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Spring 2012

Virginia: The American South's Crown Jewel of Smarts

By Mike Randle

The Institute for Advanced Learning and Research in Danville, Va., develops and attracts technology and talent critical to Southern Virginia's economic prosperity to enable economic and community transformation in the region.Virginia's a smart state. How smart? Its educational attainment rate is much higher than any Southern state and well above the national average. In fact, more than a third of Virginians 25 years old and older have a Bachelor's degree or more. That's smart. Over 14 percent have obtained an advanced degree or more. That's off the charts smart.

And here are the charts: 86.6 percent of Virginians have graduated high school, 34 percent have a Bachelor's degree or more and 14.1 percent have an advanced degree or more, according to Census. Compare that with the Southern average of 83.1 percent high school, 22.8 percent Bachelor's and 8.0 percent advanced. Yep, Virginia is smart, the smartest state by far in the world's fourth-largest economy, which is the American South.

But you have to witness this intelligence firsthand to believe it. In 1997, I met then-Governor George Allen. He and many others were celebrating the end of his term as governor at Richmond's Bull and Bear Club. Toward the end of the night, a line formed to meet Gov. Allen, so I got in it.

In those days, I wasn't politically savvy. I'm still not. But, unlike today, I knew only a handful of politicians. I was nervous as I stood in the line and thought to myself that I needed to say something to Gov. Allen that would make him easily remember me in the quest to further the small business I owned.

So, when it was my time to greet him, I said, "Gov. Allen, I am Mike Randle and I own Southern Business & Development. We are celebrating our five-year anniversary with a special issue and in that issue we are naming you one of the five best economic development governors in the South over the last five years." It is important to note that I just made that up at the moment, thinking he would remember me by the statement.

As I continued to shake his hand, Gov. Allen responded, "Who are the other four?" My knees shook. Man, talk about pressure. I said, "Well. . .ummm. . .there's Ned Ray McWherter (former Tennessee Governor, now deceased), uh, uh, Jim Hunt (former North Carolina Governor), uh, let's see, Jim Folsom (former Alabama Governor) and George Bush of Texas (Governor of Texas at the time)."

Whew, I had pulled it off, I thought, as our handshake ended. I could not believe I actually remembered four Southern governors to cover up the lie I just told him. (We did publish the five-best economic development governors in the South in our fifth anniversary issue and Allen was one of them.)

Then, Gov. Allen put his hand on my shoulder and said, "Mike, George Bush of Texas? We need to talk!" So we did for about an hour, long after everyone had left the party. We talked so long that we both got out the Copenhagen cans and dip cups to assist in our discussion.

Gov. Allen, way back in the 1990s, proved to me how smart he and Virginia are. I thought I was telling the Virginia Governor something that he would just smile at and accept as another accolade for himself and his state. Nope, Allen immediately wanted to know all of the facts. That's smart.


Virginia is a big state. Virginia is a diverse state. From the high-rise office buildings that make up the white-collar job machine that is Northern Virginia, to the port facilities and beaches in the Southeast, to the rural regions of Southside and Southwest Virginia, to the capital city of Richmond, you will find just about every opportunity available for every type of business in the Commonwealth.

There is no question that Northern Virginia is one of the strongest regional economies in the world. Surrounding much of D.C., Northern Virginia-headquartered companies include corporate giants such as Verizon Business, Capital One, Freddie Mac, Booz Allen Hamilton, General Dynamics, Northrop Grumman and SAIC. In addition, foreign-based companies like Volkswagen, Rolls-Royce, EADS, Lafarge and BAE Systems operate their North American headquarters in Northern Virginia.

But this section on Virginia isn't going to focus on Northern Virginia. NOVA dominates the Commonwealth not unlike Atlanta dominates Georgia. Those two markets, along with Dallas-Fort Worth, Houston and the I-4 Corridor from Tampa Bay through Orlando, are the largest economies in the South. They don't need promoting here.

