Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, February 9, 1993 TAG: 9302090224
SECTION: VIRGINIA PAGE: A-1 EDITION: METRO
SOURCE: DANIEL HOWES STAFF WRITER
DATELINE: LENGTH: Long
ROANOKE TRIES, FAILS TO LAND NEW NS SERVICE CENTER
DESPITE A PACKAGE of incentives from the city worth $8 million, Atlanta will get the 400-plus jobs the operation will create.
Norfolk Southern Corp. will announce this morning that it plans to establish its national customer service center in Atlanta - not Roanoke.
The long-awaited announcement will come despite an $8 million incentive package fashioned by Roanoke Del. Victor Thomas and city officials to lure the center to the Roanoke Valley.
The center, expected initially to create 400 jobs paying between $30,000 and $50,000 a year, will be located in Norfolk Southern's regional headquarters in downtown Atlanta - also the headquarters of its systemwide operations center.
"Obviously, this is a hard thing for us," spokeswoman Magda Ratajski said. "But the company has to make these decisions on a global scale."
Company officials calculated the cost of relocating employees and certain operations to Roanoke would be "in excess of $12 million" - far more than the $8 million incentive package put on the table by Roanoke.
"That was a major consideration for having it" in Atlanta, she said. "The cost of transferring all those employees to Roanoke would have been prohibitive."
Norfolk Southern Chairman David Goode, a Roanoke native, phoned Thomas and Mayor David Bowers late Monday to tell them the railroad's decision. Goode did not return a message left in Norfolk with his wife.
"It's bad news," Thomas said from the floor of the General Assembly. "I'm sorry that decision's been made, but I respect them [for] doing what they have to do. David [Goode] did tell me that no jobs would be moved out of Roanoke."
For Thomas, the news came just one day after he persuaded key legislators to support his plan to make $3 million in state development funds available for site preparation, building construction, utility extension and other costs associated with luring the railroad center to Roanoke.
But apparently it wasn't enough.
The likely jobs - first 400 paying middle-management wages, then perhaps another 500 later - sent Roanoke's economic developers scrambling to offer incentives to the railroad. A package "valued at approximately $5 million has been put together by the city and various community foundations," Thomas told a House subcommittee Sunday.
But city economic officials won't say what their package included. Even after learning the railroad's decision, Economic Development Director Brian Wishneff refused to sketch out the incentive package crafted by city officials.
"Obviously it's something we want very badly," Wishneff said. "We made the best shot we could at it."
The $8 million package crafted by Thomas and city officials appears to be the best evidence so far of the increasing pressure on municipal economic development offices to deliver results. News of plant closings, bank mergers and other cutbacks is making job creation a front-burner issue for voters - and lawmakers from Roanoke to Richmond to Washington are getting the message.
In December, the city successfully used $350,000 from the same state fund Thomas wanted to tap to persuade Vitramon Inc. to make a $21 million investment in its operations, creating at least another 200 jobs.
The state fund, created last year, can be used only if a company's investment exceeds $10 million, more than 100 jobs are created and other cities competing for the prospective industry are located outside Virginia.
"I can't think of a time since the silk mill [American Viscose] closed [in 1958] that there was a more opportune time for the state to give a helping hand to entice a company like Norfolk Southern," Thomas said before learning of the railroad's decision.
The way Thomas sees it, Roanoke is hurting:
Grumman Emergency Products Inc. closed last year, idling 270; Gardner-Denver's owner announced plans to move its facility to Texas, killing another 400 jobs; Dominion Bankshares Corp. was acquired by a North Carolina competitor, costing at least 850 jobs; Sears Roebuck and Co. announced plans to close its telecatalog centers, including one in Roanoke; job loss: 1,200.
"I've lost some of my customers who are already moving to Texas," lamented Thomas, who runs a neighborhood grocery store on Orange Avenue in Northeast Roanoke. "I realize as much as anyone what it means when industry moves on."
Competition was stiff for the railroad center: In September, Goode acknowledged that Atlanta "is probably the most logical site" for the customer service center. Atlanta is the Norfolk-based railroad's operations hub, employing 2,100 workers.
Roanoke, the company's other regional headquarters, has nearly 3,000 Norfolk Southern workers. Most of the company's mechanical, coal and merchandise marketing, computer operations, accounting and purchasing departments are in Roanoke.
The customer-service center, with banks of computer and telephone equipment, will occupy 100,000 square feet.
The centralized system is intended to seek answers and solutions internally for customers instead of forcing them to call local sales offices and be bounced from department to department.
It could not be learned Monday what incentives - if any - Atlanta or Georgia economic development officials may have offered Norfolk Southern. Many states across the Southeast can offer tax abatements to industrial prospects, but Virginia law prohibits local and state governments from offering such tax deals.
Railroad officials, asking not to be identified, have long said Atlanta appeared to have the inside track on the center. Some even said the railroad agreed to hear Roanoke's pitch for the center because of the city's historic ties to the company - not for any special attributes for becoming home to the center.
Last month, however, Goode gave Roanoke officials high marks for courting the railroad center. But he then bluntly told a group of Roanoke leaders that the decision would be "determined by hard business facts."