Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SATURDAY, April 30, 1994 TAG: 9405020156
SECTION: VIRGINIA PAGE: A-1 EDITION: METRO
SOURCE: By MARGARET EDDS STAFF WRITER
DATELINE: RICHMOND LENGTH: Long
At an upbeat news conference that ended with Gov. George Allen cruising Capitol Square at the wheel of an 81/2-ton tractor-trailer cab known as "The Eliminator," Allen heralded the Volvo announcement as proof of "a change of attitude toward business in Virginia."
Allen, who has promised to bring 125,000 new jobs to the state over the next four years, said aggressive wooing of Volvo-GM with financial incentives and tax breaks helped Virginia beat out North Carolina, South Carolina and Ohio for the investment.
Allen hesitated to put a dollar figure on the incentive package, but state and local officials indicated that its value could eventually top $30 million.
The figure includes the largest expenditure to date - up to $1 million per year over the next five years - from a "Governor's Opportunity Fund," created three years ago to make Virginia more competitive in the multistate scramble for business investment.
"The transformation of our economic development strategy has only begun," promised Allen, as a crowd of New River Valley and Volvo-GM officials applauded outside the Executive Mansion.
The announcement was greeted enthusiastically by officials in Pulaski County, which has been buffeted by layoffs at the Radford Army Ammunition Plant and the 1991 closing of the Fairlawn AT&T plant. There had been rumors that location elsewhere of the expanded Volvo-GM facilities would result in additional departures.
"It's a proud day for Pulaski County," County Administrator Joe Morgan said. Details of the county's financial commitment to Volvo-GM will be announced Monday and will be voted on by the Board of Supervisors that night, he said.
Several prominent state Democrats sounded a cautionary note, however.
Senate Finance Committee Chairman Hunter Andrews, D-Hampton, said he is "delighted because I know that area is in bad shape," but added that the state needs to develop a more uniform policy outlining when companies will be offered incentives.
"I'm not objecting to what he's done, but at some point we've got to have a policy," Andrews said of Allen's plan. "Where do we draw the line unless we print money?"
Allen's push for a multimillion-dollar financial package for the Disney Co., which is planning a historical theme park in Prince William County, was a major focus of the 1994 legislative session. The company wound up with about $131 million in state-funded incentives.
Allen said the complex financial arrangements, which depend in part on Volvo-GM's successful operation at the Dublin site, were necessary not only to attract the expansion but to protect 1,400 jobs already at the plant.
In a news release, his office also projected that the new facilities may create more than 780 jobs in the Pulaski County area and up to 6,100 jobs statewide.
A spokesman said those figures were taken from an analysis by Virginia Tech economist Thomas G. Johnson made around the time of the AT&T closing. Johnson could not be reached Friday to discuss that analysis.
Allen and Frank Adams, vice president of the Volvo-GM Heavy Truck Corp., said the work ethic of Pulaski County employees was also important to the decision.
"It's a wonderful example of what can be accomplished when the public and private sectors join with labor to form an agreement that is mutually beneficial," Adams said.
Asked about the importance of the financial package in closing the deal, he said only: "We're extremely pleased with the incentive package."
The new plant, which is expected to operate by 1997, will include an expansion of the current cab assembly plant as well as creation of a new cab-painting facility. Cab production will eventually reach 110 a day, up from the present 60, the company said.
The paint site, based on Volvo technology developed in Sweden, was described as "an environmentally friendly, next-generation" facility that will exceed Environmental Protection Agency standards.
Adams said 175 to 200 jobs will be created at the facility, and the company expects another 200 jobs to result directly from work contracted out in the community. The larger estimates released by the governor's office would apparently stem from spinoff effects.
Adams said he could not comment on the accuracy of those estimates.
According to state officials, the financial incentives fit into several categories. The largest are from state tax breaks accruing over the next 10 or so years and linked largely to the Dublin site's location in a state enterprise zone. Enterprise zones are intended to draw businesses to economically deprived areas.
Volvo-GM also would be one of the first companies to take advantage of a Major Business Facilities Tax Credit, approved by the 1994 legislature.
The credit goes to companies that create jobs and is linked to an area's unemployment rate.
The only direct outlay of state money is from the Governor's Opportunity Fund, described by economic development officials as a "deal-closing fund." That fund was created three years ago after Southwest Virginia lost a Blue Cross/Blue Shield facility to West Virginia, largely because the neighboring state could offer more financial incentives.
If companies meet certain criteria, the governor can award money for their projects from the fund. The money is channeled through local governments and is used for such items as site development.
County Administrator Morgan said the county has also developed an incentive package worth $9 million to $10 million. Details will be spelled out Monday, he said.
Mark Kilduff, acting director of the state Department of Economic Development, cautioned that the value of the incentives is uncertain. "It's very difficult to pin a $30 million or $20 million price tag on it. A lot depends on the level of success they can achieve."
State Sen. Joseph Gartlan Jr., D-Fairfax County, a member of the Senate Finance Committee, echoed Andrews' concerns. "Here we are making these incentives and we really don't have any kind of a policy for this any more than we did for Disney," he said.
by CNB