and boutique hotels, that really capture the essence of Bristol.”

Creeper Trail and Barter Theatre
Bristol has also capitalized on its location as a gateway from Interstate 81 to outdoor recreation around the region. It has become a destination for fly fishing, and the Virginia Creeper Trail. The 35-mile rail trail, which begins in nearby Abingdon, attracts hikers and cyclists.

Abingdon also is home to the Barter Theatre, which opened during the Depression offering tickets for food and other goods. Today it is the nation’s longest-running professional theater.

“There’s a saying our local [tourism office] uses,” says Kathleen Bundy, the theater’s communications specialist. “Based on research study, barterers will not creep, but creepers will barter. People who come into town for the Barter don’t visit the [Virginia] Creeper Trail, but nearly everyone who comes into town to hike or bike the creeper trail comes for a show as well.”

The theater attracts 160,000 patrons annually, Bundy says.

Economic development
Bristol has focused on reviving its downtown and expanding sectors with room to grow — a critical strategy since the city is prevented by state law from expanding through annexation. Nearby counties still can offer open land for business prospects. Accordingly, they have seen more economic development announcements in manufacturing and technology.

In 2006, Bristol Compressors nearly closed its plant in Washington County. It was saved by state and local government intervention, eventually leading to an announcement last year that it would invest $1 million to expand its operation and create 110 jobs.

Also in Washington County, Qore Systems, which makes antimicrobial hand sanitizer, announced it would spend nearly $13 million to move its operations from Arizona and create 140 jobs.

In February, TNDSYS LLC and Native Cloud Data System Inc. announced they would collaborate and expand a data center and management operations at the Crooked Road Technology Center in Scott County, investing $42 million and creating 72 jobs.

Josh Lewis, executive director of Virginia’s aCorridor, an economic development organization serving  Bristol, Abingdon and a number of other nearby localities, says the creation and expansion of smaller companies is helping drive the local economy’s growth.

“Lots of small companies pop up here and there,” Lewis says. “If you look at statistics, almost all the jobs created in the last five years came from small businesses, meaning 500 people or less.”

Aiding that growth is one of three Virginia Centers for Excellence, located at the Southwest Virginia Alliance for Manufacturing in Abingdon. The centers, created by a partnership between the Commonwealth Center for Advanced Manufacturing and Virginia's Tobacco Region Revitalization Commission, provide advanced workforce training in skill areas including machining, welding and industrial machinery mechanics.

The new center for excellence is targeted not just at the local workforce, but also at a broader multi-locality region. The approach is fitting for officials who are used to working across lines. “Our strength is truly partnership,” says Bolas. “It’s a dynamic where, this is Bristol. It isn’t we only want to see something good happen in Bristol, Virginia, or something good happen only in Bristol, Tennessee. When you’re here, it’s one Bristol, it’s one community.”

 

Read related story: Sunset Digital plans to buy BVU’s OptiNet division

Tri-Cities’ retail rivalry

For decades, Tri-Cities residents planned big shopping trips to Roanoke, Knoxville or destinations even farther away, but new retail developments on either side of the state line could change that.

The Pinnacle, in Bristol, Tenn., and The Falls, in Bristol, Va., have attracted outdoor retailers Bass Pro Shops and Cabela’s, respectively, and they’re recruiting more stores.

The developments, which are both public-private collaborations, aim to draw visitors traveling Interstate 81 in addition to shoppers from the Tri-Cities area.

Local leaders see the retail centers as added attractions in an area that’s seen steady tourism growth. Bristol Motor Speedway, which seats 160,000 fans, has been the site of NASCAR races for decades. Now the recently relocated and upgraded Birthplace of Country Music Museum in Bristol, Va., is attracting a growing number of visitors. The museum celebrates the city’s historic 1927 recording sessions, often called the “big bang” of country music.

“That’s been a big draw for us,” says Archie Hubbard, the mayor of Bristol, Va. “The tour buses are coming in now.”

Steve Johnson, a former pro football player, began construction on The Pinnacle in 2013. He started Johnson Commercial Development in 1990 with the Virginian Golf Club, a community built around a course designed by Tom Fazio. The company has developed more than 50 properties.

