Rolls-Royce could employ up to 500 in Prince George

One of Virginia's most lauded and long-awaited industrial projects is getting under way, with its priorities shuffled somewhat because of the economic recession.

About 200 people turned out yesterday for a groundbreaking ceremony at the site of Rolls-Royce Plc's planned aircraft-engine components plant in Prince George County, first announced nearly two years ago.

"The world has changed since we launched this project," Rolls-Royce North America President and Chief Executive Officer James M. Guyette said in an interview after the ceremony. "The macroeconomic circumstances are much different than anyone envisioned."

Rolls-Royce, a British company with its North American headquarters in Reston, initially is planning to invest $170 million and hire 140 people at the plant in the Crosspointe Centre Industrial Park. Eventually, it could employ 500 people, and the investment could reach $500 million.

When Rolls-Royce announced in November 2007 that it intended to build the plant, the company said it would use it to test and assemble components for mid-size corporate jets. Since then, the economic recession has hurt the market for corporate jets, Guyette said.

"That market was very hard hit, but we do much more than that," he said.

Rolls-Royce reordered it priorities and now is focusing the first phase of the project on components for commercial aviation engines, Guyette said. The first phase, a 140,000-square-foot building to make disc components for aviation engines such as the Airbus A380 and Boeing 787, is expected to be operating by early 2011. A second, 130,000-square-foot phase will produce blisks, engine components for military aircraft.

The crowd at yesterday's groundbreaking got a look at the type of technology that Rolls-Royce produces for the military, as a V-22 Osprey tiltrotor aircraft, piloted by Marines from the Marine Corps Air Station New River in North Carolina, soared over the trees and made a vertical landing in the open field. The aircraft's components include two Rolls-Royce 1107C turboshaft engines.

The Marines then assisted Guyette and Gov. Timothy M. Kaine in raising the Virginia flag and the Rolls-Royce flag at the site.

Kaine called the start of construction at Crosspointe good news in challenging economic times.

"This investment means a lot of things," Kaine said. "For those who wonder about whether manufacturing in the United States is dead or being offshored, this is a strong investment on the ground to say, 'No, manufacturing is not only alive, manufacturing is thriving with innovation and technology and educational partnerships.'"

To lure the Rolls-Royce investment, the state provided an incentives package worth $56.8 million, most of it linked to employment and investment targets that the company must meet over 16 years. The incentives package included a $35 million performance grant, to be paid in installments from 2014 to 2023.

Kaine also pledged $6 million from the Governor's Opportunity Fund to help pay for roads, water and sewer service, and utilities. The state also committed $8.7 million to assist in employee training.

The University of Virginia, Virginia Tech and the Virginia Community College System also are developing a research and training partnership with Rolls-Royce and plan to open a center for advanced manufacturing at the site.

State and local economic-development officials said they are continuing to work on recruiting suppliers and vendors to locate operations near the Rolls-Royce site, but no major announcements have been made.

The Rolls-Royce investment, along with a $363 million investment by Northrop Grumman and Areva in Newport News to manufacture large components used in the nuclear-power industry, represent two of the most significant industrial investments in the state in a generation, said Hugh Keogh, president of the Virginia Chamber of Commerce.

"No question there will be suppliers coming in," he said.

The projects should attract global investments, Keogh said, comparing them to Japanese-owned Canon Inc.'s announcement in 1985 that it would open a copier plant employing 1,000 people in Newport News.

Since then, the state has attracted investments from about 100 other Japanese companies, he said.

"About 20 percent or even a quarter of those are linked to Canon or came here because of Canon," he said.

Contact John Reid Blackwell at (804) 775-8123 or .