Mining Coal Country for Tech Workers

Russell County Administrator Jim Gillespie helped lure government contractor CGI-AMS, which plans to hire 300 software engineers for its new tech center.
Russell County Administrator Jim Gillespie helped lure government contractor CGI-AMS, which plans to hire 300 software engineers for its new tech center. (By Susan Biddle -- The Washington Post)

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By Ellen McCarthy
Washington Post Staff Writer
Monday, January 2, 2006

LEBANON, Va. -- In this town of 3,300 people, cow pastures encase the local high school, churches outnumber nightclubs 14 to zero and the unemployment rate is almost twice as high as the rest of the state.

This is where government contractors CGI-AMS Inc. and Northrop Grumman Corp. will in the next few months start building multimillion-dollar technology centers and hire hundreds of software engineers at salaries far above the region's average, bringing a taste of Washington's lucrative tech sector to a coal country enclave.

How the companies came to build here is a tale of the economic factors shaping Northern Virginia -- towering home prices and nightmare commutes that are making it hard to hire new workers at reasonable wages. But it's also a tale of Virginia politics and the potential boost that outgoing Gov. Mark R. Warner's ambitions for this part of the state could give a presidential bid.

Along with cutting their costs, the companies saw in the coalfields of Southwest Virginia a way to improve their chances of winning state contracts, and -- in the case of CGI-AMS -- a way to turn the promise of jobs into millions of dollars in government concessions.

"This is the day Southwest Virginia is transformed," Warner told the senior class at Lebanon High School in late October as he announced CGI-AMS's plans to hire 300 software engineers from the region. "These are serious high-tech jobs that any city in Northern Virginia would die to get."

Sheriff's deputy Connie Stinson directs traffic in Lebanon, Va., a farming and coal-mining community of 3,300 people in the Appalachian Mountains.
Sheriff's deputy Connie Stinson directs traffic in Lebanon, Va., a farming and coal-mining community of 3,300 people in the Appalachian Mountains.(Susan Biddle/twp)
In fact, the tech companies that line the overflowing roads of Northern Virginia have thousands of open jobs they can't fill. The job market in Washington is so tight, companies regularly pay bonuses and inflated salaries to recruit employees with technical skills, even though the work required to develop new software programs has become increasingly routine. Banks and insurance firms long ago cut their software development costs by shipping the work to India and China, but legal restrictions and the politics of government procurement have prevented federal contractors from following suit.

So they are looking at rural America instead -- to places where rents are cheap, traffic is light and, instead of companies being forced to offer bonuses or poach employees from a competitor, résumés pour in by the dozen.

The area turns out plenty of résumés that the companies want to see. Local officials drafted a study to show that 4,566 computer science degrees were awarded in the past five years by colleges within 100 miles of Lebanon, including Virginia Tech, Radford University and James Madison University. Area community colleges promised to tailor their courses to fit CGI-AMS's needs, and the county said it would build a new $5 million, 53,000-square-foot facility where the company could do relatively basic software development and troubleshooting.

The company was in the running at the time for a $270 million state contract it eventually won. Donna S. Morea, president of CGI-AMS, said the contract had no bearing on the decision to locate in Lebanon. A $4.5 million incentive package put together by local and state officials, however, was taken into consideration, she said.

Along with the two recent announcements in Lebanon, McLean-based BearingPoint Inc. announced in March that it was opening a 250-person software development shop in an old mall in Hattiesburg, Miss. In November 2004, Science Applications International Corp. (SAIC), taking a cue from defense contractors that locate facilities in the back yards of influential politicians, opened its newest technology center in Somerset, Ky., home of Rep. Harold "Hal" Rogers (R), who controls some of the purse strings for homeland security spending.

The contractors' move to rural America echoes a strategy that commercial tech companies made in the early 1990s. Some of them moved basic software coding jobs to small towns before they began sending such jobs overseas.

Though executive and sales offices are likely to remain in Washington and on-site systems integrators will need to stay near the agencies they work with, the move of software developers and some other more routine jobs "will be a growing pattern," said Anirban Basu, an economist and chief executive of the Sage Policy Group. "The Washington-area cost structure is pushing jobs out of the region."


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© 2006 The Washington Post Company

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