Key sector of economy troubled; Kaine: Manufacturing faces challenges in Virginia, but overall outlook is good
BYLINE: JOHN REID BLACKWELL; Times-Dispatch Staff Writer
Virginia is a great state for doing business, but a key sector of the economy - manufacturing - is facing challenges, Gov. Timothy M. Kaine said yesterday.
Speaking in Richmond at a summit meeting on manufacturing, Kaine touted a recent Forbes.com article that named Virginia the best state for business, but he acknowledged troubles in manufacturing. Virginia has 296,040 manufacturing jobs, down from 361,797 in 2000, according to state figures presented at the meeting.
"On the one hand, Forbes says we're great - and we are - and I am bullish about where we are going," Kaine said. "On the other hand, we have our challenges, and those challenges can be pretty acute on the manufacturing side."
Kaine cited the troubled U.S. automobile industry as one example. Ford Motor Co. plans to close its Norfolk truck-assembly plant next year as part of restructuring its struggling North American business.
The plant employs 2,400 people, and Kaine said about 25,000 people in Virginia work for companies that supply automobile manufacturers.
Machinery and tools taxes
He also acknowledged that some manufacturers were upset this year when he vetoed legislation that would have reduced machinery and tools taxes assessed by local governments on property such as industrial equipment. The Virginia Manufacturers Association backed the legislation, saying it would make the state more competitive for business investments. Local governments opposed it, fearing they would lose a key revenue source.
"I am wary of taking taxation power from local governments when they oppose it," Kaine said, adding that he is willing to work with both sides on the issue. "I am very committed to the notion that we need to be competitive on taxation."
Virginia has lost manufacturing jobs to overseas competition, but Kaine said many of the state's new investments in industry are by foreign-owned firms such as Essel Propack, an India-based packaging company that owns a manufacturing plant in Danville.
"Global pressures and competition will probably lead to more plant closings, if we are candid about it, but it is not a one-way street," Kaine said. He said the state is well-positioned to recruit new companies, and several announcements "are in the pipeline."
Report due next week
The Virginia Manufacturers Association has been pushing to reduce taxes and regulations on manufacturers, which the trade group contends are more cumbersome in Virginia than states it competes with for jobs and investments. The General Assembly's Joint Legislative Audit and Review Commission is scheduled to release a report next week on the cost to Virginia manufacturers of complying with government regulations.
Brett Vassey, the VMA's president and chief executive officer, said Kaine's comments were encouraging, because he identified the same priorities as manufacturers, such as work-force development and energy policy. Two representatives of manufacturing companies at the meeting also raised concerns about the state's traffic-burdened roads.
"I am very, very concerned that our ports will not do as well if something is not done about transportation," said Donald Wiggins, owner of Virginia Trusses Inc. in Yorktown.
Contact staff writer John Reid Blackwell at jblackwell@timesdispatch.com or (804) 775-8123.