Return to Virginia Business - April 2004

A chocolate-colored liquid sloshes like a giant milkshake inside a huge aluminum vat at Boehringer Ingelheim Chemicals Inc. Under the watchful eye of technicians, the solvents and powders that make up this witch's brew undergo a discreet chemical transformation. Soon the finished product will emerge as guaifenesin, the active ingredient found in many cough medicines.

Technicians at the Petersburg plant are as adept at concocting the chemical “recipes” as they are at managing the high-tech equipment used to distill them. First, they heat the mixture for four hours, setting off a chain of chemical reactions. After reaching the desired consistency, the chemical compound is piped to a bigger vat one floor below, where crystallization occurs. Next it travels to a whirring centrifuge that whips away the useless watery potion, known as slurry. Finally, the finished, semi-dry powder is cured and placed in 100-gallon drums for shipment to drug makers. “I tell these guys, ‘Don't worry about memorizing the recipes, learn to run the equipment.' If you do that, learning recipes is the easy part,” says Dale Williams, Boehringer Ingelheim's environmental and safety officer.

Round the clock, these high-tech chemical chefs produce hundreds of thousands of tons of active ingredients for a slew of brand-name household medicines. Guaifenesin, for instance, is a key ingredient in Robitussin, made by Wyeth Pharmaceuticals in Richmond. Boehringer is one of many chemical companies that are cooking up new jobs in the hard-hit manufacturing sector. Since arriving in Virginia in 1991, the company, part of the Germany-based Boehringer family of companies, has had to keep pace with increasing demand from drug makers.

The plant already employs 320 workers and, in the biggest corporate expansion in Petersburg's history, the company plans to sink up to $260 million to expand its manufacturing capacity by 2011. The expansion expects to create 165 new jobs, which follows a twofold increase in employment during the past five years, says John Wilson, the plant's top human resources executive.

Boehringer and other Virginia chemical companies are bucking a trend. Since 2000, Virginia has lost more than 60,000 manufacturing jobs, mostly in furniture making, textiles and electronics, to cheaper foreign competition and industry consolidation. It's not just Virginia – since mid-2000 the U.S. has lost some 2.6 million manufacturing jobs, according to the U.S. Department of Commerce.

As old-guard manufacturing segments die out, chemical companies are still able to generate new jobs that pay comparatively well. Indeed, industry leaders tout high-tech manufacturing, in chemicals and related fields, as the last best hope for the state's beleaguered manufacturing sector. “Manu-facturing remains a very important part of Virginia's economy, but over time it's evolved and become more em-bedded with new technology to cut unit costs and add a tremendous level of productivity,” says Rob McClintock, director of research for the Virginia Economic Development Partnership. Today there are about 19,000 people working in the industry in Virginia and they make an average of nearly $53,000 annually, according to the American Chemistry Council, a trade group in Arlington. That's about 35 percent higher than the state's average manufacturing wage and 43 percent higher than the average pay for all Virginia industries.
More new jobs are on the way. Chemical companies led all manufacturers in 2002 with capital investment approaching $530 million, according to the VEDP. That's expected to produce nearly 1,000 highly coveted positions during the next several years.

Powering the growth are companies in newer sectors such as specialty chemicals and advanced manufacturing, which use high-tech processes and equipment to boost output while lowering costs. These include companies producing chemical compounds used to make pharmaceuticals, super-strong synthetic fibers and electronics. Virginia was sixth in the nation in number of advanced manufacturing companies in a recent survey by the National Association of Manufacturers.

“Virginia has the basic structural supports in place needed by heavily mechanized manufacturers: affordable electrical power, access to skilled workers, low taxes and a reasonable regulatory climate,” says Brett Vassey, executive director of the Virginia Manufacturers Association in Richmond.
Those factors enticed Barr Laboratories to Virginia in 1996. The Pomona, N.Y.-based pharmaceutical manufacturer launched operations in Bedford County near Lynchburg, with 12 full-time employees. Two expansions and eight years later, Barr now employs about 400 people at a 300,000-square-foot manufacturing facility there, where it makes some of the company's more than 100 prescription-only pharmaceuticals. “When we decided to expand, Virginia was very cost effective. Plus it had quality workers and good colleges,” says company spokeswoman Carol Cox. It didn't hurt that Virginia provided $300,000 to help localities with site development and other infrastructure needs.

Virginia's proximity to the Pentagon has paid dividends, too. The U.S. Army in 2001 awarded the Barr plant a six-year $35.4 million contract to develop and manufacture an oral vaccine for adenovirus, a highly contagious respiratory infection that has plagued troops living in close quarters.

