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Intermodal Facility More Important Than Ever

Posted by Chris Berry on July 7, 2008 in Economic Development, Energy and Environmental Issues

The July 14th issue of Time magazine contains an article titled “10 Things You Can Like About $4.00 Gas”. The author touches on a variety of beneficial side effects, ranging from reduced obesity to lower insurance rates, but the most interesting idea put forth is that high oil prices will bring manufacturing jobs back to the United States.

When U.S. manufacturers first began exporting jobs to countries like China, the relatively low price of oil made it economically feasible to transport finished goods across the Pacific. Even with the cost of shipping, companies could still enjoy a substantial savings based on the labor cost alone. As transportation becomes more expensive, that equation no longer balances. Since the start of the decade, the cost of shipping a standard container from China has tripled, and there is every reason to believe that the price will continue to rise. When the increased cost of shipping finally outweighs the labor savings, the logical decision for U.S. based manufactures will be to bring jobs back home.

This is not to say that every lost manufacturing job will return to American soil, or that companies will come back to the same cities and towns they left behind. As long as they are plagued by high taxes, onerous regulations, and hostile labor unions, the rustbelt states will continue to suffer job losses. On the other hand, business friendly, right-to-work states like Virginia stand to benefit. This is good news for a region that has lost thousands of manufacturing jobs in the textile and furniture industries. It also highlights the need for increased cooperation among our local and regional governments.

With rising oil prices, the cost of transporting raw materials and finished goods is going to play an increasingly important role in determining the location of new manufacturing facilities, and first consideration will be given to sites with ready access to transportation infrastructure. The cost advantage of shipping products by rail will also increase. All of this means that the need for an intermodal freight facility in the Roanoke Valley is more vital than ever. Not only will it make the decision easier for furniture and textile manufactures to return to the region, but could also serve as a major enticement for other companies seeking alternatives to their former rustbelt locations.

After years of study, Norfolk Southern and the State of Virginia have determined that the Elliston site is the most feasible location for the proposed freight yard. The only hitch is that the people of Elliston clearly don’t want it there, and the Montgomery County Board of Supervisors has vowed to stop it. While the projected benefits of the facility are expected to provide an economic boost for a region encompassing nine counties, the people of Elliston are the only ones who are being asked to pay the price in terms of quality of life and environmental degradation.

This is clearly the kind of issue that demonstrates the need for true regional cooperation, but so far all we’ve heard are calls for the people of Elliston to “suck it up” or “take one for the team”. Before losing his seat on the Roanoke City Council, Bev Fitzpatrick publicly stated that “one government cannot keep this region from moving forward.” In reality, they can. While the railroad could exercise it’s power of eminent domain as a last resort, the county and the town could also choose to dig in their heels for a protracted legal battle that the railroad may choose not to fight. In that event, we would all lose.

There is a far better alternative. Rather than simply bullying the citizens of Elliston into accepting a project that will dramatically alter their landscape and their way of life, our elected leaders need to focus on a solution that will benefit everyone, including those who will suffer the negative impact. Instead of demanding that the people of Elliston suck it up, why not ask them what we can offer in return? A package of incentives with money for local schools, or for preservation of other green space in the surrounding area just might make the project palatable. Perhaps the answer will be hiring preferences for local residents once the new facility is operational. In any event, a carrot will be far more effective than a stick. This facility represents an economic development opportunity that our region cannot afford to lose, and it’s up to our elected leaders to work together to make it a reality.

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