Deja vu for Franklin
Franklin survives a second flood and looks to new marketing and businesses to help area bounce back

by Beth Cooper
for Virginia Business
November 2006

Two floods in seven years. That's a lot for a small town to face. Business and home owners in Franklin and the surrounding area showed their stamina again last month after heavy rains pushed the Blackwater River over its banks, causing more than $5 million in damage to 70 businesses and 35 homes.

David Rabil, owner of Fred's Restaurant on Main Street, evacuated, but his business was spared. In operation since 1945, Fred's closed for eight months after a major flood in 1999, and Rabil rebuilt it. The second time around he felt fortunate to have escaped damage altogether. "We've got to go in and put things back together and go to work. Hopefully, this won't deter anyone else."

That seemed to be the rallying cry for business leaders who have worked to move the area forward since Hurricane Floyd submerged Franklin's downtown seven years ago. The hurricane's torrential rains swelled the Blackwater to record levels, and a 12-foot wall of water surged through the business district, where it languished for a week, devastating all of the area's 182 businesses and 150 homes.

While the most recent brush with Mother Nature wasn't as severe with the river cresting at 22.9 feet — three feet lower than in 1999 — just the sight of dirty floodwaters fouled with gasoline from a spill at a nearby depot was enough to create a disturbing feeling of déjà vu. On the other hand, improved downtown drainage and elevated homes and businesses rebuilt after the 1999 flood reduced the amount of damage.

Left unharmed was a new business incubator on the outskirts of downtown. "I think people will look beyond these freak weather incidents and see Franklin for what it is and what it can be," says John Smolak, president of the Franklin Southampton Economic Development Inc.

The Franklin Business Incubator built on high ground is one example of how the Franklin/Southampton area has been retooling its economy after the floods and other economic challenges. For years, this rural area situated 45 minutes west of metropolitan Hampton Roads depended on paper and peanuts for its economic vitality, but the community has been forced to diversify to survive.

The changes that would remold the area began in 1999 when International Paper bought out the century-old Union Camp paper mill. A fixture in Franklin's civic and financial life, the plant employed more than 2,500 workers, including mill executives who were transferred to a new headquarters in Memphis, Tenn. While no hourly jobs have been cut by IP, the company has reduced the mill's work force to 1,050 through attrition.

During the next few years, the area lost more of its identity and economic stamina as federal price supports and quotas for peanuts were phased out. Peanut production plummeted as farmers cut their losses and discarded the formerly profitable crop.

The biggest blow to the region's economy, though, was the hurricane-related flood, which in addition to Franklin's downtown damaged City Hall and the police and fire departments. The paper mill sustained $50 million in damage, but International Paper managed to get it up and running within six weeks.

In response to these blows, local government, business and civic leaders formed the Franklin-Southampton Alliance to establish a vision for the region's economic future independent of paper and peanuts. For help, they turned to MDC, a Chapel Hill, N.C., organization that helps rebuild economies in small towns. The alliance resolved to create more high-wage jobs and preserve the area's environmental assets and small town-rural charm in the face of potential unchecked sprawl from greater Hampton Roads.

With the relatively small populations of the city and county (Franklin has 9,000 people and Southampton has 17,500), the leaders merged their economic development teams into one organization to improve prospects for attracting new industry and retaining current businesses. The August 2005 merger resulted in the private, nonprofit Franklin Southampton Economic Development Inc., which moved into the business incubator.

Two months later, John J. Smolak, former manager of economic development for American Electric Power in Charleston, W.Va., came on board as president. No stranger to cultivating rural economies, Smolak ticks off a list of long-term plans. He wants to develop enterprise zones, establish a small-business revolving fund, and encourage more minority-owned business. "The key is to diversify the economic base so that when one industrial sector takes a downturn, the economy remains strong," he says.

The incubator has attracted many startup businesses, including a technology information firm, a recording studio and a medical supplier. Another occupant is Star Investigations Inc., which John and Elizabeth Drewry used to run out of their Southampton County home.

Although Star Investigations provided security services for businesses throughout Hampton Roads, the couple had no room to meet with clients. Making copies or faxing documents meant a drive to a convenience store.

So when they heard about the incubator it sounded like heaven, because companies were offered everything they needed to run a business: office space, meeting rooms, Internet and telephone connections, support staff and assistance with business planning.

Housed in a four-story brick building built in 1907 for the Virginia Buggy Co., the project opened in May 2005 and is 76 percent full. "It's very rare to have a 40,000-square-foot incubator in a rural area," says Cathy Davison, manager of small business development for Franklin Southampton Economic Development Inc.

Since the Drewrys moved Star Investigations in August 2005, they have expanded their client base and their work force by 18 people. "The rent was very reasonable, and the staff has helped us complete a business plan and put us in touch with new clients," says Elizabeth Drewry. "I'm just really glad we got the chance to get in here."

Entrepreneurs have five years to stabilize their companies. Upon reaching established benchmarks, such as the number of employees and annual revenues, firms graduate from the incubator and move out. Davison and her team help tenants find a new location in Franklin or the county within six months of a company's decision to go out on its own.

The incubator evolved from discussions between the federal Economic Development Administration and the Franklin Southampton Economic Development Commission on ways to revitalize the area after the 1999 flood. The city received more that $2 million in federal and state grants to begin the incubator. The investment has paid off as the area's economic development organization looks into expanding the facility by converting its fourth floor into offices and opening a satellite incubator. "Southampton County is so long that it takes 45 minutes for someone on the south side of the incubator to drive to it," notes Davison.

Yet, there's more to attracting new business than having an incubator. Franklin and Southampton officials realized their area needed to be identified as part of a larger region. So they recently joined the Hampton Roads Economic Development Alliance, which represents the interests of 15 localities in marketing the region to industrial prospects. "It's difficult to market oneself to a new business if you are just a small area," says Smolak.

Discussions to bring Franklin and Southampton into the regional alliance had been ongoing for nearly a decade, but the formal agreement did not take place until April of this year. "We didn't see ourselves as part of the greater Hampton Roads region," says Felicia Blow, a board member of Franklin Southampton Economic Development Inc. "We were doing well on our own. We had trees, land, Union Camp. We were the best kept secret, and we liked it that way."

But the secret is out. With U.S. Routes 460 and 58 connecting to Interstates 95 and 85 and Hampton Roads' ports, Franklin and Southampton are accessible, making the area attractive to industries such as warehousing, distribution, medical labs and food processing. The area already has the Pretlow Industrial Park in Franklin and the Southampton Business Agri Park in the county, complete with water, sewer, Internet and broadband.

Last spring, Southampton's Board of Supervisors unanimously voted to invest $11 million to construct a 490-acre industrial park adjacent to a CSX rail line. "This is an investment in the future," says Michael W. Johnson, Southampton County administrator.

As Franklin and Southampton move forward, area leaders take pride in the community's ability to survive challenges. "This is a town that really pulls together," says Smolak. When last month's flood threatened, he was impressed with what he saw. "I saw a lot of community support and spirit that you don't see in a lot of places."