“My father-in-law and I recognized the need for shopping and dining because of what we saw here at the Virginian. Purchasers of real estate — second-home owners, retirees — kept asking, ’Where do you eat, where do you shop?’ ”

Johnson designed the Pinnacle to take advantage of the region’s combined population of about 300,000 along with its proximity to I-81. “No one had ever tried to find the right access, right visibility, right tenants to accommodate this super-regional demographic,” he says.

The State of Tennessee helped the project. It allowed Bristol, Tenn., to recoup more of its state sales tax to fund a $20 million general obligation bond issue for grading and public infrastructure.

The first anchor tenant, Bass Pro Shops, opened in fall 2014. By the next spring, Belk and Marshalls stores opened, and nearly two dozen other retailers  are open, under construction or have signed a lease.

The Pinnacle got wheels turning in Bristol, Va., which planned its own project, The Falls. The city purchased land and recruited a developer, Brent Roswall of Interstate Development.

“As they develop it, we turn that portion of the land over to them,” Hubbard says. “They’d collect the rent as their income stream, and we’d collect all the property improvement and sales taxes and meals taxes.”

In addition to the city’s 7 percent meals tax, it would also collect one-fifth of the state’s 5 percent sales tax. Bristol also asked the Virginia General Assembly for permission to collect an extra 2 percent sales tax from sales at The Falls, using the money to pay back bonds issued to buy and prepare the site.

The legislature initially balked but eventually approved the change a year later. The delay meant the Virginia development fell further behind The Pinnacle.

The Falls has attracted Cabela’s and Lowe’s. Others retailers have committed to joining them but have been slow to open. The delay has left the city figuring out how to manage debt it incurred from the project. Hubbard says Bristol still hasn’t locked the debt into permanent bonds but is “still doing short-term stuff.”

Johnson meanwhile has continued building out The Pinnacle. Last fall he announced the project’s second phase, with 15 more retailers.

Johnson intends to someday extend The Pinnacle across the state line to land he owns in Washington County, Va. Officials there are open to that possibility: “Washington County wants to see more retail development,” says County Manager Jason Berry.

Hubbard says he’d love to see that expansion, too. “I would consider that good news. That means everything’s booming, and we’ve got to have more room.”

Big layoffs overshadow job growth

Southwest Virginia spent last year struggling against national trends that hurt some of its most historically consistent economic drivers, yet the region managed enough job growth to keep its unemployment rates steady.

The big losses drew most of the media attention: 350 jobs lost with the closure of Home Shopping Network in Roanoke County, 426 jobs lost with the shuttering of Norfolk Southern’s Roanoke offices, 600 workers laid off at Volvo Trucks’ Pulaski County plant, and 230 jobs lost at Ball Corp. in Bristol.

Then there was the continuing decline of Southwest Virginia’s coal industry. It has been hit with a double-whammy as electrical utilities move away from coal toward natural gas while demand for metallurgical coal used in steel slumps because of China’s slowing economy. Bristol-based  Alpha Natural Resources warned of hundreds of layoffs as it struggled through Chapter 11 bankruptcy.

Yet for all the bad news, unemployment rates across much of Southwest Virginia dropped from already low levels. Roanoke’s December unemployment rate was 3.8 percent compared with 4.5 percent at the same time in 2014. The New River Valley similarly dropped to 3.9 percent in 2015 from 4.5 percent in 2014, and the Bristol region dropped to 4.3 percent from 5.1 percent.

Those figures demonstrate the economic diversification that has occurred during the past three decades. Historic industries where closures and layoffs once would have been crippling have been supplemented by newer, technology-driven businesses. These newcomers have contributed to keeping the regional economy afloat.

Beth Doughty, executive director of the Roanoke Regional Partnership, says there is a disconnect between economic headlines and the constant simmer of economic activity that takes place out of sight.

“When something happens like a Norfolk Southern or a Volvo, it is front-page news,” Doughty says. “When people are adding jobs, which happens every day, unless they want to make it a big deal, it’s not a big deal. And to be honest, many companies don’t want to make a big deal out of it.”

