Ripple effect of Franklin mill closure could cost 3,500 jobs

Double-digit unemployment. More than 3,000 jobs gone. Nearly $33 million a year in lost tax revenue. Two years or more of lingering pain.

The economic after effects of the closing of the International Paper Co. mill near Franklin next year will strike deep and last long, officials and economists predicted Friday. However, state and local leaders vowed to work fiercely to help workers recover and to attract other employers to Isle of Wight County.

“We’re not going to wait for people to lose their jobs to start working with them,” said Lyn Hammond, the deputy state secretary of commerce and trade.

Finding a manufacturer to take International Paper’s place could be a tough sell, said Peter Shaw, a business and economics professor at Tidewater Community College.

“The good news is: They have a commercial plant infrastructure in place,” he said. “That’s going to be a selling point, and they have an immediate labor pool in place.”

When the economy revives, “you’re going to see some pickup in existing manufacturing,” Shaw said. “But they’re going to take a very cautious eye toward any plant expansion.”

International Paper announced Thursday that the mill would shut by spring , with the first layoffs coming next month. The closing will eliminate about 1,100 jobs.

Shaw said the combined unemployment rate for Franklin and Isle of Wight County stands at about 7 percent. Add 1,100 jobless people, and it will jump to 12 percent, he said.

The plant workers probably won’t be the only ones looking for work in Franklin, which has a population of just under 9,000.

The closing could trigger an additional 2,400 job losses in the region, according to an analysis released Friday by Lisa Perry, the county’s director of economic development.

The report said the closing would ripple across other businesses, including truckers, loggers, restaurants and auto repair companies.

“I don’t know what we’re going to do,” said Robert White, who runs Lee M. White Inc., a small, second-generation trucking company in Franklin.

He figured that 90 percent of his business comes from the mill. His 17 trucks travel throughout Virginia and to Maryland, Pennsylvania and West Virginia for the paper company. His lot sports a new $124,000 Kenworth tractor.

Three months ago, White said, a meeting with International Paper officials left him upbeat.

“They told us they were pretty much done with shutdowns,” he said.

The county’s economic-impact analysis also estimated the mill closing could reduce state tax revenue by $19.2 million and local tax revenue by $13.5 million a year – $11.5 million in property taxes and $2 million in sales taxes.

Its report looked at the cities of Franklin and Suffolk and the counties of Isle of Wight, Southampton, Surry and Sussex. However, the damage will spread farther.

A breakdown of employee residences provided by the mill showed that nearly 220 live in North Carolina, including Gates County.

“I’ve always joked that if somebody built a fence around Gates County, the paper mill would have to close,” said Sol Rawls, a Franklin business leader.

In Virginia, the municipalities with the largest number of paper workers are Franklin, with 324; Suffolk, 139; and Courtland, 109.

The economic ripples will begin before the layoffs, as workers “start planning for that doomsday” and reducing spending at restaurants and other businesses, said Travis Taylor, an associate professor of economics at Christopher Newport University.

Shaw, from TCC, predicted three waves of upheaval: First, workers will lose their paychecks. Second, businesses will lose more revenue. Third, local governments will lose sales and real estate tax revenue.

The departures of workers, Taylor said, also will trigger a decline in real estate demand and prices. The repercussions could linger for two years or more, he said.

State and local officials are rallying to Franklin’s aid.

At 1:30 p.m. Sunday, U.S. Sen. Mark Warner will hold a closed-door meeting with city officials, business leaders and others at Franklin City Hall.

At 6:30 p.m. Wednesday, state and local officials will meet with businesspeople and others at a public meeting at the City Hall to begin marshaling a response, said Hammond, the deputy state secretary of commerce.

The state is gathering a corps of partners including the Virginia Employment Commission and Paul D. Camp Community College to help the workers, she said. Virginia also will seek aid for them under the federal Trade Adjustment Assistance program, which could include extended jobless benefits and money for training, relocation and health care.

Perry, Isle of Wight’s economic development director, said the county could reel in an employer to replace International Paper.

“Now, we’ve got an even more compelling story to tell,” she said. “We have hundreds of people that are going to be out of work. While that’s a terribly sad story, other companies view this as a displaced work force that’s educated and ready to go.”

Steve Cook, a vice president of the Hampton Roads Economic Development Alliance, pointed to a recent success in Virginia: AVID Medical last year announced an $8 million expansion of its Toano facility, doubling its work force to 600.

However, he also said: “You can look to the former Ford truck plant and see that we’re still actively pursuing opportunities there.” That plant closed in June 2007.

“When you have these large manufacturing facilities that have unique equipment and assets, you really have to get the right user,” Cook said. “It’s not going to be an easy task.”

Rawls, 90, who started the Chamber of Commerce in Franklin and has dedicated most of his life to civic involvement, invoked the unquenchable spirit that permeated the town even after this week’s announcement.

“We’ve got to come together,” he said. “We’ve still got a great potential. Industry has got to come our way.”

Philip Walzer, (757) 222-3864, phil.walzer@pilotonline.com

Linda McNatt, (757) 222-5561, linda.mcnatt@pilotonline.com