Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, April 16, 1995 TAG: 9504180055
SECTION: EDITORIAL PAGE: D-2 EDITION: METRO
SOURCE:
DATELINE: LENGTH: Medium
Motorola is a highly regarded American company, a world-class player in the high-tech manufacture of high-tech products. It has only bought a land option; it has not committed yet to Virginia. But if plans work out, a high-tech plant will be built in Goochland County to make semiconductors, the tiny chips that nowadays run almost all electronics devices.
For economic development in the Richmond area, the factory would be a major boost. Projected wages average $35,000 a year, and employment eventually could reach 5,000. No company in the Roanoke Valley employs as many. In the Richmond area, the only bigger private-sector employer is Philip Morris USA.
The new plant also would contribute to tax revenues that fund statewide services. Southwest Virginia would benefit if this region proves a good location for spinoff companies to serve as Motorola suppliers.
To get Motorola, the state is offering nearly $86 million in incentives, not including infrastructure improvements for roads and local utilities. Therein lie a couple of issues.
One involves the $16 million that the state promises to spend on an electronic-manufacturing curriculum at a proposed engineering school at Virginia Commonwealth University in Richmond. In addition, $5 million is to be spent for work-force training through the community-college system.
That reflects a welcome, if heretofore rare, acknowledgment from the Allen administration of the link between higher education and economic development. Moreover, education and job training are well within the sphere of services that government should provide.
Virginia, however, already has four state-supported engineering schools. In this era of higher-ed restructuring, does the commonwealth really need another? Or would Virginia's (and Motorola's) needs be better served if the new curriculum were based, at least administratively, at an existing engineering school?
A second issue involves a $4.6 million tax credit for Motorola, and Motorola's eligibility for as much as $60 million in performance-based cash grants over five years. The latter, to be made under a 2-year-old incentive program to bring high tech to Virginia, would constitute the commonwealth's most direct entry to date into industrial policy - the controversial idea that the public sector should influence marketplace decisions by identifying and fostering certain kinds of industry through such means as tax preferences and subsidies. While a successful Motorola factory would pay millions in taxes to the state, so do many other Virginia employers who don't get grants from the state.
The practical reality, however, is that Virginia must compete with other states for prospective employers in a market saturated with financial incentives. Indeed, Virginia's are relatively limited: "Incentives should be used cautiously," says Gov. Allen's strategic plan for the state's economic future, "and only as a competitive necessity to attract or retain desirable jobs and investment." The fact that a Virginia site was chosen anyway is a sign that Motorola placed a higher priority on other criteria, and is the kind of company the state should want.
Even so, the incentives are a factor. The higher-ed promises are fine in principle; the practical details may need adjustment. The cash grants raise questions of principle; the practicalities of the moment may have to override them.
by CNB