Technological advances also have resulted in productivity gains, meaning that fewer people can do more. “You don’t see those blockbuster job announcements like you used to, just because technology has changed the landscape,” Doughty says.

To put it another way, there’s enough small-scale business growth — a job here, a couple more there — to offset major closures.

“The beauty of the onesie-twosie jobs is they don’t all go away at once,” says Bristol, Va., Mayor Archie Hubbard. “The others [big job announcements], everyone wants those, but when the economy goes down, they have big losses.”

Many of those large-scale job losses have resulted from seismic global economic trends over which the region has no control. The mandatory, across-the-board federal budget cuts known as sequestration hit Northern Virginia and Hampton Roads more forcefully, but their ripple effects also hurt western Virginia.

Meanwhile, coal — a historic economic driver in western Virginia — has declined due to the Chinese economic slowdown, low prices, federal regulation and competition from natural gas.

The layoff of 600 workers at Volvo came about after the announcement of two major investments in the last two years, including a $69 million, 200-job deal to create a customer-experience track in 2014 and a $38 million, 32-job deal to build a related facility in 2015. The layoff announcements weren’t tied to economic overreach, but to a decline in demand for commercial trucks across the entirety of the North American market.

Charlie Jewell, executive director of the New River Valley Economic Development Alliance, says Volvo’s recent investments will continue despite the layoff announcement and may contribute to its eventual rebound.

Indeed, maintaining businesses through difficult times often eventually leads to expansion announcements.

In the case of Montgomery County’s Hubbell Lighting, its $6 million, 100-job expansion signaled the addition of a new product, LED lighting, which helps to broaden the company’s markets even as it contributes to regional economic diversification as well.

In Salem, Yokohama Tire agreed to invest $15 million in its tire-manufacturing plant in return for a series of local tax breaks, basically amounting to a holding action to retain an 800-job employer the same year that it opened a new, $300 million commercial plant in Mississippi. Deals like this not only preserve existing jobs but often pay off in future announcements.

Bristol Compressors, for example, struggled through the early 2000s, closing its plant in Allegheny County, N.C., and laying off hundreds from another plant in Washington County. At one point in 2006, the Virginia plant was put up for sale, but governmental action, including investment by Washington County and the Virginia Tobacco Indemnification and Revitalization Commission, kept it open, saving 1,000 jobs.

This year, Bristol Compressors announced it would invest $1 million to expand its operation and create 110 jobs. “We once thought they were going to go out of business, and now they just added 100 new jobs,” says Rob McClintock, vice president of research for the Virginia Economic Development Partnership. “It was a big deal to get them back on solid footing.”

In Smyth County, Utility Trailer Manufacturing Co., which located there in 1988, announced it would expand, creating 200 jobs.

Two big expansions came in Wythe County. Coperion Corp., which makes compounding systems, bulk materials systems and components, announced it would invest $3 million and create 22 jobs. Schaffner MTC Transformers, which makes specialty electronics, announced it would invest $3 million and create 79 jobs.

David Manley, executive director of the Joint Industrial Development Authority, says an additional 20 businesses opened in Wytheville as part of its downtown revitalization.

“Being able to not be married to one thing forever and to acknowledge when industries change has been important for Southwest Virginia,” Manley says. “No matter what you think the economy is married to today, history has shown that that can change quickly. I think part of Southwest Virginia resilience, beyond its history of being a resilient people, has been the willingness to adapt.”

In Washington County, Qore Systems, which makes antimicrobial hand sanitizer, announced it would spend nearly $13 million to move from Arizona and create 140 jobs in Highlands Business Park. Qore is opening on a pad that had been occupied previously by a company that closed after a 2011 tornado. Washington County Manager Jason Berry praised the opening as the gateway into nanotech, a sizzling sector that other regions, including the New River Valley, are seeking to develop as well.

Roanoke’s biggest 2015 job announcement came from one of the valley’s more underrated employers — banking giant Wells Fargo. Its operations center on Plantation Road — the bank’s low-key counterpoint to the Wells Fargo tower downtown — will hire 500 workers as part of an expansion.

