Virginia Economic Review: Second Quarter 2021 by vedpvirginia

SECOND QUARTER 2021

Business Without

Borders

Virginia connects companies to international trade opportunities

P E R S P E CT I V E S F R O M I N T E R N AT I O N A L T R A D E L E A D E R S: Stephen Edwards, The Port of Virginia | John Keppler, Enviva Edward Alden, Council on Foreign Relations | Craig Allen, US-China Business Council John Murphy, U.S. Chamber of Commerce | William Reinsch, Center for Strategic and International Studies

The city of Norfolk hosts the Great American Picnic and Fireworks each July 4 at Town Point Park on the Elizabeth River.

Contents 16 Business Without Borders The economic value of international trade

18 What’s Next for International Trade? Four experts weigh in on American trade policy in the Biden administration

26 Virginia Sets Course for Robust Trade Growth With bold goals on the horizon, Virginia’s International Trade Strategic Plan is moving forward

32 The Port of Virginia: A Crucial Link in Vital Supply Chains Targeted improvements have the already-thriving port prepared for the world’s largest container ships

04 Facts & Figures 06 Selected Virginia Wins 10 An Exporter’s View of International Trade: A Conversation With John Keppler 40 Building on Success at The Port of Virginia: A Conversation With Stephen Edwards 54 Profiles of Exporters 56 Regional Spotlight 60 Economic Development Partners in Virginia

48 Bespoke Export Support Virginia offers best-in-class export assistance for companies’ complete life cycle

Subscribe today. Visit www.vedp.org/Virginia-Economic-Review

Named one of the Happiest Seaside Towns in America by Coastal Living, Cape Charles on the Chesapeake Bay is a great destination for visitors of all ages, with shallow, wave-free water ideal for wading and play.

Advancing International Trade in Virginia INTERNATIONAL TRADE IS A BOON

for businesses in Virginia and across the country. Virginia’s $35 billion in annual exports support more than 250,000 jobs and account for $2 billion per year in state and local tax revenue. Companies that export are more stable, more likely to grow and hire new employees (and pay higher wages), and more likely to invest in domestic facilities. Those benefits, along with substantial economic benefits to consumers, reinforce why Virginia is embarking on an ambitious long-term International Trade Strategic Plan to boost exports by 50% over the next 10–15 years through enhanced support of trade-intensive businesses and efforts to attract new exporters to the Commonwealth. This edition of Virginia Economic Review provides an in-depth look at that plan and highlights other issues that affect international trade both inside and outside Virginia. In this issue, we explore the economic value that international trade brings to Virginia companies, along with the resources VEDP has to offer companies looking to begin exporting or expand their export reach, and we look at some of the companies that have taken advantage of these resources. We also detail the ongoing improvements at The Port of Virginia, which has thrived amid circumstances that crippled other ports.

And we feature perspectives from experts on trade and international relations who offer guidance on U.S. trade policy as the Biden administration works to establish and advance its priorities. Also inside are discussions with major stakeholders in Virginia-based international trade: Stephen Edwards, the new CEO and executive director of The Port of Virginia, and John Keppler, CEO of bioenergy company Enviva, one of the Commonwealth’s biggest exporters through its private terminal in Chesapeake. Through its new International Trade Strategic Plan, Virginia aspires to fully harness the Commonwealth’s natural export advantages to diversify and boost its economy. We hope you enjoy this look at the strategies and resources that can make the goals of that plan a reality. Best regards,

Stephen Moret President and CEO, Virginia Economic Development Partnership @StephenMoret

Facts Figures Virginia’s Top Export Destinations, 2020 #

1 2 3 4 5

Canada

($2.7B)

China

($1.8B)

Mexico

($830M)

United Kingdom

($700M)

Singapore ($640M)

IHS Markit, Global Trade Atlas

Virginia’s Top Import Markets, 2020

1 2 3 4 5

China ($6.6B)

Germany ($2.2B)

Canada ($2.1B)

Malaysia ($2B)

Mexico ($1.6B)

IHS Markit, Global Trade Atlas

Trade Overview, 2020

2.8 1.5 1.3

The Port of Virginia:

Largest Port on East Coast

million million

(Exports)

million

(Imports)

Twenty-Foot Equivalent Units (TEUs) Volume at The Port of Virginia, 2020

The Port of Virginia

Top Export Goods From Virginia, 2020

Top Import Goods Into Virginia, 2020

(By Value)

Mechanical appliances

Electrical machinery

3. Fuel

3. Vehicles

4. Plastics

5. Vehicles

5. Furniture

Seeds, grains

6. Aircraft

Aircraft

Toys, games, sports equipment

8. Meat

8. Textiles

9. Steel

Scientific instruments

10. Paper

10.

Scientific instruments

IHS Markit, Global Trade Atlas

Selected Virginia Wins Aditx Therapeutics, Inc. (Aditxt), a biotech innovation company focused on improving the health of the immune system, will invest $31.5 million to establish its first AditxtScore™ Center in the city of Richmond in the Greater Richmond region. The project will create more than 300 new jobs. Aditxt is pioneering a new approach to immune health monitoring that will provide a personalized profile of a person’s immune system and measure indications of immunity to specific diseases, including the recently commercialized AditxtScore™ for COVID-19, developed for use in detecting and neutralizing antibodies against SARS-CoV-2 antigens. The company will occupy 25,000 square feet of space in the Virginia Bio+Tech Park, a dynamic life sciences and emerging technologies community adjacent to the medical campus of Virginia Commonwealth University, with plans for future expansion. Support for Aditxt’s job creation will be provided by the Virginia Talent Accelerator Program, a workforce initiative program created by VEDP in collaboration with the Virginia Community College System and other higher education partners. The program accelerates new facility startups through the direct delivery of recruitment and training services fully customized to a company’s unique products, processes, equipment, standards, and culture.

Richmond is an ideal location for our first high-capacity AditxtScore™ Center given its skilled workforce, location, and infrastructure. AMRO ALBANNA Co-founder and CEO, Aditx Therapeutics, Inc.

Selected Virginia Wins Greater Richmond

I81-I77 Crossroads

Shenandoah Valley

Jobs: 1,000 New Jobs Locality: Henrico County

Jobs: 120 New Jobs CapEx: $39M Locality: Wythe County

Jobs: 31 New Jobs CapEx: $149K Locality: City of Staunton

Amazon

STS Group AG

Babylon Micro-Farms

New River Valley

Jobs: 24 New Jobs CapEx: $140K Locality: City of Richmond

Moog Inc.

Jobs: 75 New Jobs CapEx: $10.7M Locality: Montgomery County

Eaton

Jobs: 80 New Jobs CapEx: $3.6M Locality: Henrico County

Oransi

Fortune Auto North America Jobs: 10 New Jobs CapEx: $250K Locality: Powhatan County

Grenova Inc.

Jobs: 250 New Jobs CapEx: $10.6M Locality: City of Richmond

Vytal Studios

Jobs: 155 New Jobs CapEx: $6.8M Locality: City of Richmond

Hampton Roads

Katoen Natie Norfolk Jobs: 35 New Jobs CapEx: $61M Locality: City of Norfolk

Sunny Farms, LLC

Jobs: 101 New Jobs CapEx: $5.6M Locality: City of Radford

Northern Virginia

Ceres Nanosciences, Inc.

Jobs: 50 New Jobs Locality: Prince William County

SecureTech360, LLC Jobs: 10 New Jobs CapEx: $155K Locality: Fairfax County

SES

Ryzing Technologies, LLC

Valley Guard Supply LLC Jobs: 45 New Jobs CapEx: $1M Locality: City of Harrisonburg

Southern Virginia J&J Truck Sales, Inc.

