Economics of Virginia

historic Glass House at Jamestown Glass House at Jamestown historic Glass House at Jamestown
historic Glass House at Jamestown Glass House at Jamestown historic Glass House at Jamestown
earliest Virginia site for manufacturing glass (1608 and 1621-22) and "reconstructed" furnace at Jamestown
(click on images for larger versions)

Businesses do not locate their facilities at random, by throwing data at a map or looking at just the sources of labor and raw materials. State, county, and city governments are active players in attracting private sector businesses and non-government organizations to locate in a particular area.

The primary state agency recruiting employers to locate in Virginia is the Virginia Economic Development Partnership (VEDP), created in 1995. In 2017, the Joint Legislative Audit and Review Commission (JLARC) criticicized the agency harshly. It noted in the evaluation that the Virginia Economic Development Partnership was not systematically planning, controlling, or evaluating its marketing activities, and its unstructured approach to administering incentive grants made Virginia vulnerable to fraud and poor use of limited resources.1

in 2016, the Joint Legislative Audit and Review Commission identified fundamental management weaknesses in the Virginia Economic Development Partnership (VEDP)
in 2016, the Joint Legislative Audit and Review Commission identified fundamental management weaknesses in the Virginia Economic Development Partnership (VEDP)
Source: Joint Legislative Audit and Review Commission (JLARC), Management and Accountability of the Virginia Economic Development Partnership (p.ii)

Three years later in 2019, the Virginia Economic Development Partnership had new leadership and a diferent reputation. Site Selection magazine placed it #1 nationwide the magazine's annual Prosperity Cup ranking of state-level agencies dedicated to business recruitment and retention. The award reflected Virginia's success in recruiting a portion of Amazon's second headquarters, plus a commiment by Micron to invest $3 billion to expand a plant in Manassas that manufactured chip for automated cars.

As the Bacon's Rebellion blog noted, the award also reflected a fundamental ship in Virginia's efforts to recruit employers. It praised Stephen Moret, president and Chief Executive Officer of the Virginia Economic Development Partnership:2

In the past, economic development professionals in Virginia were reluctant to stray far from their role as glorified practitioners of the real estate industry: developing, marketing, and selling large commercial and industrial sites. Moret understands and fosters linkages between economic development, job training, higher-ed, innovation ecosystems, and urbanism...

...Moret takes an integrative approach to economic development. The ability to think beyond traditional economic development tools such as tax breaks and subsidies was critical to clinching the Amazon deal. True, Virginia did offer significant incentives, but they were far less lavish than the packages offered by other states. Moreover, much of the state’s commitment to the project consists of investments in higher education — a pledge to build human capital — and transportation infrastructure, both of which benefit Virginians broadly, not just Amazon.

Tax dollars are also used to retain jobs and property taxes, when other governments try to entice existing companies in Virginia to move to another location. For example, Virginia's A.L. Philpott Manufacturing Extension Partnership (VPMEP) was described in a news release:3

The partnership, based in Martinsville and named after the late House Speaker A.L. Philpott of Bassett, works to improve the manufacturing capabilities and global competitiveness of manufacturers through offices in Danville, Harrisonburg, Lynchburg, Newport News, Norfolk, Richmond, Roanoke, Winchester and Wytheville. Internal VPMEP resources are supplemented by private consultants, community colleges, universities, and government agencies. VPMEP partners with Virginia's Center for Innovative Technology to provide access to high technology resources across the Commonwealth.

In addition, VPMEP works in partnership with the Technology Applications Center (TAC) at Old Dominion University and the Manufacturing Technology Center (MTC) in Wytheville to bring services to manufacturers from Hampton Roads to Southwest Virginia:

The Manufacturing Technology Center in southwestern Virginia is a consortium of five community colleges and is funded by VPMEP, the Commonwealth, CIT, and federal grants. It provides technology deployment and manufacturing modernization services in southwestern Virginia.

The Technology Applications Center at Old Dominion University is funded by VPMEP and CIT. It primarily provides faculty-based engineering services to manufacturers for high technology product and process prototype development and testing in the Hampton Roads area and across Virginia.

VPMEP is based in Martinsville in part because A. L. Philpott was the powerful Speaker of the House of Delegates and he represented Pittsylvania County. Even before passage of the North American Free Trade Act (NAFTA), the textile, furniture, and other manufacturing businesses were reducing work hours and closing plants. The state and the local governments recruit companies that could provide high-wage manufacturing jobs to replace the companies that are leaving are reducing hours.

