Economic development in county means more than just jobs

When they think of the term economic development, most people immediately think of jobs.

That is understandable, but economic development is more than that.

“It’s hard sometimes for some to understand how economic development affects them. How the fact Volvo expanding will affect them,” said Massie District Supervisor and Board Chairman Andy McCready.

“Let’s look at the timeline,” he said.

McCready said Volvo officials say the timeline on their expansion – and the addition of 777 new jobs – in six years.

“When you start building those buildings and bring the machinery and tools in here, those are all things that the county can tax,” he explained. “We just had a ballot referendum last year for the new middle school, and the tax rate had to go up 13 cents for that new middle school.

“This project at Volvo will generate about $3 million in tax revenues per year. To equate that for our citizens, that’s equal to about 12 cents on our property tax rate. We just raised property taxes 13 cents to pay for the new middle school.

“Years ago, when I first went on the board, I said there are two ways to pay the bills – raise taxes or through economic development. I chose economic development. This is a tangible example that our citizens can look at and say, okay, as this gets built the county will have more tax revenue without raising taxes because someone else is going to be sharing more of the burden.

That will give us money to address situations like infrastructure needs including some of the school building needs. But it also gives us an opportunity to pay some of that progress back to our citizens in the form of a tax cut. A 77-cent tax rate is tough on some of our citizens, and if we can ease that burden down, we’re better off in doing it.

“We will gain that $3 million in tax revenue – conservatively speaking – for the next 20 years.

“Some people will say, ‘well, what did you have to give to get it?’

“Well we spent about $2.5 million on a farm and we had been leasing it out and that farm has been paying taxes on the full value of the industrial property, not land use taxation. So that’s been bringing us money in.

“So, rough numbers, we had about $2 million in the farm and we’re passing title to that to Volvo.  They’ll be paying $3 million a year in taxes, and we spent $2 million ONE TIME to get that $3 million in taxes.

“So, in business, we’d say that’s less than one-year payback. You get less than a one-year payback, you’ve got a good deal,” McCready said.

County Administrator Jonathan Sweet agreed but noted there will be some lag time before the county realizes all the tax revenue from the Volvo project. Although McCready said he doubts it will take six years as Volvo said.

So, while the county will benefit from the 777 new jobs created by the project, citizens are due to see even more benefits from the tax revenues raised.

“And that’s just one economic development project,” Sweet noted.  “We have other things like Phoenix Packaging. We don’t get to tax that new building of theirs until it’s up.”

 

The county will benefit, too, from Friday’s announcement that BimmerWorld will be spending $1 million on an expansion of their facility in the county’s industrial park, and 15 new jobs will be added.

“People have seen these announcements on varying types of manufacturing, but that’s not the only type jobs we’re out seeking,” McCready stated.

“We are seeking jobs that require higher levels of education. One project we’re talking with folks on now – and I think we’re probably in good standing to get it – just about everyone who works there will need to have a master’s degree in computer science.”

While the county is casting a wide net to attract a variety of jobs, not all new development is necessarily a good thing.

“We once had a major retailer wanting to put in a warehouse distribution center here,” McCready said.  “Quite frankly the pay wasn’t great. It may have been a thousand jobs, but the pay wasn’t that great. Ultimately, the company decided they needed to go somewhere where there was a bigger population around. When you look at Giles, Carroll, Wythe – even Montgomery and Pulaski – you only have so much population. The company said, ‘to get these 1,000 employees we’ve got to have X-number of population around us,’ and we just didn’t have it.”

McCready noted the company didn’t pay well enough for people to drive in from surrounding areas.

“We’re trying to shift our thinking toward better jobs that will take care of our people,” he said.

To get those jobs, the county will have to have a workforce that’s ready to take them. And it has to be on the lookout for opportunities to tap into workforce pipelines.

“We’ve got to make sure we’re getting our people ready – those who come out of the community college who are ready to go, or those in high school – they know they need to check off these skill boxes to go to work here,” McCready said.

“A lot of communities have these drivers – like Virginia Tech is for Blacksburg. When we see that driver, and we’re near that driver, there’s no reason why we can’t position ourselves for it to be a driver for us as well. So, we say ‘what do we need to do for it to be something good for us too.’ We need to be sophisticated enough to take full advantage of what aren’t crumbs falling off the table – they’re loaves of bread,” Sweet added.