Jobs: 27 New Jobs CapEx: $5.2M Locality: Pittsylvania County

Southwest Virginia Lawrence Brothers, Inc. Jobs: 40 New Jobs CapEx: $3.2M Locality: Tazewell County

Tempur Sealy International Jobs: 25 New Jobs CapEx: $16.7M Locality: Scott County

Jobs: 200 New Jobs CapEx: $17M Locality: Prince William County

Zasti, Inc.

Jobs: 60 New Jobs CapEx: $5.9M Locality: Loudoun County

Jobs: 155 New Jobs CapEx: $59.6M Locality: City of Virginia Beach

Roanoke Region New River Valley

Southwest Virginia I81-I77 Crossroads

Northern Shenandoah Valley

Washington, D.C.

Northern Virginia Shenandoah Valley Central Virginia

Greater Fredericksburg

Northern Neck

Middle Peninsula Greater Richmond Lynchburg Region

Eastern Shore South Central Virginia

Southern Virginia

Virginia’s Gateway Region

Greater Williamsburg

Hampton Roads

An Exporter’s View of International Trade A Conversation With John Keppler

John Keppler is chairman, CEO, and co-founder of Enviva, the world’s largest producer of woody biomass and one of Virginia’s largest exporters out of its private terminal in the city of Chesapeake. Enviva’s sustainable wood pellets, made from low-value wood, are sourced from regions where the carbon stocks of the forests are stable or increasing, and with a requirement that landowners intend to return their land back to forests after harvest. VEDP President and CEO Stephen Moret spoke with Keppler about the company’s unique export profile, its commitment to sustainable forestry practices, and the quest to get to net zero carbon emissions by 2030.

Enviva, Chesapeake

Stephen Moret: Can you tell us a bit about the genesis of Enviva and how you initially got into the bioenergy field? John Keppler: The founders of this company, myself and a couple of other folks, actually met at the University of Virginia’s Darden School of Business. We got to know each other pretty well and shared a similar intellectual curiosity for what was a really, really difficult question: how to solve the complex equation between energy and the environment? We didn’t start the company right out of business school but spent a couple of years working in different industries before we quite literally “put the band back together” and started what would be the predecessor company to Enviva.

Like many startups, we did a lot of different things we thought we would be good at. Ultimately, we converged around a few things that we were actually good at. One was helping large-scale energy producers displace coal with a new, reliable, dispatchable fuel — biomass. As a result, we were able to manufacture a renewable, sustainable product that is a direct drop-in substitute for coal. Moret: Why did Enviva originally choose Virginia, and Chesapeake specifically, as a shipping location for your products? Keppler: We have to start with the reality that climate change is a global problem. That means you need global solutions as part of an all-in approach to solving this problem. If you’re going to see the growth and success of your company, where are you likely to do so?

Where there are talented people, resources, and infrastructure that will support and be beneficial to your business. For us, that was Virginia. We were able to invest intensely in Virginia for a couple of reasons. The first is that Virginia has been a very supportive state for business and industry. Virginia also provides a combination of tremendous terminal and port access to the Chesapeake Bay as well as access to a skilled workforce and raw natural resources, which are healthy, growing forests. The ability to access these raw materials in a place where we could logistically get to a terminal that we own, control, and export around the world was a match made in heaven. That’s why we initially decided to anchor our business in Virginia.

A C O N V E R S AT I O N W I T H J O H N K E P P L E R

The ability to access these raw materials in a place where we could logistically get to a terminal that we own, control, and export around the world was a match made in heaven. That’s why we initially decided to anchor our business in Virginia. JOHN KEPPLER Chairman and CEO, Enviva

Moret: Let’s talk about some of the biggest markets for your wood pellets. What is it that drives demand in those markets? Keppler: The key driver of demand is the macro theme around the world — the transition away from an economy that has been based historically on fossil fuels and hydrocarbons to one based on renewables and alternatives. What has happened around the world, and most recently in the United States with President Biden reentering the Paris Agreement, is a global effort to change the outcomes of the way energy is sourced, produced, and leveraged. Mitigating climate change is critical and Virginia is a key part of that solution. The policymaking mechanisms are creating incentives for large-scale, coalfired power generators to convert away from coal in favor of renewable resources, and that’s exactly where we come in. Whether it’s the United Kingdom or across continental Europe — Denmark, the Netherlands, Belgium — countries are making a substantial contribution to climate change mitigation, underscoring the indispensable role of biomass in the EU energy transition. For example, Germany recently passed its coal exit law and Poland, the largest per capita user of coal on the European continent, is looking at massive decarbonization. Japan, of course, is solving the same climate change objectives, but with an

additional challenge — they have been falling short of generating capacity in the wake of the Fukushima nuclear disaster. With that, the opportunity for utilities there to build new biomass firepower stations has created a very large market growth opportunity for us. In fact, Japan has a growing, policy-fueled appetite for U.S.-made wood pellets and its demand is expected to grow 33% just in 2021. Moret: We talk a lot about exports and trade at VEDP. We’ve been fortunate to have one of the best trade development teams of any state in the country, if not the best. We talk about the benefits for wages, for economic growth, for competitiveness. What has exporting meant for your company and your growth for Enviva? Keppler: We would not be the export business that we are today without the leadership of the Virginia team across multiple gubernatorial administrations. What we have seen since starting our business in Virginia is the full support of Virginia legislators and executive leadership in doing overseas trade missions. Physically going to international markets and talking to policymakers about the decisions they are making, and reinforcing the value and opportunity that Virginia can bring to those jurisdictions around the world, have proven beneficial. Secretary [Bettina] Ring is obviously not just a state forester, but a leader in natural resources, and has been a remarkable ally

in educating folks around the world about how Virginia landowners grow trees and why that private land ownership base across Virginia and the Mid-Atlantic is so important to helping solve the world’s problems. It may sound counterintuitive, but strong markets for forests and forest products create more forests. That’s why we’ve seen such rapid forest growth across Virginia. It’s also why you’ve seen continued investment in companies like Timberland Holdings. The more demand to grow trees, the more trees planted, and more carbon sequestered. It’s a very, very positive cycle, and Virginia is among the best in doing this across the entire U.S. southeast. Moret: This issue of Virginia Economic Review is all about international trade. As a major exporter from the U.S., what are the highest-priority trade issues that concern you at Enviva? Keppler: As one of the largest exporters in Virginia, we made an important decision to invest a large amount of capital in the physical infrastructure to maintain the consistent, reliable delivery of our products to our customers around the world. From the start of the relationship, our customers enter into long-term commitments with us that ensure their own base load of dispatchable heat and power generation. Maintaining the free flow of trade — that is, maintaining open borders and consistency in the flow of products, which is essential to helping countries meet their

Enviva, Chesapeake

decarbonization goals — is very, very important. We have been quite fortunate with Virginia’s interest and focus on being an export economy, particularly around natural resources. The level of investment that Virginia has and continues to make in ports like Norfolk, Portsmouth, and Chesapeake is really quite remarkable. That level of dedication ensures our company has, and will continue to have, uninterrupted access to the global distribution of our product. Their support, both with the federal government and with trade missions overseas, has really continued to reinforce that. We are privileged to be a part of the Virginia economy. Moret: The COVID-19 pandemic has obviously been a challenging time for company leaders across the spectrum. What kind of impact did that have on you and on the energy industry more broadly? Keppler: From Enviva’s perspective, we have been incredibly fortunate. Gov. Northam, his administration, and the Department of Homeland Security classified our industry as critical infrastructure early on. That direction

The level of investment that Virginia has and continues to make in ports like Norfolk, Portsmouth, and Chesapeake is really quite remarkable. That level of dedication ensures our company has, and will continue to have, uninterrupted access to the global distribution of our product. JOHN KEPPLER Chairman and CEO, Enviva

enabled us to keep our plants and ports running. We didn’t miss a single delivery to any of our customers and, as a result, our supply chain kept running and we grew pretty significantly across the full year of 2020 and into 2021. That doesn’t mean we’ve been immune from COVID by any means. For example, the health and safety of our employees, our partners, and our communities are

of the utmost importance to us, and therefore we had to reimagine and change the way we did business to ensure the continuity of that safety. With that being said, we were very fortunate to be largely insulated from the economic effects of the pandemic. This, in part, is due to our long-term customer contracts with very specific obligations. Additionally, our customers

