ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Sunday, January 28, 1996 TAG: 9601260045
SECTION: BUSINESS PAGE: G-1 EDITION: METRO
COLUMN: Economy
SOURCE: JOHN LEVIN
Western Virginia's economy sat on the sidelines during the boom decade of the 1980s.
While Northern Virginia, Richmond and Tidewater melded into what's termed the state's Golden Crescent, Roanoke and smaller markets west of the Blue Ridge bemoaned their slower growth rates and lack of appeal to speculative developers.
Bemoan no more. The fable of the hare and tortoise may be an oversimplification of the issue. But a mid-1990s look at Virginia's economy suggests that while the rabbit takes a breather, the slow but sure-footed turtle keeps plodding forward.
Federal government cutbacks and corporate downsizing mean factors that prodded Virginia's growth in the '80s aren't at work anymore. Virginia's economy, instead of outpacing the nation's growth as it has for many years, is expected to be "distinctly average," in the words of University of Virginia professor John L. Knapp.
Statistically, that's making Roanoke look a lot better by comparison with the former boom regions, specifically Northern Virginia. The area's gain of 5,300 jobs in 1995 ranked it with Northern Virginia as the second fastest growing employment markets. Charlottesville was first with a 4.1 percent gain in nonfarm employment, Knapp reported in a recent newsletter.
When industrial prospects ask about Roanoke's economy, "we say we have a slow, plodding, methodical economy," said Doug Chittum, a municipal economic development specialist for Roanoke.
"We're like a big running back who always gets the job done," he said. "Our job growth has been consistent.
"You could legitimately feel either good or bad about our kind of economy," Chittum said. "But most people in my field are glad we have the kind of economy we do. In the long view, the more stable economy is safer."
Western Virginia's economy has several characteristics that make it safer over the long term:
Diversity. Unlike Northern Virginia's tether to the federal government or Tidewater's dependence on the military, Western Virginia's fortunes are tied to a wider spectrum of business sectors.
"A major lesson that any metropolitan area ought to learn is no matter how fast the train is traveling, if your economy is not diversified, you're subject to a crash when the train goes off the track," said David Orr, an economist with First Union Corp. in Charlotte, N.C. "The lesson is to diversify."
Aversion to risk. Developers based in the Roanoke region often complain they must look outside for opportunity, an euphemism for the fact that local investors won't gamble on speculative projects.
The most tangible evidence of the lack of such risk-taking is this region's absence from the 1980s boom of commercial real estate. While overbuilt office towers were going to foreclosure in Washington's suburbs and downtown Richmond and Norfolk, Roanoke's two newest office structures - First Union Tower and Norfolk Southern Corp.'s regional headquarters - were being developed through relatively unrisky deals.
Size. "One important aspect to consider is (the Roanoke region) is of sufficient size to take a hit and survive - it has resilience," said Knapp, a professor of business and economic research at UVa's Weldon Cooper Center for Public Service.
Consider that while the Roanoke metro area consists of about 224,000 residents, the population of a wider region within an hour's drive of the city is three times that number.
It means that a city that historically was a regional shopping center still feeds from a larger market for health care, financial services and as a transportation hub.
Yet Knapp, in his newsletter released last week, said all areas of the state could feel the impact of an economic slowdown in Northern Virginia.
Considering that region contributes 42 percent of the state's income tax revenue and 35 percent of its take on sales tax, a decline in Northern Virginia's economy likely will be felt statewide as lesser revenue for education and highways, Knapp said.
That suggests that even the plodding turtle might feel some impact of the panting rabbit. "If a high-flying area slows down, the whole state will feel the impact," Knapp said.
"I'm not sure that Roanoke is quite as slow as a tortoise," Knapp said. "And no area can sit back on its haunches; it's a world economy."
LENGTH: Medium: 85 linesby CNB