Ikea Helps a Town Put It Together

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New Plant Brings Hope to Manufacturing Town

The powerful global economic forces that swept away thousands of textile and tobacco jobs in Danville, Va., are now working in this small town's favor. On May 21, 2008, it became the site of Sweden-based IKEA's first furniture factory in the United States.

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He started by holding a retreat with his staff at the 4-H center at nearby Smith Mountain Lake. Gwaltney put a bucket of water, a bar of soap and a towel on the table and instructed his staff to lather up.

"We're going to wash away the past, and we're going to set our sights on the future," Gwaltney recalled saying. "And we're never going to look back."

It was not an easy task. Although some sectors of manufacturing, like chemicals and computer parts, have grown in recent years, textile mills and production -- the making of blankets and pillowcases, Dan River's specialty -- have all but disappeared.

The sector employs about 309,000 people nationally, according to the latest government data, making up just 2 percent of all manufacturing jobs. In Virginia, textile employment is down to about 8,000 from a peak of more than 40,000 during the late 1960s and early 1970s.

"The labor-intensive manufacturers are just gone," said William F. Mezger, chief economist of the Virginia Employment Commission. "I don't see those industries coming back."

That has resulted in an unemployment rate in the Danville area of 7.4 percent in March, compared with the state average of 3.7 percent. Even attracting companies may not be enough because the new high-tech plants such as Ikea's require less manpower than old-line manufacturers.

"It's a better job for the people that get them," Mezger said. "But the problem is you've lost the textile mill with 1,000 jobs, and you get in a new niche employer that employs about 100 people."

But to Danville, the alternative -- no new jobs -- was even worse.

The city started its turnaround by sprucing up, turning the depressed downtown into the Tobacco Warehouse Historic District and commissioning public murals depicting its history, including the great Old 97 train wreck in 1903.

Danville has also received millions of dollars in grants to diversify its economy from the tobacco settlement of 1999, which required tobacco companies to pay $206 billion to states over 25 years. That helped pay for a $15 million glass-and-steel research institute anchoring a 330-acre technology park. And then Danville went courting.

"My first thought was Danville needs to clean itself up," Gwaltney said. "You have to show that you care."

The tide began to turn in 2004, when Telvista, a technical support firm in Dallas, arrived with 750 jobs. The next year brought Yorktowne Cabinetry and its 540 jobs. And in 2006, Ikea, which has more than 300 stores around the world, announced its plans to open the Swedwood furniture plant, which will eventually employ 740 people.