Drugs aren't the only things being made here. The Richmond region, spurred by the presence of Dupont and Honeywell Specialty Materials, is emerging as a hub of research and development of high-performance fibers. In fact, Honeywell and Dupont are girding for a fight. The rival companies are pitching their different patented polymer-based fibers to the U.S. Department of Defense for use in making safer armor for soldiers and military equipment. Neither Dupont nor Honeywell actually make the vests. Instead, their advanced fibers are sold to armor makers who weave the special material into vests, helmets and armor plating for military vehicles. At stake could be millions of dollars worth of defense contracts, with the military's expanding role ensuring high demand for the foreseeable future.

Dupont's Kevlar has been used for years to make bulletproof vests worn by members of law enforcement. First discovered in 1970, resin-rich Kevlar is made at Dupont's Spruance plant along the James River in Chesterfield County. Having the James nearby is critical, since Kevlar and other specialty fibers produced by Dupont require copious amounts of water for processing. The plant's 2,700 workers also produce Nomex used for fire-resistant material, Tyvek, a composite used in packaging and construction, and Zytel, a palletized plastic found in engine manifolds and tools.

But the undisputed star in Dupont's universe is Kevlar. Formed in a continuous strand from a yellow, taffy-like polymer, Kevlar is shipped in spools to companies making hockey sticks, circuit boards and blue jeans, to name a few. America's Cup yachters use Kevlar sails because they are lightweight but extremely durable. What made Kevlar a household name, though, was its ability to smother a sniper's slug. Kevlar vests stop bullets and even sharp objects by absorbing their impact like a catcher's mitt. “Kevlar is still our signature product and the demand by the Defense Department has really shot up since 2002,” says Plant Manager Mike Mayberry, who declined to specify a dollar amount for military-related Kevlar contracts. However, Dupont spent $50 million last year to expand its Kevlar production.

It's the job of ballistics expert Gary Garrison to make sure the vests work. During testing, Garrison fires live rounds into a Kevlar vest to determine how well it smothers ammunition. Garrison keeps firing until he achieves a “V-50” rating – the point at which three bullets pierce the vest and three other bullets almost penetrate the material. “That means there is a 50 percent probability of penetration at a given speed,” information used by Dupont scientists to make improvements, says Garrison. Displayed on the wall of his testing lab are photos of some of the estimated 2,600 police officers whose lives were saved by Kevlar vests.

Dupont officials point out that Kevlar is five times stronger than steel, although that boast doesn't impress employees at Honeywell's Colonial Heights plant. Honeywell makes a composite fiber known as Spectra that is 10 times stronger than steel —making it one of the toughest manmade fibers ever developed. Like Kevlar, Spectra's consumer applications are fairly ordinary: rope, protective clothing and fishing line. Yet the most visible application is in a product known as Spectra Shield, which is used as backing for ceramic strike plates in ballistic vests.

Spectra Shield is created by laying parallel strands of Spectra fiber side by side, then fusing them together with resins under intense heat until it reaches an oxford shirt-type thickness. Spectra's polyethylene chemical composition enables it to absorb more energy than other high-performing fibers, including Kevlar, says Honeywell scientist Dr. Lori Wagner. That makes it ideal for incorporating into the Small Arms Protective Insert, or SAPI plates, used by soldiers in Iraq and Afghanistan. “We are the only company that meets all the military specifications with regard to SAPI plate requirements. Our Spectra Shield material has managed to reduce the weight (of vests) from eight pounds to four pounds,” says Wagner, who declined to say how much Spectra gets sold to the military.

Even while Dupont and Honeywell slug it out, other companies are moving in. Entrepreneur Gene Vetter is relocating his specialty fiber company, Magellan Systems International, from Maryland to Chesterfield County to tap into the Richmond region's critical mass. Vetter says only Osaka, Japan, matches Richmond's cluster of specialty fiber makers. He claims the Defense Department is in hot pursuit of Magellan's M5 fiber for body armor, while aerospace companies are eyeing it for helicopter blades and aircraft. “In 10 years, you'll be riding in an airplane made out of this stuff,” Vetter says.

Vetter has another gaudy prediction: within five years, his company will employ up to 200 chemical engineers, scientists and skilled technicians in jobs paying annual salaries between $45,000 and $55,000. Magellan already is “exploring a relationship” with Dupont that would include product support and design engineering for the M5 product. Dupont has acknowledged that it is working with Magellan, although company officials did not provide specifics.

Specialty chemicals aside, the Richmond area is home to numerous bulk chemical producers as well. Honeywell workers make caprolactam – a byproduct of crude oil – at a plant in Hopewell and send it to Honeywell's Chesterfield County plant, where it is fashioned into Nylon 6, a trademarked fiber sold to carpet mills. At 1.5 million metric tons a year, the Hopewell plant also is the largest single-site producer in the world of ammonium sulfate, a caprolactam byproduct used in fertilizer.

