Jobs flat on FSEDI’s watch

Manufacturing employment down

By Charlie Passut | Tidewater News

Published Saturday, March 6, 2010

■ Third in a series

FRANKLIN—Since Franklin-Southampton Economic Development Inc. was founded nearly five years ago, the number of jobs in the localities it represents has remained collectively flat.

The local numbers are better than regional and statewide trends during the same time period.

FSEDI, founded in August 2005, has been given $3.5 million by public and private sources to attract jobs — especially in manufacturing, transportation and warehousing — to Franklin and Southampton County.

Under FSEDI’s watch, the localities combined have lost more than 100, or 13.7 percent, of their manufacturing jobs and posted a slight gain in transportation and warehousing positions, according to data provided by the state. Those numbers do not include layoffs at International Paper Co.’s paper and saw mills and the closure of Franklin Equipment Co., as those facilities are physically located in Isle of Wight County.

The City of Franklin and Southampton County each contribute $150,000 a year to FSEDI. Two additional stakeholders, the private Camp Foundations and Franklin-Southampton Charities, contribute the rest of FSEDI’s $700,000 annual budget.

According to data from the Virginia Workforce Connection’s Quarterly Census of Employment and Wages, or QCEW, the number of jobs in Southampton and Franklin combined remained about the same — up 87 jobs, or 1.1 percent — between the third quarter of 2005 and the third quarter of 2009, the most recent quarter for which figures are available. Combined, the localities lost 106, or 13.7 percent, of their manufacturing jobs but gained 52 transportation and warehousing jobs, a 42.6 percent increase, during the same timeframe.

All things being equal, that means each job gained in the two localities cost taxpayers and private foundations roughly $40,230. QCEW data show the average wage per local job in 2009 was $27,248 annually.

QCEW data reported that there were 3,762 jobs in Southampton County during the third quarter of 2009, down 104, or 2.7 percent, from 3,866 jobs during the third quarter of 2005, when FSEDI was founded.

Employment gains in Franklin helped offset the loss in Southampton. QCEW data indicate the city gained 191 jobs, or 4.8 percent, from 3,952 in the third quarter of 2005 to 4,143 in the third quarter of 2009.

“I think those are encouraging numbers given the position of the economy and what’s happening around the country, not just in Virginia,” John Smolak, president and CEO of FSEDI, said Friday. “The numbers are at least holding steady over time. I think that says a lot for the kind of people and companies we have, that they are trying to keep people working.”

Franklin Mayor Jim Councill concurred.

“I don’t think any of us are satisfied with the number of jobs that we’ve created over the last five years,” Councill said Friday. “We wish we could have done a great deal more. But if we’re not in the game, we’ve got nothing.”

The mayor added, “I’m convinced that if we hadn’t been doing what we’ve been doing, job losses would have been worse. We’re losing some jobs as a result of plant closures, (and) transportation and warehousing is off tremendously. But the good news is that there are people with a bigger vision that see that industry has a bright future. (And) the (Franklin Business) Incubator is on a positive; they’re growing jobs. They’re adding to the job base at a nice clip and with good-paying jobs.”

The incubator, designed to help start-up businesses, is owned by the city and managed by FSEDI.

The region and state have fared no better than Franklin and Southampton in recent years.

According to seasonally adjusted data from the Hampton Roads Planning District Commission, the region lost 2,400 jobs, or 0.3 percent, between August 2005 and December 2009.

Manufacturing, trade, transportation and utilities jobs also fell, according to the HRPDC. Using numbers that were not seasonally adjusted between December 2004 and December 2009, the region lost 6,900 manufacturing jobs and 7,900 in trade, transportation and utilities – declines of 11.4 percent and 5.4 percent, respectively.

“Many of these job losses are tied to the recession but not all of them,” Greg Grootendorst, chief economist for the HRPDC, said Wednesday. He cited Ford Motor Co.’s decision to close its Norfolk assembly plant in 2007 as an example of job losses not tied to the recession.

“Competition is fierce,” Grootendorst said. “It’s not like you can let your guard down in a recession. Competition stays high, especially in a recession, and there’s quite a focus on keeping what you do have.”