A C O N V E R S AT I O N W I T H J O H N K E P P L E R

are the world’s largest power and heat generators that are also classified as essential to keeping lights on in hospitals, and heat generated throughout places like Copenhagen and elsewhere. Enviva played a critical role in helping energy suppliers around the world navigate through something our generation certainly has never seen and, hopefully, will never see again. Moret: What do you see as the next big innovation that could transform the way the energy industry operates? Keppler: I think it’s driven a bit by the policy to reduce global greenhouse gas emissions. The European Union is a great example. The EU set its 2020 goals in its renewable energy directive (RED), which was 20% renewable energy by 2020, and 30% by 2030. However, over time, I think we have concluded that it’s not just about reduction — it’s about getting to what net zero really is: industrial activity and human behavior. We will inherently always have some form of emissions profile, but to get to net zero we will have to identify a negative emissions profile somewhere else. Looking ahead, we expect the role of wood pellets in the energy system to substantially evolve as we exponentially reduce carbon emissions globally. Sustainably sourced wood-based biomass offers a carbon-neutral replacement to coal and gas-fired furnaces in heavy industries such as steel, aluminium, and cement. More exciting yet is the possibility of teaming bioenergy with carbon capture and storage, known as BECCS, to create negative emissions technology. It means you’re taking essentially a renewable fuel and you’re sequestering carbon while generating the benefit of principal power and heat. If we cannot totally decarbonize sectors of our economy by 2050, then it is critical we develop carbon-negative solutions to offset the emissions that remain. BECCS is one of the few technologies available

today at scale that can create negative emissions, and we’re excited to be a supply chain partner for BECCS as it continues to emerge around the world. Moret: You also manufacture in Virginia, in Southampton County. What does the Commonwealth have to offer companies like yours that are involved in the wood products industry, as well as others that are exporting from the United States? Keppler: The development cycle for building new businesses is hard on its own, and we would not have been able to build a terminal like we did in Chesapeake without the help of Virginia. We would not have been able to build a plant like we have in Southampton — which we recently expanded — without consistent support from Virginia.

shift a little bit and ask you a personal question as we wrap up. I know you’re not from Virginia, but I do know that you got an MBA from the Darden School at UVA, which is one of our great universities in the Commonwealth. What are your favorite places in Virginia to visit? Keppler: Charlottesville is an incredibly special place. Truth be told, the place I wanted to go to college was Mr. Jefferson’s university. Although it was my first choice, I don’t think I was their first choice. When business school came around, I had the chance to get down to Charlottesville and interview at UVA and the Darden School. I feel incredibly fortunate to have had that time there. Charlottesville is absolutely one of my favorite places in the entire world.

Regarding our Southampton plant, it’s not just the business and the jobs we create, but ensuring we do right by the people we serve and the communities we operate in. To this point, the plant in Southampton is the most air emission-controlled plant in Virginia, if not the U.S., from a wood products industry perspective. Additionally, our plants are all contracted on a long-term basis, meaning these assets are going to be employing people for a long time and buying residual, low-value wood from thousands of Virginia landowners for many years to come.

The other place in Virginia that is one of my favorite places is the end of our pier at our terminal in Chesapeake. As I stand there and look back, I find a lot of personal reflection about what we have helped build and how we have helped unlock opportunity around the world to change the difficult equation of energy and the environment. I reflect on how we have benefited from Virginia, its natural resources, and its landowners. Standing out there, you can see how it all comes together.

To date, our annual economic impact in Virginia is about $300 million, not to mention Enviva supports more than 400 jobs across the state, both direct and indirect. We pay wages that are 30% to 40% higher than the local average and have invested more than $280 million in Virginia. We are proud to be an employer of choice in the state of Virginia.

Moret: John, thank you, not just for joining us today, but thanks so much for everything that your leadership and your company have done to advance economic development in multiple parts of Virginia, to help advance exports and our trade development activities. You’re definitely one of the great success stories that we’re proud to be associated with.

Moret: It’s a wonderful story and I think all of us at VEDP who have been aware of it are very proud just to have been a part of Enviva’s success in the Commonwealth, along with so many others at the local and state levels that have supported your growth. I want to

Keppler: I appreciate being invited. Thank you so much.

For the full interview, visit www.vedp.org/Podcasts

Business Without

Borders

The Economic Value of International Trade INTERNATIONAL TRADE is beneficial

for American consumers and businesses alike. Benefits for consumers include lower costs and a greater variety of goods available in their local markets. Benefits for businesses include additional market opportunities for sales and less exposure to the risk of domestic economic slowdowns. Companies that export are more stable, more likely to grow and hire new employees, and more likely to invest capital in their domestic facilities to fulfill increased demand. The United States is the world’s largest importer and second-largest exporter

of goods and services. International trade accounted for about 26% of the U.S. gross domestic product, or $5.6 trillion, at the end of 2019, according to data compiled by the U.S. Bureau of Economic Analysis. The U.S. Department of Commerce estimates that exports of manufactured goods directly support more than six million manufacturing jobs, or roughly half of all nationwide manufacturing employment. Across all industries, more than 40 million American jobs depend on the exports and imports of goods and services, according to Trade Partnership Worldwide.

In Virginia, international trade accounted for more than 250,000 jobs and $2 billion in state and local tax revenue in 2018, according to data from the Virginia Chamber of Commerce Foundation and the Brookings Institution. The state’s $35 billion in annual exports is split about evenly between goods ($16.4 billion) and services ($18.7 billion). Analytics Corp. CEO Jeff Spink can attest to how companies benefit from international trade. The Ashland-based environmental health and safety analytical laboratory started exploring international opportunities in 2014, with Spink visiting

Colombia through VEDP’s trade mission program after performing a market study to determine potential international markets. Within a couple of years, the company had 10 employees in Brazil taking samples and shipping them back to the home office for analysis. Analytics has since expanded into Argentina, Chile, and Peru, with international sales now making up as much as 25% of annual revenue. Todd Haymore, the former Virginia secretary of commerce and trade who now serves as managing director of global economic development for international law firm Hunton Andrews Kurth LLP, framed international trade in terms of sheer population numbers, with only about 5% of the world’s population living in the United States. “There are lots of people all over the world who need the goods manufactured and services provided by Virginia companies,” he said. Haymore says the Commonwealth has the foundation in place to become “a trade powerhouse,” citing a beneficial Mid-Atlantic location and targeted investments in the infrastructure necessary for international commerce, including improvements to The Port of Virginia detailed on page 32 that will make the port the deepest on the East Coast. The economic impact of the port has nearly tripled from about $36 billion a year in output sales in the mid-2000s to about $92 billion a year today. Among the companies benefiting from those investments is World Art Group, a worldwide art publisher located in Richmond, which started aggressively pursuing international trade in 2005 after being accepted into VEDP’s Virginia Leaders in Export Trade (VALET) program, detailed on page 48. Lonnie Lemco, World Art Group’s executive vice president of sales, says that exports now make up a quarter of the company’s sales. “International trade has been a great channel for revenue growth,” he said. “Plus, it can help cushion the blow when the U.S. economy is soft or in recession.”