“We’re doing that now. We’re truly thinking strategically. How do we take full advantage of the talent pipeline so we can syphon some off here? We need to understand that first and then market it. We want to get those higher pay grades into our community, which increases our population and average household income, cash flow into the community, etc.”

“People need to know that, in round numbers, every day 8,000 citizens leave the county to work outside the county. But about 8,000 come into Pulaski County every day to work. We want to bring that migration out of the county down some,” McCready said.

Both McCready and Sweet note that a huge economic development boom itself is likely involving all the workers coming into the county who will build the Volvo expansion, the housing projects that are on the drawing board now, etc. They can easily point to some $400 million in construction project labor that is currently happening or will be taking place. And that doesn’t count the jobs at Volvo or BimmerWorld or any others that occur.

“And that doesn’t count what’s happening at Commerce Park and other places,” McCready said.  “There is potential for a tremendous amount of construction labor, construction payroll infused in the community over the next three years.”

Sweet said that means biscuits flying off the shelves at the Cougar Express and everywhere else, hotel occupancy going up as contractors look for places to stay while in the county to work, fuel, restaurant business going up and more.

“Construction payroll over the next three years will be huge. That doesn’t count the jobs that will be created,” Sweet said.

By MIKE WILLIAMS, The Patriot

In just 6 1/2 years local officials have announced

$622 Million in new capital investment and 2,092 new jobs.

Here’s a breakdown:

2013 and 2014 (2 years) –

Red Sun Farms- 205 new jobs; $30 million investment – Mexico

Korona S.A.- 170 new jobs; $18.3 million investment – Poland

MTM Expansion- 66 new jobs; $1.0 million investment – U.S.

Falls Stamping- 112 new jobs; $5.7 million investment – U.S.

RickUSA Stamping Corp.- 10 new jobs and $1. million investment – U.S.

NW Hardware- 12 new jobs; $800,000 investment – U.S.

James Hardie- 9 new jobs; $3.5 million investment – Australia

Burnell Group- 10 new jobs; $50,000 investment – U.S.

Total:  Two year total of 594 new jobs and $60 million investment

  For 2015 –

Volvo invested $69 million and no jobs – Sweden

 For 2016 –

Volvo invested $31 million and 30 new jobs – Sweden

MTM announced new 66 jobs (Note:  They are currently at 200 jobs) – U.S.

For 2017 –

The numbers from Jan. 2017 to present are quite impressive with a top overall economic development performance outcome in 2017 per capita and currently in a really good position to finish first in the Commonwealth again for 2019.

The 2017 ranking outcomes were the result of Pulaski County’s five qualified projects in Calendar Year 2017, two of the projects were officially announced in concert with the Governor’s office.  These five basic industry sector projects will collectively create more than 600 new jobs and $57 million in new capital investment.  The five projects referenced consisted of Phoenix Packaging Operations, LLC expansion – Columbia, MicroXact – U.S., Koinonia Ltd – Brazil., MTM Inc. expansion – U.S., and Volvo Trucks expansion – Sweden.

For 2018 –

We enjoyed only one basic industry sector announcement and that was Newcan Corporation – U.S. with a total for 2018 of $4-million and 40 new jobs.

For 2019 –

We have had two basic industry sector announcements already and they were Volvo Trucks – Sweden at 777 new jobs and $400-million in capital investment; and Bimmer World – U.S. at 15 new jobs and $1-million in capital investment.

This brings the 2.5 year total announcement of new jobs to more than 1,400 (1,432) and new capital investment to more than $460 million ($462 million).

We have seen our unemployment rate stay below 4% for the last 12 months (June 2018), and had it at less than 3% twice in the last 12 months. (Nov. 2018 at 2.8% and April 2019 at 2.8%).

(Note:  2.8% unemployment is our lowest unemployment rate since October of 2000 – nearly 20 years.)

The 6.5 year grand total is $622-Million in new capital investment and 2,092 new jobs.

-Jonathan Sweet

County Administrator

Pulaski County