THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Sunday, May 26, 1996 TAG: 9605250679
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY JAMES SCHULTZ, STAFF WRITER
LENGTH: 103 lines
So, why is Richmond and not Hampton Roads snaring semiconductor plants worth billions of dollars and thousands of jobs?
Gregory H. Wingfield, president of the Greater Richmond Partnership Inc. and former president of Forward Hampton Roads, seems to have a pretty good idea.
First, there is the matter of a well-educated, well-trained labor force. While Wingfield characterizes Hampton Roads' work force as ``outstanding,'' he said companies like Motorola Inc. and Siemens AG are concerned about future labor availability. And with a high concentration of military in South Hampton Roads, trained for very specific tasks, retraining becomes an issue.
``The missing ingredient,'' Wingfield contended, ``is making sure that existing military have skills technology companies need.''
Motorola and Germany's Siemens announced plans this week to build a $1.5 billion semiconductor plant in suburban Richmond that will employ 1,500. That comes on the heels of plans announced by Motorola late last year to build another $3 billion chip plant in the Richmond area.
IBM Corp. and Japan's Toshiba Corp. are also readying a chip factory in the Northern Virginia community of Manassas.
In the Richmond area, Motorola and Siemens found sites that matched their manufacturing and transportation needs, Wingfield said. Add to that the establishment of an engineering school at Virginia Commonwealth University and other factors Wingfield described as ``second-tier concerns.''
``In Hampton Roads, you don't have the depth of the corporate base,'' he said. ``(In Richmond) they got a sense they would be part of a community of their peers. They wouldn't be a big fish in a small pond.''
Wingfield said he sees little potential benefit to Hampton Roads from the announcements so far ``unless there are existing vendors able to meet the needs of these chip makers.''
Others, however, are more optimistic about Hampton Roads' prospects to tap into the growth of the industry.
The Peninsula, with its concentration of high-tech engineering and computer companies, could gain chip-related business and investment over the next several years.
That's certainly the intent of Donald Joyce, president of Muhlbauer Inc. Joyce is working out of a Newport News office to develop plans for a factory that will produce machinery to assemble and test semiconductors.
``Some vendors will choose to locate here,'' Joyce predicted. ``They may not want to compete for labor (in Richmond). Maybe it's a better idea to be a little farther away.''
The semiconductor industry is in a bit of a slump, but Joyce said it's inevitable that chip demand will increase. Demand already is affecting his own plans; with the arrival of Motorola and Siemens, Joyce calls his initial work-force projection of 150 ``conservative.'' Its eventual size could soar to 200 or more.
``It's an incredibly competitive business overall,'' Joyce said. ``The growth potential is there.''
Another upbeat view for Hampton Roads is offered by Hugh Keogh, president of the Virginia Chamber of Commerce. Like Wingfield, Keogh is a former Forward Hampton Roads president.
``I think Hampton Roads will do just fine,'' Keogh said. ``Ultimately, there should be job creation on the part of vendors who like the life there and are only a couple of hours away. But it won't be around the corner. It will be over the next three to five years.''
Keogh points to Suffolk as a South Hampton Roads locale that would have enough land for a chip plant while providing ready access to transportation. He, too, endorses the notion that more plants are likely to be built - even if planners can't exactly forecast where.
``(The chip makers) are probably rolling the dice a little bit,'' Keogh said. ``No one can be 100 percent sure of anything. They have enough confidence to expand production and not be burned, even if they don't know exactly where the chips will be sold.''
Motorola executives expect more companies to join theirs in Virginia's up-and-coming chip industry - and don't rule out the possibility of the wealth spreading to Hampton Roads.
``I can almost assure you we'll look back 10 years from now and there will be others,'' said Ken Phillips, chief spokesman for Motorola's Phoenix-based semiconductor products unit. ``They may not all choose to do it in Richmond. Some may choose to do it down in your part of the state.''
But Richmond will be the center of it all, Phillips said, predicting that the metro area will within in a decade or two rival Austin, Texas, as the nation's leading chip-making employment center.
Roy L. Pearson, director of the College of William and Mary's Bureau of Business Research, said the chip-plant partnerships should be infusing hundreds of millions of dollars each year into local economies for decades to come.
``It's not pie-in-the-sky,'' he said. ``It's a real accomplishment.''
And Pearson said he, too, believes there's more to come. He said that companies considering relocation are swayed by the presence of industrial colleagues - be they competitors or allies.
``(The plants' arrival) moves us up a notch, gets people to notice us as a sophisticated manufacturing area,'' he said. ``We will gain from some of the suppliers moving in. And if we have this type of manufacturing activity, that puts us in a position to move into new industries, new kinds of electronic components.''
It was just four years ago, Pearson said, that the state's semiconductor industry amounted to 13 firms with 100 workers. Or, to put it another way, Virginia shipped out a microscopic three one-hundredths of the nation's total dollar value of semiconductors.
Still, as the plants in the Richmond area and Northern Virginia ramp up, Pearson argued that large economic benefits will ripple out a relatively short distance from each.
``It may help sell other companies, but this won't help South Hampton Roads directly,'' he said. ``Most of the economic effect will be felt in the Richmond metro area. That's where most of the workers will spend their money.'' by CNB