More jobs, less investment
2010 brings new players and lots of corporate expansions
- February 28, 2011
There have been few events lately in Danville and Pittsylvania County that were more welcome than the news last fall that a new company, United States Green Energy, was going to build a manufacturing plant there that will eventually employ nearly 400 people.
Construction on the $30 million building, in the Cane Creek Centre, began in January. The company will make building materials such as roofing slates and siding that are integrated with photovoltaic cells to produce electricity. “We’re going to start out with about 50 [employees] and be at 100 by the end of the year, and close to 400 at the end of three years,” says U.S. Green Energy Vice President Robert Bennett.
Those jobs come as a welcome boost to a region with some of the highest unemployment rates in the state. Thousands of textile- and furniture-manufacturing jobs have been lost in recent years as companies closed or moved operations elsewhere. At the end of 2010, Danville’s unemployment rate was hovering above 12 percent; Pittsylvania’s was nearly 10 percent.
Bennett says his company — which has been developing its products in a small building in Spotsylvania County — was ready to go to a site in Pennsylvania until it got a pitch from Danville and Pittsylvania. “They’ve got a great manufacturing work force,” he says. “It’s a very supportive city, and they try to help us every chance they get.” Plus, the Virginia Tobacco Commission kicked in $1.6 million in incentives.
Danville’s much needed good fortune was mostly the exception to the rule for major corporate expansions in 2010. The biggest deals in terms of jobs and investment went to Northern Virginia, especially Fairfax County. Richmond fared well, too, while Mecklenburg County saw the biggest investment: a $499 million deal with Microsoft Corp., which plans to build a data center there that will employ 50 people.
Overall, the state fared better in terms of job creation in 2010, compared with the year before, but it didn’t attract quite as much investment. According to the Virginia Economic Development Partnership, the state announced 284 economic development projects. They are expected to generate 17,416 jobs and $2.59 billion in investment. In 2009, Virginia’s tally was 312 projects, 17,066 jobs and $2.8 billion in capital spending.
The 2010 figures could tick up slightly as communities continue to report final tallies. However, it’s unlikely that Virginia will reach 2008 pre-recession levels, when the state brought in 351 projects, 22,000 jobs and $5 billion in corporate investment. Still, the good news is that Virginia saw more new projects in 2010, like the Microsoft data center, along with many corporate expansions.
The bulk of the expansions happened in Northern Virginia. The Fairfax Economic Development Authority worked with 154 companies, which plan to add 6,495 jobs to the local economy. Fairfax captured a 400-job expansion at Capital One Financial Corp.’s corporate headquarters and the $20 million headquarters expansion of ICF International, a professional services company. That deal will bring nearly 500 new jobs.
The county also won one of the biggest plums of 2010: the corporate relocation of Northrop Grumman Corp., a Fortune 500 giant in the defense industry. The company, which already employs thousands of people in Northern Virginia, plans to move its headquarters from Los Angeles to the Merrifield area by this summer, creating 300 new jobs.
Henrico County snagged the biggest job gain in the state with news that Capital One plans to hire 700 people and house them in two buildings it bought last year in the Innsbrook Corporate Center.
The Microsoft deal in Mecklenburg County underscores the efforts state and local economic developers have put into recruiting companies to Virginia’s economically depressed regions along the North Carolina line. To make this area more competitive, the state’s tobacco commission has pumped in millions in recent years to assist the Mid-Atlantic Broadband Cooperative with a fiber-optic network. The creation of a state tax break in 2009 for equipment purchased for new or existing data centers is another carrot. To qualify, projects must have a capital investment of at least $150 million and create at least 50 new jobs.
The state tax break and the building of the fiber-optic network “are now beginning to bear fruit,” says Rob McClintock, director of the research division at the VEDP. “I don’t think there’s any question that the Microsoft deal wouldn’t have happened” without those efforts, he says.
It’s one of several data center projects on the VEDP’s list of the top 10 investment projects for 2010. Terremark Worldwide announced a $250 million data center in Culpeper County last summer with an estimated 100 jobs, and Prince William County got a $60 million data center planned by Capgemini U.S. In addition, Henrico County is where Kansas-based Quality Technology Services plans to locate a data center, investing $100 million during the next three years. QTS bought the building formerly occupied by Qimonda.
Data centers have been a strong sector in Northern Virginia for several years, and the success there is attracting attention. In late January Verizon Communications announced plans to buy Terremark Worldwide for $1.4 billion.
Meanwhile, Gov. Bob McDonnell — who has made job creation the centerpiece of his administration — was seeking $54 million in budget amendments. That total includes $25 million for a Virginia Research and Technology Innovation Fund. It would target certain industries, such as IT, biotech and alternative energy and try to assist them by getting innovations into the marketplace and attracting top faculty to Virginia’s colleges and universities. Another $5 million would be set aside to help provide capital to small businesses.
McDonnell and previous governors, as well as the tobacco commission, have long played a role in putting up money to bring companies to Virginia. McDonnell’s Governor’s Opportunity Fund approved $2.1 million for the Microsoft project, for example, and the tobacco commission contributed $4.8 million.
Other noteworthy corporate expansions in 2010 include:
KPMG LLP expanded its presence in Northern Virginia, moving to a larger office in Tysons Corner in Fairfax County, in a deal that’s expected to bring 375 new jobs. The audit, tax and advisory firm received $1 million in incentives from state and county sources. In return, KPMG must make at least $12 million in capital investments in the site in the next few years and pay salaries that average $98,224 a year.
Virginia Casting Industries plans to take over the former New River Foundry in Radford and open a new manufacturing operation there, investing $9.1 million and creating 300 jobs.
Neustar announced plans to expand its corporate headquarters in Loudoun County, signing a 10-year lease on a building in the Loudoun Tech Center in Sterling. The new building is twice the size of Neustar’s previous headquarters, and the move is expected to bring about 280 jobs and an investment of $11.2 million.