Last year Wells Fargo issued layoffs at the operations center as part of a contraction in the home-equity section. Now it’s seeing growth in other sections, including credit cards, personal loans, and wholesale and commercial banking, says Chris Lee, a senior-level manager. Those jobs will include entry-level office positions as well as a higher-level career path.

It’s one brick in a region that’s working to build a resilient, stable economy out of an increasingly diverse set of building materials.

Railroad legacy fades

When news came in March that Norfolk Southern would close its Roanoke administrative offices, moving 426 jobs to Norfolk and Atlanta, many city residents feared for the city’s economic future.

After all, Norfolk and Western Railway’s decision to build in Roanoke in the 1880s kick-started the “Magic City’s” growth and long served as its leading industry. Yet, the railroad has waned in influence and employment for decades, shrinking a local workforce of more than 5,000 people at its height to 1,200 today. The closure of the administrative offices continues a process that began in 1982 when Norfolk Southern, formed in the merger of Norfolk and Western and Southern railways, moved its headquarters from Roanoke to Norfolk.

Other closures are testing the economic resilience of the Roanoke and New River valleys. Retailer HSN Inc. will close its Roanoke County fulfillment center next year, eliminating 350 jobs. Banking company BB&T Corp. closed its Roanoke call center, and wireless phone service nTelos shuttered its Botetourt County customer support center for a combined loss of nearly 200 jobs. A staff reduction at Allstate Insurance Co.’s Roanoke County customer support center cost another 185 jobs.

Despite the spate of job losses, however, optimism remains. The region no longer relies on one, two or even three industries. Indeed, Moody’s has ranked Roanoke and Richmond as the cities with the most diverse economies in Virginia — an attribute that helps cushion the blow.

“Any day of the week you’d pick an opportunity to be a broadly based economy, and that’s what we are,” says Beth Doughty, executive director of the Roanoke Regional Partnership. “The foundation of a broad-based economy is you can recover from and withstand the natural cycles of business.”

Health care and small business
Health care long surpassed the railroad as the region’s largest industry.  Carilion Clinic employs more than 10,000 people, followed by Virginia Tech with more than 8,000 jobs.

More people, however, work for smaller companies, many of which have grown steadily in recent years. Drawing on an expanding pool of local entrepreneurs and companies that have relocated to or expanded in the Roanoke and New River valleys, there are an increasing number of places to work.

Developers have invested more than $400 million since 2009 in downtown Roanoke real estate, renovating old warehouses and office buildings for apartments, retail space and other uses. Paired with capital investments that have rebooted the City Market district, Elmwood Park and the Main Library, downtown has been transformed from a 9-to-5 weekday work center to a 24-hour neighborhood that attracts singles and families to its restaurants, stores and festivals.

Additionally, major corporate investments announced in the last few years have continued to unfold. New employers include Ardagh Group, a food packaging manufacturer; Korona S.A., a Polish candle maker; Red Sun Farms, a Mexican greenhouse tomato grower; and Falls Stamping & Welding Inc., which provides metal stamping for the automobile industry. Several existing employers, including Volvo Trucks North America; Altec Industries Inc., another truck-related company; and Virginia Transformer Corp. also are expanding.

In May, unemployment stood at 4.9 percent in the Roanoke metro area, down from 5.2 percent the year before.  In Blacksburg, the jobless rate stood at 5.3 percent, down from 5.6 percent. The May statistics don’t reflect the Norfolk Southern losses, which won’t wrap up until the end of summer.

Finding a way to stay
After news of the Norfolk Southern announcement broke, Joyce Waugh, executive director of the Roanoke Regional Chamber of Commerce, saw a flurry of activity between local businesses and railroad employees who did not wish to leave the region.

“There were companies here eager to talk to them, and a lot of them stayed,” Waugh says. “Organically, people started reaching out. Meridium got some. Advance Auto got quite a few. Others are with some other, smaller firms.”

Her story illustrates the desire of local companies to recruit well-qualified workers and the attractiveness of the Roanoke and New River valleys.

The region features a low cost of living and high quality of life, plenty of access to outdoors recreation, a central location along the East Coast, cultural amenities in urban and rural settings and many institutions of higher education, including Virginia Tech, Radford University, Hollins University, Ferrum College, Roanoke College and two community colleges, which partner with the private sector to provide specialized workforce development.