Therefore, there's not going to be much to read about NOVA as we embark on this Virginia section. But you will read plenty about what you may not know about the "rest of Virginia," or ROVA, and what it could mean for your company.

ROVA: Some seriously smart infrastructure

What you will find in the rest of Virginia regarding infrastructure support for your business is not only smart, it is unprecedented. And that infrastructure is not planned. It's in place.

While Charleston, Savannah, Jacksonville, Miami and others are planning to deepen their ports to accommodate post-Panamax ships that will traverse the Panama Canal in 2014, the Port of Virginia (shown) has finished deepening its channel to 50 feet. In fact, the channels leading to facilities in Norfolk, Newport News and Portsmouth are the only channels on the East Coast that can accommodate supersize freighters right now.For example, while Charleston, Savannah, Jacksonville, Miami and others are planning to deepen their ports to accommodate post-Panamax ships that will traverse the Panama Canal in 2014, the Port of Virginia has finished deepening its channel to 50 feet. In fact, the channels leading to facilities in Norfolk, Newport News and Portsmouth are the only channels on the East Coast that can accommodate supersize freighters right now.

With the South being outsourced by foreign manufacturers for export throughout the world in fast measure, the fact that Virginia's port can handle the largest ships afloat -- behemoths of 1,100 feet long with the capacity to haul up to 13,000 freight containers -- and its competitors can't, is a huge advantage for the Commonwealth.

U.S. exports have increased by $645 billion since 2002, a 104 percent rise in goods shipped through the nation's ports. In the South, exports grew by 17.7 percent from 2010 to 2011, compared to only 10.8 percent nationwide. Those figures are good news for Virginia because with the deepest port and an already surprisingly large manufacturing sector in the state, the Commonwealth is set up nicely for the manufacturing wave we are experiencing.

"Most of our activities -- including inquiries -- are in manufacturing and that's because of the Port of Virginia," said Darryl Gosnell, President and CEO of the Hampton Roads Economic Development Alliance. "About half of that activity is domestic and half is foreign-based. With manufacturers such as Canon Virginia and STIHL, Hampton Roads is as well-known outside the country as in. We have 170 businesses in the region from 27 different countries," Gosnell said. Canon Virginia (Japan) employs about 1,500 workers at a large plant in Newport News, Va., and STIHL (Germany) employs about 2,000 at its plant in Virginia Beach.

What Hampton Roads has going for it, all of Virginia has as well, since manufacturers in the state can easily tap the port's supply chain muscle. "We have a couple of things coming our way," Gosnell said. "First is the Panama Canal situation (expansion completing in 2014) and the other is Norfolk Southern's new Heartland Corridor. The new rail line cuts the time it takes to ship goods through the port to the Midwest by a day and a half," says Gosnell. Indeed, Norfolk Southern and CSX offer on-dock, double stack intermodal service to key markets in the Midwest, Ohio Valley and the Southeast from the Port of Virginia.

In addition to the infrastructure advantages offered by the Port of Virginia, there are plenty of seriously smart frameworks to assist new, expanding and relocating industry to Virginia.

Wired smartly

David Hudgins, Director of Member and External Communications with Old Dominion Electric Cooperative and Vice Chairman of the Mid-Atlantic Broadband Cooperative (left) and Southern Business & Development and publisher Mike Randle. Hudgins and Randle were at a restaurant on the James River in Richmond.I remember getting a call from David Hudgins in the late 1990s. Hudgins runs the economic development department at the statewide electric power cooperative Old Dominion Electric.

I had just written an article comparing the installation of fiber-optic cable throughout the rural South with the pre- and post-World War II economic development initiative that was known at the time as "farm to market."

Farm to market was a road building initiative that enabled farmers in rural regions in the South to efficiently transport their produce to markets before it spoiled. Back then, if it rained, it was difficult to manage rural dirt roads. Farm to market was designed to solve that problem.

