CHARLESTON, S.C. — THREE years ago, when the federal government announced it would close the Charleston Naval Base, the news hit this quaint coastal city like a shell from a frigate.
The base and shipyard were the region's largest employer - accounting for 22,000 jobs. Some predicted double-digit unemployment. Others saw the entire economy sinking into the deep.
But as the April 1 deadline for closing the base nears, doomsday hasn't arrived. Unemployment is down, job growth is up, and new companies are moving in.
While Charleston has been aided by a strong overall economy in the Southeast, the palm tree-studded city has also taken steps to smooth the transition that may provide lessons for other communities going through base closings.
"Charleston is one of the more successful stories that we have where bases have been closed," says Mark Vitner, an economist at First Union National Bank in Charlotte, N.C.
Many here attribute the progress to several factors. First, the state's attempts to land the Mercedes-Benz plant and its success at luring BMW several years ago helped put it on the global job-hunting map with a package of incentives, job credits, and worker-training programs.
Then, the base-closing announcement spurred Charleston-area recruiters, who once bickered and battled over turf, to work together. They formed the Charleston Regional Development Alliance, a tricounty effort that has gone on a rampage to attract new industry. Since its inception in February 1995, the alliance has wooed 21 companies, 4,100 new jobs, and $1.1 billion in investment. Among the prizes: Nucor Steel, a steel manufacturer that will create 500 new jobs, and National Car Rental, which will move its headquarters here.
"That's a dramatic change" in company relocations and job creation from other years, says Ben Cole, executive director of the alliance.
The Port of Charleston, the nation's sixth-largest container port, has also experienced expanding business and is part of the draw for both domestic and international firms. In 1995, it saw an 11 percent increase over 1994 in the goods that moved across its docks, including exports of South Carolina-made BMW cars and new shipping to Asia.
Ironically, the Navy is also contributing to the economy. The Base Closure and Realignment Commission voted to consolidate three East Coast naval electronics facilities to Charleston. Now other electronics and high-tech contractors that had offices near those centers are planning to move here.
Some say the closing of the Charleston Naval Base and Shipyard was a blessing rather than a curse. "I think five to 10 years from now we're going to be thankful the base isn't there, because as long as you rely on that for your engine of economic development, you don't aggressively go out after anything," says Frank Hefner, an economist at the College of Charleston. He says the grim forecast of job losses was exaggerated from the start.
Indeed, Charleston has improved its status considerably since 1993. DRI/McGraw-Hill, a Massachusetts-based economic consulting firm, projects the city will rank 56 out of 114 metro areas in job growth for the next two years, up from a ranking of 103 in the 1993-95 period.
Still, despite the improved outlook, the city lags behind other mid-sized Southeast cities such as Charlotte, N.C., Memphis, and Columbia, S.C., which have a higher growth rate. The Charleston metropolitan area, which has about 500,000 people, also has sluggish population growth - due in part to the loss of Navy personnel.
Today, the once-bustling naval complex seems almost abandoned. Housing barracks are vacant; the red-brick McDonald's has closed down; and the 23 piers, which used to dock dozens of ships, now jut out empty into the sea.
Nevertheless, the Charleston Naval Complex Redevelopment Authority hopes to bring new life to the 1,600-acre complex. Though some political wrangling hampered early efforts to find tenants, the authority says it's making headway in getting businesses to locate here. Some have already set up shop, including Charleston Marine Manufacturing Corporation, a company that repairs ships, and an office of the National Oceanographic and Atmospheric Administration. The US Border Patrol plans to open a school to train agents, and there is talk of converting a building into a movie studio.
A major reason Charleston has been able to weather the closing well is its diverse economy. Tourism is strong, there is an available work force for new companies, and tax and utility rates are competitive.
But the base closing has been hard on some businesses. Southern Lumber & Millworks, a family-owned company, had a $1 million contract for the past several years to provide the Navy with timber. To make up for the loss, the company has trimmed its work force and expanded its showrooms in hopes construction growth in the area will help keep business stable.
"It was sad to see the ships pull out one by one for good," says Joye Shuler, co-owner of Southern Lumber & Millworks. "But I don't think Charleston has become the ghost town everyone thought. You have an established city that will entice people to come."