REGIONAL
               REPORT           


VIRGINIA'S REGION 2000:

Building On
What Works

By Lisa Davis Allison

Grayson Electronics is a home-grown success story. Company President Terry Garner and three co-founders left their jobs at a large electronics company, but they wouldn't leave Lynchburg and the way of life they'd come to appreciate.

So into their respective garages and basements they went, creating what 11 years later is a flourishing firm that designs and manufactures telecommunications products. Now owned by Allen Telecom Inc. of Ohio, Grayson employs 120 people and operates from a 75,000-square- foot building in Bedford County.
Large windows in the foyer of what is now called Grayson Wireless frame waves of grass- covered hills. This is a typical industrial park in Bedford County. But the park, in the heart of the region's budding electronics industry and a five-minute drive from the solitude of the countryside, represents the pairing of business growth and quality of life.

Terry Garner, president of Grayson Wireless, wanted to stay in the Region 2000 area when he started the company. Terry Garner holding a circuit board
photo by Mark Rhodes
"We liked it here, our families liked it here. We felt that there was a growing base of technology here," Garner says. "I think we're going to be here for a long time."

For the past decade, seven contiguous counties and cities surrounding Lynchburg have worked together as Region 2000. The name comes from the number of square miles that this area represents -- not from some fixation on the next millennium. But the economic development group's focus is clearly on the future.

Region 2000 has its challenges. There's no interstate running through it, and the area suffered from high unemployment in the 1980s. But a major inflow of new manufacturers in the late '80s and early '90s has sent the jobless rate tumbling below 3 percent. Since then the region's economic developers have turned much of their attention to existing companies.

Officials say, however, that Region 2000's industrial growth will not encroach upon the rural assets that have attracted new businesses in the first place. Employees seem to agree. Local companies boast low turnover rates without having to offer higher pay and benefits. Paychecks stretch a long way here, says Lynchburg Economic Development Director Lee Cobb. Housing prices are moderate, taxes are reasonable, and the quality of life is exceptional.

* * *

Region 2000 has many faces -- seven, to be exact. Since 1988, the cities of Lynchburg and Bedford, the town of Altavista and the counties of Amherst, Campbell, Appomattox and Bedford have worked in unison to gain economic strength.

Representatives from each of these localities maintain that the group has managed to avoid the squabbling or back-biting that have plagued other regions made up of so many partners.

"What makes it work is recognizing how it benefits everyone," says Grant Massey, Amherst County's director of planning and economic development.

Many area businesses have also joined the partnership, making it one of the state's premier public-private economic development alliances. From 1994 through 1997, Region 2000's budget topped $1.3 million, with almost $450,000 from the private sector alone.

Born out of a Lynchburg Chamber of Commerce program, the partnership was designed to relieve the high unemployment rates across the area, explains Stan Goldsmith, program director of Region 2000. Businesses were struggling, he says, and both public and private sectors agreed that merging their resources to promote the region was the answer. "It takes a lot of money to market a region," Goldsmith says. "If you don't have a strong marketing effort, nobody will even know you're there."

In recent years, though, Region 2000 and many other localities have discovered that the best success stories were in their own back yards. More than six years after the partnership began, new businesses were providing minimal investment. Of about 33 companies investing heavily in the community since the outset of the partnership, 26 were existing businesses.

In January, Ericsson announced a $30 million expansion of its telecommunications equipment plant in Lynchburg. In his last public appearance as governor, George Allen praised the region's efforts to foster business expansion: "It takes a lot of teamwork to get these sort of investments," he told a crowd gathered inside Ericsson's facility. "There's not a region that knows how to market better than you here in Region 2000."

Ericsson has been growing steadily at its Lynchburg site. The plant now employs nearly 3,000 people, and the latest expansion will add another 150 jobs, says Charlie Kelly, the company's director of human resources.

In 1997, the partnership changed direction to focus less on business attraction and more on the growth of existing industries. Region 2000 began providing incentives for corporate expansions, and it started supporting several work force development programs.

