By Lewis Loflin
Published: March 7, 2017
Update, May 26, 2016: Kennametal announced the closure of its plant in Smyth County, Virginia, impacting more than 80 jobs. According to *WJHL*, declining sales in the coal business are to blame for the shutdown.
Woodgrain Millwork announced the rehiring of 17 workers in Marion, Virginia. Starting in 1996 with around 30 workers, the company now employs 140. This is touted as being related to the forestry industry, which is puzzling—the state has invested millions to diversify the local economy away from mineral extraction (coal) and timber. Yet, Woodgrain Millwork received $100,000 to do the opposite of these diversification efforts.
These are not truly new jobs but a rehiring of workers laid off from similar roles at Merillat, which closed in January 2013. This falls far short of replacing the 300 jobs lost at Merillat. See Smyth County Loses Another 300 Jobs at Merillat.
Another furniture company, Liaoyang Ningfeng Woodenware Co., Ltd., a Chinese firm, announced 125 “new” jobs in Smyth County on November 21, 2013, largely by rehiring Merillat workers. A press release from then-Governor Bob McDonnell detailed the corporate welfare package:
The Virginia Economic Development Partnership worked with Smyth County and Virginia's aCorridor to secure the project for Virginia. Governor McDonnell approved a $250,000 grant from the Governor’s Opportunity Fund to assist Smyth County with the project. The Virginia Tobacco Indemnification and Community Revitalization Commission approved $450,000 in Tobacco Region Opportunity Funds for the project. The company is eligible to receive benefits from the Virginia Enterprise Zone Program, administered by the Virginia Department of Housing and Community Development. Through its Virginia Jobs Investment Program, the Virginia Department of Business Assistance will provide funding and services to support the company’s recruitment and training activities.
The value of these incentives, approximately $1 million, nearly matches the company’s $2.1 million investment. Even if both rehiring efforts had succeeded, they wouldn’t have replaced the 300 jobs lost at Merillat. The furniture industry remains unstable, prone to relocation or closure.
Update, 2017: As predicted, the 125 jobs promised by Liaoyang Ningfeng never materialized. The company took the money and failed to deliver. *The Roanoke Times* (March 7, 2016) reported:
Darrell McCready passes time driving plastic golf balls inside an empty factory that was expected to house production lines tended by 125 workers making more than $15 an hour. “I’m the only one here,” said McCready, the caretaker for the factory in Smyth County where former Gov. Bob McDonnell 26 months ago announced a Chinese company’s plans to produce furniture. The project got an infusion of $1 million in taxpayer money. None of the promised production jobs have been filled, with six months remaining until the company must begin to repay grants… Another Chinese furniture manufacturing project, this one promising 300 jobs, already has been declared dead and has saddled Danville with a $1 million debt…
Regarding the Tobacco Commission’s role:
Tobacco commission puts locality on hook… GOK International in 2012 outlined plans to invest $12.5 million and hire 300 people to manufacture office, hotel, and institutional furniture in Pittsylvania County… By fall 2014, the commission wanted its money back… Danville… has paid the commission $500,000 and agreed to pay $500,000 more in each of 2016 and 2017…
Handing out hundreds of millions of dollars without verifying job creation or tracking the funds is a recurring issue. See more on the Tobacco Commission:
Since 1988, Smyth County has experienced significant industrial decline, as detailed in the *Los Angeles Times* article “A Town Traded Away” (www.latimes.com):
CHILHOWIE, Va.—People in this pocket of Appalachia aren’t sure what it’s like to work in a Mexican garment factory or an Asian furniture plant. But they know how it feels to be globalized… For years, manufacturers flocked to Chilhowie and neighboring communities because of their abundant supply of loyal, low-cost workers. “This was the China of Virginia,” said Mike Hopkins, who supervises production at a local wood products mill. Then… plants began shutting down and moving out. Since 1988, Smyth County has lost 10 big factories employing 2,075 workers. Five of the plants and 1,430 of the jobs were in little Chilhowie, population 1,827…
Below is a list of additional job losses, mainly in Smyth County and surrounding areas, from 1998 to 2008:
| Year | Company | Location | Jobs Lost |
|---|---|---|---|
| 1998 | Tultex Apparel | Chilhowie | 200 |
| 1999 | Kerns Bakery | East Bristol | 180 |
| 1999 | PCS Phosphate | Saltville | 50 |
| 1999 | Buster Brown Apparel | Chilhowie | 300 |
| 2000 | McBee Systems (check printing) | Damascus | 65 |
| 2000 | GreenSeed | Abingdon | 10 |
| 2000 | Svedala Industries (Mining Machinery) | Saltville | 25 |
| 2000 | US Gypsum | Saltville | 200 |
| 2001 | Natilie Knitting | Chilhowie | 350 |
| 2001–2008 | Electrolux Vacuum Cleaners | Bristol | 550–600 |
| 2002 | Spring Ford Knitting | Chilhowie | 120 |
| 2002 | Dana Corporation (auto parts) | Marion | 200 |
| 2002 | Virginia Glove | Glade Spring | 45 |
| 2002 | Bristol Brass Copper | Bristol | 65 |
**That’s 2,360–2,410 jobs lost over the period, with Electrolux contributing 550–600 jobs between 2001 and 2008.** These closures, largely attributed to NAFTA, devastated the region. See DANA Automotive Fires Bristol Workers Heads for Mexico.
Additional job losses in the wood-related industry in Smyth County include:
Woodgrain Millwork’s website is www.woodgrain.com. On November 6, 2014, the company laid off 200 employees in Prineville, Oregon. *KTVZ* reported: “It’s becoming a fatal pattern for the timber industry. The latest cutback at Woodgrain Millwork will have a big impact on the city and Crook County, where it’s been the third-largest employer, with over 200 jobs.” (www.ktvz.com)
Meanwhile, Bristol lost another 230 manufacturing jobs at Ball Corp. in May 2016 (*BHC*, April 19, 2016). The stability of companies like Woodgrain Millwork remains in question.
Additional demographic data:
The Smyth County Comprehensive Plan (May 2013) highlights the economic challenges:
Total employment in the county decreased by 12.8 percent over the six-year period from 13,404 persons in 2003 to 11,683 persons in 2009… The most apparent change in employment over the period is the continued decline in manufacturing industry, with the percentage of persons employed in manufacturing falling from 31.8% in 2003 to 27.8% in 2009. This decline is due to the downsizing of employment, especially with manufacturing companies that have direct ties to the home building industry… Employment also decreased in construction and decreased slightly in wholesale and retail trades.
Conversely, sectors like health care, accommodations, food service, and public administration saw gains:
On the other hand, the health care, accommodations, food service, and public administration sectors increased employment… Health care and social assistance employment represents over 20 percent of the employment, and over five percent of the jobs in Smyth County are considered public administration.
Electrolux fired 550 workers in Bristol and later secured a $188 million corporate welfare package from Tennessee to relocate to Memphis. The deal exemplifies the corruption in economic development incentives, effectively paying companies to downsize American workers with taxpayer money.
A critic summarized the deal after Electrolux closed its Canadian operation:
So Electrolux was able to get rid of 60 workers, cut the wages of the jobs they kept by more than $4 per hour, get a more central distribution location, and a free factory courtesy of state and local governments in Tennessee.
Shockingly, Tennessee agreed not to sue to recover the funds if Electrolux failed to deliver on job creation promises. Read the full story: Obscene Electrolux-Tennessee Incentive Deal Puts State at Risk by Lewis Loflin.