Ironically, farm to market produced something else. For the first time, industry could actually access the rural South and tap an incredibly hard-working labor force as a result of the much improved road system. That labor force helped develop non-farm jobs in the rural South for the first time in modern history. Most of those industries were of the apparel, textile and furniture varieties, which for decades were the rural South's, as well as rural Virginia's, economic backbone.

Hudgins read my article and told me that wiring rural Virginia was exactly what he and others were championing in the Commonwealth in the late 1990s; a modern day "farm to market" system that connects rural Virginia with the rest of the world via a high-speed network.

What emerged was a plan to develop an advanced open-access fiber-optic network for Southern Virginia and the outcome was the creation of an independently managed broadband cooperative. It is called the Mid-Atlantic Broadband Cooperative and the world-class, 400 gigabit-per-second backbone that connects Southern Virginia with the world is unmatched by any rural network.

"Mid-Atlantic Broadband Cooperative (MBC) is working to bridge the digital divide in rural communities in Southern Virginia," says Tad Deriso, President and CEO of MBC. "The use of MBC's network has reduced transport costs, enabled new services and applications, and driven the advancement of broadband services in the unserved and underserved localities in the region."

One thing Deriso didn't say about the Mid-Atlantic Broadband Cooperative is that its existence was a huge factor in attracting data centers from HP and Microsoft to Southern Virginia recently.

ROVA is Nirvana for the manufacturing sector and re-shored projects

If you have read the 2012 SB&D 100 that is in this issue on page 52, or checked out this issue's cover, you know that manufacturing is taking over the South's economy. Scratch that; it has taken over. Large manufacturing projects announced in the South lately are running two-to-one compared to what services are putting on the board. >From 1999 to 2005, it was the exact opposite. Services were beating manufacturing two-to-one of deals of 200 jobs or more.

In fact, 2011 was the best year for large manufacturing projects in the South since SB&D began keeping records in 1991. What year held the previous record? Well, that would be the year before, or 2010.

That being the case, along with the fact that Virginia has the infrastructure previously described, I am not sure I have ever seen a more attractive place to establish a mini-manufacturing beachhead in the South than in the ROVA (rest of Virginia). To me, ROVA is nirvana for manufacturers.

Much of the ROVA's economy was built on manufacturing and it remains a large manufacturing center, as some 20 percent are still employed in the sector in many places in Southside and Southwest Virginia. Secondly, Southside and Southwest Virginia have a big fan; an advocate that no other rural region I know of has in the entire South. It is called The Virginia Tobacco Indemnification and Community Revitalization Commission. In the 13 years I have known it, I just call it the Tobacco Commission.

Here is the intro blurb on the Commission's Web site default page: "The Tobacco Indemnification and Community Revitalization Commission is a 31-member body created by the 1999 General Assembly. Its mission is the promotion of economic growth and development in tobacco-dependent communities, using proceeds of the national tobacco settlement. To date, the Commission has awarded 1,527 grants totaling more than $893 million across the tobacco region of the Commonwealth, and has provided $309 million in indemnification payments to tobacco growers and quota holders."

Wow, nearly a billion invested in rural Southside and Southwest Virginia in a little over a dozen years? That's some serious coin. And there is no place in this part of Virginia that has been left untouched by the Tobacco Commission's smart investments.

Brains and brawn in the ROVA

The Virginia infrastructure described -- all recently completed or planned -- is so intelligently contrived and built that it is hard to believe it's been done in a decade. These are one-of-a-kind developments that have created a foundation for the Commonwealth to stay at the top in the South and the nation in technology job growth each year.

Yep, Virginia's smart and what was profiled is just a small taste of what you will find in the Commonwealth. Wherever I go in Virginia, I see knowledge-based ecosystems that are more advanced than most places I visit. What Virginia has done is prepare itself for the future like few states have.

Yet, in my three weeks in the Commonweath in the spring quarter, something less advanced really piqued my interest. If you read my article titled, "How the American South is beating China at its own game," that was published two issues ago (Fall 2011), you saw that sectors such as furniture -- even textiles and apparel -- and other less advanced general manufacturing projects are making their way back to the South from China and elsewhere for the simple reason that it makes financial sense. I saw a part of that event in tiny Keysville, Va., in the spring.

