Week of December 30, 2002
  Special Report

Supply and Demand:
Richmond's 'Easy to Love'
for Three Firms

by RON STARNER, Director of Publications, Site Selection and Conway Data
Maruchan food-processing plant in Chesterfield County, Va.
This Maruchan food-processing plant in Chesterfield County, Va., is growing so fast that the company must add a new $30 million production line a year for each of the next four years.

RICHMOND, Va. – Three recent company expansions in the Greater Richmond, Va., metro area illustrate the concept of supply and demand.
        The demand on the U.S. Eastern Seaboard is growing for high-quality products made with precision craftsmanship and sold at an affordable price. Thanks to new capital investments into facilities and infrastructure at a food processor, an office-supply distributor and a custom house-wares manufacturer, the supply of those products is on the rise.
        At Maruchan Virginia Inc. in Chesterfield County, Va., business is increasing so fast that the food-processing plant for Ramen noodles will add a US$30-million production line once a year for each of the next four years.
        The company's latest $30-million, 250,000-sq.-ft. (22,500-sq.-m.) 50-job expansion was unveiled in early October in the Chesterfield Industrial and Air Park on Whitepine Road near the Chesterfield Airport.
        "We were looking at plants in mid-America and Mexico," said Mike Daugherty, director of human resources at Maruchan, "but we ultimately decided to purchase 32 acres (eight hectares) right here in Richmond for this expansion."

Labor, Costs and Interstate
Access among Key Location Factors

The reasons for the site selection were both simple and compelling, Daugherty said. "The major reason for locating the Maruchan plant in the Richmond area is because the East Coast is the main market we are trying to reach," he said. "This Central East Coast location was selected because our market was established in the North and was heading South. The other finalists for this site were in southern Virginia and North Carolina, but nothing in those areas could match the accessibility to the interstates and the labor market we found here."
        Daugherty added that the cost of doing business in Richmond is quite favorable. "It's certainly more favorable than in California and Japan, where we conduct our research and development," he noted. "Our labor costs and taxes are very favorable here, and the machinery and tools taxes in Chesterfield County are the lowest of anywhere in the state of Virginia."
        As a result, Maruchan has grown from 160,000 sq. ft. (14,400 sq. m.) in 1990 to 750,000 sq. ft. (67,500 sq. m.) today, with seven production lines and 350 employees. "And as the market for our products continues to grow," said Daugherty, "we will continue to expand."

The Supply Room Companies
The Supply Room Companies, headquartered in Ashland, Va., recently moved into this 280,000-sq.-ft. distribution and office facility.
Office Supplier Plans to Add
More than Half a Million Sq. Ft.

So will The Supply Room Companies in nearby Ashland, Va., in Hanover County, also part of the Greater Richmond area.
        The $50 million-a-year office supply, furniture and printing company recently completed a $4.5-million capital investment in a 280,000-sq.-ft. (25,200-sq.-m.) distribution, manufacturing and showroom facility on North Washington Highway in Ashland - just to keep up with the growing demand from its customers throughout Virginia.
        But even that won't be enough room, said Yancey Jones, president, CEO and co-owner of the company. "Our plans are to add another 250,000 sq. ft. (22,500 sq. m.) for our Open Planning Systems business," he said, "and in another six months we will need an additional 75,000 to 100,000 sq. ft. (6,750 to 9,000 sq. m.)."
        The company's space needs apparently are growing as fast as its business. Five years ago, revenues were running at about $20 million a year. They will soon reach $60 million, said Jones.
        "We have bought 23 companies in the last 15 years," he said. "And we will soon expand outside of Virginia, with sales offices in New York and Pennsylvania."
        For right now, however, Virginia is supplying more than its share of demand for the company's products. The firm won the state contract to provide supplies to the Commonwealth of Virginia offices in 1995 and still maintains that business today. In addition to its corporate headquarters and warehouse in Ashland, the company maintains Virginia operations in Richmond, Fredericksburg, Harrisonburg, Sterling, Charlottesville, Norfolk, Roanoke and Lynchburg. The company also operates a facility in Jessup, Md.
        Jones said the decision to relocate to Hanover County in 2000 was an obvious one. "Hanover offered a unique tax deal for a company like this, and plus we wanted to be on the I-295 Corridor around Richmond," he said. "We have 65 vehicles doing next-day delivery of our products, and we supply customers within a 200-mile (320-kilometer) radius. From this location in Ashland, we can fill an order anywhere in Virginia."
        The deal on the old retail catalogue warehouse was also too good to pass up, Jones added. The Supply Room Companies purchased a 280,000-sq.-ft. (25,200-sq.-m.) plant for what it would have cost to buy a 120,000-sq.-ft. (10,800-sq.-m.) site in Henrico County.
        "Hanover County also helped out with the building permits so that we could move in quickly, and they helped us out by improving the road access to this site," said Jones.
        The best part about the move was what it did for his work force, said Jones.
        "We lost a few workers in the move but gained good people from Hanover," he said. "Getting the skilled labor in this market made it a great move for us. The people who live here are very family friendly and very conscientious. We have less than 10 percent turnover."

Rogar: Small Firm, Large Growth

There's also very little turnover at Rogar, a manufacturer of fine house wares in Midlothian, Va. - partly because the company itself is so small.
        The $4 million-a-year company may have only about 35 year-round employees, but it's growing rapidly. The custom manufacturer in Chesterfield County currently has about 51,000 sq. ft. (4,590 sq. m.) of plant space, but will soon add another 20,000 sq. ft. (1,800 sq. m.) "You really need all the help you can find when you are a small business," said Tom Baron, vice president of operations for Rogar. "The Chesterfield County economic development department helped us out a lot."
        Rogar was founded in Abilene, Texas, but moved to Richmond because of its "good transportation network," said Baron. "Virginia was ranked as the fifth-best state for small business, and the cost of living here is very reasonable. Plus, the labor is available, so we decided to bring the company here 12 years ago."
        The first Rogar plant was located in downtown Richmond, but that facility was relocated to Chesterfield County in 2000. The current plant represents about $1.4 million in capital investment.
        The company's major customers are BJ Wholesale, Costco and various mom-and-pop shops that specialize in custom house wares, especially the ornate wine bottle openers made by Rogar.
        "This new location has allowed us to produce a better product," said Baron. "We needed a different level of worker, and we're finding them out here. This has allowed us to expand."

Richmond Partnership Repositions Image

Expand is one word that the Greater Richmond Partnership (GRP) would like to hear more often. While its 2001-2002 annual report showed a decline in the number of company expansions and jobs created for the city and surrounding three-county area, GRP President Greg Wingfield is optimistic that those numbers will soon improve.
        The partnership assisted 19 companies which created 1,035 jobs and invested $31 million in the past fiscal year, and Wingfield said his group hopes to improve on those totals in 2003.
        "We have a strong, existing business base here," he said. "We have a good business climate, strong labor market and a very stable business environment."
        The GRP has also repositioned its image to complement Greater Richmond's new "Easy to Love" branding message. "A new logo based on the partnership's Web address (www.grpva.com) is designed to make the address top-of-mind as the business world moves deeper and deeper into digital exchange and retrieval of information."
        Of course, if Wingfield really wants to know what it takes to get companies to expand in Richmond, all he has to do is talk to the people at Maruchan, The Supply Room Companies and Rogar.
        They will tell him.

sp1230bsp1230b ©2002 Conway Data, Inc. All rights reserved. Data is from many sources and is not warranted to be accurate or current.