ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Thursday, February 22, 1996 TAG: 9602220068
SECTION: VIRGINIA PAGE: A-1 EDITION: METRO
SOURCE: JEFF STURGEON STAFF WRITER
NOTE: Lede
R.R. Donnelley & Sons Co., a Chicago-based outfit that calls itself the world's largest printing company, said Wednesday it will open a $102 million book printing plant in Roanoke County in May 1997.
The plant holds the promise of 175 to 750 new jobs and represents a vote of confidence in the people and business climate of the Roanoke Valley and Virginia, Gov. George Allen said.
Though the project will cost county taxpayers millions to build, those costs would be offset by real estate and other taxes the company will pay in the plant's first five to six years of operation, said Brian Duncan, the county's assistant economic development director.
``This is the beginning of a great marriage, a marriage between an outstanding state and ... an outstanding company,'' James R. Donnelley, vice chairman and the great-grandson of the company founder, said at a news conference Wednesday.
R.R. Donnelley & Sons Co. is a 132-year-old company that took in $6.5 billion last year and reported profits of $299 million. It employs 41,000 people in 26 countries. It operates a 950-employee book plant in Harrisonburg and a 700-employee catalog printing operation in Lynchburg.
The company rejected four sites in North Carolina before choosing Roanoke County for its new operation. Its reasons for picking the Roanoke Valley included its central mid-Atlantic location, capable work force, reasonable cost of doing business, generous incentive package and good quality of life, company officials said.
Construction of the plant is to begin this spring in Valley TechPark, a county-owned industrial park off U.S. 460 west of Salem. The facility will print and bind a variety of books with color pages, such as coffee table books, cookbooks, children's reading materials and how-to guides.
The company plans to have a work force of 175 by the end of 1997 and 310 by 2000; a third phase without a definite construction date could boost employment to 750, Allen said. The plant eventually is to operate around the clock.
The jobs will pay an hourly wage of $9 to $17, and employee training will be provided.
``Their plan is to grow their own work force,'' said Beth Doughty, executive director of the Roanoke Valley Economic Development Partnership. ``They don't expect to find 50 press operators standing in the unemployment line or working elsewhere. What they want to do is to find the people who have the aptitude for this work and train them.''
None of the plants Donnelley has built are unionized, though some plants it acquired do have union work forces. Grant McGuire, president of the book division, said Donnelley strives to treat employees fairly in the hope they won't feel a need to join unions.
The Virginia Department of Environmental Quality said the company has no record of pollution violations involving its inks, solvents or other chemicals.
The Roanoke County plant's first phase will cost $63 million, and an expansion in about two years that already has been approved by Donnelley's board of directors will cost $39 million. If both phases are completed for $102 million, the project would become the largest industrial investment in Roanoke County history, said Bob Johnson, chairman of the Board of Supervisors.
Though construction of a third phase depends on many factors, company officials have estimated it would cost another $100 million.
The corporate courting process began last May when Donnelley representatives toured potential construction sites in the valley without identifying themselves. Doughty, a lead participant in the tour, ultimately was instrumental in Donnelley's decision to locate in the county, said County Administrator Elmer Hodge.
Doughty shared credit with 25 people, among them representatives from Vitramon Inc., Carilion Health System, the ITT Gallium Arsenide Technology Center and Ingersoll-Rand, who briefed Donnelley executives on the characteristics of the local work force.
Donnelley said it needs the new plant to respond to the changing book business. Publishers want to save money by reducing the number of volumes in distribution channels, reordering additional volumes more often instead. The plant will have what executives called the world's best technology for quickly producing small lots of books.
The company needed to put the plant within a day's drive of New York, location of the headquarters of many of its primary customers, which include HarperCollins, Simon & Schuster and Random House, said McGuire. Roanoke is one such location, but there were others.
Roanoke County stood out in the negotiations, however, because it is populated by sufficient numbers of people with the capacity to learn a trade such as the printing business, while its wage rates are still lower than those in cities, McGuire said. He said North Carolina, with its lower land costs, still offered Donnelley an attractive business opportunity.
But because of the potential size of Donnelley's investment, Roanoke County officials were prepared to offer the costliest incentive package the county has ever given a company, Johnson said.
On Wednesday, as Donnelley executives left a news conference to have snacks, supervisors went to their meeting room and approved an initial grant of $2.5 million.
The county is giving Donnelley most of the remaining developable land in its industrial park - about 90 acres - as an enticement to build. The land's assessed value is about $612,000.
McGuire called that a key decision. ``When the land no longer became an issue, that made this deal possible,'' he said.
In 1990, the county bought the land and some adjoining acreage to lure another company. But Allied Signal Inc. of Morristown, N.J., citing economic pressures of recession, backed away from its plans for an automobile disc brake plant.
The county has been under pressure to find users for the industrial park because its total investment exceeds $3 million for the purchase of land and improvements.
The only other company with plans to do business in Valley TechPark is Rusco Window Co., a Roanoke manufacturer that must move from its current location to make room for the Peters Creek Road extension project.
The county's $2.5 million contribution to the Donnelley project will pay for a stoplight at U.S. 460, utility connection fees, grading and other site work and part of the cost of training Donnelley's new workers, said Tim Gubala, economic development director. The county is scheduled to contribute another $2.1 million for the second construction phase, but nothing to the third phase.
The state will pay $460,000 toward site work from the Governor's Opportunity Fund, an account from which funds are doled out to specific private industrial projects at the governor's discretion. The state also pledged $450,000 in training money and a one-time tax credit of $190,000.
Roanoke County officials have put in place what they call taxpayer protection measures that would require the company to pay cash penalties for not meeting investment and hiring projections.
And if Donnelley backs out of the project, it must give the land back, said Duncan, the county's assistant economic development director.
Duncan said he doubts the penalty provisions will be needed.
``I just had Mr. Donnelley tell me, `We'll be here at least 60 years,''' Duncan said.
R.R. Donnelley & Sons Co.
The company: Donnelley manages, reproduces and distributes print and digital information for the publishers, retailers and marketers of information technology. It is the largest commercial printer based in North America. The company was founded in 1864 in Chicago.
Operations: Headquarters in Chicago, subsidiaries in England, Ireland, Mexico and the Orient. It has 41,000 employees in 21 countries.
Major products and services: Printed sales materials, mailers and catalogs for retailers, newspaper coupon inserts, telephone directories, reference and text books, children's books, religious books and mail-order book club books, computer software distribution, management financial services,
Ownsership: The company's common stock is traded on the New York Stock Exchange and owned by about 9,500 shareholders. Of the 153.6 million shares outstanding, about 68 percent is held by institutional investors. The stock closed Wednesday at $37.12 1/2 a share, up 50 cents a share from Tuesday's closing price.
Financial data:
(for fiscal years ended Dec. 31)
1995 1994 1993 1992 1991
Sales (in billions) $6.51 $4.89 $4.39 $4.19 $3.92
Net income (in millions) $299 $269 $246 $235 $205
Earnings per share $1.95 $1.75 $1.59 $1.51 $1.32
Sources: The company, Nelson Investment Research Database
LENGTH: Long : 166 lines ILLUSTRATION: PHOTO: James R. Donnelley\Good location, good people. color.by CNBGraphic: Map by staff. color. KEYWORDS: JOBCHEK