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Posted at 02:55 PM ET, 05/24/2011

The Virginia jobs shuffle


Just how successful is Bob McDonnell at being the “Jobs Governor”?

The question gets more interesting week by week as Virginia struggles through the anemic recovery.

Last week, the news was good. Some 213 new jobs were announced as International Paper refits its Franklin plant that it shut down, with a loss of 1,000 jobs, in 2009. This week, the news is bad. A major call center in Henry County will cut about 700 jobs by July.

And so it goes. While McDonnell and his lieutenant governor, Bill “Jobs Guy” Bolling, scrounge up jobs and trumpet their successes, others aren’t so upbeat, naturally, in a Democrat vs. Republican kind of way.

Democratic delegate and General Assembly powerhouse Ward Armstrong announced: “The McDonnell-Bolling Administration has been touting the creation of jobs throughout Southside and Southwest Virginia. But the administration has not been able to create more jobs than have been lost. Unless that trend is changed, we will continue to go backwards.”

Armstrong’s comment did not go over well with McDonnell’s staff, but it does point out just what a predicament parts of Virginia are in. There are two basic types of job losses. First are those related to the 2008-09 recession. Second are those related to a much deeper-rooted problem involving Virginia’s transformation from old textile, furniture and tobacco jobs to more sustainable replacements.

The sad story in Henry County actually covers both. In the early years of the last decade, places such as Danville and Martinsville were taking dramatic hits as huge, old-style textile plants such as Tultex and Dan River Mills laid off hundreds. Problem was, the replacement jobs came from firms such as StarTek, a Denver-based company that operates call centers around the country.

Call centers are quick and easy to set up and don’t require all that much in worker retraining. But they are also easy to shut down when the economy goes bad. StarTek reported declining revenue of $5.2 million in this year’s first quarter, although it got a gross margin pop of 12.4 percent compared to 9.7 percent for the quarter the year before. It got that pop on the backs of workers. The firm laid off 69 at a Lynchburg call center in March and now 700 in Henry County.

The International Paper plan to produce soft, wood-based pellets for insulation in baby diapers is good news, but it only brings back about one fifth of the original workforce. Terry McAuliffe, a Democratic politician, has plans for another company at the Franklin factory to employ some of the rest, but it hasn’t happened yet.

The bottom line here? Creating new jobs may be hard but they should be real and sustainable.

Peter Galuszka blogs at Bacon’s Rebellion. The Local Blog Network is a group of bloggers from around the D.C. region who have agreed to make regular contributions to All Opinions Are Local.

By  |  02:55 PM ET, 05/24/2011

 
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