The Certified Business Location program, begun in the latter half of the 1980s, required each locality to establish an Industrial Development Authority, formalize their industry targeting activities, and establish other processes in support of industrial development. However, the Virginia Department of Economic Development no longer offers the certification.

In 2018, Congress revised the tax laws. It allowed investors to minimize taxes by reinvesting in 212 census tracts designated as Qualified Opportunity Zones by the US Department of Treasury. Governor Northam chose those zones from the 901 census tracts that were eligible, due to low-income.4

212 Qualified Opportunity Zones were designated in 2018
212 Qualified Opportunity Zones were designated in 2018
Source: Virginia Department of Housing and Community Development

In 2019, Fortune magazine included 21 Virginia-based companies in its Fortune500 list that are based on total revenue. Of the companies, 11 were in Northern Virginia, three were in Hampton Roads, and 7 were in or near Richmond.5
No. 40: Freddie Mac, McLean
No. 92: General Dynamics, Falls Church
No. 98: Capital One Financial, McLean
No, 108: Northrop Grumman, Falls Church
No. 122: DXC Technology, Tysons
No. 135: Dollar Tree, Chesapeake
No. 162: Altria Group, Henrico County
No. 174: CarMax, Henrico County
No. 176: Performance Food Group, Richmond
No. 238: Dominion Energy, Richmond
No. 277: Norfolk Southern, Norfolk
No. 296: AES, Arlington
No. 311: Leidos Holdings, Reston
No. 317: Owens & Minor, Mechanicsville
No. 345: Hilton Worldwide Holdings, McLean
No. 360: Genworth Financial, Henrico County
No. 371: Huntington Ingalls Industries, Newport News
No. 424: NVR, Reston
No. 441: Markel, Henrico County
No. 464: Beacon Roofing Supply, Herndon
No. 475: Booz Allen Hamilton, McLean

Amazon Headquarters in Arlington County

Banking in Virginia

Coal in Virginia

Data Centers in Virginia

Economic Regions

Virginia Enterprise Zones

Economic Statistics

Energy

Manufacturing in Virginia

Movies and Virginia

Moving Norfolk Southern Jobs From Roanoke to Norfolk

Newport News Shipbuilding and Drydock Company

Safety and Workers Compensation

Sports and Stadiums in Virginia

Virginia Agriculture

Water-Powered Mills

silk production was one of the first industries intiated by the Virginia Company at Jamestown
silk production was one of the first industries intiated by the Virginia Company at Jamestown
Source: National Park Service, Silk Culture (painting by Sidney E. King)

number of business firms in top Virginia counties, 2008
number of business firms in top Virginia counties, 2008
Source: Bureau of Census, Statistics of U.S. Businesses (SUSB) State by county, totals (see spreadsheet)

Links

References

1. "Management and Accountability of the Virginia Economic Development Partnership," Joint Legislative Audit and Review Commission, November 2016, http://jlarc.virginia.gov/vedp-2016.asp (last checked May 17, 2019)
2. "2019 Prosperity Cup," Site Selection, May 2019, https://siteselection.com/issues/2019/may/2019-prosperity-cup.cfm; James A. Bacon, "VEDP Snags Recognition as Best Economic Development Organization in Nation," Bacon’s Rebellion blog, May 17, 2019, https://www.baconsrebellion.com/wp/vedp-snags-recognition-as-best-economic-development-organization-in-nation/ (last checked May 17, 2019)
3. "Governor Warner Announces Grants to Virginia Manufacturing Partnership," August 15, 2002 news release from Governor Mark Warner, www.governor.state.va.us/Press_Policy/Releases/Aug2002/0815c.htm"www.governor.state.va.us/Press_Policy/Releases/Aug2002/0815c.htm (last checked August 24, 2002)
4. "Opportunity Zones," Virginia Department of Housing and Community Development, http://www.dhcd.virginia.gov/index.php/component/content/article/346.html (last checked June 1, 2018)
5. "One addition, one departure among state firms on Fortune 500," Virginia Business, May 16, 2019, http://www.virginiabusiness.com/news/article/333878 (last checked May 17, 2019)

inside Potomac Mills
inside Potomac Mills

First National Bank in Philadelphia
inside Potomac MillsFirst National Bank in Philadelphia


Virginia Places