The benefits of diversification go beyond sheer sales figures. Businesses engaged in international trade can tap into a wide-ranging network of global partners and suppliers and become stronger, more innovative companies by participating in global competition against a larger pool of competitors while staying abreast of international best practices. Companies that export are more stable and less likely to go out of business, and companies in export-intensive industries pay 18% higher wages, according to U.S. Trade Administration data. Export programs from VEDP and other government partners have made those benefits available to smaller businesses, with small and medium-sized enterprises making up 84% of exporters in Virginia. Phoenix Group of Virginia Inc. has benefited from that stability since beginning its export program in 2008. The company, headquartered in Chesapeake, provides essential professional support services and products to the U.S. Departments of Defense, Homeland Security, and Transportation, as well as the North Atlantic Treaty Organization (NATO). Phoenix Group started its export efforts with market research through a VEDP program designed for new-to-export companies before graduating to the VALET program. The company gathered information on competition in prospective markets and potential overseas partners that have connections and can help navigate local requirements in key foreign markets. “Before meeting with an international customer, we always ask for assistance from VEDP, including a due-diligence report,” Phoenix Group Sales Director Stephen Clock said. “This helps assure us that we will be engaging with a legitimate company that we as a defense contractor can do business with.” Phoenix Group now does business internationally in Norway, Poland, and Canada, with global sales accounting

I N T E R N AT I O N A L TRADE BY THE NUMBERS

250,000

Virginia jobs supported by international trade

$2 billion

Virginia state and local tax revenue from international trade

$35 billion Estimated annual value of Virginia exports

Source: Virginia Chamber of Commerce; Brookings Institution; The Port of Virginia

for 15–20% of annual revenue for the product division. “Expanding our products into new markets, building new relationships with great international businesses, and marketing all our products and services have been the biggest benefits of global trade for us,” Clock said. Analytics cited similar benefits to working with the right international partners. “We were very fortunate and found the exact people we needed,” Spink said. “You have to stay actively involved throughout the process, monitor and mentor your employees, and reward them for a job well done.” Haymore says that opportunities for global expansion will increase in the future as the global population continues to grow, citing infrastructure improvements both at The Port of Virginia and further down the supply chain. “This enables truckers and railroads to get goods from the port to a large number of consumers, and vice versa, in relatively short course,” he said. “For these reasons and more, I believe that Virginia sits at the nexus of global trade.”

What’s Next for

International Trade? U.S. Trade Policy in the Biden Administration With the presidency changing hands and parties, the United States is shifting its trade priorities and engaging with organizations and agreements that had previously been sidelined. VEDP recently asked a number of international trade thought leaders for their insights on what U.S. trade policy should be and what it may look like in the Biden administration. JOHN MURPHY is senior vice president for international affairs at the U.S. Chamber of Commerce, where he directs advocacy related to international trade and investment policy. He has led successful campaigns to win Congressional passage of trade agreements with a dozen nations and plays a key role in the Chamber’s advocacy for international business priorities before Congress, the White House, foreign governments, and the World Trade Organization.

WILLIAM REINSCH holds the Scholl Chair in International Business at the Center for Strategic and International Studies. Previously, he spent 15 years as president of the National Foreign Trade Council and was a member of the U.S.-China Economic and Security Review Commission. He served as under secretary of commerce for export administration under President Bill Clinton.

CRAIG ALLEN is president of the US-China Business Council, a private, nonpartisan, nonprofit organization that provides information, advisory, advocacy, and program services to more than 200 companies doing business with China. Previously, he served in numerous government roles relating to trade with Asia, most recently as the U.S. Ambassador to Brunei.

EDWARD ALDEN is the Bernard L. Schwartz Senior Fellow at the Council on Foreign Relations, specializing in U.S. competitiveness, trade, and immigration policy, and the author of “Failure to Adjust: How Americans Got Left Behind in the Global Economy.” He was previously the Washington bureau chief for Financial Times and managing editor of the newsletter Inside U.S. Trade.

W H AT’S N E X T F O R I N T E R N AT I O N A L T R A D E?

Key Decisions for American Trade in 2021 JOHN MURPHY SENIOR VICE PRESIDENT FOR INTERNATIONAL AFFAIRS, U.S. CHAMBER OF COMMERCE

AS WE LOOK AHEAD IN 2021, it’s

increasingly clear that the pandemic and recession will begin to give way to vaccines and economic recovery. For the United States and our partners around the globe, that recovery — and our longer-term economic growth prospects — will depend a great deal on international trade and investment. With that in mind, the U.S. Chamber of Commerce has urged the Biden administration and the new Congress to engage with the world through a bold trade agenda centered on American competitiveness. Already, the Biden administration is reengaging in multilateral organizations and agreements, including the Paris Agreement and the World Health Organization. The U.S. welcomed a new leader last month to the World Trade Organization, where a consensus for reform is taking root. This is all welcome.

America has been falling behind on trade. Other countries are inking new trade deals left and right, while the United States has been renegotiating old agreements or concluding mini-deals — none of which generate much new market access. which remains the world’s fastestgrowing big market for U.S. business. A second goal is to challenge China’s unfair trade and regulatory policies, only some of which were addressed in the January 2020 trade agreement. A third is to achieve reciprocal elimination of the tariffs the United States and China have imposed on hundreds of billions of dollars of bilateral trade.

As now-Secretary of State Tony Blinken said on the campaign trail, the Biden administration has committed to “end the artificial trade war” on America’s allies. We’ve already seen some Trumpera tariffs on European goods lifted as the administration works to resolve long-running trade disputes. Blinken’s comment surely also means ending the tariffs on steel and aluminum.

There will be tradeoffs, and global issues such as climate may also come into play. We’ve long agreed that the United States must work with allies globally to address shared concerns about China’s unfair policies, and the Biden administration has already made overtures to this effect. Of course, translating rhetoric into action is harder.

On the biggest foreign policy challenge, China, the new administration will need to craft a nuanced strategy that hits multiple objectives at the same time. One goal will be to win improved access for U.S. business to the Chinese market,

While the Biden administration may not immediately prioritize trade negotiations, we are hopeful that officials will continue to pursue comprehensive, high-standard trade agreements with the United Kingdom and Kenya — and hopefully other new markets.

The truth is, America has been falling behind on trade. Other countries are inking new trade deals left and right, while the United States has been renegotiating old agreements or concluding mini-deals — none of which generate much new market access. We are pleased to see the Biden administration reaching out to allies and partners around the globe. The U.S. will host the next Summit of the Americas, and we may also see the first U.S.-Africa summit in years. Progress against the pandemic should allow the important Asia-Pacific Economic Cooperation summit to go forward in New Zealand this November. These are opportunities that we are optimistic the Biden administration will seize and build on. On trade, America is getting off the sidelines and back on the field. This is welcome news for American workers, farmers, and companies that depend on international commerce. The business community will be pushing for a bold trade agenda to seize these opportunities.

W H AT’S N E X T F O R I N T E R N AT I O N A L T R A D E?

Looking at the Biden Trade Policy WILLIAM REINSCH SENIOR ADVISOR AND SCHOLL CHAIR IN INTERNATIONAL BUSINESS, CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES

WHILE IT’S TOO EARLY in the Biden

administration to be certain about his trade policy, we have already observed some trends and can make some predictions. Gone is Donald Trump’s “America First” approach, but we won’t return to the trade policy of previous presidents. Biden wants a policy that will ensure trade more equitably distributes benefits to and among workers, but it will take some time to decide exactly what that means. Biden is a multilateralist who believes in coalitions and cooperation. We should see renewed U.S. engagement with international organizations, including an effort to settle disputes that have paralyzed the World Trade Organization. Here, as elsewhere, the difference with Trump will be over tactics rather than goals. In China, Biden faces similar challenges on subsidies, support for state-owned enterprises, and forced technology transfer. He will try to resolve them by aligning countries through coalitiondriven diplomacy rather than unilateral tariffs. Currently, Biden has limited maneuvering room because of strong anti-China sentiments in the public and in Congress. National security-related restrictions will remain, but tariffs may be eventually removed if the Chinese make concessions. Meanwhile, decoupling will proceed, driven not by Biden, but by China’s go-it-alone policies and growing discomfort with Xi Jinping’s repressive policies in Hong Kong and human rights concerns in Xinjiang. Second, Biden wants to rebuild the transatlantic relationship after four years

of damage. The European Union (EU) has invited a dialogue on trade, and the reality is that Biden can’t build a coalition on China without Europe. The EU must decide what its new fashionable term, “strategic autonomy,” means, and whether it wants to work alongside the U.S. against China or be a “third force” perched somewhere in between. The U.S. position echoes Benjamin Franklin: “We must all hang together or we will all hang separately.” Third, two big climate and trade issues are carbon border adjustment measures and subsidies for green initiatives. On border measures, the challenge will be finding a common approach among large economies. On subsidies, Congress will debate eliminating “bad” fossil fuel subsidies and supporting “good” subsidies on green tech. Biden’s top priority is dealing with the COVID-19 pandemic and investing in America’s infrastructure and innovation capabilities. We won’t see new trade agreements, but policies will be shaped by deteriorating U.S. attitudes toward China, and by traditional trade skeptics refocusing the debate toward their goals. A good example is AFL-CIO President Richard Trumka, who worked with House Democrats to include enforcement provisions on worker rights in the United States-Mexico-Canada Agreement. His goals were specific and attainable, and ultimately he supported the agreement. This will be a good template for the future.

