by Karen Nelson

PASCAGOULA - They are, arguably, the least-known of those who work in the public arena. Economic development organizations are involved in a realm that, for the most part, operates behind the scenes. Yet their work has a major impact on an area's economic well-being. This is the third story in a four-part Sun Herald series about South Mississippi's economic development game.

ECONOMY

The chase that landed a $10 million plant expansion in Pascagoula last month was a short one by economic development standards.

It began just a little over a year ago, in December 2002, when George Freeland, head of the foundation set up to spur economic development in the county, received a phone call from Rolls-Royce North America headquarters in Virginia.

The company, which has a foundry off Industrial Road that makes huge Navy ship propellers, planned to expand one of its U.S. facilities with the latest equipment, and Pascagoula was in the running. It would mean at least a 25 percent increase in the size of the plant and a 50 percent increase in jobs.

"He said this is very preliminary right now, but that he and others at his level wanted to make sure that Pascagoula was on the radar screen, that we would be given a chance to make the business case for why this expansion needed to be in Pascagoula," Freeland said.

The executive on the other end of the line wanted to know what Mississippi and the county had to offer his company. He admitted he needed to know more about financial incentives.

Then he said something that set Freeland in motion.

"He said, 'Look, our vice president will be coming through Jackson, Miss., on his way to a meeting in north Mississippi,' and he said, 'I think I can get him to meet with you for 20 minutes.' "

Not a problem. Freeland would be there.

When Freeland hung up, he mulled over the conversation. Rolls-Royce is a marquee name that most people associate with ritzy autos, though it long ago set that up as a separate entity. Today it's a major defense company. A bigger presence in Jackson County was great in itself, but for a county that already has the biggest builder of Navy ships, Northrop Grumman, a larger role for a company known for its marine power systems couldn't help but excite Freeland.

Learning more

"The first thing I did at that point was to hop on some industry research and learn a little bit about the product line, these large propellers, to understand the project itself," Freeland said.

His staff was mobilized to assemble the information.

Then they had to dissect the proposal. How much was Rolls-Royce going to spend on the building? That was $2 million. And how about the equipment that would be involved? That was $8 million. How many jobs? Twenty-five. Strong numbers, but small by some standards.

Still, there was something else in this proposal that was particularly intriguing. The new facility would be designated a Center for Naval Propulsor Excellence, a designation that brought with it a lot of potential down the road.

He arranged with the Jackson Airport Authority to have a conference room set aside.

Twenty minutes

"I drove three hours and 15 minutes, waited for this Rolls-Royce VP to get off a plane, corralled him into a conference room and had 20 minutes to make a case for Jackson County," he said.

Freeland talked about the Advantage Mississippi program, the state's set of financial perks that includes industrial bond financing and job tax credits.

He talked about Jackson County tax exemptions and how long they last, and about how the people of the county are industry-friendly with a pro-business climate.

He discussed the county's ready pool of qualified workers and a community college that is flexible enough to train even more. And he emphasized the value of having a military presence and Navy shipbuilding established in the county.

Then came the numbers: Freeland gave them a calculation of their legislated incentives based on what they wanted to invest, a detailed breakdown using all available incentive tools - city, county and state.

"They were very interested in the industrial revenue bonds," he said. What he took from the meeting was "adequate initial-level interest... and a contact."

That contact was the chief financial officer for Rolls-Royce North American, a business division of British Rolls-Royce and the parent division for Rolls-Royce Naval Marine, which operates the Pascagoula foundry.

"Apparently it was successful," Freeland said about the 20 minutes he had with the executive. But he also knew full well that the meeting was just the beginning.

He and Jackson County leaders would begin building a relationship with the company throughout 2003 with trips to Virginia for county leaders and trips to Pascagoula for Rolls-Royce North American.

"We spent the next year going back and forth," Freeland said. He spent endless hours with company CPAs, company attorneys and outside attorneys hammering out details, assuring outcomes.

The meeting Freeland had with Rolls-Royce was a start, but a start isn't everything. It can falter without follow-up and that's what the foundation is designed to do.

Political clout

While economic development efforts like the Rolls-Royce project rely on how well local officials respond to a company's need, having the help of well-placed politicians can grease the skids.

It would be hard to overstate the importance of the state's congressional representatives. Sen. Trent Lott is known for being able to steer defense dollars to his home state. In addition to all the other defense dollars earmarked for Mississippi, the FY 2004 defense bill included $1 million to set up a Center of Excellence for Advanced Naval Propulsors in Pascagoula at the Rolls-Royce facility. On Oct. 1, President Bush signed the bill.

While nobody is saying that was key to the decision to expand in Pascagoula, Rolls-Royce officials during the January groundbreaking said the $1 million went a long way toward speeding up the entire process.

In late 2003, the Atlanta-based Southern Company, parent company of Mississippi Power, and its economic development specialists hosted a meeting in Texas that included foundation members and Rolls-Royce officials. That, said Freeland, is when he came to believe the expansion would be in Pascagoula.

He was right.

In January 2004, all the work paid off during a groundbreaking for the 18,000-square-foot facility, set to open in 18 months. It will be able to produce propellers at a speed four to five times faster than what's currently used.

And for Pascagoula it likely will produce more.

As a Center of Excellence for Advanced Naval Propulsors, it will eventually involve more than the production of propellers. Rolls-Royce is considered a leading innovator for advanced waterjet technologies, and is involved in a range of defense activities.

The foundation

The win was just what the foundation needed. It's a relatively new organization in a county that has gone through its share of grief in recent years with the closing of several industries, including International Paper.

The Jackson County Economic Development Foundation, with its combination of public and private funding, was reorganized three years ago in part because the economic development effort in the county was disjointed. In its new form, it treats the county as a whole when trying to lure industry or encouraging ones to expand.

Though he disliked the analogy, foundation Chairman Jerry St. Pé likened it to one-stop shopping - one place for an industry to go for a look at what the area has to offer.

"The modern process of economic development is highly technical," St. Pé said. "If it ever was just about making prospects feel good about your community, those days are long gone."

St. Pé, former chief of Ingalls Shipbuilding, said the foundation never takes for granted that an expansion is going to be automatic. And the Rolls-Royce success "validates everything that was envisioned when the foundation was formed several years ago," he said. It involves local governments working in concert so businesses do not have to go from state to city to county to find out what the area has to offer.

"I'm satisfied that once they came to the foundation and the staff and board embraced their interest and all aspects of the expansion, what they saw was a way to get the thing done in the shortest amount of time," he said.

"This is an indicator that the foundation is measuring up to what it was intended to do," said St. Pé.

The tally of what the state and county offered in incentives: $45,000 in sales tax exemptions on building and construction materials; $120,000 in sales tax exemptions on new equipment; $779,000 over 10 years in property tax exemptions; $50,000 in state job tax credits on corporate income and a $349,000 state income tax exemption through the rural economic development program.

And the county's gain? Certainly the jobs, but it's what might come down the road that most excites those involved.

It was a "classic case of mining an existing business for economic development," said Freeland. "What you see is a good thing. What you don't see can be even better."