Post-mill unemployment figures revised

Published 9:32 am Saturday, December 26, 2009

FRANKLIN—The Hampton Roads Planning District Commission has unveiled what it believes unemployment figures will look like once the International Paper Co. paper mill closes in the spring.

Economist James Clary said the HRPDC, using an economic impact software program from Regional Economic Model Inc. (REMI), estimates that the region will lose 2,850 jobs as a result of the mill’s closure. That figure includes 1,750 jobs indirectly tied to the mill.

Clary said three industries that would be most affected by the mill closure are retail trade, construction and wholesale trade, affecting approximately 450 jobs.

“This is an additional worry because construction and retail trade are already under stress because of the current (national) economic situation,” Clary said Monday before the Southampton County Board of Supervisors.

The REMI model further estimates that the annual gross regional product and regional personal income will decline by $310 million and $180 million, respectively. Clary said both numbers would decline in large part because mill workers averaged $74,000 a year.

“This is significantly above the average wage in the region and for the affected counties,” Clary said. By comparison, the average wage in Virginia is $48,000 a year.

The Virginia Beach-Norfolk-Newport News Metropolitan Statistical Area, a region defined by the United States Office of Management and Budget, includes Isle of Wight County, the City of Suffolk and municipalities to the east and north, but does not include the City of Franklin or Southampton County.

“This analysis is made more complicated because our model is for the entire metropolitan statistical area, and of course it’s harder to model things that are on the edge (of the MSA),” Clary said. “It’s also harder to model catastrophic events where you go from 1,100 employment to zero employment in an industry.”

The local housing market is also under stress. Citing figures from Real Estate Information Network Inc. (REIN), Clary said 469 residential properties are for sale this month in Franklin, Southampton and Isle of Wight, a 45 percent increase over the normal monthly average.

“(Additionally) closings are down 29 percent, indicating a slowing down of the housing market,” Clary said.

Data from the U.S. Department of Labor indicate that unemployment rates for October — not seasonally adjusted — were 9.6, 7.6 and 5.9 percent in Franklin, Southampton County and Isle of Wight County, respectively. By comparison, the November unemployment rate for Virginia was 6.4 percent and nationally it was 10 percent.

Citing a survey of households by the Bureau of Labor Statistics, Clary said Southampton’s unemployment rate would climb to 10.8 percent with just the job losses from the mill alone, while Franklin could exceed 18 percent and Isle of Wight 6 percent.

In October, IP revealed that 324 of the 1,097 mill employees live in Franklin, while 250 reside in Southampton County. The southern half of Isle of Wight County, specifically Carrsville, Windsor and Zuni, is home to 107 workers. Another 198 employees live in other Virginia communities, and 218 reside in North Carolina.