Biden’s intentions are to increase domestic content and return manufacturing jobs to the U.S. Although too soon to predict the outcome, if they succeed, that could force significant adjustments in global supply chains and changes in the way America does business.

support American workers. Reshoring will be the biggest debate. Biden’s Build Back Better proposals recommend tax carrots for companies that return to the U.S. and sticks for those that do not. Biden’s intentions are to increase domestic content and return manufacturing jobs to the U.S. Although too soon to predict the outcome, if they succeed, that could force significant adjustments in global supply chains and changes in the way America does business.

These trends force discussions over how trade policy can reduce inequality and

W H AT’S N E X T F O R I N T E R N AT I O N A L T R A D E?

What Does a WorkerFocused Trade Policy With China Look Like? CRAIG ALLEN PRESIDENT, US-CHINA BUSINESS COUNCIL

PRESIDENT BIDEN INHERITED a

fraught relationship with China. His predecessor launched a trade war that unraveled established commercial ties between our two countries and, at its peak, cost 245,000 American jobs. Many considered it to be the beginning of a “new Cold War.” Biden, too, is under immense pressure to be tough on China from both sides of the political aisle. Early on, Biden said that his administration would put “American working families” at the center of every foreign policy decision. We should welcome this wholesome approach to international relations; foreign and trade policy could prove to be important tools for addressing inequality in our society. But if this is the case, why does the United States still have 20% tariffs on $360 billion worth of goods from China? Put simply, tariffs kill jobs, drive up prices for everyday Americans, and make American companies less competitive. The misguided tactic translated into tangible economic losses for Virginians. The Commonwealth’s exports to China, which support roughly 15,000 jobs, fell by $270 million between 2017 and 2019. Over the same period, jobs supported by Virginia’s exports to China fell by 9%. The tariffs are also to blame for ceding U.S. market share in China to competitors — at the same time China raised retaliatory tariffs on U.S.

products, it lowered tariffs on goods from other countries. But Biden cannot simply remove the tariffs. In fact, his administration recently defended the tariffs in court. To be clear, there are real issues in the commercial relationship that must be addressed to ensure American intellectual property is adequately protected and that American companies can access and compete fairly on a level playing field. To draw down the tariffs, the United States must secure meaningful concessions from China through regular, constructive, results-oriented dialogue. The reality is that trade with China is beneficial for the United States. Success in China will continue to be critical for U.S. firms to compete globally, create more American jobs, and be the standard-bearers for the technologies of the future. The United States, with our allies, must find a way to confront the China challenge without needlessly harming American jobs, consumers, and commercial competitiveness. For trade policy to actually work for everyday Americans, tariffs on Chinese goods must be drawn down. This will not be easy. Commercial ties are not the only, nor even the paramount, aspect of the U.S.-China relationship. Our partnership is critical to addressing

Trade is one of the few areas left that can serve as a ballast in an otherwise complicated bilateral relationship. We should let it.

global challenges, yet we face a mounting list of disagreements ranging from human rights to technological leadership and cybersecurity. Trade is one of the few areas left that can serve as a ballast in an otherwise complicated bilateral relationship. We should let it. To that end, new U.S. Trade Representative Katherine Tai should engage with her Chinese counterparts as soon as possible to achieve improvements in intellectual property protection and market access for American companies, in return for the complete elimination of bilateral tariffs that are harming American working families.

Listening to New Voices in U.S. Trade Policy EDWARD ALDEN BERNARD L. SCHWARTZ SENIOR FELLOW, COUNCIL ON FOREIGN RELATIONS

UNDER THE SLOGAN of a “foreign

policy for the middle class,” President Joe Biden is trying to usher in a transformation in the U.S. approach to trade policy. The goal is to integrate foreign and domestic policies to enhance economic security for ordinary Americans, reversing the pattern of recent decades in which the well-off and well-educated pulled away from the rest of the country. He has tasked top officials from across the foreign and domestic policy agencies in Washington with coming together on a plan by this summer. To succeed, however, the Biden team will need to reach outside the Beltway and broaden the circle of voices that get heard in the making of U.S. trade and international economic policy. States and cities focused on economic development in their regions should have a much bigger say. A good place to start would be overhauling the nearly half-century-old trade policy advisory system that gives corporate America the strongest voice in setting the priorities of U.S. trade policy. To be sure, these companies do most of the exporting and importing, and their interests should matter. But the global success of American companies too often has not translated into broader prosperity for Americans, especially those not living in globally connected cities like Seattle, San Francisco, Atlanta, and Washington. And while the advisory system has been expanded to include environmental, labor, and consumer advocates, most of the voices are still coming from inside the Beltway.

The Biden team will need to reach outside the Beltway and broaden the circle of voices that get heard in the making of U.S. trade and international economic policy. States and cities focused on economic development in their regions should have a much bigger say.

The administration and Congress should create a Federal-State Trade and Investment Policy Commission, with a strong research staff, as the new vehicle for coordination between Washington and state and local governments on trade priorities. These are the agencies on the front line of international competition — the ones trying to encourage local companies, attract investment, and promote exports for their regions. U.S. initiatives on trade liberalization and trade enforcement should be more attuned to these local efforts. Many countries, notably Canada, do a far better job of integrating regional and local concerns into trade policymaking that the United States should emulate. The Biden team is also rightly determined to break trade policy from its silos, to integrate trade opening negotiations with domestic measures to help Americans succeed in a more competitive global

economy. Education, infrastructure, and worker retraining are all part of that mix, and here, too, state and local governments often play the critical roles. On workforce, for example, Congress and the administration should create a new National Commission on the U.S. Workforce that includes federal, state, and local officials, as well as representatives from business, education, labor, and nonprofit groups focused on workforce development. The Commission should become the vehicle for coordinating workforce strategies across the country, and a clearinghouse for sharing best practices across the states. A foreign policy for the middle class requires creating new market opportunities abroad while ensuring that Americans have the tools they need to succeed. State and local voices need to be at the forefront of shaping that new agenda.

The town of Urbanna on the Rappahannock River can trace its history to the 17th century and the colonial government at Jamestown, which established 20 port towns in 1680 to boost the burgeoning tobacco trade in Virginia. Today, Urbanna is a summer resort town popular with boaters, fishermen, and oyster enthusiasts.

he fundamental conditions are in place for Virginia to significantly grow its international trade. Now, the Commonwealth is setting a course to capitalize on those assets.

That new direction comes from Virginia’s new International Trade Strategic Plan — a bold, first-of-its-kind initiative that aims to leverage the Commonwealth’s strengths to increase exports of goods and services by 50% over the next 15 years. Virginia’s strengths are many, from its leading deepwater port to a major international airport to a business climate consistently recognized among the best in the country, according to Mike Ligon, vice president of corporate affairs for Fortune 1000 company Universal Corporation and chairman of VEDP’s Advisory Committee on International Trade (ACIT).

