Defying the odds

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Newport News is the new star in Virginia’s economic crown. The Peninsula city, long known for its major shipyard, provided a stay against recession by capturing nearly one quarter of Virginia’s new corporate investment in 2008 ($1.2 billion), along with more than 2,000 projected new jobs.

Fueling the growth are major expansion projects planned by three longtime city employers: Northrop Grumman Shipbuilding, Canon Virginia Inc. and Continental AG. “Any one of these projects qualifies as the announcement of a generation for most communities,” crows Florence G. Kingston, director of Newport News’ Department of Development. 

In fact, Virginia on the whole fared better than economic conditions would suggest. Including Newport News, companies last year revealed plans to spend $5.1 billion to relocate or expand operations — activity that could spawn 20,714 new jobs for the commonwealth during the next several years. That’s up from 16,600 jobs and $3.5 billion in capital spending reported in 2007, according to the Virginia Economic Development Partnership, the state agency that recruits business. “In a year that was tough, those are significant numbers,” says Elizabeth Povar, the partnership’s director of business development.

The momentum continued last month with another plum: Hilton Hotels Corp. plans to relocate its headquarters from Beverly Hills, Calif., to Fairfax County. The deal will bring 300 new jobs over the next 36 months and $17 million in corporate investment. With Maryland in the running, Virginia helped seal the deal with a $4.6 million incentive package from the state and Fairfax County. 

Even in the face of a woeful U.S. economy, Virginia’s strengths are winning over new business. It offers a central location to U.S. markets, educated workers and access to global markets both through Washington Dulles International Airport and the port of Hampton Roads. A national No. 1 ranking by as the best state for business for three years running doesn’t hurt either.   

The services sector remains Virginia’s strongest growth engine, accounting for roughly seven in 10 new jobs.  Of the 20 top announcements by job creation, 13 involve companies in the services sector, with cumulative new jobs of 5,600. Setting the pace is nuclear power company Areva. It’s hiring up to 500 new engineers, although economic concerns have temporarily halted plans for a $25 million expansion of Areva’s Lynchburg headquarters, which included a new office building. Areva, whose parent company is based in France, says the added brainpower is needed as it prepares to build roughly 50 nuclear plants worldwide during the next two decades.

The burgeoning sectors of advanced manufacturing (2,233 jobs, $985 million) and aerospace (510 jobs, $156.6 million) underscore Virginia’s growing economic diversity. The state also is taking on more of an international flavor. Foreign-owned companies accounted for 35 percent of new jobs and 54 percent of capital spending last year, notes Paul H. Grossman Jr., VEDP’s director of international trade and investment.

Newport News reflects the growing cosmopolitanism. Canon Virginia, whose parent company is Japan-based Canon Inc., is working on a series of projects in and around Newport News. The centerpiece: a new $623 million high-tech plant for making toner cartridges and other products for laser printers. Encompassing 700,000 square feet, the factory exemplifies Virginia’s growing cluster of advanced manufacturers. It features robotics equipment used to automate many manufacturing processes.

Canon’s factory could begin operations by May.  More than 1,000 employees will be hired to run it, nearly doubling Canon’s 1,500-person Virginia work force. About 300 new employees already are on board. The plant positions Newport News as a hub of Canon’s North American and South American operations, says Rick Hammond, Canon Virginia’s senior vice president. “The important thing is we’re actually bringing jobs and investment to the U.S., at a time when most other manufacturers are going offshore,” says Hammond.

Areva Newport News LLC, a new company created by Areva and Northrop Grumman Shipbuilding, also plans to build a new massive manufacturing plant. The corporate heavyweights are joining forces to supply the U.S. nuclear industry with nuclear reactors, steam generators and pressurizers.  The 300,000-square-foot factory will cost an estimated $363.4 million and is expected to produce at least 540 high-paying jobs.

Areva wants to accelerate U.S. manufacturing for an expected renaissance of nuclear power. It considered several locations along the East Coast, says Chris Levesque, an Areva executive who has been named president of Areva Newport News. Ultimately, Northrop Grumman’s deep pool of experienced machinists and welders — coupled with access to the deepwater terminal in Hampton Roads — tipped the scales.

Areva owns 67 percent of the newly formed company, with Northrop Grumman Shipbuilding taking a 33 percent share. The new factory will be built on land adjacent to the shipyard’s existing facilities, with groundbreaking slated for March.  According to Areva-Newport News officials, the plant is expected to be fully operational in about three years.
In addition to land, Northrop Grumman Shipbuilding will provide the skilled labor and transportation for moving the 500-ton components to market, says Chris Vitarelli, its director of commercial nuclear programs.