HRPDC represents Franklin, Southampton and 14 other localities: the cities of Chesapeake, Hampton, Newport News, Norfolk, Poquoson, Portsmouth, Suffolk, Virginia Beach and Williamsburg, and Gloucester, Isle of Wight, James City, Surry and York counties.

QCEW data also shows that the entire state has lost jobs over the past five years, the biggest majority coming in the manufacturing and transportation and warehousing fields.

Virginia lost 73,257 jobs, a 2.0 percent decline, between the third quarters of 2005 and 2009, according to QCEW. Of those jobs lost, 59,989 were in manufacturing and 10,675 were in transportation and warehousing. Statewide, manufacturing jobs declined 19.7 percent while transportation and warehousing jobs fell 8.1 percent.

“I’m surprised we were flat, considering that our unemployment rate is up,” Franklin City Councilman Benny Burgess said Friday. “I think it shows that businesses are not expanding and putting on (employees), and that makes the upcoming IP closure have more of an impact because everything around us is not expanding.”

The Virginia Employment Commission reports that the unemployment rate in Franklin was 9.6 percent in December 2009, compared with 5.4 percent in August 2005, when FSEDI was created. Southampton County’s jobless rate in December was 8.7 percent, nearly double its rate of 4.4 percent in August 2005.

Franklin City Councilman Barry Cheatham declined to comment on the local job figures, but he said the ongoing loss of manufacturing jobs is a national issue “that needs to be looked at.”

“We’re losing manufacturing jobs all over the country, not just in Franklin and Southampton, and we definitely need to do something about that,” Cheatham, who represents Ward 1, said Friday.

Dallas Jones, chairman of the Southampton County Board of Supervisors, said Friday that, “With the economy like it is, nobody is doing anything. Jobs are being lost all over the United States.”

Jones said manufacturing, transportation and warehousing are “not the only areas we’re looking at. We’re looking at just about anything we can get that won’t be a detriment to the county or to our citizens.”

Jones said development of the Turner Tract industrial site is essential to attracting industry to the county in the future.

“(FSEDI) is doing a good job of trying to bring us business clients, but we’re just not ready for that yet,” Jones said. “We’re not ready for them, especially warehousing. We hope next year at this time that we’ll be ready and have something in place that they can come right in.”

Burgess, who represents Franklin’s Ward 2, said he would like to see FSEDI work with farmers to advance economic development efforts in agriculture.

“Agriculture seems to be on an uptick, and I’d like see if there is anything that could be done to support that, to help make sure that our farmers are successful,” Burgess said.

QCEW data reported the number of businesses in Southampton fell by one, from 284 to 283, between the third quarters of 2005 and 2009. The number of businesses in Franklin also fell during that time, from 317 to 304, a net loss of 13, or 4.1 percent.

According to Smolak and FSEDI, three businesses — Feridies, Southampton Terminal and Money Mailer — have created new jobs during FSEDI’s tenure.

Feridies expanded into the Southampton Business Park near Courtland, spending $3.2 million to build a 43,000-square-foot peanut processing facility. The expansion created 25 jobs.

Southampton Terminal, a warehousing and distribution company, built a $2.5 million, 50,000-square-foot storage facility in the same industrial park in 2008 and added another 20 jobs.

Money Mailer expanded its facilities in the Pretlow Industrial Park in Franklin in 2008 and reportedly added about 20 jobs.

“I think they are all trying their hardest to improve what they’re doing,” Smolak said of Feridies, Southampton Terminal and Money Mailer. “But, business is tough right now for a lot of these companies.”

Asked if he thought the job trends over the past five years would be better, worse or unchanged without FSEDI or other economic development officials working on Franklin’s behalf, Burgess said, “We would have something in its place if FSEDI wasn’t around. It’s just too important to the city.”

Franklin City Councilwoman Rosa Lawrence, who represents Ward 3, said she is concerned about the future.

“Even though the numbers look good right now, people are still in a dilemma over what’s going to happen in the next 30 days,” Lawrence said Friday, pointing out that 106 more employees of the International Paper Co. mill are scheduled to lose their jobs on April 30.

IP last fall announced its plans to close the mill by spring, eliminating 1,100 jobs.

“It’s a bad time right now, and it’s kind of scary, but there are still opportunities out here,” Lawrence said. “We’re going to be praying for the best.”

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