VIRGINIA SETS COURSE FOR

ROBUST TRADE GROWTH

With initial funding approved and bold goals on the horizon, Virginia’s International Trade Strategic Plan is moving forward

“We have high-quality talent. We have a good standard of living,” Ligon said. “We strongly believe we can become one of the top states for trade.” Ligon added that hitting that mark requires a significant funding commitment. That’s happening now, as what previously was just a plan is coming to fruition thanks to an initial $1.35 million appropriation made by the Virginia General Assembly in March 2021. That money will go toward launching a new capacity-building program to support businesses with supply chain optimization, expanding existing trade promotion programs from VEDP, the Virginia Department of Agriculture and Consumer Services (VDACS), and other state agencies, and enhancing the ability to capture available federal grants and manage federal grant programs. One program set to expand under the first allotment of funding is VEDP’s flagship Virginia Leaders in Export Trade (VALET) program, which provides export planning services and assistance to companies. The funding will enable VEDP to expand VALET and a number of other trade programs and increase the companies served by more than 50%. For VDACS, the money will go toward expanding the agency’s international marketing resources. “It was really an easy sell with the plan’s legislative champions,” said David White, executive director of the Virginia Maritime Association. “They did all the heavy lifting with their colleagues to make this funding possible.” White, a member of both the ACIT and the International Trade Strategic Plan Steering Committee, noted the existing trade programs’ full participation levels and what he described as a best-in-class reputation.

“When the plan was developed, we started at that time to make it one of our legislative priorities,” he added. “It was a priority for us because we’ve seen that the state is so well-positioned to benefit from increased trade.”

ASSEMBLING THE CREW Announced by Virginia Gov. Ralph Northam, the Trade Plan was developed with input from a multitude of voices from the public and private sectors, and includes two advisory committees — the existing ACIT and the new International Trade Strategic Plan Steering Committee, which includes two state cabinet officials as co-chairs: Secretary of Commerce and Trade Brian Ball and Secretary of Agriculture and Forestry Bettina Ring. Another important factor was the creation of a staff-level working group across agencies that included VEDP, VDACS, the Virginia Tourism Corporation, the Virginia Department of Forestry, and The Port of Virginia. That collaboration is ongoing, with the goal of fulfilling the plan’s initiative to keep staff-level dialogue and coordination going across agencies. “The first thing I told them was that I applauded them for having a strategic, well-coordinated plan,” said Andy Karellas, executive director of the State International Development Organizations, a nonpartisan, nonprofit association that seeks to share best practices and efficiencies across state governments. “It doesn’t happen very often. Getting all resources and players involved is something that rarely happens at the state level.” Despite Virginia’s great trade assets, including an international trade development team at VEDP recognized as one of the best in the country, there was still a distance to bridge. The members of these advisory groups were charged with leveraging the Commonwealth’s historic strengths and making the right resource allocation recommendations to address any current limitations. Nathan Bass, vice president for strategy at WestRock Company and a member of the Steering Committee, was among the representatives from leading exporters who had deep experience to share as well as needs to address. “Our main objective around trade is to ensure that Virginia has a business-friendly environment that helps our manufacturing operations compete in a global marketplace,” Bass said. “In particular, investments in transportation and logistics infrastructure are critical to ensure that we can effectively and efficiently get our goods to market.”

I N T E R N AT I O N A L T R A D E S T R AT E G I C P L A N A D V I S O RY GROUPS AND MEMBERSHIP Steering Committee

VEDP Advisory Committee on International Trade

Brian Ball Virginia Secretary of Commerce and Trade (co-chair)

Mike Ligon Universal Corporation (chair)

Bettina Ring Virginia Secretary of Agriculture and Forestry (co-chair)

Bob Feeser Riverwind Advisors, LLC

David White Virginia Maritime Association

Tag Greason QTS Data Centers

John Reinhart Virginia Port Authority

Nick Jiannas STIHL, Inc.

Nathan Bass WestRock Company/ Virginia Chamber of Commerce

Stuart Malawer George Mason University

Nick Jiannas STIHL, Inc./Virginia Manufacturers Association

Ned Massee Croatan Advisors (VEDP Board liaison)

Tom Taliaferro Montague Farms/Virginia Agribusiness Council

John Milliken Virginia Port Authority

Garrett Hart Chesterfield County EDA/Virginia Economic Developers Association

Bettina Ring Virginia Secretary of Agriculture and Forestry

Andy Karellas State International Development Organizations, Inc.

David White Virginia Maritime Association

Jim LeBlanc The Candy Group USA/ Northern Virginia Technology Council

James Xu AVAIL Vapor

Marek Gootman Brookings Institution

VIRGINIA SETS COURSE FOR ROBUST TRADE GROWTH

S U M M A RY O F I N I T I AT I V E S BY C AT E G O RY Building Capabilities

Expand capacity to serve existing Virginia businesses across all stages of growth

Making Connections

Expand programs focused on facilitating connections between Virginia businesses and foreign buyers

Sharing Risk

Develop programs to offset risks involved in closing foreign transactions with first-time international partners

Finding Resources

Enhance the ability to capture available federal grants and manage federal grant programs

Building Capabilities

Expand capacity to serve existing Virginia businesses across all stages of growth

Making Connections

Curate directories of professional services providers, training opportunities, and importsfocused networking

Exports

Imports

Expand, focus, and align business expansion and recruitment activity with Trade Plan goals Align infrastructure investments and related policies

Enablers

Invest in tourism strategies

Enhance state capabilities and collaboration to serve Virginia businesses

Advocate for supportive policies from federal and state leaders

Source: Virginia International Trade Strategic Plan

Ligon added: “It is imperative that we utilize the extreme potential of the port and further enhance the infrastructure in southern Virginia, like upgrading U.S. Route 58. Such improvements would take pressure off our already congested interstates, provide economic opportunity along our southern border, improve the efficiency of deliveries to the Midwest, and much more.” The Trade Plan focuses on two main priorities: ρ

Expanding the reach and impact of trade development services to existing Virginia businesses

Enhancing Virginia’s focus, capabilities, and resources to support existing trade-intensive business in expanding and to attract new export-intensive companies to the Commonwealth

Supporting these are 26 distinct initiatives that fall into one of three categories: Exports; International Supply Chains; and Business Attraction, Infrastructure, Tourism, and Other Enablers. Together, the initiatives have the potential to boost annual exports by nearly $18 billion while generating 150,000 jobs. “As we look at a post-COVID recovery plan, we need to make sure that trade is a key part of the global reopening,” Karellas said. The Virginia Maritime Association’s White also recognizes the importance of the timestamp on the plan. “I think we have a reputation of being businessfriendly,” he said. “We need to maintain that. Right now, we are in such a strong position to take what we have to the global marketplace.”

TUNING UP AN ECONOMIC ENGINE As Northam said when he announced the plan in 2019, “International trade is a powerful economic engine for our Commonwealth. Maintaining Virginia’s position as the best state to do business and ensuring that all regions of the Commonwealth can participate in our economic growth require that we boost our international trade.” When the information-gathering phase concluded and the advisory groups completed their rigorous download, they had garnered meaningful input from hundreds of companies, nearly a dozen state and federal agencies, a number of trade associations, and countless leaders from a broad cross section of public and private-sector organizations.

