A turning point
The Lynchburg area diversifies its economy as nuclear industry growth slows
- December 30, 2014
Jeff Taylor faced an uphill battle when he became Appomattox County’s economic development director in 2011. Thomasville Furniture was closing its local factory, eliminating more than 170 jobs. The plant closing left many more residents in Appomattox, a county of about 15,000 near Lynchburg, feeling discouraged about the local economy’s prospects.
For more than two years, Taylor reached out to manufacturers and developers who were willing to look at the 800,000-square-foot property. “We knew we had to find the right client for that facility,” says Taylor.
The search officially ended in November. Taking advantage of nearly $4 million in incentives, China-based Lindenburg Industry announced it will make pollution control devices at the plant, creating about 350 jobs.
Lynchburg-area officials see the Appomattox deal as a sign of a changing tide in the regional economy. For a variety of reasons, a growing number of companies like Lindenburg are producing their goods in the U.S. instead of China, and some area manufacturers are now winning back some contracts they once lost to foreign competition.
Leaders in the Lynchburg region believe the momentum will keep growing. To help it along, they are preparing to recruit targeted businesses that would diversify the economy. “The future looks really great for our regional economy, and I mean that in the short term,” says Megan Lucas, CEO of the Lynchburg-based Region 2000 Business and Economic Development Alliance.
Beyond the nuclear option
Seven years ago, the Lynchburg region was poised for rapid job growth in the nuclear power industry. Local employers Areva and Babcock & Wilcox announced they each would develop their Lynchburg-area workforces to prepare designs for new nuclear reactors.
The Great Recession, low natural gas prices and the Fukushima Daiichi Nuclear Power Plant disaster in Japan in 2011, however, caused electric companies to postpone most plans for new nuclear plants, sidelining both Lynchburg projects.
Whereas Areva once planned to have its pressurized water reactors, called EPRs, operating in the U.S. by 2015, it now expects to have the design finalized by 2018, says Gary Mignogna, CEO of Areva Inc. The company does not need to boost its headcount in Lynchburg to meet that later deadline, he says. “We have the resources we need to do that.”
Areva has continued to invest in Lynchburg, recently spending $500,000 to install new reactor mockups to train service employees. But the company now has about 1,800 Central Virginia employees, fewer than it did when the major expansion was announced seven years ago. It recently laid off 22 workers, and had 83 leave voluntarily in exchange for severance incentives, in a workforce reduction designed to adjust to changing needs in the post-Fukushima nuclear market.
Mignogna says he sees potential for increased hiring in Lynchburg if power companies decide to increase the generation capacity of their existing nuclear plants — a decision that becomes economically feasible if natural gas prices rise 30 percent from recent levels.
The delay in nuclear expansion also impacted B&W’s mPower program, which was developing a modular nuclear reactor. In 2014, the company slashed its spending on mPower and laid off 100 Lynchburg-area employees.
B&W’s initial mPower customer, the Tennessee Valley Authority, has indicated that the new reactor will not be needed immediately, says Bob Bailey, executive director of the Center for Advanced Engineering and Research, a research facility in Bedford County where B&W has built an mPower prototype for testing. “We’re watching very closely,” Bailey says. “That’s a big part of our economy. For the next couple of years at least, it’s very slow.”
“We continue to have discussions with stakeholders, including the U.S. Department of Energy, TVA and Bechtel [a partner in the mPower project], on the path forward for the mPower program,” B&W spokeswoman Aimee Mills says in an e-mail.
In November, B&W announced a plan to split off its nuclear business lines into a separate publicly traded company named BWX Technologies this summer. BWXT would be based in Lynchburg, and the mPower program would continue under BWXT, Mills says.
Lucas, the CEO of Region 2000, says that the local economy may have grown too dependent on nuclear. “We have allowed the region to put the majority of its eggs in a particular sector,” she says. “As such, when that sector contracts, we don’t have any jobs that can utilize those skill sets at that level.”
Region 2000, a partnership of several organizations focused on Lynchburg-region development, is planning to market the region and recruit new employers. Lucas is collaborating with local economic development officers to determine which industries would yield prime candidates. She mentions energy, pharmaceuticals, insurance and health care as possibilities.
Identifying exactly which businesses would fit well in Lynchburg will allow her to work more effectively, Lucas says. “If we don’t define our sectors, then I’m just out there casting an unbaited hook.”
One year ago, there was upheaval at Region 2000 as a drop in donations forced the organization to reduce its staff and consolidate two top leadership jobs to create the post Lucas now holds. At the same time, the Lynchburg Regional Chamber of Commerce shed its president’s position when the city did not renew a contract to operate its tourism marketing program.
Since then, these organizations have been exploring ways to work together. “We felt that there was a real opportunity with new leadership here, as well as new leadership coming to Region 2000, to have a different conversation … to talk about what are our unique, individual roles and strengths that we can bring to the table to move the region forward,” says Christine Kennedy, the chamber’s interim president.
Discussions between the chamber and Region 2000 officials have reached a point where they now are exploring formal partnership. In January, leaders from both organizations, along with regional stakeholders such as government officials and business leaders, will travel to Lexington, Ky., to learn about an organization that formed in 2004 with the merger of several business and economic development groups.
After the trip, the boards of each organization will decide how to collaborate. While the outcome of the process remains unknown, Marjette Upshur, Lynchburg’s director of economic development, says it makes sense to have all local organizations focused on economic development working together. “The business community doesn’t need to be choosing sides,” she says. “All of us need to be working to support them.”
Lynchburg-area economic developers also have focused on helping existing businesses grow.
In Lynchburg, Upshur instituted a program about two years ago when Virginia raised the requirements for receiving enterprise zone grants. The minimum $100,000 investment put the grants outside the reach of many small businesses, so Lynchburg created its own incentives for capital improvements. “There is no barrier to entry,” says Upshur.
Under the program, a business in Lynchburg’s two enterprise zones can get a grant to cover some costs in expanding a building or repainting the facade. These facility improvements result in a more attractive city and increased tax revenue, Upshur says.
Lynchburg also recently followed the lead of Marion by conducting a business contest. With the help of a Virginia Main Street grant, Lynchburg’s INOV8 contest gave $10,000 prizes to three downtown businesses with expansion plans. As part of the contest, 11 companies went through a series of classes that helped them develop business plans. Anna Bentson, assistant director of economic development in Lynchburg, says the project met its goal because it helped business owners pause and find out what would take them to the next level.
Altavista, about 25 miles south of Lynchburg, is sponsoring a similar contest called Pop Up Altavista. The development organization Altavista On Track hopes to have several businesses competing for $20,000 in prizes beginning in January, says Linda Rodriguez, the executive director.
Altavista recently finished improvements to make the streetscapes and sidewalks more inviting, and Rodriguez says building new businesses is the logical next step for the town’s economy. “It’s time to work on the businesses and bringing people here,” Rodriguez says.
Back when Taylor was trying to find a company to utilize the former Thomasville Furniture plant in Appomattox, he reached out to retailers about an empty grocery store building in town. He suggested the location to Tractor Supply and to Dollar Tree, among others. All told him that Appomattox was not in their expansion plans.
But today, there is a Tractor Supply store on the main highway through town. Not far from that store is a Dollar Tree.
“Sometimes it’s a matter of planting a seed, giving folks options ... and letting them determine something on their own,” Taylor says. “We don’t have things that we want a lot of times, but things that we want do show up.”