Lots of new investment — not as many jobs
Related
story:
- The
biggest deals of 2003
by
Paula C. Squires
Virginia Business
April
2004
With
the economy rebounding, companies were more willing
to invest in corporate expansions last year. In fact,
Virginia recorded one of its best years ever with just
over $4 billion in announced deals. In keeping with
the times, though, the expansions don't necessarily
mean jobs.
The dollar total for deals announced in 2003 showed
a healthy gain over the $2.4 billion reported in 2002.
“It's the second highest capital investment
year we've ever reported. The last time we got
that high was in 2000,” says Rob McClintock, research
director for the Virginia Economic Development Partnership.
Yet, the number of new jobs expected to come from those
deals — 28,500 — was down from the 30,600
new jobs reported in 2002.
The problem, says McClintock, isn't outsourcing,
an issue that's becoming increasingly sensitive
as out-of-work Americans bemoan the moving of highly
skilled jobs off shore. Rather in Virginia he sees companies
improving productivity by spending on new equipment
and technology. “While there's a lot of
emotion now on the outsourcing of jobs, really that
pales in comparison to the replacement of jobs because
of technology, which has contributed to higher productivity
and brought this economic expansion forward.”
For instance, Anheuser-Busch Inc. plans to spend $200
million to upgrade and install new equipment to boost
capacity at its beer brewery plant in James City County,
“but they don't need any more people to
do that,” says McClintock.
Fortunately, some of the state's biggest deals
will create jobs, including the deal ranked as No. 1
for 2003. The $500 million Howard Hughes Medical Institute
in Loudoun County broke ground on a biomedical research
facility that's expected to hire 300 people. “The
research that revolves around the biosciences is a big
driver for the economy in Northern Virginia,”
notes McClintock.
That area will benefit also from several defense-related
expansions including the Arlington location for the
headquarters of the U. S. Transportation Security Administration,
one of the branches of the new Department of Homeland
Security, which is expected to create 2,000 new jobs.
In Prince William County, General Dynamics Land System
plans to spend $64.5 million for the assembly of new
fighting vehicles for the U. S. Marines Corp. The project
will initially employ 140 workers and perhaps as many
as 340 over the life of the program.
Besides defense, headquarter expansions helped give
Virginia one of its strongest years. In fact, three
of the companies that ranked in the top ten deals for
corporate investment were spending on headquarter operations.
They included Philip Morris USA's corporate relocation
from New York City to Richmond, an expansion at AMERIGROUP
Corp.'s national health care headquarters in Virginia
Beach and the third expansion in 20 years for Stihl
Inc., a German-based manufacturer of power equipment,
which has its U.S. headquarters in Virginia Beach.
Stihl plans to spend $60 million on a 228,000-square-foot-addition,
so it can boost manufacturing capacity for its many
power tools, which include chain saws, leaf blowers
and edgers. In what is a refreshing reverse NAFTA scenario
— an international company continuing to grow
here through the use of U. S. labor — the latest
project will add 200 news jobs to Stihl's current
work force of 1,100, with workers needed in manufacturing,
engineering, quality assurance and marketing.
There's no reason for his company to move, says
Paul Bruggeman, director of manufacturing for Stihl
in Virginia Beach. “For the last 25 years, we
have been very successful here. … The city and
support and the colleges have been good. We have future
engineers coming out of these schools. So this is our
home.'' Still, he realizes that in this
day and time, Stihl's approach is “kind
of unique. We do continue to grow and hire people and
do not source out of the company even though our parent
company is in Germany.”
Another Virginia headquarters expansion and one of the
biggest job producers announced last year came from
the financial services sector. Wachovia Securities plans
to spend $8.3 million, creating 1,000 new jobs to grow
its headquarters operations in Richmond and Henrico
County, following its merger with Prudential Securities.
Rounding out last year's nearly 376 projects,
are several new power plants, the continued growth of
several of the state's chemical companies, a new
Wal-Mart distribution center in Rockingham County that
will hire 1,000 workers and the entry of some new employers
in the Southwest and Southside regions, which badly
need jobs to replace those lost in textiles and coal.
Minnesota-based Marvin Windows and Doors chose Roanoke
County as the site for a new manufacturing facility
for one of its product lines. The company plans to invest
$32 million over the next five years, creating 350 jobs
by 2008.
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