THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: MONDAY, June 27, 1994 TAG: 9406290344
SECTION: BUSINESS WEEKLY PAGE: 10 EDITION: FINAL
SOURCE: BY TONI WHITT\
DATELINE: 940627 LENGTH: Long
Portsmouth had been teetering on the brink of failure for nearly a decade. Businesses were leaving. The city's finances had dwindled. Parts of downtown were in decay. MidCity, a once-thriving retail center, was all but boarded up.
{REST} And even the economic development staff had begun jumping ship. It was enough to send most managers running for cover.
But something in the city sparked James' interest and made him believe that he could attract new business there.
``I like challenges,'' he said, ``and I'm not afraid to fail.''
So the Norfolk native left the security of Chesapeake's Economic Development Department - where he was the assistant director in an aggressive, fast-growing city - and headed for Portsmouth, an urban city with steep taxes, high poverty and little room for new growth.
While many of these urban problems still exist, Portsmouth is emerging as a city of economic hope:
In three years, James and his assistant director, Steve Herbert, have helped make the city a main contender for the state's first pari-mutuel horse racing track.
The Economic Development Department also brought in $18.4 million in new business investment last year - nearly half a million dollars more than that attracted to Virginia Beach.
The number of vacant offices downtown and in Churchland - which hit a high of 26 percent a year after James arrived - is now down to 10.7 percent.
But James still has a long way to go to get the city vibrant.
Portsmouth has problems - especially with the dwindling retail market and unanswered questions about what to do with MidCity and parts of downtown. The city's real estate assessments are stagnant, and in parts of the city, housing values have actually fallen.
Between 1990 and 1991, for instance, property value citywide dropped $5.8 million. And money for new construction fell by more than 27 percent.
Forty percent of the property in the 30-square-mile city is tax-exempt because it's owned by churches or the city, state and federal government.
And at City Hall, employees are facing layoffs.
The city manager and others on the economic development team promise big development news in the coming weeks.
No one will give a clue of what's to come, but they say it will be important.
``It's still confidential. I could tell you, but then I'd have to shoot you,'' says James, laughing and then casually throwing an arm around a surprised visitor's shoulder.
\ James' affability and sense of humor belie a serious nature and a hunger for challenge.
When James, the youngest of six children, was in junior high school, his family left Norfolk for the suburbs of Chesapeake. His grades at Indian River High School earned him an appointment to the U.S. Naval Academy.
``The academy gave me a lot of confidence,'' James said. ``It was academically enriching. I learned teamwork, responsibility and that I can overcome a lot just by focusing.''
But after two years and no interest in a military career, James transferred to Hampton University, where he earned his bachelor's degree in economics.
When he finished at Hampton University, James was offered a job at First National Bank of Chicago, where he worked full time while earning his master's in business administration at Northwestern University's Kellogg School of Management.
Through the MBA program and the bank, James designed an economic-development and revitalization program for a decaying Chicago neighborhood.
After receiving his MBA, James was promoted to senior vice president and financial analyst in service products.
With the banking industry in flux, James later decided to try consumer marketing.
He ended up at Kraft Foods, where he met his wife, Karen, a Chicago native.
At Kraft, before his 30th birthday, he was given a new cheese brand and the chance to develop and market it.
``It was like running my own business,'' James said. ``It was a $144 million business. The idea was to take the cheese from a concept to the national market.''
His first cheese didn't become a hit, but James went on to help reposition Velveeta in the national cheese market. His advertising group came up with a new jingle. The team expanded the brand and introduced Mexican Velveeta. All of this took intense teamwork, forcing him to rely on what he learned at the Naval Academy.
James loved his work and was happy with the Kraft company.
But by this time, James and Karen had a daughter, and Karen was searching for a new career path and a place to raise their family.
Karen, now an assistant vice president at Central Fidelity Bank in Norfolk, visited James' family in Chesapeake and fell in love with the area. While she was visiting, she saw an employment ad for a job with the Chesapeake Department of Economic Development. She pulled together her husband's resume and turned it in.
Then she called him to tell him about the opportunity. James replied, ``It sounds interesting.''
``Good,'' she said, ``because I've already submitted your resume.''
``I went from selling cheese products,'' James said, ``to selling a city.''
\ James, who now earns $67,000 a year, took ``a significant cut'' in his salary to move to Chesapeake, but he said he was excited by the chance to test his abilities.
``If the challenge hadn't been there, no amount of money would have made me leave Kraft,'' James said. ``I felt like, if the challenge was there, then the money would follow.''
In five years of working for Chesapeake, James designed promotional brochures, automated the department and worked his way up to assistant director of economic development. He even served as interim director for a short time before Donald Goldberg moved into the top job.
``Matthew's experience gave him an understanding and an ability to relate to business,'' Goldberg said. ``I knew at some point he would try his own shop.''
Goldberg praised James' ability to get along with people, his concern and willingness to work.
``He's got a good sense of humor,'' Goldberg added. ``In this business, you have to have a good sense of humor in order to survive.''
Portsmouth City Manager V. Wayne Orton said James came with high recommendations - not only from Chesapeake's Economic Development Department, but also from the Chamber of Commerce and individual members of Chesapeake's business community.
Orton saw the support James had developed, and he wanted that for Portsmouth.
In 1991, when James was interviewing for the director's position, Portsmouth had become isolated: a bad thing for a city in search of new businesses.
The department had no connection with the state Economic Development Department, Orton said, and it was ``out of the loop'' in regional efforts to attract industry.
Orton was looking for someone who could build a team.
James began looking at Portsmouth closely, he said, rather than focusing on the skeletal staff or the deteriorating portions of the city.
He saw a framework for future success that was already in place, he said. And he saw a community that only wanted him to succeed.
``I felt the city hadn't maximized its potential . . . but many of the key ingredients for success were here,'' James said, ``like the community support from business groups, civic groups and the Portsmouth Partnership. They all had a sense of urgency toward economic development.
``You have to have people who are anxious and want to go to work to help you.''
Today, the city receives business prospect referrals from the state, regional business groups, local Realtors and from local companies that have enticed new businesses to take a look at Portsmouth.
Dave DiPersio, controller for Lindab Inc., a Swedish-based company, said the city's Economic Development Department was a major factor in the company's decision to move to Portsmouth. The company had searched for manufacturing headquarters in Connecticut, where its sales offices were. It also looked at Charleston, S.C., and Atlanta before deciding on Portsmouth.
``We're extremely happy to be here,'' DiPersio said. ``We're in constant communication with economic development. When you call and ask for Matthew James, you don't get a secretary, you get to talk to Matthew - and he's very eager to help you out. Some places, once you're there, they'll neglect you, but they definitely haven't done that here.''
James gives most of the credit to his staff and to the teamwork in the department. But Orton is quick to point out that it was James who built that team after losing all but two people on his staff.
``Matthew James is the spiritual force in that department,'' Orton said. ``I've hired a lot of people in my career. I put him in the exceptional category.''
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