Continental AG capped off Newport News’ strong 2008.  The German automotive supplier in December said it would shutter a South Carolina plant by 2013 and spend $194 million to consolidate manufacturing of gasoline and diesel fuel injectors at its Newport News facility. Nearly 320 jobs will be coming to Virginia, joining about 575 Continental employees already here. 

Elsewhere, the Danville/Pittsylvania County region continues on the comeback trail, landing its second advanced manufacturing plant in as many years. Com.40 Ltd., which makes mattresses and upholstered furniture, is spending $36 million to refurbish a former tobacco warehouse in Danville, says Jeremy Stratton, Danville’s director of economic development.

Here again, foreign investment provides fuel for Virginia’s economy. Plans call for Poland-based Com.40 to create 813 jobs in Virginia during the next seven years. The company supplies products to furniture retailer Ikea, whose Swedish subsidiary, Swedwood International, opened its first North American manufacturing facility in Danville in 2007.
Com.40’s arrival, coming on the heels of the Swedwood/Ikea project, illustrates the “continual evolution of our regional economy” from old-line furniture and textile making to advanced manufacturing, Stratton says. It is welcome news for a region in which nearly 12 percent of people remain without work, according to the Virginia Employment Commission.

Virginia’s emerging aerospace segment is earning prestige, too.  NASA last year chose Dulles-based Orbital Sciences Corp. to develop a successor rocket to its shuttle program. By 2010, Virginia’s Eastern Shore is slated to be a center of research activity for NASA’s Taurus II rocket. That’s when Orbital Sciences is scheduled to launch flight testing and demonstration missions from the Mid-Atlantic Regional Spaceport at Wallops Island.

The Taurus II rocket, if successfully developed and tested by Orbital, could be used to ferry food, equipment and other supplies to the manned International Space Station, says Billie Reed, the spaceport’s executive director. The spaceport, affiliated with Old Dominion University in Norfolk, beat out Cape Canaveral in Florida to host the project.

Prestige aside, the Orbital-NASA contract is expected to generate about 125 high-paying technical jobs, says Reed. Also expected is a “spinoff effect” as vendors and suppliers put down stakes, further aiding Virginia’s growing aerospace cluster.

Virginia’s pipeline of potential new projects and capital investment is at its highest since 1995, says Povar of VEDP. That’s promising, yet it’s hard to know whether a prolonged national recession will torpedo companies’ expansion plans here. One thing appears certain in 2009: Virginia’s competition with other states for new business is about to grow even more intense. 

Top 10 Projects by Employeement
Company Name             Location           MFG Type Business                                                         Employment Investment (millions)
Canon Virginia Inc.*                       Newport News M E Repair and refurbishing operations for select Canon products       1,035 $623.50
VT Milcom*                       Virginia Beach N E Telcomunications contractor for the Department of Defense       1,000 1.00
Com.40 Ltd.*                       Danville           M N Manufacture mattresses and upholstered furniture                 813           36.30
Pragmatics Inc.                       Fairfax Co.           N E Systems engineering, custom application software consulting       737           1.50
NCO Financial Systems Inc.                Hampton           N E Provide customer service/collections services                 571           1.20
Areva Newport News LLC*                  Newport News M N Manufacture equipment and pressure vessels for the nuclear industry     540           363.49
Areva NP Inc.*                       Lynchburg           M E U.S. HQ, nuclear power products & services                             500           25.00
Home Depot Retail Distribution Center Frederick Co. N N Retail distribution center                                       400           32.20
Serco Group Inc.*                       Fairfax Co.           N E North American HQ; variety of services to the federal government       400           10.00
Sykes Enterprises Inc.           Buchanan Co. N E Technical support; customer service center                             400           10.00

Company Name                       Location           MFG       Type Business                                                           Jobs             Investment(millions)
Dominion Virginia Power           Wise Co.      N N Coal power station                                                     75     $1,800.00
Canon Virginia Inc.*                       Newport News M E Repair and refurbishing operations for select Canon products       1,035             623.50
Areva Newport News LLC*           Newport News M N Manufacture equipment and pressure vessels for the nuclear industry     540             363.49
Goodyear Tire & Rubber Co.           Danville           M E Aircraft tire and medium radial truck tire manufacturing                   0             200.00
Continental AG*                       Newport News M E Diesel and gasoline fuel injectors                             318             194.00
Osage Bio Energy LLC           Hopewell           M         N         Manufacture ethanol                                                   50             165.00
RTI International Metals Inc.           Henry Co.      M N Manufacture titanium for the aerospace industry                   150     100.00
Dominion Virginia Power           Caroline Co. N E Electric power generation                                         1               79.00
Barr Laboratories Inc.*           Bedford Co. M E Pharmaceuticals                                                   220               62.00
Sabra Dipping Co. LLC*           Chesterfield Co. M N Manufactures hummus and vegetable dips                             260   59.30



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