ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Sunday, June 23, 1996 TAG: 9606210001
SECTION: BUSINESS PAGE: 1 EDITION: METRO
SOURCE: JEFF STURGEON
Virginia's Department of Economic Development will shut down next week after 34 years. But that doesn't mean the state is getting out of the business of recruiting new companies and encouraging expansion of existing operations.
The department, set up in 1962 to stimulate business growth, will be replaced on July 1 by the Virginia Economic Development Partnership.
The new group hopes to improve on what some consider an already strong state economy. Here's how it works:
The state will continue to rely on Wayne Sterling, director of the soon-to-be defunct department, who has been in the spotlight recently for his role in landing new factory announcements. He will remain in charge of daily affairs at the new organization.
More than 80 percent of his department's employees will join him, about 125 people. In this respect, little will be different. Most workers won't even shift their desks in Richmond.
What's different is who'll be boss. A 15-person volunteer body dominated by executives who run some of the state's largest companies will assume the leadership role that Sterling, as department director, has performed as an appointee of Gov. George Allen.
They will form a group not unlike a corporation's board of outside directors, setting policy for the partnership and applying business philosophy to the process. They will meet at least quarterly in sessions expected to be open to the public.
Whichever officials are serving as secretary of finance and secretary of commerce and trade will have board seats, which is why they are calling the new organization a public-private "partnership."
It will be a state authority, like those that run its ports and arrange small business financing, but will perform the old economic development department's chief functions of national and international industrial marketing, export expansion and tourism promotion.
Other functions, including providing services to small business, facilitating worker training and keeping existing industry happy transfer to a new Department of Business Assistance.
Allen planted the seeds of this change in 1994, his first year as governor. He has shared credit for the idea with other states such as Michigan that have already used public-private partnerships for economic development with success. He also shared credit with 800 business, community and organization leaders who co-wrote his economic strategy, called "Opportunity Virginia."
In the past, the plan said, incoming governors have interrupted Virginia's economic development efforts, albeit inadvertently, by filling top jobs with their appointees of choice. A better way, the plan said, would be to set a long-term strategy, create a permanent authority to carry it out and limit politicians' control.
The legislature did that when it created the partnership. Allen appointed the partnership's first 15-person board of directors. He picked mostly business leaders by choice, not mandate. He also picked some civic leaders and economic developers, including Mary Rae Carter of Collinsville, a public relations and economic development consultant.
No future governor will be able to pick the full body, however, because directors' staggered terms will limit reappointments to a few per governor.
The partnership's inaugural budget will be about $30 million per year, which represents a slight increased cost to taxpayers.
Edward Bersoff, chairman of the partnership's board of directors, said they will justify this by landing more new jobs and investments than before.
The new board, said Bersoff, president and chief executive of BTG Inc., a Northern Virginia information technology company, will rule unencumbered by some of the restrictions that can stifle government process.
"What we have is a growth-orientation, a can-do attitude. These [attributes] are not necessarily absent from the public sector, but they are not the essence of the public sector. They are the essence of the private sector - to grow and survive and provide new opportunities."
Board members will include David Goode, chairman, president and chief executive officer of Norfolk Southern Corp.; and Richard Holder, chairman and chief executive of Reynolds Metals Co. of Richmond. Others are J. Thomas Fowlkes, president and chief operating officer of United Co., a Bristol coal producer; and James L Keeler, president and chief executive of WLR Foods Inc., the Broadway chicken and turkey processor.
In keeping with a businesslike approach, the new organization can tie the size of employees' paychecks to their performance, a motivating tool that can't be used on regular state employees under current law. The partnership also was exempted from some government spending controls.
Bersoff predicts the General Assembly will increase future partnership budgets if the organization performs well and restrict budgets if not - putting the state's economic developers more nearly on the for-profit terms as the companies they recruit.
LENGTH: Medium: 92 linesby CNB