THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Sunday, October 22, 1995 TAG: 9510210367
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY JAMES SCHULTZ, STAFF WRITER
LENGTH: Long : 181 lines
Former NASA Langley Research Center employee Ross Goble says something significant is happening on the Peninsula. The founder and president of the 11-year-old Engineering Development Laboratory Inc. in Newport News says his business has been expanding at an annual clip of almost 30 percent and has nearly doubled in size over the past four years.
His 60-person company assembles electronic components used to make computer circuit boards. His customers are national: Canon, General Motors, Chrysler, Allied Signal. His suppliers, foreign and domestic, include many in nearby Hampton and York County.
Business couldn't be better, Goble asserts. In fact, it's so good that the company will be setting up another production line by the end of this year and hiring an additional 15 to 20 people by early 1996.
``This is a crackerjack place,'' Goble said. ``There's no question that newer companies are coming in here. It's kind of a Silicon Valley east.''
Despite government cutbacks and corporate restructuring, Hampton Road's Peninsula appears to be attracting and retaining a growing corps of high-tech businesses, large and small, specializing in everything from manufacturing to engineering services.
The pending arrival of computer assembler Gateway 2000 in Hampton and the promise of 1,000 relatively high-wage jobs by 1999 signals the beginning of the Peninsula's emergence as a high-tech corridor, as well as long-term prosperity for the region.
Several other electronics companies are said to be eyeing the Peninsula for manufacturing sites. MCI Communications Corp. is considering a 1,000-worker service center.
In terms of high-tech growth, the Peninsula is far outpacing its much larger and more populated cousin across the James River, South Hampton Roads. Company after high-tech company seems to be bypassing the cities of Virginia Beach, Norfolk, Chesapeake and Suffolk to set up shop in Hampton or Newport News.
``Is this a quirk or a trend? It's a trend because there's been deliberate activity to make it a trend,'' said H. Frederick Dylla, technology transfer manager for the Continuous Electron Beam Accelerator Facility, a nuclear-physics research facility in Newport News. CEBAF is underwritten by the U.S. Department of Energy and a 41-member university consortium.
``I've only been here five years, but in that time I've seen a concerted effort on the part of economic development offices to link up with universities and the national labs to promote the region as friendly to business. You're beginning to see the payoff.''
Most likely, according to Dylla, is steady development of the Peninsula as a home to electronics firms. It's a demonstration of what some call ``cluster theory,'' the notion that companies naturally congregate in a place where competitors and suppliers also are moving.
``You have the start of an electronics cluster here,'' Dylla said. ``It's only strengthened by having Motorola come in up the road (in Richmond). Think of this as one of Virginia's interlocking research triangles.''
In the longer run, the region could become known as one of the nation's premiere technology centers, building on its strengths in aerospace, high-energy physics and construction technologies.
Enthusiasts have long insisted the Peninsula will prosper from the talents and resources available from NASA Langley Research Center, the Peninsula's largest federal employer, and Newport News Shipbuilding, Hampton Road's biggest jobs provider in the private sector.
Why? Because the behaviors of businesses and people often dovetail: most enjoy being around those of similar interests or inclinations.
``A Gateway locating here certainly will get the attention of other substantial technology companies,'' said Stephen S. Cooper, executive director of the Peninsula Advanced Technology Center. ``It goes back to the critical mass idea. Technology companies like to be where other technology companies are. They all have the same kind of basic interests and needs.''
But those meeting payrolls aren't just interested in social contacts. Executives must also have reliable, inexpensive and speedy pipelines to the myriad of small but essential services that, not provided, can cripple even the most efficient enterprise.
And that's where the Peninsula specifically may have the edge, according to Roy L. Pearson, director of the College of William and Mary's Bureau of Business Research. According to figures compiled by Pearson, engineering and management services on the Peninsula are comparable to the best found in the state.
``It's not necessarily critical mass in a particular industry,'' Pearson said. ``It's having all the supporting industries. It's a coming-together of business, legal, transportation, and engineering consulting services. If you're going to have technological spinoffs, you need some good patent lawyers.''
Goble, the owner of the Newport News engineering company, couldn't agree more. Within the last several years, he's finding it easier to get sophisticated, specialized work done close to home.
``Companies come in when the infrastructure has grown enough to provide support services and the required amenities,'' Goble said. ``You can almost see the curve progressing geometrically, in terms of technology development. That opens up opportunities for everybody: us, our competitors.''