Real estate activity
For many of those reasons, Dennis Cronk of commercial real estate group Poe & Cronk says he’s seeing more activity now than he has since the Great Recession. 

“Most of our business during the slowdown period from ’08 to ‘12, was primary investment properties,” Cronk says. “There was a lot of investment property because prices had been slashed. It was a buyer’s market. Now you’re seeing more businesses that have been sitting on the sidelines waiting, and they’re in need of capacity to grow their businesses. That’s the positive element I’m seeing this year.”

Industrial and retail properties have been especially hot, Cronk says, to the point where inventory in those sectors is becoming scarce. Those spaces are being filled by smaller companies that are looking to grow.

“We often forget our existing companies are expanding,” says Wayne Strickland, executive director of the Roanoke Valley-Alleghany Regional Commission. “Our economy really is driven by what we call small businesses, with fewer than 500 employees. If you look at our workforce, a good percentage of [workers] are employed by companies with fewer than 50 [workers].”

Local entrepreneurs
Particularly since the recession, entrepreneurship has become much more important to the regional economy.

Virginia Tech engineering graduates Jack DuFour and Alley Heffern failed to win funding for their fair-trade backpack business, Taaluma Totes, when they appeared on the television show “Shark Tank” in February, but they benefited  from the exposure and attracted investment from other sources. They are among the many  entrepreneurs in the region who are building viable companies.

Samantha Steidle founded the Roanoke Business Lounge in 2012 as a place for small businesses and startups to share space and save on operating costs. Last year she moved and rebranded as the Grandin CoLab, which now is home to 107 clients. Some are nearly ready to move to the next level, including Momentum Solutionz, an IT consulting group that was featured this spring in Forbes, and Freak Athletics, which produces athletic training videos that have caught the attention of major brands and millions of YouTube viewers.

Fast-growing companies like these, which are ready for the next step of development, tend to hit the sweet spot for Jonathan Whitt, president and CEO of the Roanoke-Blacksburg Technology Council.
“Our focus is on really helping the smaller companies in that space become big companies,” Whitt says. “The real growth is in the late startup or post-startup that’s ramping up to the next level, or has desire to do so.”

Infrastructure improvements
In March, Roanoke received a $600,000 grant to renovate a former hospital building into the Gill Memorial Technology Accelerator, which aims to help growing tech companies make that jump. Whitt says he sees enormous potential in the region’s bioscience, IT, big data and cybersecurity sectors.

Other infrastructure pieces are coming into place as well. The Virginia Department of Transportation is expanding the Interstate 581 interchange at Valley View Mall, western Virginia’s biggest retail center, which will improve access and open 100 forested acres on the west side of the interstate to potential development. Other transportation projects on I-81 and other major merchant routes may boost the region’s profile as a centrally located hub with proximity to major East Coast metropolitan areas.

Local governments are working together to fill other gaps in infrastructure. The Western Virginia Water Authority, formed in 2004 to provide sewer and water service to the Roanoke Valley, has expanded to include new counties, most recently Botetourt County.

More recently, the Western Virginia Industrial Facility Authority was formed to give Roanoke Valley governments more flexibility to strike agreements and work together to attract large business prospects. The authority has compiled a list of the 10 most promising, larger-than-100-acre, potential industrial sites for future growth. The authority was modeled in part on Virginia’s First Regional Industrial Facilities Authority, which includes 13 localities and operates the New River Valley Commerce Park.

The Roanoke Valley Broadband Authority was formed in 2013, five years after the New River Valley Network Wireless Authority. Both work to coordinate public and private efforts to develop fiber-optic cable networks in the region. The authority pitched an $8.2 million, 60-mile fiber project that won approval from Roanoke and Salem, but not Roanoke County and Botetourt County. As a result, the proposal was downsized for the two cities with the hopes of building approximately 46 miles of broadband fiber between them.

Growth companies
Even with occasional hiccups in these regional infrastructure projects, companies continue to grow.

Roanoke-based Interactive Achievement develops software for school systems to help with testing and preparing students for standardized tests. “They’ve been in growth mode like you wouldn’t believe,” says the Technology Council’s Whitt.

