ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Thursday, May 30, 1996 TAG: 9605300050
SECTION: EDITORIAL PAGE: A-11 EDITION: METRO
COLUMN: Ray L. Garland
SOURCE: RAY L. GARLAND
IS IT mere coincidence that so many companies have chosen this time to invest in Virginia, or does special credit belong to Gov. George Allen and his administration?
Last year, Motorola said it would invest $3 billion to build a plant in Goochland County that may employ 5,000 making computer microprocessors. That was followed by news of a joint venture between IBM and Toshiba of Japan to activate an old IBM plant in Prince William County to build semiconductors.
Just the other day came word Siemens of Germany will team with Motorola to invest $1.5 billion to build a plant to make memory chips in Henrico County on land owned by the state. But Motorola also said business conditions forced it to slow development at the Goochland site.
A commitment to such vast projects does not materialize overnight. The corporate drill on locating any sizable facility now is to canvass numerous sites and consider many factors, especially the inducement packages states and localities are prepared to offer. Some of these "freebies" have got completely out of hand, though that doesn't appear the case in the current crop of Virginia projects.
Taxpayer assistance for site preparation and worker training is now a given. But Secretary of Commerce and Trade Robert Skunda believes in making direct aid contingent upon a company achieving certain performance objectives. Under this policy, Siemens/Motorola may get as much as $20 million in direct payments.
The state's 1996-98 budget provides $65 million for the Virginia Economic Development Partnership, which includes $31 million to promote tourism. It also provides $12 million for community and business assistance and $20 million to pay for employee training. From these relatively small sums, Virginia must market its wares to prospective visitors and investors, though additional funds would almost certainly be provided by the legislature to meet the terms of any megadeal.
In making his pitch to business leaders in Asia, Allen sang from the same sheet governors since John Dalton have used. "We're a low-tax state," he said. "There's been no increase in the corporate income tax in nearly 30 years." He also touted Virginia's low rates for insurance covering workers injured on the job or laid off.
There was customary praise for the Virginia right-to-work law that forbids compulsory union membership in most cases. Where workers at unionized companies are free to refuse to join the union and pay its dues, managers believe the union will be more amenable.
Virginia obviously benefits from its superb location in the center of the Eastern Seaboard, within a day's travel by road or rail of much of the U.S. market. But it's hard for most Americans to grasp the luxury of space this country affords.
Japan, with 125 million people, would fit comfortably into California, which has only 33 million. Germany counts 82 million in a space not much larger than Virginia, Maryland, North Carolina and West Virginia. But these states have only a quarter of its population.
And compared with the cost of investing in many countries, America is cheap. The extreme cheapness of land, housing, fuel, water, power and food - especially when measured in marks or yen - is a source of amazement to foreign visitors. Taxes are also lower.
Not many years ago, it took more than three German marks to buy a dollar, and nearly 400 Japanese yen. Now, only 1.54 marks are required, and 108 yen. This makes the cost of investing here seem cheap. Conversely, their products are expensive when priced in dollars, which forces them to manufacture here.
With Japan and most European countries saddled with a low birth rate, and hostile to immigration as a matter of policy, America is the only major industrial power promising a steady supply of reasonably cheap labor. The recent action of Congress in refusing to restrict legal immigration makes the point our porous borders will continue.
Our political system, while much abused at home, also offers advantages to business it doesn't find elsewhere. To make a long story short, political power in this country is divided into more pieces, and subject to change in more frequent elections.
If business finds the policies of one state distasteful, it has only to shop among the other 49 for a better deal. If it doesn't like the president, it can look to Congress. If it likes neither, it can go to the courts for relief.
American campaign-finance laws permit business to buy influence openly in both parties. In fact, the anti-business instincts of the Democratic Party were tamed by its increasing reliance on corporate contributions. Among major powers, America is the only one never embracing a true left-wing government, nor one of any radical stripe, for that matter. Our tradition of political stability counts for much in the councils of capitalists.
There is a negative side, of course, mainly that we seem a more corrupt country - and people - than we used to be. If so, it can probably be traced to the growth of the welfare state and government assuming the role of deciding winners and losers in the private sector.
But there is vitality and flexibility here that others can't match. As British historian John Keegan recently said, " ... Americans have a secret, the secret of a way of life different from any other lived on Earth. What it is, I'm still trying to find out."
What it comes down to, I think, is a trust in progress; a distrust of elites; an anxiety to succeed; and a belief in American destiny to prevail. Our basic national question is, and has been, "What's the deal and how can I get a piece of it?"
The plums Allen is picking may not be ones he planted; and there is, of course, a good deal of hype in all such junkets. But as super salesman and dealmaker for Virginia, he's giving all he has.
Ray L. Garland is a Roanoke Times columnist.
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