While officials from Danville and Pittsylvania County are disappointed Ikea will shut down its operation — leaving 300 unemployed in the process — they also are satisfied with the results of the 11-year partnership.
Ikea employed hundreds, paid more than $4 million in taxes split between the city and county, and developed a highly marketable building leaders hope will be filled in early 2020.
“At the end of the day, we got more money than we gave,” said Matthew Rowe, Pittsylvania County director of economic development.
Ikea announced Wednesday it would close the facility located just outside of Danville in December and transfer production to manufacturing locations in Europe. The high prices of raw materials in the United States is the main reason for the decision, according to a company statement announcing the closure.
Wednesday’s announcement comes just six months after Ikea cut 90 positions, with Ikea Danville site manager Bert Eades citing high inventory and low sales for those layoffs.
The city of Danville, Pittsylvania County and Virginia worked together to incentivize Ikea to bring the production plant here in 2008. Once Ikea met all of its original requirements — $85 million in capital investments and 271 jobs — it received several incentives, including a grant from the Governor’s Opportunity Fund Program, the Virginia Tobacco Commission and cash from the city and county. The exact amount of incentives wasn’t available Thursday.
The agreement also allowed Ikea to lease the building site for 10 years. After purchasing the land for $1, Ikea now owns the land and the building, but the Danville-Pittsylvania Regional Industrial Facility Authority — also know as RIFA — still owns much of the surrounding property in the Cane Creek Centre industrial park where the building is located.
Danville City Manager Ken Larking said there were more incentives offered to Ikea if it met additional capital investment and job creation requirements, but Ikea never pursued those options and didn’t receive any of those grants.
Ikea also received tax rebates, which concluded in 2010. Pittsylvania County Administrator David Smitherman said Ikea was one of the largest taxpayers in the area over the last year, paying more than $500,000 per year, which was divided evenly between the county and Danville.
Larking said a combination of different funds and grants were used to make infrastructure improvements around the building.
“These improvements will support any other company that locates in that facility,” he said.
As a result of those investments — which include railroad improvements — city and county officials said the property is highly marketable. Rowe said five or six parties already had expressed interest in the area before the announcement, and all are serious candidates for the building.
Danville Economic Development Director Telly Tucker said there possibly could be incentives for whoever fills the space, but nothing is sure now. It all will depend on the industry and investment amount.
Even though Ikea now isleaving, city and county officials still are satisfied and believe the deal was worthwhile.
“I don’t know many businesses in the area that have put the food on the table for 300 families for 11 years,” Rowe said.
“Ask any of the hundreds and hundreds — if not thousands — of people who have worked for Ikea over the last 12 years if they thought it was worth it, I think the answer would be a resounding yes,” Smitherman said.
As city and county leaders pivot and work with potential suitors for the facility, Ikea is working closely with them in the hopes of finding a new employer for their workers.
“We will do everything we can in the coming months to support our co-workers through this change as they look for new jobs and training opportunities,” Eades said.
County and city officials spoke highly of the way Ikea has approached the decision.
“While we are disappointed that they are leaving, we are really appreciative of the way they are handling it,” Larking said.
“Ikea is being a very generous and productive partner at this time,” Smitherman said.
Ayers reports for the Register & Bee. Reach him at (434) 791-7981.