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1:59 am
Wed November 28, 2012

Cement plant won't create as many jobs as first forecast, says new study

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A Titan Cement plant would bring about 48 jobs to New Hanover County – not the 720 originally quoted by an earlier economic impact study.  That’s according to a new analysis paid for by the North Carolina Coastal Federation, an environmental advocacy group.

As Rachel Lewis Hilburn reports, the new study, presented last night at WHQR during a meeting of the Cape Fear Economic Development Council, incorporates the possible negative impacts of a cement plant.

They’re called negative externalities.  They’re the potential adverse consequences – the downsides -- that are not often considered in economic impact studies.  And that’s largely because they’re difficult to quantify, says Dr. Craig Galbraith of UNCW’s Cameron School of Business.   He’s also co-author of a 2012 study on the potential economic impact of a cement plant in New Hanover County.

“A very important part of understanding economic impact of cement manufacturing or heavy industry in general is that it’s not all good.  In fact, you can have several negative impacts and sometimes the negative impacts will actually outweigh the positive impacts.”

And since those factors weren’t part of the equation in an earlier study, Dr. Galbraith says the old data -- trumpeting hundreds of jobs and millions in economic activity -- is fundamentally flawed. 

So what are the potential downsides of a cement plant, according to Dr. Galbraith?

Now I’m not saying that Titan has all these but these are kind of the general sort of things you might want to consider.  One is pollution and environmental degradation.”

Even just the perception that an industry is a polluter can repel other attractive businesses – such as high-tech or knowledge-based companies, says Galbraith.

“Another negative externality which is very rarely talked about in economics is that it’s not compatible with a long-term vision of a community.  If you have a long-term vision of a community that says we want to move in this direction, and you bring in a business that doesn’t fit with that, that actually may hurt that vision.” 

Galbraith says the elements that attract desirable companies have been studied exhaustively and are widely-known and well-documented.

“It turns out that attractive communities attract knowledge-based industries, they attract hospitality visits, and they attract residents who want to live there.  Beauty is in fact good business.”

Bob Odom is General Manager of Carolinas Cement, the company that would construct and operate the plant in Castle Hayne.  In a statement earlier this year, he said Titan supports the manufacture of cement through environmentally and socially responsible business practices.   And, he says, the company is continually working to identify innovative ways to improve plant operations, minimize emissions, promote a safe workplace, improve energy efficiency and conserve natural resources.  Odom also points to what he calls the “much-needed, good jobs” that Titan would bring to the county.

While Galbraith acknowledges that even heavy manufacturers are finding new ways to operate, they’re not within a sector that typically spurs economic development.  And it’s a fallacy that more jobs equal growth.

“The vast majority of industries are embedded in the economy and do not contribute significantly to economic development – even if they have significant employment.  One of the big mistakes I hear constantly is by people associating employment with economic development.  And it’s not.”

And studies show, says Galbraith, that firms usually wind up hiring nearly 14% fewer people than they announce.