Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, June 24, 1990 TAG: 9006240218
SECTION: VIRGINIA PAGE: D1 EDITION: METRO
SOURCE: KEVIN KITTREDGE SHENANDOAH BUREAU
DATELINE: COVINGTON LENGTH: Long
For the next two years, this city of 7,500 people will be the hub of the largest industrial capital investment in the history of Virginia - a $530 million expansion at Westvaco Corp.'s paper mill.
Announced in October by Westvaco President John Luke, the project will create 1,600 to 1,800 construction jobs between now and the summer of 1992, company officials say. That will provide a multimillion-dollar payroll boost for the economically depressed Alleghany Highlands. The permanent work force will eventually increase by 50.
As the construction workers arrive, say local officials, the local housing market will fill to bursting. Night life will hum, money will flow.
But to people like Steve Bennett - whose logging and lumber business sells wood to Westvaco - and to others who rely on the Westvaco mill for their livelihood, the biggest impact is written between the lines.
To them, the project means Westvaco, with its endless demand for lumber and its 1,700-plus work force, is going to stick around for a while.
"The main thing it means to me, a small businessman, is they are planning on staying in Covington. At least it will be business as usual for a long time to come," Bennett said. "You don't spend that kind of money unless you're serious about what you're doing."
Westvaco officials agree.
"It means the longevity of this operation," said mill manager Bill Small, "job security to employers, commercial security to the region - and obviously a commitment to our customers as well."
The project will include a huge new paper-making machine as well as a recovery boiler to trap and recycle potential pollutants. Work on the boiler is under way, but the rest of the project is just gearing up.
Though company officials say as many of the construction jobs as possible will go to local residents, they also note the need for skilled labor - boilermakers, pipefitters, electricians, instumentation experts and concrete workers, for example - will draw workers from other points in Virginia and beyond.
Even so, they say, the out-of-town workers will leave money in local restaurants, motels and stores.
"A sizable amount of [the construction payroll] will stay here," said W.H. Boatwright, the assistant mill manager.
Local officials also note the project could draw back some former residents who left the depressed area to find work.
In recent years, the Alleghany Highlands has suffered repeated layoffs in its once-healthy textile industry. In addition, Hercules Inc., another large Covington employer, suffered a fire in 1980 and has not fully recovered. Its current work force of about 400 people is nearly 1,000 below its pre-fire total, said Hercules officials.
Westvaco is the Alleghany Highlands' largest employer.
Unemployment in Covington in April, the latest month for which figures are available, was 6.4 percent. In April 1989, before the construction work had started, the figure was 8.2 percent.
But Michele Wright, executive director of the Alleghany Highlands Chamber of Commerce, said unemployment figures are only part of the picture. The region also is losing people, she said, as they give up on finding jobs.
Covington's population has dropped by 300 people since 1985, according to estimates by the Virginia Cooperative Extension Service.
"People haven't stayed here and drawn unemployment," Wright said. "They've left the area. If these people have the opportunity for a good job with reasonable wages, they'll come back."
Though the current Westvaco construction force numbers only about 150 people, interest is already building in the jobs to come, local officials say.
"I've probably got at least 800-1,000 construction applications right now," said Jack Beason, job service manager at the Virginia Employment Commission office in Covington. "They're coming, or calling, from everywhere."
In addition, the local chamber of commerce is deluged with calls from people who will be working on the project and need a place to live, chamber officials said.
"Constantly," said Wright. "Telephone calls, walk-ins, letters." She said landlords in town have begun buying and remodeling older properties, converting single-family dwellings into multiple apartments, and even turning a few buildings into bunkhouses to meet the demand.
Even so, she said, the overflow will almost certainly force some workers to seek housing in neighboring Bath County or in nearby West Virginia communities of White Sulpher Springs and Lewisburg.
"We know that probably not everybody's going to be able to be housed here," added Loretta Reeves, executive director of the Greater Alleghany Economic Development Commission. "I think something's going to have to be done."
Some are already reaping benefits from the growing demand for housing here. Maudie Mitchell, owner of the Hotel Collins in downtown Covington, has a full house of construction workers, she said, after writing to one of the contractors working on the Westvaco project.
"I'm real aggressive," Mitchell explained.
Meanwhile, local businessmen like Bennett who trade with Westvaco say the end of the project will bring the greatest dividends.
The modern new paper machine, which is expected to increase the Covington mill's production by 40 percent, will create such a demand for additional raw lumber and pulpwood that some 400-500 new jobs in logging, trucking and heavy equipment operation could be created within 100 miles of Covington, Bennett said.
In addition, officials at Selma's Bolivia Lumber Co., which makes pallets and wedges for Westvaco, and at Sonoco Products Co. in Alleghany County, which provides the cores for the huge rolls of Westvaco-made paper, both say they expect their employment to increase once Westvaco's No. 2 paper machine is on line.
Also, both Covington and Alleghany County - the Westvaco plant straddles the city-county line - are expecting a tax bonanza from the finished plant.
Westvaco, which paid $951,000 in pre-expansion taxes to the city of Covington in 1988, will pay $2.3 million to the city when the expansion is completed, according to Reeves.
In Alleghany County, where Westvaco paid $2,054,000 in 1988, the post-expansion tax bill is expected to be $4.8 million, she said.
The expansion project is expected to peak in the winter and spring of 1991, when 1,600 or more construction workers will be on the job, Westvaco officials said.
A housing crunch isn't the only inconvenience likely to surface by the project's peak. Some city leaders, though careful to point out the trade-off is more than worth it, note a probable increase of truck traffic through town and an increased load on services.
City Manager David Dew said the city is working on the traffic problem. Dew also said he is concerned about the possible emergence of bars that cater to the construction crowd, which he said occurred during Westvaco's last expansion here in 1985.
"They work hard; they like to play hard," Dew said of the workers. "We are concerned about that happening in certain areas. . . . That's sort of the negative side."
"We recognize that during the expansion, there's going to be some tremendous inconveniences at times," said Westvaco spokesman Robert Crockett.
Crockett also said most of the workers spend their time after work just sleeping. "These guys are here to work. And they work some very long shifts."
Development officials in Covington caution that merchants as well as workers should be prepared for the end of the project in 1992, and the sudden drop in income that could follow.
"They need to be aware of the fact that this is a false economy, just here for a short time," Reeves said.
Merchants, she said, should be prudent in starting expansions to accommodate the increase in business, and in overstocking. "They need to be smart, to be safe."
Hugh Gwin, a First Virginia Bank manager in Bath County, saw the down side of big construction projects during Virginia Power's Back Creek hydroelectric project in the early 1980s.
"When Virginia Power came, it changed the lifestyles of a lot of people," said Gwinn, noting many jobs in Bath County start at minimum wage, but the construction jobs paid much more. "And then suddenly one day, they didn't have those jobs. They wanted to maintain that lifestyle, and it was impossible.
"I would say the lesson that should have been learned is during the big times, when money is being earned, to save it rather than spend it," Gwin said. "For a lot of people, they didn't save, they spent. But they had a good time."
by CNB