VIRGINIA SETS COURSE FOR ROBUST TRADE GROWTH

EXPORTS AS A SHARE OF GROSS REGIONAL OUTPUT BY REGION 24% 18%

17%

16% 11%

(Thousands)

Estimated number of exporters

Southwest Virginia

Shenandoah Valley

Southern Virginia

Roanoke/ New River/ Lynchburg

Hampton Roads

Greater Fredericksburg

Greater Richmond

Greater Charlottesville

Northern Virginia

12%

17%

14%

31%

275

425

600

1,200

325

750

775

1,500

Share of Virginia exports Direct exportsupported jobs

Source: The Brookings Institution; U.S. Department of Commerce; VEDP analysis

“It was a very well-organized, well-coordinated, and thorough process,” Karellas said. WestRock’s Bass embraced the opportunity to bring together different constituents to shape the strategy around international trade. “The collaboration is also consistent with the mission of the International Trade Strategic Plan to address the needs of small to large businesses — those already well-established in the Commonwealth and those looking to expand or move here,” he said. “It’s always a good sign when government looks to involve businesses to shape strategy, and I’m looking forward to seeing the plan put into action.”

TRADE SECRETS? HARDLY. None of the existing trade advantages buoying Virginia’s comprehensive Trade Plan are floating under the radar. Quite the opposite, in fact. This begins with the hub of the Commonwealth’s trade infrastructure. The Port of Virginia has been undergoing a series of robust renovations and upgrades — all of which act

as additional bait to export-heavy companies — including a $1.5 billion infrastructure project adding cranes for mega-vessels, extending berth space, and dredging to widen and deepen the channels to become the deepest on the East Coast.

Commonwealth…we have a really strong recipe there,” White said.

The overlap in timing with the International Trade Strategic Plan implementation has emerged as a strength itself.

For Ligon, whose company sends over 80% of its U.S. business product through The Port of Virginia, anything short of a comprehensive strategy just won’t cut it.

“I see this as being synergistic,” White said. “We have the new capacity and efficiencies of the port that will help Virginia companies conduct trade more efficiently and at a lower cost.” White also points to the built-in advantages of Virginia’s railways, barge service, increased capacity coming to Interstates 64 and 95, and Dulles International Airport, which handles more than 300,000 tons of cargo annually and provides connections to more than 50 international destinations. “When you add to that the programs of the International Trade Plan that help Virginia companies grow imports and exports, and attract companies to the

Confidence is high that once the plan gets underway, it will demonstrate the necessary ROI to knock over the other funding dominoes.

“We strongly believe that the Commonwealth can become one of the top states for trade, and a fully funded Trade Plan will be required to get us there,” he said. To achieve the bold goals of the Trade Plan, Virginia needed to be comprehensive in its approach and gather input from a broad cross section of the government and business community. “Piecemeal isn’t going to get us there,” he said. “It’s going to take all hands on deck.”

Visitors to Claytor Lake State Park in Pulaski County can enjoy six hiking trails open year-round in addition to water recreation activities like kayaking, stand-up paddleboarding, boating, and fishing.

We selected the Commonwealth for its workforce culture and regulatory climate. In our experience, people in the region stay with companies long-term. MICHAEL FLEMING CEO, Torc Robotics

The Port of Virginia:

A Crucial Link in Vital Supply Chains

he last year has been challenging to all aspects of the logistics industry, and The Port of Virginia was not immune. Not only did the port have to protect the health of its employees to continue serving its vital function during the COVID-19 pandemic, it also had to keep cargo flowing through the supply chains of businesses across the Commonwealth while keeping up the pace on its ambitious infrastructure upgrades. When cargo volumes bounced back in the latter part of 2020, Virginia’s ports were strategically positioned to handle a surge of freight that brought many other U.S. ports to their knees.

4,000’ WHARF (1,219M) AGGREGATE LENGTH

50’ (15.24M)

BERTH & CHANNEL ACCESS

RMG CRANES

TRUCK GATE LANES 17 Inbound/13 Outbound

VIRGINIA INTERNATIONAL GATEWAY AFTER IMPROVEMENTS 12 STS CRANES SUPER POST PANAMAX

SEMI-AUTOMATED STACKS

1,212

REEFER PLUGS

19,000’

RAIL TRACK

A C R U C I A L L I N K I N V I T A L S U P P LY C H A I N S

The Virginia Port Authority (VPA) manages four terminals in the coastal Hampton Roads region with close to 20,000 linear feet of berth space that can handle some of the largest megaships in service today. The port’s two primary container terminals, Norfolk International Terminals (NIT) and Virginia International Gateway (VIG) in Portsmouth, can handle multiple ultra-large container vessels (ULCV) simultaneously with double-stack, on-dock rail service provided by both of the East’s Class I railroads, CSX and Norfolk Southern. Also in Hampton Roads is the Portsmouth Marine Terminal (PMT), a multi-use facility that can handle containers, break-bulk, and roll-on/roll-off cargo and is being considered as a staging area for offshore wind materials by Danish energy company Ørsted to support its work on Dominion Energy’s Coastal Virginia Offshore Wind Project, as well as for other East Coast projects. Newport News Marine Terminal (NNMT) is the main break-bulk and roll-on/roll-off facility in Hampton Roads. Its on-dock rail link is equipped for loading and unloading construction and agricultural equipment, and its Pier C can handle heavy-lift cargo such as power plant equipment. The VPA also administers two inland ports to serve markets and companies away from the coast. The Virginia Inland Port (VIP) is in Front Royal in the Northern Shenandoah Valley, west of Washington, D.C. near the intersection of Interstates 66 and 81. Containers destined for VIP are transferred from ships onto rail cars, avoiding traffic congestion, and then transferred to trucks. Home Depot, Family Dollar, and Mercury Paper are among the companies that have opened distribution centers nearby. The InterChange Group, a third-party logistics provider based in Rockingham County, has had facilities at both NIT and VIP since 2006 to help serve the food and beverage cluster in the Shenandoah Valley.

50’ (15.24M)

BERTH & CHANNEL ACCESS

567 ACRES

(229.46 HECTARES)

35 NEW

HYBRID SHUTTLE CARRIERS

SIX BERTHS

(2 NORTH & 4 SOUTH)

6,630’ WHARF (2,020M)

AGGREGATE LENGTH

A C R U C I A L L I N K I N V I T A L S U P P LY C H A I N S

NORFOLK INTERNATIONAL TERMINALS AFTER IMPROVEMENTS

18,000’ RAIL TRACK

SERVICING CSX & NS

60 NEW

TRUCK QUEUING LANES

30 NEW

CONTAINER STACKS

816 TOTAL

REEFER PLUGS

60 NEW

RMG CRANES

16 STS CRANES SUPER POST PANAMAX

67 HUSTLER TRUCKS

A C R U C I A L L I N K I N V I T A L S U P P LY C H A I N S

THE PORT OF VIRGINIA’S TERMINAL LOCATIONS

DEEPER, WIDER, SAFER

InterChange President Devon Anders cited VIP as an innovation in logistics due to its status as the first inland port established in the United States. The other inland port, the Richmond Marine Terminal (RMT), is located along Interstate 95 and is linked to the port’s main container terminals in Norfolk Harbor by thrice-weekly container-onbarge service. Its 2020 barge volumes were up nearly 9%, with overall cargo volumes up 20%. The terminal offers connections to CSX and Norfolk Southern rail on inducement via a local switch. In 2015, the city of Richmond agreed to lease the terminal to the port for 40 years. The result has been expanding volumes and development of new warehouse operations near the terminal, with Amazon, Bissell, Lidl, and LL Flooring among the companies building new space nearby.

BUILDING A 21ST-CENTURY PORT Former VPA CEO John Reinhart worked with the Virginia Maritime Association and state leaders to launch a modernization program aimed at improving operational efficiency. Construction began in 2016 on a $320 million investment at VIG to increase its capacity by 40%, with new ship-to-shore cranes, a doubling of the capacity in the container stack yard, expansion of the terminal’s rail capacity, a lengthened berth, additional lanes at the truck gate, and an update to the terminal’s operating system, with work finishing in 2019. NIT saw a separate $425 million upgrade that wrapped up in January 2021, with new ship-to-shore cranes, a doubling of the number of stacks, a new 26-lane semi-automated truck gate, and a new terminal operating system. An additional $350 million is being spent to deepen the inner harbor to 55 feet and widen the channel to accommodate two-way ULCV traffic, with a goal completion date of 2024. The deeper channel will enable unobstructed access for the very largest ships with maximum loads and no height restrictions.