Helping companies grow and training the work force to keep up with technology doesn't require starting from scratch. All it requires is the ability to be resourceful. "You can use things that you know will work," Cobb says, "if you just do them."

* * *

Robert Bailey Jr. is anxiously awaiting the arrival of his new machinery -- the latest in manufacturing technology. What Bailey hopes to create, though, isn't on the output side of the process. Bailey's product is trained workers.

FACTS ON
SEVEN FACES

POPULATION


205,900

UNEMPLOYMENT RATE*


2.9 percent

BUSINESS BREAKDOWN**


Manufacturing 28 percent

Services

22 percent
Trade 23 percent
Government 14 percent
Construction 6 percent
Finance, insurance and real estate

4 percent

Transportation, pub. utilities and commun.

3 percent

Other

1 percent

LARGEST PRIVATE EMPLOYERS***


BGF Industries

BWXT

Centra Health

Central Virginia Training Center

Ericsson

First Brands

First Colony Life Insurance

Founders Furniture

Framatone Technologies

Frito Lay

Griffin Pipe Co.

Intermet Inc.

J. Crew Outfitters

The Lane Co.

Liberty University

Lynchburg College

Ross Products

R.R. Donnelley & Sons

Rubatex

Wachovia


Median Household Income


$34,160

Average Manufacturing Wage


$625 per week


Note: Figures are for the entire MSA

* November 1997
**Based on nonagricultural employment
***Firms with more than 400 employees

Region 2000 recently won a state grant for its Advanced Manufacturing Technology Education Center. Bailey heads the center, which is in part aimed at better training the area's work force to help companies grow. "This is where existing employees and prospective employees can come in and learn from real production," he says.

Styled after a similar project in Ohio, the center's training will focus on precision metalworking, a field in which 88 companies in the region employ between 10,000 and 15,000 people.

Jim Warner hopes to add to the 350 people who work at Belvac in the coming years. The company, based in Lynchburg, manufactures machinery used in making cans. But Warner, a manufacturing engineer, knows something must be done if he's going to find enough workers to carry out Belvac's expansion plans. "We've tried to recruit people and bring them in. They just weren't out there," he says. "If you don't have people to run your machines, you can't grow."

Wexco in Lynchburg has produced bimetallic cylinders for the plastics industry for 22 years. Now the squeeze for workers is on, says plant manager Don Smith, who is choosing the first round of employees to be trained at the Advanced Manufacturing Technology Education Center. "It's cheaper for us to let someone else do the training, instead of tying our machinery up," he explains.

The idea for the center goes back to 1994, when industry and education got together to tackle the work force training problem. But the center is just one of several recent initiatives that have targeted training. For example, the Work Keys Program in the Workforce Development Center at Central Virginia Community College in Lynchburg is heading into its second year.

Bob Staples has been profiling jobs under the auspices of Region 2000 since 1996 to determine the basic skills required for success in different positions. Companies can then move to the assessment phase, where workers' skills are reviewed to look for gaps or weaknesses. With that information, Staples explains, employee training can be focused on deficient skills.

Scott Wilkerson, manager of nuclear manufacturing at Framatome Cogema Fuels in Lynchburg, is gaining a better understanding of what employees actually do. He too is trying to discover what skills they need to succeed.

map of Region 2000 area

"Most of the skills [needed] are higher than what I imagined," he says.

Staples is convinced that his efforts will lead to lower turnover and increased productivity. "This is not new stuff," he says. "It's not rocket science, but it is a very logical extension of what [Central Virginia Community College] and Work Keys and places like it can do."

Businesses also are getting more involved in the schools and colleges to get a jump on training the next generation of workers. Wegmann USA Inc. is one of many area companies hiring college and high school interns. "We believe that there's not enough emphasis on education in this country on ... vocational trades," says President Chuck Warren.

