
DATE: Thursday, July 17, 1997               TAG: 9707170512

SECTION: FRONT                   PAGE: A1   EDITION: FINAL  

SOURCE: BY MEREDITH COHN, STAFF WRITER 

                                            LENGTH:   98 lines

CORRECTION/CLARIFICATION: * A chart in Thursday's newspaper, showing the number of naval federal civilian employees, had an error in the range of numbers. The graph should have shown a span of between 27,000 and 43,000 employees, not 270,000 to 430,000. Correction published in The Virginian-Pilot, Thursday, July 17, 1997, page A2. * MILITARY DOWNSIZING HAS UPSIDE PRIVATE-SECTOR GROWTH HAS HELPED OFFSET LOST MILITARY JOBS, DOLLARS

For most of the decade, Hampton Roads has nervously braved predictions of economic malaise or meltdown from military downsizing.

The cause for concern was real as the region shed 46,000 Navy, Navy-employed civilian and shipbuilding jobs since 1985.

Despite economic shivers from the Cold War's end, Hampton Roads' economy has emerged robust and diversified.

New private industry employment has more than offset Navy job losses in the region, according to an economic report outlined Wednesday. That growth has allowed the region to share in economic euphoria being celebrated on Wall Street and in other, less military dependent communities throughout the state and the country.

What this means, according to John Whaley, director of economics at the Hampton Roads Planning District Commission, is that Hampton Roads is successfully weaning itself from the military payroll.

Whaley's numbers show that only about 30 percent of the region's earnings is now military linked, versus about 40 percent in the mid 1980s.

The commensurate drop in Department of Defense dollars flowing to the region amounts to about $200 million each year since 1988, he said.

``This is probably a substantial undercounting of losses, because the numbers don't include Army jobs, Air Force jobs or the ripple effect on the economy,'' Whaley announced Wednesday at the commission's monthly meeting. ``But we've restructured our economy . . . and gotten away from a heavy dependence on military.''

Whaley attributed the positive economic picture in Hampton Roads and the nation to low inflation, low interest rates and high consumer confidence. And in the last couple of years, the region has outpaced the nation in employment - mostly from the creation of service and retail jobs.

The unemployment rate in Hampton Roads is 4.6 percent, while the national average is 5.5 percent.

There is a smattering of gray in Whaley's otherwise silver lining. Salaries that come with the new service jobs are lower than the lost military-related jobs, he said. Per-capita income is about 87 percent of the national average, down from about 94 percent in the mid-1980s.

Whaley said the region's seven cities, and groups including the Hampton Roads Economic Development Alliance, the public-private economic development organization, will face greater pressure to bring in new industry - and better-paying jobs.

The targets should include manufacturing and electronic firms, he said. Both types already thrive in Hampton Roads and pay well.

In the last few years, the region has attracted a host of customer service and distribution centers and small manufacturers. Examples include, Canon Computer Systems, which brought 300 jobs to Chesapeake in 1995; Avis Rent-A-Car Systems, which brought 540 jobs to Virginia Beach in 1995; and Market Connections Company, which brought 300 jobs to Norfolk in 1997.

Tourism and the port have also helped the area rebound.

Whaley's report shows Hampton Roads and Virginia have had a longer road to recovery from the military losses than the nation as a whole - although California, New York and Massachusetts were hit the hardest.

Specifically, since its peak employment, Hampton Roads lost:

23,000 Navy jobs since 1990;

11,000 Navy-employed civilian jobs since 1991;

12,000 Newport News Shipbuilding jobs since 1985.

But Whaley said the region has become more attractive to business and more competitive with its East Coast neighbors. The area's quality of life, affordable labor pool and location will continue to make the region attractive.

The report left many local leaders optimistic.

``We have to maintain our aggressive economic development at the ports and in other areas and continue diversifying,'' said Norfolk Mayor Paul D. Fraim. ``But it sounds like we're headed in the right direction.'' ILLUSTRATION: Graphic

WHERE JOBS WERE LOST

Job losses in the Navy, the Navy-employed civilian sector and at

Newport News Shipbuilding account for much of the decline in Hampton

Roads.

WHERE JOBS CAME FROM

Numerous customer service and distribution centers and small

manufacturers have come to the area. Tourism and the port have also

contributed.

JOB DECLINE

SOURCE: Hampton Roads Planning District Commission

[For complete graphic, please see microfilm] KEYWORDS: U.S. MILITARY DOWNSIZING