From Cokes to crab cakes

Rebirth: The former Coca-Cola plant in Locust Point will effervesce again as the new city headquarters of Phillips Foods & Restaurants.

April 24, 2002|By Meredith Cohn | Meredith Cohn,SUN STAFF

In the heart of gentrifying southern Baltimore's Locust Point, a plant that used to produce Coca-Cola will soon house a giant new assembly line where workers will mix imported crab meat and spice by hand to make 200,000 cakes a day.

Unremarkable - except that city and business leaders had been expecting Locust Point to become the area's next high-tech hub, where workers would handle a computer mouse, not a hard-shell crab.

During the past 1 1/2 years, developers who bought the old Fort Avenue plant unsuccessfully marketed it to telecommunications companies, among others. They had even formed a company called Locust Point Technology Center LLC to own the property, although the building was going to be called the Coke Factory.

But no one counted on the tech companies' fall from favor on Wall Street, the mass bankruptcies and the survivors' reluctance to expand into large new facilities. And while manufacturers have not built many new plants anywhere for decades, those industrial dinosaurs are, at least in part, still in Locust Point's future.

Facing this reality, city and business leaders have latched onto those manufacturing roots - and the jobs - and are calling the deal with Phillips Foods & Restaurants a success. Public funds are even subsidizing Phillips' move.

"Whatever works," Mayor Martin O'Malley declared between bites of crab cake at a ceremony recently to mark Phillips' decision to stay in the city and build a new headquarters, assembly line and freezer. "Tech jobs are great, but Phillips is talking about adding people, and we certainly need entry-level jobs. ... The nice thing about Phillips is it's known in the community, and it's a growing business."

City and state officials, who have often touted the importance of high-tech companies to Maryland's future, also actively courted Phillips and shelled out millions of dollars to retain the company.

The Maryland Department of Transportation will pay Phillips $6.8 million to buy the company's Monroe Street property, about $5 million more than its appraised value. The figure reflects the amount of money necessary to rebuild the operation in Locust Point, said David S. Iannucci, secretary of the Maryland Department of Business and Economic Development, which helped broker the deal.

Iannucci said state transportation officials were going to use the Phillips building as a maintenance facility, so they wanted to find the company a new home at no cost to it.

Phillips plans to use state and federal historic tax credits to renovate the space. Also, the city offered a $600,000 loan to the company.

In exchange, Phillips agreed to keep its headquarters in the city for seven years, spend $15 million on new facilities and maintain its current level of operations.

The company does not have to add jobs, though the site is big enough to triple production, company officials said.

Iannucci said the push for manufacturers is not a sudden policy shift. They have always been a priority in the state, along with such growth industries as biotechnology and defense, because of their history here and because they provide needed entry-level jobs.

As for Locust Point, he said tech and manufacturing companies could live side by side.

Manufacturers' exodus

Other available sites - and the effort to fill them with tech companies - opened up as manufacturers that churned out products from soap to syrup began leaving Locust Point. During the past decade, the community has lost Procter & Gamble, General Electric, Bond Trucking Co., Southern States, Chesapeake Paperboard and Archer Daniels Midland.

According to the state Department of Labor, Licensing and Regulation, the number of manufacturing jobs in Baltimore fell from 32,248 in 1996 to 27,606 in 2000. During the third quarter of last year, the period with the most recent data available, the city had 24,640 manufacturing jobs.

Costar Group, a real estate information provider, reports that there is a 14 percent vacancy rate among the city's 783 industrial buildings, which does not count those slated for another use. Small industrial sites and research and development spaces are the most in oversupply, according to state and industry sources.

Older cities share story

The story of Baltimore's waterfront is the same as in other coastal cities, said Richard Clinch, director of economics for the Maryland Business Research Partnership, a University of Baltimore think tank.

"In older cities, there's been a massive move by manufacturers to the suburbs and rural areas, and they've left the waterfronts for 10, 20, 30 years," he said. "Yuppies have recently found and redeveloped some of them. [Waterfronts] still have some of the best land for manufacturers, but that land is permanently being erased from the landscape. Cities need those people, but they need those jobs, too."

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