Foxguard/Qualtrax, a quickly growing Blacksburg business, oversees smaller companies that develop security software and make computer equipment designed for rugged environments.

Meridium assists clients in more than 75 countries improving their businesses and meeting regulatory requirements. It has offices in Houston, Madrid, Dubai, Bangalore, Singapore, Perth and Johannesburg, with its headquarters located in downtown Roanoke.

Banking on a trend
Crowning Touch Senior Moving Services acts as a one-stop shop for seniors who are downsizing and moving to new living spaces. It handles all aspects of the move: transferring belongings, selling the old house as-is and assisting in disposing of unneeded items through auctions and its consignment store.

Linda Balentine, its founder and president, started the company 20 years ago while living out of two friends’ houses and relying on a single cell phone. Today, she has 22 employees and recently began franchising the company, planning 100 new Crowning Touch locations in the next five years, all in metropolitan areas with 1 million or more people.

“Eighty million seniors over the next 30 years will be moving,” Balentine says, describing the trend as a tsunami of gray hair.  These seniors’ “needs are not being addressed by the moving industry. We’re the only moving company in the United States with a consignment shop, auction house and real estate division. There is no business model like this.”

Balentine says she’s been courted by potential franchisees looking to open Crowning Touch locations in Iraq — she turned that one down — and the United Kingdom. A mid-June weekend found her pitching the company at the International Franchise Expo in New York City.
That’s the kind of business growth that economic development advocates say represents the future of the Roanoke and New River valleys.

A game-changer for Grayson

Legend has it that Arthur Jones, inventor of workout equipment, exotic animal enthusiast and airplane fanatic, chose the Southwest Virginia town of Independence to manufacture his Nautilus product line because of a chance listing in a plane’s logbook.

Jones had bought a used aircraft and needed a pilot with the correct certification to fly it, says Jon Little. He looked through the logbook from the previous owner and found the name of a pilot.

“The guy certified for that model airplane had lived in Grayson County in [the town of] Independence,” Little says. “Arthur hunted him down and decided to open up a factory in Independence. He felt like the people were great, and it was a great place to open a business.”

That was 1975. Despite changing hands numerous times since then, the factory consistently served as the county’s largest employer. For several weeks, though, it looked like the plant had shut down for good.

Nonetheless, Core Health & Fitness, where Little works as vice president of operations, announced last year it would take over operations, investing $2 million to expand the plant and provide 250 jobs.

Core Health & Fitness includes remnants of the former Nautilus corporate structure that oversaw the Independence plant until 2009, two years after Jones’ death, when the company split up its brands.

Med-Fit Systems bought the Independence plant and the Nautilus commercial brand, while Schwinn Fitness and Stairmaster remained with Core Health & Fitness, which was located in Nautilus Inc.’s longtime home of Vancouver, Wash.

Med-Fit struggled to do more than break even, however, and it closed in April. When it issued its notices for layoffs and+ closure, Core Health & Fitness moved in to acquire the brands and the plant.

“Nautilus had been a leading employer in Grayson County for around 40 years, and so when they closed the doors, it was a real bitter blow, not only economically but to the morale in the county,” says Tom Elliott, executive director of Virginia’s aCorridor, a Southwest Virginia economic development alliance. “For these former Nautilus executives to make the decision to acquire the assets and reopen the facility was really a game-changer.”

Grayson County Administrator Jonathan Sweet worked with the Virginia’s aCorridor, the Virginia Economic Development Partnership, the Tobacco Indemnification and Community Revitalization Commission and others to help line up incentives to seal the deal with Core Health & Fitness while also taking care of loose ends from the Med-Fit closing.

That included assisting Med-Fit in continuing operations until the company could be positioned for sale by temporarily deferring principal and interest payments on its economic development loans.

Sweet also worked to line up the incentive package for Core Health & Fitness, which totals $2.7 million, including $1 million from the Tobacco

Commission, $350,000 from the Governor’s Opportunity Fund and $783,200 from an Enterprise Zone Job Creation Grant.

Sweet says the county also “got creative” in shifting Med-Fit’s old incentives to make way for Core Health & Fitness.