Clustering along the Richmond-Petersburg corridor continues. Goldschmidt Chemical Corp. in Hopewell added about 30 jobs through a recent expansion, while Mitsubishi Gas Chemical Co. is breaking ground on a $14 million plant in Chesterfield expected to initially employ at least 30 people. One of the steepest challenges faced by heavy manufacturers: finding workers with the necessary skills to run the high-tech processing equipment frequently used.

Aiding that effort is the Community College Workforce Alliance, formed when J. Sergeant Reynolds Community College and John Tyler Community College merged a few years ago. Housed on Tyler's Chester campus, the alliance customizes training programs for specific manufacturers. When Dupont-Spruance added a production line for its Zytel product, training was provided to new workers on management skills, software and team building. The alliance recruits trainers from local companies and also from a large pool of retirees who have factory experience. “What companies need are people not only with skills for the factory floor,” says Ron Laux, the alliance's vice president, “but also an understanding of customer service. And it's not just external customers. The customer could be the next department in the manufacturing cycle.”

VCU's engineering school combines advanced engineering degrees with a focus on economic development. Its dean, Dr. Robert Mattauch, says demand for new engineers in Virginia will outpace graduates. “Technical excellence is assumed. What companies also want are people who are able to communicate well, work in teams, be entrepreneurial and have an understanding of the global manufacturing milieu,” he says. Seventy-five percent of VCU's engineering graduates hook on with Virginia companies, Mattauch says, defying the perception that brainpower is migrating out of state.

Far from Richmond in mountainous Giles County, Celanese Acetate is hiring 55 chemists, engineers and technicians as part of its expanding R&D capacity in Narrows. The new jobs will pay wages “substantially higher than the Giles County average,” says B.J. Smith, vice president of human resources for the acetate manufacturer, whose products are used in apparel, home fashions and industry.

The emerging field of nanotechnology also may play a role in how Virginia's chemical sector evolves. Nanotechnology refers to the science of manipulating matter at the atomic level to give it enhanced performance characteristics. Virginia Tech especially is a hub of nanotech research. NanoSonic, a six-year-old Blacksburg firm started by Virginia Tech professor Rick Claus, has patented a process known as electrostatic self-assembly, or ESA. That's a fancy term for an amazingly simple chemical process in which a base material, such as glass, is alternately dipped into water-based solutions containing positive and negative ions. The dipping causes particles with opposite charges to attract and stick to each other. The alternate dipping is repeated, creating a layer of a new material of no more than a few nanometers.

These thin films can be specially developed for use in intense environments, including coating sensors used to monitor flow rate, temperature and pressure in oil wells. As the company's technology has rapidly developed, so has its work force, doubling from 20 to 41 employees during the past two years. “Our key is showing manufacturers that we can lower (their) manufacturing costs and improve performance,” says Claus.

Even larger established firms are dabbling in nanotech-based manufacturing methods. Honeywell's specialty polymer unit incorporates nano-particles of clay during extrusion to make special resins for beverage bottles. Although Honeywell's nanotech research occurs at its New Jersey headquarters, much of the product development, including specifications and trials, take place in Virginia.

“The future will be in nano-composites, which get added to items as small as a safety pin to as large as a spaceship,” says Nathan Swami, a University of Virginia professor who spearheads the Initiative for Nanotechnology in Virginia, a project funded by Virginia's Center for Innovative Technology. The National Science Foundation projects 800,000 to 900,000 new jobs could be created nationwide as nano-manufacturing technologies mature. Swami boldly predicts up to 30,000 such jobs will occur in Virginia by the end of the decade.
Such assertions are debatable but, for now, bulk producers generate the lion's share of manufacturing revenue. Virginia chemical firms generated $10 billion worth of products last year, with U.S. exports from Virginia totaling $1.3 billion, according to the American Chemistry Council.

Preserving that robust business is one of the state's foremost challenges. Plans to overhaul the state tax code — something Gov. Mark R. Warner has proposed to repair the state budget — have some manufacturers worried. Of even greater concern is deregulation of the electricity industry, which Virginia began phasing in several years ago. Kilowatt-per-hour costs remain lower here than at least 30 states, but some wonder if that will continue once deregulation takes hold. “Energy always is a beneficial component or an eliminating component for manufacturers. There's no other way to put it,” says the VMA's Vassey.
The VMA's concern has resonated as far as the Virginia General Assembly, which may appoint a blue-ribbon committee to study manufacturing. A bill making its way through the legislature calls for a one-year study of the structural challenges faced by manufacturers, including costs of compliance, heavy equipment, permits, tolls and global competition. “Throw taxation on top of all that, and it's a break-the-bank scenario for manufacturers,” says Vassey.

It's too early to know if the panel will even be formed, let alone produce meaningful data. Moreover, the happy alchemy of Virginia's chemical sector can't make up for losses in other industries. Yet as they spend money on new plants, employees and equipment, chemical producers are sounding an upbeat tone in a sector too often singing the blues.

Return to Virginia Business - April 2004