Wegmann recently moved into a new $1.3 million building in the Lynchburg Center for Industry. It had been manufacturing defense goods, such as ammunition racks and vehicle-mounted smoke discharges, in the same 27,000-square-foot facility for more than a decade. Warren says he didn't look elsewhere for a new facility because the city offered incentives and because he is confident that he will be able to find skilled workers in the coming years. Although the company only employs 27 people, having a larger pool of potential workers benefits everyone, he says.

BGF Industries Inc. in Altavista is also reaching back into the schools, says plant manager Herman Rogers. But instead of bringing students into the plant, it brings teachers. Each year, the company chooses an educator from Campbell County schools to teach in its in-house computer learning center. The company then pays for the teacher's replacement in the school system. After a year at BGF, the teacher rotates back into the school system. The exchange program, Rogers says, gives educators a better idea of what skills the work force needs.

The 700-employee company, which produces woven fiberglass, spends between 2.5 percent and 3 percent of its payroll on training. "The real big problem is finding qualified people," Rogers says. "You have to grow them yourself."

* * *

Catherine McFaden wants to grow small businesses that will employ tomorrow's work force. Right now, she has 15 of them planted at the Business Development Centre and Business Incubator where she is executive director.

The city of Lynchburg started the center in 1989 as one way to put people back to work during the height of the recession. The plan worked: By helping turn innovative ideas into business ventures, the center has fostered 521 new jobs.

Of the 52 companies that have been through the center, 81 percent are still in business -- all in Region 2000. Typically, only about one-third of fledgling businesses survive past one year, McFaden says. "Some of them would have made it anyway," she says. "Then there are others that probably would have never done it if they hadn't come here."

All but two spaces in the 42,000-square-foot warehouse are filled with start-ups: A shoe broker, machinists and a wholesale paper supplier are among them. The center provides such services as receptionists and business counselors, and businesses have access to phone lines, fax machines and copiers. These shared services eliminate a lot of initial overhead, McFaden says, giving dreamers a better chance at success. And Region 2000's small business efforts seem to be working. In 1994, 72 percent of the area's workers were employed by companies with 10 or fewer employees.

Dewey and Betty Stinnett risked their modest life savings when they started Quality Tool Grinding Inc. at the center a little over two years ago. "You didn't have a lot of riffraff to go through," she says. "We never had to go to the bank to borrow a dollar."

Learning the ropes of accounting, billing and sales wasn't nearly as easy, Dewey Stinnett says. "Even though we have been in this type of work for 12, 13 years, we didn't know how to do the business stuff -- we knew how to do the work."

A few years after establishing Datacut Precision Machining Inc., Terry Thompson still couldn't afford the overhead of a building, office help or additional employees. So he moved to the center. The company, which has been there for nearly four years, now has four full-time employees and a couple of part-timers. And Thompson hopes the company will be strong enough to move out of the center by the end of the year. There were times, he says, when it seemed like the business wasn't going anywhere and his work was in vain. But the center's staff gave him the encouragement and consulting that he needed. "Without them," he says, "I may have called it quits."

* * *

Rodger Fauber worked on Main Street in the heart of Lynchburg's historic downtown for more than 30 years until his retirement last year.

While he was president of Central Fidelity Bank's western division, much of what Lynchburg had to offer was downtown. Each day, Fauber rode past the antique shops and family owned furniture stores and ate in family owned restaurants that fill the decades-old buildings downtown. Now, as president of Region 2000, he also travels across town visiting industrial parks, the area's new retail center near the mall and a series of chain restaurants.

Together those areas are making Lynchburg an even better place to live, Fauber says. "When I was real little, and before I was born, the city of Lynchburg was dependent on a few industries. What's happened over a period of time is a real diversification of its industry," he says. "We don't have the real highs of an economic boom, or the real lows, either."

Like many of his friends, Fauber grew up in Lynchburg and returned a few years after college. Now his children have also made their way back and are part of the educated, rooted work force that the region is counting on to help it grow, he says.

"Lynchburg still is a small town," he says, maneuvering through downtown traffic. "A lot of people who left are coming back and saying, 'That's the kind of community I want to raise my kids in.'"



© MARCH 1998, VIRGINIA BUSINESS MAGAZINE