“Med-Fit had taken out a tooling loan for a quarter million dollars. We were able to allow Core to assume that note, and we were willing to forgive that assumed note based upon the same jobs and capital investment performance as outlined in the state incentives,” Sweet says. “That saved the county a quarter million dollars of new money and prevented us in essence from losing a quarter million dollars in that note because Med-Fit went defunct.”

Beyond his responsibilities as county administrator, Sweet has worked with the company in a different way, serving as a fitness model in Nautilus ads.

Core Health & Fitness says its decision to acquire the Grayson County plant came about not just from incentives but because of how the existing facility and its trained workforce fit into its plans.

“The plant’s already set up for commercial strength manufacturing,” Little says. “You’ve got second- and third-generation employees there who’ve been doing machining, welding or assembly in that factory for years and years and who know how to do it with exceptional quality. We looked at that and determined that part of our strategy, if we acquired the [Independence] plant, needed to be leveraging its flexibility in manufacturing equipment across all of our products.

“Our plan is to bring manufacturing strength products back from Asia to the U.S.,” says Little. “That will double the volume coming through that factory, and in manufacturing volume is the key to happiness.”

Restoration of the factory’s operations and the planned expansion for new product lines again restores the Independence plant to its status as Grayson County’s top private-sector employer.

“What was so exciting about the project is they looked at the quality of the product and quality of the workforce, as well as their desire to have a Made in the U.S.A. product for state tax and marketing reasons,” says Sweet. “We’re talking about bringing manufacturing jobs back from China to the U.S. and Southwest Virginia. That’s the game-changer.”

Manufacturing rebound

Buoyed by a resurgent manufacturing sector, Southwest Virginia continued to ride the nation’s economic upswing in 2014.

Numerous longstanding employers announced expansions from the Roanoke Valley down through the New River Valley and farther southwest, while two localities on the Blue Ridge Plateau — Carroll County and Grayson County — saw new businesses fill spots left vacant by previous occupants.

The growth filled vacant industrial land tracts and spurred Roanoke Valley governments to form the Western Virginia Industrial Facility Authority to find new potential economic development sites. A longer-running collaborative effort — the 13-locality Virginia’s First Regional Industrial Facilities Authority, which operates the New River Valley Commerce Park — saw its first tenant open its doors and begin production, with Red Sun Farms growing 18 acres of organic and hydroponic tomatoes under greenhouse glass.

Other projects announced in 2013, including Korona Candles and Falls Stamp and Welding in Pulaski County, Virginia Transformer in Roanoke and Ardagh Group in Roanoke County, also began production last year.

“Things have been firing on all cylinders, from the smallest … projects all the way up to the Red Sun Farms, the Korona Candles and Volvo,” says Aric Bopp, executive director of the New River Valley Economic Development Alliance. “Our region is one of the few in Virginia that’s out of the recovery phase of the recession. We’ve got more jobs than we’ve ever had, more people in the workforce than we’ve ever had. We don’t want to let off the throttle at all.”

(This year, however, began on a somber note as Norfolk Southern announced in January that it would relocate 500 positions in Roanoke to either Norfolk or Atlanta. The company employed 1,700 people in the area.)

Roughly three-quarters of job growth nationally tends to come from expansions by existing companies, and that rule of thumb fit the Roanoke and New River valleys last year.

Consider Altec Industries. The Birmingham, Ala.-based company makes aerial devices for bucket trucks, cranes and digger derricks at a plant in Botetourt County.

“Once I became familiar with their name, now if I’m going down the road and see a bucket truck for Appalachian or whoever, it’s almost always an Altec truck,” says Beth Doughty, executive director for the Roanoke Regional Partnership.

“They located here in 2000 and expanded in 2010, 2011, 2012 and now 2014,” with the latest announcement adding 203 jobs, Doughty says. “They’ve continued to expand and grow. You want the businesses in your region to be successful. They’re the poster child for that.”

Similarly, Volvo Trucks added 200 jobs this year at its Pulaski County plant as the company ramped up production. The company also collaborated with its workers union, United Auto Workers Local 2069, to identify and use in-house talent to design and build a customer experience track. The dogbane-shaped, 1.1-mile paved loop wraps around storm water ponds and an off-road path, allowing potential buyers and visitors without commercial driver’s licenses to test long-haul and off-road trucks in simulated real-life conditions.

