Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, April 9, 1993 TAG: 9304090317
SECTION: CURRENT PAGE: NRV1 EDITION: NEW RIVER VALLEY
SOURCE: MICHAEL STOWE STAFF WRITER
DATELINE: FAIRLAWN LENGTH: Medium
AREA TO LOSE $49 MILLION IN RECENT ARSENAL LAYOFFS
The last two rounds of layoffs at the Radford Army Ammunition Plant will mean a decline of $49 million in income and spending during the next year, according to an impact study completed by the Virginia Employment Commission."That is the maximum impact these layoffs could have," said Bob Griffis, the VEC's chief economist. "For an area with a relatively small economy it's a big blow."
The arsenal laid off 730 workers in January and another 350 at the end of March.
Tom Johnson, an economics professor at Virginia Tech, said $49 million could be a conservative figure. "It's probably at least that bad, but it could be more," he said.
Griffis said the study was completed to gauge the secondary or "ripple" effects the layoffs at the arsenal have on other areas of the economy.
The initial layoffs resulted in a loss of 1,080 jobs with wage losses of $34.2 million, but the secondary impact will mean the loss of 816 more jobs and $14.8 million in the economy.
The payroll decline represents 4.3 percent of the New River Valley's total payroll and the employment losses represent 3.3 percent of the area's total employment.
Griffis said the economic impact is so high because the average laid-off worker's salary of $31,700 is about 54 percent higher than the average industrial wage of $20,592 in the New River Valley. It also was 31 percent higher than the statewide industrial wage of $24,128.
A decrease in consumer spending will cause the largest secondary effects from the layoffs to occur in the retail market. That sector will lose approximately 294 jobs and $3.8 million in earnings in the next year, according to the VEC study. The service industry also will be hit hard, losing 275 jobs and $4.74 million.
Johnson said the secondary job losses will be gradual and go unnoticed by most people.
`'There truly is a ripple effect," he said.
For instance, the loss of 10 retail jobs could mean less newspaper advertising for a company, which could result in the loss of two workers at the paper.
Montgomery and Pulaski counties were the only two of Virginia's 136 localities to have an increase in unemployment in February and Griffis said he expects those numbers will continue to go up.
In Montgomery County, unemployment is at 7.8 percent and in Pulaski County the unemployment rate is 12.3 percent. The New River Valley overall has an unemployment rate of 9.4 percent.
It will take several years for the economy to bounce back from the layoffs at the arsenal, Johnson said.