THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Thursday, April 13, 1995 TAG: 9504130397
SECTION: FRONT PAGE: A1 EDITION: FINAL
SOURCE: BY MARGARET EDDS AND ROBERT LITTLE, STAFF WRITERS
DATELINE: RICHMOND LENGTH: Long : 149 lines
State officials Wednesday hailed a new $3 billion high-tech manufacturing plant planned for central Virginia as an unparalleled economic development coup - one that could have massive benefits but is virtually risk-free in its cost to taxpayers.
The new Motorola Inc. semiconductor plant, announced this week, is expected to employ as many as 5,000 people and bring $564 million in new tax revenue over 20 years. Gov. George F. Allen's top economic development official said the plant could also create as many as 25,000 spinoff jobs.
To attract the facility, state officials offered Motorola an $85.6 million package of incentives, most of which will only be paid if the operation is as successful as billed.
A Motorola spokesman cautioned, however, that the company has not made a final commitment to the project, having simply purchased an option to buy a 230-acre tract of land in Goochland County, just west of Richmond.
But Allen was not so restrained.
``Motorola is coming to Virginia,'' he said at an afternoon news conference.
``This is great news for the people of Virginia. . . . It's going to secure Virginia's prosperity'' into the 21st century, he added.
And in a morning news conference, Paul J. Shimp, a Motorola senior vice president who heads its semiconductor business, was enthusiastic about his company's plans.
``People should be proud,'' he said. ``We looked at over 300 sites'' around the United States.
Motorola's selection of Virginia was also good news for the Allen administration, which has made economic development a top priority but whose most publicized initiative - a Walt Disney theme park - failed.
The announcement also came after a string of high-profile missed opportunities for the state, starting with United Airlines' 1990 decision to locate in Indiana. Since then, Virginia has bid for and lost major expansion projects from Mercedes-Benz, BMW, Lego and the Nucor Corporation, a steel manufacturer that decided in March to locate a mill in South Carolina.
``I think the Motorola announcement is a major symbolic victory that Virginia seems to have not been a bridesmaid again,'' said state Secretary of Commerce and Trade Robert T. Skunda.
And compared to other offers the state has made when courting new businesses, it won't cost much, either, Skunda said.
The state has promised a $16 million upgrade of the engineering department at Virginia Commonwealth University, and has agreed to spend $5 million on work-force training through the community college system.
But the bulk of the state government's incentive - $60 million in tax rebates - only kicks in when Motorola hires employees and starts generating tax revenue.
Also, if the new manufacturing plant falls through - Motorola has signed only a 120-day option to buy the site, not a contract - all deals are off.
While Motorola expects to build the Virginia plant, there is no guarantee, cautioned Jeff Gorin, media relations manager for Motorola's semiconductor operations, in a telephone interview from Arizona.
``We've not made a final commitment to go ahead with the project. . . . That's the expectation, but there's a little bit of reserve there,'' he said.
Gorin said the company hopes to decide within the next four months whether to purchase the Virginia land. The community's response and the results of various site engineering tests will be critical to the decision, he said.
Gorin also cautioned that even the purchase of the land would be no guarantee that construction will begin quickly. ``It's possible that it could lie for some months or years, depending on the business outlook at the time,'' he said.
The most optimistic projection is that within one to 1 1/2 years after construction begins, about 1,000 people would be employed at the Motorola plant, he said. The expectation, if all goes well, is that employment would reach about 5,000 within 10 years.
Still, state officials were exuberant.
The manufacture of semiconductors, tiny computer chips used in pagers, cellular phones and other electronic equipment, is an environmentally ``clean'' industry, they noted. And it pays well: Average employee salary is estimated to be $35,000 annually.
Motorola also has an international reputation for good employee relations and for investing in communities in which it locates.
``This is just the type of company any state in the union would be thrilled to have,'' Allen said.
Gorin offered little information about why Virginia was chosen, saying, ``We hold pretty close to our chest the details of the process we go through.'' He said there were hundreds of potential sites, and that Goochland County's selection was based on its infrastructure, cooperation of local and state officials, availability of an educated work force and good education facilities.
Skunda said state officials were first approached about nine months ago by a site-location firm working for an anonymous prospect. From the size of property the prospect was interested in, Skunda knew the potential payoff was great.
About a month later, Skunda said, he learned the prospect was Motorola, and he got the governor involved in making phone calls and pitching the state. A few months later, the company said Virginia was a finalist.
Skunda then offered Motorola dozens of potential sites around the state, and the company soon announced an interest in Goochland County. ``They fell in love with it,'' he said. State officials began crafting the package of economic incentives.
Allen said Wednesday that he was involved in negotiations with Motorola officials, and that he recently toured a company plant in Arizona.
Ultimately, Skunda said, one factor that helped Virginia succeed where before it had failed was that Motorola didn't consider tax breaks and other monetary offerings a primary factor.
``Motorola didn't offer themselves up to the highest bidder - that's the difference,'' Skunda said.
If Goochland passes Motorola's site-location test, the project's economic incentives would have to be approved by the General Assembly. Its final test, then, could be a political one.
House Majority Leader C. Richard Cranwell, D-Roanoke County, said Democrats in the Assembly are inclined to work with Allen on economic development. But he also cautioned that he has received no briefing from the administration on the prospective deal.
Allen said Wednesday he expects that the Assembly will embrace the Motorola deal, and Cranwell did not counter him. But Cranwell said legislative action could be colored by a sense of betrayal on the Disney deal, which required General Assembly approval but whose full details were not disclosed to lawmakers during the negotiating process.
``Some of us feel like we got burned,'' Cranwell said. ``Anything that happens in the next session will be strained through that filter.'' MEMO: The Associated Press contributed to this report.
ILLUSTRATION: STATE'S COST
State grant to Motorola over five-year period: $60 million
State grant to help develop an "electronics manufacturing
curriculum" at Virginia Commonwealth University:
$16 million
Work force training in local schools and community colleges:
$5 million
Tax credit to Motorola;
$4.6 million
TOTAL: $85.6
PLANT'S COST $3 billion
LOCATION 15 miles west of Richmond
EMPLOYMENT 5,000
TAX REVENUE (over 20 years)
$564 million
ABOUT THE PLANT
It would produce semiconductors, the fingernail-size electronic
circuits that serve as the "brains" of everything from computers to
pagers.
More on the deal in BUSINESS/D1.
KEYWORDS: MOTOROLA by CNB