Sunday, November 08, 2009

Shuttered factories pose big challenges for communities

By Josh Brown
The Virginian-Pilot
© November 8, 2009

After the wood chippers go still and the boilers cool, the International Paper mill outside of Franklin will join a growing list of closed local factories.

Nearly 4 million square feet of factory space across the region is dormant or scheduled to close, not including International Paper's plant, which will add hundreds of thousands of square feet to the market when it closes next spring.

In Norfolk, Ford Motor Co.'s 2.6 million-

square-foot assembly plant has sat vacant for more than two years. Chesapeake Hardwood Products Inc. closed last year, and its 452,000-square-foot plywood plant is up for sale. And Smithfield Foods Inc. plans to close a 413,000-square-foot meatpacking facility in its hometown early next year.

Shuttered factories pose big challenges for communities in lost jobs, tax income and often blight, yet they also offer opportunities for redevelopment.

But the latter is a difficult proposition.

Unlike cookie-cutter warehouses, factories are designed and built for the purpose of producing a specific product. Everything from the layout to land use has a purpose and may not lend itself to modification. The same goes for machinery, which is often highly specialized and expensive to remove or alter.

Add to that the recession and credit crunch that have reined in

developers who redevelop factory land for other uses such as office and shopping space or even residences, and it becomes even more difficult to for cities to get unused factories back to work.

After a company has decided to close a factory, it sometimes takes months or years to decide whether to sell, demolish or hold onto the plant - much to the chagrin of economic development officials eager to find a way to use it to create new jobs.

"Here's the rub: The highest and best use most of the time is the same use, whether it be paper production or food production," said Worth Remick, a vice president with the Norfolk office of real estate firm CB Richard Ellis. "And so the buyer would most likely be a competitor of International Paper or Smithfield. Are these sellers essentially creating more competition or assisting competition, or are they just getting rid of buildings that aren't contributing to the bottom line?" More.

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