At least two expansions saw existing companies in one locality open new operations centers in a neighboring locality.

Alexander Industries, which since 2001 has built specialized rifles, cartridges and accessories at the Radford Army Ammunition Plant for use by military, law enforcement and civilian customers, is building a new, 25,000-square-foot facility in Dublin Industrial Park in Pulaski County. The expansion allows the company to move from a “build-to-order” to a “build-to-sell” business model, meaning that company officials will seek out new domestic and international markets.

Farther southwest, Mayville Engineering Co. Inc. (MEC) in Wytheville announced it would invest $10 million to expand into a new manufacturing facility in the former Merillat plant in Smyth County. 

MEC fabricates metal products for agricultural, commercial vehicle, construction, forestry, on/off road power sports, energy, military and industrial markets. The company has seen growth in demand from new and existing contracts.

“They had a need to expand and a need to expand quickly,” says Tom Elliott, executive director of Virginia’s aCorridor, a Southwest Virginia economic development alliance. “They were unable to do so in Wytheville, where they already have an operation. We were very pleased they were able to locate that project in a neighboring county.”

The Smyth County Board of Supervisors voted in December, four months after the MEC deal was announced, to withdraw funding and disaffiliate with Virginia’s aCorridor. Still, the regional partnership saw major deals announced in two of its affiliate members, Carroll County and Grayson County, both of which sit atop the Blue Ridge Plateau.

Vanguard Furniture, a high-end, made-to-order furniture upholstery maker with five manufacturing buildings in Conover, N.C., and a showroom in High Point, N.C., announced it would open a new production operation in the former Parkdale Mills site in the Carroll County Industrial Park, creating 200 jobs.

In Grayson County, Core Health & Fitness said it would take over the former Med-Fit operation, which in various forms had manufactured Nautilus fitness machines for nearly 40 years. The reopened facility added brand lines that previously had been produced in China, creating a total of 250 jobs. The increased employment allowed the plant to retake its spot as the county’s top employer.

“I think that we were lagging a little bit behind the economic turnaround, even though a lot of the economists in Washington were pointing to factors that said we were turning the corner a couple of years ago,” Elliott says. “It appears that this year is when we started seeing that very intangible factor called confidence. It began to return. This year represents our best year in terms of jobs since 2007 and our best year in terms of capital investment since 2011.”

Pulaski County continued to assert strength as a regional destination for manufacturing. The NRV Commerce Park is located there, and four of the year’s top job-producing deals, including the Volvo and Alexander Industries expansions, happened in Pulaski County. Additionally, MTM Inc., a medical and transportation management company, and James Hardie Building Products Inc., which makes fiber-cement siding for the construction industry, announced expansions in Pulaski, creating 66 and 69 jobs, respectively.

Chalk up the county’s success during the past couple of years to a combination of offering a key location with access to rail, interstate highways and natural gas; plenty of still-vacant industrial land; a cooperative pro-business attitude from local government; and positive movement in the national economy, says Pulaski County Administrator Pete Huber.

“I’ve been working in Pulaski County for 28 years, and I’ve seen some bad times when AT&T and Burlington Industries were closing,” Huber says. “We swam upstream just a bit following the recession. Things picked up a bit quicker here, but where the national economy is going is a prime, if not the prime, driver in the economy.”

While Pulaski County still has remaining room in the NRV Commerce Park — a 1,000-acre property is planned for sites 75 acres or larger, with the anticipation of hosting up to five businesses of that size — other localities are rapidly running short of inventory.

“A lot of the good products and good buildings and good sites that were available are beginning to be occupied,” Bopp says. “There’s starting to be a shortfall of turnkey infrastructure and product. That’s going to be a challenge going forward.”

Doughty cited similar problems in the Roanoke region but also expressed hope in the creation of the Western Virginia Industrial Facility Authority, designed to identify possible Roanoke Valley economic development sites and give its governments more flexibility to strike agreements and work together to lure large industry.