Although Goble still shops for raw materials and parts in Singapore and Taiwan, his company's metal stamping is done in Newport News. He obtains sheet metal from a Hampton company, has welding done there as well, and patronizes machine shops in York County.
``There's talk that there will be at least 10 other small to medium-size companies coming here in order to supply Gateway,'' Cooper of the technology center said. ``The same thing happened with Canon. The whole thing just builds.''
High-paying manufacturers are the plums most prized by economic developers. And it is in manufacturing and manufacturing-related services that the Peninsula outshines South Hampton Roads.
``The Peninsula's economy is more of a manufacturing economy than Virginia's economy, even more so than the United States economy,'' said business researcher Pearson. ``For the size of its economy, manufacturing is under represented on the other side of the river, in South Hampton Roads.''
Pearson's figures indicate that, based on national averages on dollars earned from private, non-farm employment, the Peninsula pulls down about three times more than do areas south of the James.
Factor in the proximity of two high-profile national labs, NASA Langley and CEBAF, plus an abundance of highly trained scientists and engineers, and Pearson believes the Peninsula's long-range prospects for high-tech prosperity from manufacturing or engineering-related enterprise are strong.
Although South Hampton Roads has recently snared some desirable businesses, such as Panasonic and Canon Computer Systems, these tend to be more service-oriented and, therefore, pay less. It appears that South Hampton Roads has yet to put together as strong a regional technology identity as has the Peninsula.
``As a community we're all concerned that we are not having more success in recruiting manufacturing companies,'' conceded Hans Gant, president of Forward Hampton Roads, the economic development arm of the Hampton Roads Chamber of Commerce. ``I'm not sure why. But my suspicion is we're not competitive.''
Competitive, Gant contends, in the robust incentives that lure companies and keep them. Increasingly, companies are enticed by reduced land costs, free or partial site preparation, job and investment tax credits and subsidized training programs for new hires.
Efforts are under way to cool regional rivalries, Gant said, but locales in South Hampton Roads still find themselves in intramural contests.
``Although we're working together better today on issues like public services, there's an awful lot of independence,'' Gant said. ``When it comes to economic development, each individual city wants to go it on its own. The best of all possible worlds would be a truly regional approach -- but we're not there yet.''
Squabbles over authority and influence may eventually be resolved. When and how, no one is able to say.
``Southside's problems are probably best characterized by the water debate,'' said Hugh Keogh, president of the Virginia Chamber of Commerce. Keogh was Forward Hampton Roads' first president, serving two years beginning in 1985.
``Not just Lake Gaston, but between Virginia Beach and Norfolk. That has to be put to bed. There's a perception of discord.''
And discord is not a good thing in attracting top-drawer manufacturers. But Gant advises not to dismiss South Hampton Roads as an also-ran. Those outside the state looking to relocate or set up a new plant usually scope out the entire region, not just part of that region, he says.
Hampton had just the right parcel of land for Gateway, Gant explains. The next company may find what it needs in Chesapeake, or Norfolk, or Suffolk or Virginia Beach.
``The fact that Gateway landed on the Peninsula is good,'' Gant said. ``Whether it's in Norfolk or Hampton, it's in our region. It's not a negative for South Hampton Roads.''
Broad regional cooperation is both desirable and likely, said William and Mary economist Pearson. But for Hampton Roads in general to enjoy the growing success of high-tech companies on the Peninsula, regional efforts must intensify and be sufficiently funded to offer competitive incentives.
As a model, Pearson cites an agreement between the state of Arizona and the state of Sonora, Mexico to aggressively develop a variety of technology clusters that play to the pair's strengths.
Reaching across the international boundary of the Rio Grande river, a coalition of businesses, universities, and state and local agencies are working up action plans to put economic development theory into practice.
Pearson believes that should a similar effort be undertaken in Hampton Roads, many more Gateway-like companies could end up south and north of the James. With them will come next century's jobs.
``Here's my pet theory: If Sonora and Arizona can do it, South Hampton Roads and the Peninsula can do it,'' Pearson said. ``We're not there yet.'' ILLUSTRATION: Graphic
JANET SHAUGHNESSY/The Virginian-Pilot
IN THE SECOND QUARTER OF 1994:
1993 ECONOMIC PERFORMANCE
SOURCE: Roy L. Pearson, School of Business Administration at the
College of William and Mary
[For complete graphic, please see microfilm]
by CNB