Virginia Electric Cooperative goes the Extra Mile to Promote Rural Development

By Daniel Christopher

Like many utilities across the South, Mecklenberg Electric Cooperative (MEC) is eager to promote economic development and job creation—particularly in rural areas. To spur economic development, MEC, which serves nine counties along the southern border of Virginia, helped locate Israel-based Oran Safety Glass (OSG) to Emporia-Greensville County in 2006. MEC helped the company in obtaining a zero-interest loan to finance its future. Working with other economic development organizations in Virginia, MEC has been a critical part of the team that helped attract the bulletproof glass manufacturer and that’s helped the company achieve remarkable growth in short order.

A little more than two years ago, OSG announced plans to locate its first U.S. facility in Emporia. By early 2008, the company had dramatically exceeded its initial job creation targets and implemented plans to nearly double its manufacturing capacity. OSG, which supplies bulletproof glass for U.S. military vehicles, has international ties. The company is Israel’s leading processor of flat and curved glass and it boasts customers across the globe.

To assist in locating OSG, MEC went the extra mile to help obtain a zero-interest loan from the Rural Economic Development Loan and Grant program (REDLG). These funds, along with others from the state were a critical factor in OSG’s initial decision to locate in the Greensville County Industrial Park, according to company leaders and MEC officials.

Under the REDLG program, the U.S. Department of Agriculture provides zero-interest loans to local utilities, which they can pass on to companies that will create and retain jobs in rural areas.

MEC’s Vice President of Business Development Brian Mosier said that the REDLG program was a big selling point for OSG. “As it would be for many companies, the advantage of a zero percent interest loan was very appealing,” he says.

OSG’s leaders agree. “The partnership of MEC and OSG Inc., utilizing the REDLG loan has been a tremendous success and has allowed us to grow our business far beyond what our original business plan projected,” says Vice President of Manufacturing at OSG Inc. Louis Mitchener. “OSG’s 30 years of reputation for outstanding quality and service have resulted in very high demand for our products since we opened our first U.S. operation in Greensville County, Va., and will continue based on current customer demand.”

Specifically, OSG was able to use the REDLG funding to purchase equipment and machinery. The program guidelines also enable the loan money to be used for business expansions and startups including cost of buildings, equipment, machinery, land, site development and working capital; community infrastructure necessary for economic development and job creation purposes; educational facilities and equipment to provide training and job enhancement skills for rural residents to facilitate economic development; business incubator projects to assist in developing emerging enterprises; and similar purposes.

“We are pleased to have played a small role in OSG’s decision to locate in Greensville County,” says John Lee, president and CEO of Mecklenburg Electric. “Their expansion stands as testament to not only their ongoing business success, but also to their original decision to locate here and we congratulate them on both. We are also honored to provide assistance to a business that manufactures a product that protects the brave men and women who protect our nation. It is part of our cooperative’s mission to bring economic value to the communities we serve, and this is certainly a success story for all involved.” MEC worked with other groups on the REDLG loan application including Greensville County, the Emporia-Greensville Industrial Development Corp., Greensville County Industrial Development Authority, and the Virginia Israel Advisory Board, Lee says.

Mosier notes that MEC’s previous experience in successfully obtaining REDLG funding was a tremendous asset in working with Oran Safety Glass. “The process is very in-depth—very tedious and time consuming,” he says. “We had already developed guidelines of what factors would be considered in the award process. We are looking for companies that are directly creating jobs and bringing long-term improvements in economic development. We also look at the county’s economic conditions such as the unemployment rate and per capita personal income. Finally, we are looking to see if the physical location of a project is in a rural area of less than 25,000 people and if the company has a solid ability to repay the loan.” All projects also must meet the MEC board of director’s approval before REDLG funding is granted.

Along with OSG, MEC had obtained REDLG funding for another company in recent years. MEC was successful in getting a zero-interest loan for manufacturer Capps Shoe Co. Inc. With the funds, Capps Shoe was able to purchase equipment and machinery to improve its products. The money from the loan helped retain jobs for 120 people in Gretna, Va., a town of only 1,300.

“We made this (loan for OSG) a very high priority,” Mosier says. “It took a long time to pull it together and move forward, but we were committed to helping Oran Safety Glass.” He adds, “This is a strong company and it’s really worked out well. It has far exceeded our expectations.”

In the end, the REDLG loan was part of a larger funding package that helped attract OSG to rural Virginia in 2006 and has helped it thrive there as evidenced by the company's latest expansion. So, not only did Virginia, Greensville County and MEC put together a strong incentive package for OSG's initial investment in 2006, they also had the flexibility to step up to the plate again to assist the expansion project less than two years after the initial location. A local delegation from Greensville County traveled to OSG's headquarters in Israel in April of 2008 to finalize the company's expansion agreements. 

For the expansion, which includes a $2.65 investment by the company and 25 additional jobs, Gov. Tim Kaine approved a $50,000 grant from the Governor’s Opportunity Fund to assist Greensville County. Greensville County was awarded a $150,000 Community Development Block Grant (CDBG) from the Virginia Department of Housing and Community Development (DHCD) to support the infrastructure needs of the expansion. The project also will be eligible to receive benefits from DHCD’s Virginia Enterprise Zone program, because it is locating in a designated enterprise zone. The Virginia Tobacco Indemnification and Community Revitalization Commission approved $100,000 in Tobacco Region Opportunity Funds for the project. Finally, the Virginia Department of Business Assistance provided training assistance through the Virginia Jobs Investment Program.

Mosier notes that in addition to providing hands on help with financing, MEC also has provided customer service—a hallmark of many rural electric cooperatives. “An advantage in the process was that there was one point of contact. OSG officials could contact me anytime, anywhere,” he says. “That availability proved to be very important for an international company that was locating its first U.S. facility, especially considering the international time difference between Israel and Virginia.

“We have a long history spanning more than 70 years of helping out our members and local communities in everything we do,” Mosier says. “Using our resources to work with economic development organizations throughout our territory is one way we can help strengthen Southside Virginia.”