Rural renaissance in Virginia

Shown, left to right, are Susan Adams, Charlotte County, Va.'s economic development associate, Allen Farmer, general manager of Genesis Products and R.B. Clark, Charlotte County's administrator at the Genesis Products furniture plant in Keysville, Va. On one of my three trips to Virginia in the spring quarter, I flew into Richmond on May 22 and arrived late, around 3:15 pm. Susan Adams, the Deputy County Administrator in Charlotte Court House (Charlotte County) and I had an appointment at 4:00. Charlotte County is 60 miles from Richmond and I got stuck with a minivan from the car rental. Thinking the appointment was not possible, I called Susan and she said to just come on down anyway.

I met Susan at the Cruis-in restaurant in Keysville, Va. Across the street was a very large former textiles plant, just a block or two from the well-kept Keysville central business district. Susan and I went into the facility, where we were met by R.B. Clark, Charlotte County's Administrator and Allen Farmer, General Manager of the Genesis Products plant.

Genesis was formed in 2002 and started its operations in Indiana. In 2011, the company acquired Appomattox River Manufacturing and expanded its operations into Virginia. Genesis manufactures doors, cabinet parts, moldings and wood panels for homes and recreational vehicles in Keysville, Va. You know, the stuff that used to be made in the South that left for good for China years ago.

Genesis' Keysville, Va., plant is a poster child for the resurgence the South is seeing in less advanced – but no less important – industry sectors like furniture manufacturing. The company continues to expand its operations in rural ROVA.Well, it's back and Genesis is a poster child for the resurgence the South is seeing in less advanced -- but no less important -- industry sectors like furniture manufacturing. As I toured the plant with Susan, R.B. and Allen, I was struck by the hard-working employees, how the company had taken an old, closed textile facility and made it workable and new again, and the quality of the products being made.

R.B., a smart, humorous legend of a man, told me that he grew up in Keysville, just down the creek from the plant. He said that he and his friends would go swimming in the creek when he was little and they knew right away what color the plant was using that day to dye fabric because the "water in the creek would turn blue or pink, or whatever color dye the plant was using at the time." Now, decades later, the plant is again one of Charlotte County's largest employers and I am sure right with the EPA.

Growing up on a tobacco farm, Garet Bosiger, Genesis' CFO, has decades of experience in furniture manufacturing in the ROVA. He understands that patience and hard work are the core elements to achieving the unimaginable. Bosiger also saw the rise of the furniture industry, its collapse and now its resurgence.

He owned Appomattox River Manufacturing when it was acquired by Genesis. Because of Garet's global recognition in the furniture industry, Genesis insisted that he agree to join their team as CFO for at least five years to assist in the company's future in Virginia.

We asked Garet how he stuck it out when less advanced industries like furniture manufacturing were having such a tough time in the South for the past two decades, but now seem to be clawing their way back. "It used to be that lots of furniture was made in the U.S. Of course, over these last years, competitors went out of business; customers were leaving and going overseas to make their products there. It's people like John Bassett (of Bassett, Va.-based Bassett Furniture) who fought unfair dumping from the Chinese that have put us in the position we are in now," Bosiger said.

"Today, we have a good story to tell. We can build furniture in Virginia and we can compete. Our workers are better than the Chinese. Our quality is better. I have benefited by the ones who have stayed, like John Bassett, and we are thriving now. We are adding capacity in Virginia, spending money on workers, equipment, doing everything we can to be ready for a peak that I expect will be here in five years. I am upbeat."


There you have it. The new and the old. The brains and the brawn. It's no wonder that CNBC named Virginia "America's Top State for Business" last year, why the U.S. Department of Commerce commended Virginia as "America's Most Livable State" this year and why the Commonwealth is No. 1 in so many other accolades given out by others who are so smart as well.

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