Jul/Aug 2006

Truck Stop

Hampton Roads must learn a lesson from the closing of Ford's Norfolk plant so we don't drive away other potential economic engines.

By Michael Jon Khandelwal

Hampton Roads was caught off guard on the morning of Thursday, April 13 when Ford Motor Company announced that production at its Norfolk Assembly Plant will come to a screeching halt in 2008.

Facing a rapid decline in sales and a $1.6 billion loss last year, Ford decided to close the plant as part of an overall plan to maintain only its operations located closer to major suppliers and factories. Shipping parts to Norfolk became costly, and the plant was not able to build bigger, more profitable trucks. Nationwide, Ford plans to close seven assembly plants by 2008 and lay off up to 30,000 workers by 2012.

Some suggest that Norfolk's taxes had something to do with Ford's decision to close the plant, but it really comes down to the company's own corporate problems. Many of the jobs we lose will go to Michigan, where workers are unionized and earn a higher wage within a state that has a higher tax rate.

Ford said it will continue operations for both shifts until 2008 and will cooperate with local and state officials, who will try to find another use for the land. Gov. Kaine announced that state officials will work with community colleges in Hampton Roads to offer job training for laid-off workers.

Ford brought us quality, high-paying jobs filled by able and respected employees. In a press statement, Anne Stevens, Ford's chief operating officer, said "some of our best workers in the world are at that plant." Many are members of United Auto Workers Local 919, whose beginning can be traced to the World War II era. Their dedication to quality and their work ethic is perhaps a reason the plant was not closed earlier.

The 2.6 million square-foot facility, on 102 acres in Norfolk near the Chesapeake border, produced 213,000 F-150 trucks in 2005, and 400,000 more trucks should roll off the assembly line before the plant closes. The plant's beginning can be traced to 1921, and in April 1925, production of the Model T began. In 1974, the plant was converted to build the F-150 pick-up truck. In the '90s Ford invested $470 million in an environmentally friendly paint shop and a new body shop. Between 2001 and 2003, $350 million was spent on an upgrade for the redesigned F-150.

The economic influence of the plant's closing will be widespread. The Hampton Roads Planning District Commission estimates that by 2012, our area could lose 8,665 jobs, 6,636 in population and $954.6 million in gross regional product. While the plant alone employs 2,275 hourly workers and 158 salaried workers-with a $160 million total payroll-17 local suppliers in Newport News, Chesapeake, Hampton, Virginia Beach and Portsmouth employ more than 2,700.

Norfolk Southern will also feel the plant's loss, as the railway estimated that automotive shipments brought the company $997 million in revenue last year. Ninety Ford dealers operate in Virginia, and 40-70 percent of business at Hampton Roads dealerships comes from Ford's workers, their families and retirees. Eight million in property taxes will be lost, the monies no longer flowing into our schools and public services.

There is a chance that some of these jobs will be re-gained if Toyota comes to town. Recently, the world's second largest auto manufacturer announced that Hampton Roads is on the list of possible sites for its expansion. If a Toyota plant came here, it would create more than 2,800 jobs, and the company would invest more than $2.5 billion in the local economy.

Hampton Roads does have an advantage in that we already have skilled automotive workers, are a major port and have three possible sites in Isle of Wight County, Elizabeth City and Chesapeake that would meet Toyota's requirement of 1,500 acres of land with rail access.

But whether Toyota comes here or not, we need to think about what the loss of the Norfolk Assembly Plant really means to our region. Ford may not have made its ultimate decision based on traffic or taxes, but in a sense, attitudes about infrastructure and paying for it are part of a larger problem we all face. Ford had to make some tough decisions to vouchsafe its future. Because of bad corporate planning, the company is causing tremendous pain for its workers. We need to understand that our own inaction today will cause us pain tomorrow.

The Ford plant's closing will ripple through our economy. It may only affect certain sectors, but it's endemic to the idea that we need to do more to ensure high-paying jobs for our citizens and easy access to those jobs.

The closing will occur the same year the aircraft carrier George Washington is expected to move to Japan, taking away an additional 5,000 jobs and $400 million from our economy. Because of traffic delays, $42 per load is added to cargo to and from our ports. For a company that moves 25,000 loads a year, that amounts to a $1.05 million loss. Ford estimated that the costs due to traffic congestion added $300 to the supply costs in building each truck at the plant.

That doesn't sound very attractive to potential employers. We need to fix our transportation and infrastructure problems so that other companies will eye Hampton Roads as an attractive partner in the growth of jobs and opportunity. A third crossing and better access across the Elizabeth River through a second midtown tunnel should be built now.

We are in a unique position, as Hampton Roads politicians hold three key chairmanships in the state assembly. Virginia Beach Delegate Bob Purkey is the chair of the House Finance Committee, Newport News Sen. Marty Williams is the chair of the Senate Transportation Committee and Virginia Beach Delegate Leo Waldrup is the chair of the House Transportation Committee.

But the state assembly haggles and argues and hasn't done anything to help us fix our traffic snarls. It is wasting valuable time, and in this case, wasted time is wasted money. For every delay, potential jobs are lost. -

For the rest of this story, see the Jul/Aug 2006 issue of Hampton Roads Magazine, currently available on newsstands.