Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, January 8, 1995 TAG: 9501060064
SECTION: BUSINESS PAGE: F-3 EDITION: METRO
SOURCE: JOHN LEVIN BUSINESS EDITOR
DATELINE: LENGTH: Medium
But people who work at bringing new companies to Western Virginia and help those already here to expand are betting the former force will prevail.
"Businesses are expanding," said Beth Doughty , executive director of the Roanoke Valley Economic Development Partnership. "Companies that haven't built new facilities in 20 years are doing it now."
She said the uptick in interest rates will not be sharp enough to halt those expansions.
Manufacturers nationally are using 85 percent of their capacity on average, with some industries, such as textiles, running at 95 percent and steel makers going full-tilt. And the nation's railroads are carrying more freight than ever before, said Mark Vinter, economist with First Union Corp. in Charlotte, N.C.
"In a historical sense, American industry has already surpassed the peaks of capacity utilization of the 1980s," Vinter said. "We've seen companies expanding in terms of adding equipment. Now they'll have to have factories and warehouses if they want to continue growing."
Also significant to his outlook is that for the first time in a decade all regions of the country are expanding at the same time and for the first time in three decades all of the major industrial countries are predicting sustainable economic growth.
If normal business cycles prevailed, the four-year-old economic recovery in the U.S. already would be headed toward recession. But the climb out of the 1991 recession has been so gradual that economists such as Vinter now look for a recession no sooner than mid-1996 or later.
"Recession is not in view," he said. "It is so far over the horizon that you can't even see it."
That should be comforting news to Western Virginia communities that are investing heavily in land development and buildings on the gamble that companies will need them.
In the Roanoke Valley, industrial sites are being readied at Valley Tech Park in Roanoke County, Vista Corporate Park and EastPark Commerce Center in Botetourt County and Roanoke's Centre for Industry and Technology, and a 75,000-square-foot shell building is being built at EastPark. Shell buildings allow companies to start new production in a few months.
Also, Franklin County voters approved a bond referendum to develop industrial parks.
Largely, the development has been prodded by companies' increased interest in the region, Doughty said.
The development partnership in 1994 received about 750 inquiries from companies and had 51 prospects. A prospect is defined as any company that sends a representative for a formal visit to a region. Last year's number was a record for the Roanoke Valley. Because economic development is a long-cycle endeavor, often with six to nine months between a company's visit and announcement of plans, it is too soon to know how many will result in new enterprise.
Rising interest rates are one of several factors that could influence those decisions, said John B. Williamson III, president of the valley's economic development partnership and vice president of Roanoke Gas Co. Interest rates affect the cost of financing corporate expansions.
"Sure, they have to feel comfortable about borrowing money for expansion, but [trade treaties such as] NAFTA are creating more demand for American products and they have to be made somewhere," said Stuart Litvin, executive director of the Rockbridge Area Economic Development Commission.
"You're going to continue to see companies wanting to leave urban areas because of the breakdown of the quality of life there. It's just whether we have the ability to get our name out there so they'll look at Western Virginia."
by CNB