Enviva’s private terminal in Chesapeake can host a wide variety of vessels, up to a 42-foot draft, and includes two wood pellet storage domes, each with 45,000 metric tons of storage capacity.

Private Terminals Provide Value Options for Exporters Companies don’t even have to use VPA facilities to take advantage of the widening and deepening of the shipping lanes. No fewer than 50 private companies — as varied as CITGO Petroleum, Morton Salt, and Perdue Agribusiness — take advantage of the deep waters of the Elizabeth River to operate their own terminals where ships call directly. One of those companies is Enviva, the world’s largest producer of sustainable wood biomass and one of Virginia’s largest exporters. Since 2011, the company has operated a terminal on the Elizabeth River in Chesapeake, where it loads wood pellets in bulk from its Southampton County plant and two plants in northeastern North Carolina onto ships bound for Europe. According to Enviva, the Chesapeake terminal has all the elements essential to the company’s success: vicinity to a rich and growing wood basket, a skilled and experienced labor force, and a geographically advantaged location for the export terminal. “Enviva’s deepwater marine terminals are strategically located to decrease transportation time, costs, and energy expenditure through the supply chain,” said Aaron Anseeuw, regional port manager for Enviva. “They are important assets that enable us to precisely control our product every step of the way.” The Enviva terminal can accommodate vessels up to a 42-foot draft and includes two storage domes, each capable of holding 45,000 metric tons of material. In January 2021, the terminal received the Sustained Distinguished Performance River Star Business Award from the Elizabeth River Project for its efforts to improve water quality and reduce energy use. 37

Virginia International Gateway, Portsmouth

RESPONDING TO CUSTOMER NEEDS A major focus of VPA’s modernization was improving customer service. For Virginia importers, that means swiftly unloading containers and getting the contents onto trucks and trains. For exporters, it means efficiently moving cargo on to scheduled sailings. Kimberly Clark, logistics manager for Hooker Furniture in Martinsville, is responsible for importing more than 3,500 containers a year. She recalled how severe congestion in 2015 meant her truckers faced lengthy wait times to pick up a load. The port instituted an appointment system in 2018 that allowed drivers to schedule slots to pick up their container once it was unloaded. The new semi-automated stackers shift boxes

at night, migrating them to the truck loading points in the right sequence and reducing congestion outside the truck gates. “The appointment system helped to structure the wait time and how many trucks they allowed into the gate,” Clark said. Today, wait times can be as brief as 30 minutes. Another unique investment from the port is the Hampton Roads Chassis Pool II, the nation’s only port-owned and managed chassis fleet with equipment available for short-term rental by drayage operators. The fleet is the most modern in the U.S., with an average chassis age of three and a half years. The port invests in preventative maintenance and is able to offer availability when other ports around the country are struggling with significant shortfalls of chassis.

EXPANDING CONNECTIVITY AND ATTRACTING MORE TRAFFIC Like an airline hub, a port’s connectivity is important to shippers because direct service means less time in transit and less money tied up in inventory. In Virginia Beach, STIHL, Inc., a leading manufacturer of outdoor power equipment, is one of those longtime clients, having operated in the city since 1974. The Port of Virginia is a critical link in STIHL’s global supply chain, handling both imports and exports of parts and finished products to more than 80 countries. “The Virginia ports have done a lot of automation to improve their efficiency,” said Mike Broz, STIHL’s senior manager of distribution logistics. “Our overall business has seen double-digit growth over

A C R U C I A L L I N K I N V I T A L S U P P LY C H A I N S

the last year. One of the highlights of STIHL’s supply chain around the world has been our ability to get access in and out of The Port of Virginia.” Modernization has put Virginia in a good position to handle cargo destined for, or originating from, the Midwest. Widening the Panama Canal in 2016 meant that New Panamax vessels from Asia carrying as many as 15,000 twenty-foot equivalent unit (TEU) containers had direct access to the U.S. East and Gulf Coasts. In 2020, the surge in imports related to the COVID-19 pandemic meant waits as long as eight days just to unload at Los Angeles and Long Beach — plus congestion surcharges, shortages of truck chassis, and extended times to pick up and deliver containers at those ports. Surging ocean freight rates reduced the “Panama Spread,” the difference in spot market pricing from Shanghai to the East Coast instead of the West Coast, to less than a 20% premium. Virginia’s investments in speed and efficiency proved prescient. Virginia terminals can discharge a container from a ship and have it on a train and on its way in less than 40 hours, days ahead of the extended delays seen in more congested ports. “The investments made to increase capacity at The Port of Virginia have provided new opportunities for Trex to better service our customers thanks to increased capacity on critical lanes,” said Michael Reger, director of distribution and transportation at Trex Company, Inc., a manufacturer of wood-alternative decking and other outdoor items based outside Winchester in Frederick County.

REAPING THE BENEFITS, PREPARED FOR THE FUTURE “The port was proactive. They made the necessary investments at the right time, and they are reaping the benefits,” said Mike Pilot, corporate director at Universal Corporation in Richmond, a large user of the ports for both exports and imports.

THE PORT OF VIRGINIA AT A GLANCE: 2020 EXPORT LOADS HANDLED

940,684 TEU

IMPORT LOADS HANDLED

1,316,976 TEU

EXPORT EMPTIES HANDLED

534,217 TEU

IMPORT EMPTIES HANDLED

21,539 TEU

TOTAL TEUs HANDLED

2,813,415 TEU

PEAK MONTH FOR IMPORTS

NOVEMBER

PEAK MONTH FOR EXPORTS

MARCH

NUMBER OF SHIPS WHO CALLED

1,428

EXPORT GROWTH SO FAR IN 2021

60%

COMPARED TO SAME PERIOD IN 2020 NUMBER OF TRUCKS PASSING THROUGH

992,576

ALL TERMINAL GATES, FULL YEAR 19,000

TYPICAL GATE MOVES PER WEEK CRANE MOVES PER HOUR

~ 32

RAIL DWELL TIME FOR IMPORT CONTAINERS DWELL TIME FOR A TRUCK PICKING UP/

40 HOURS (AVG.) 45 MINUTES OR LESS

DROPPING OFF A CONTAINER TEU = Twenty-Foot Equivalent Units, the size of a 20-foot box. 40-foot boxes are two TEUs

Source: The Port of Virginia

“They are ahead of the game and they are prepared for the big ships.” Stephen Edwards took over as CEO of the Virginia Port Authority in January. As he looks to the future, he sees nothing but opportunity. As more 20,000–22,000 TEU ULCVs are added to the East Asia to Europe trade lanes, more of the 14,000–18,000 TEU ships will be

shifted to the North Atlantic lanes, and more New Panamax ships will come to the East Coast via the Panama Canal. That volume will go to the ports that are prepared to handle it. “The Port of Virginia’s modernization positions the state superbly to capture more of that traffic,” Edwards said. “That will be great for Virginia businesses.”

Norfolk International Terminals

Building Success

at The Port of Virginia:

A Conversation With Stephen Edwards Stephen Edwards joined The Port of Virginia as CEO and executive director in January. Before joining the port, he was president and CEO of TraPac, which operates container terminals in California and Florida. VEDP President and CEO Stephen Moret spoke with Edwards about the port’s ambitious ongoing modernization efforts, Virginia’s geographic export advantages, and the challenges of guiding essential logistics operations during a global pandemic. Stephen Moret: Why don’t we start by sharing a little bit about what drew you to The Port of Virginia? Stephen Edwards: Our subsidiaries operate the port. We’ve got direct responsibility for port operations and delivery at the service level. We’ve got commercial oversight for the port and direct involvement in economic development to the port when appropriate. And the attraction of my role is the ability to really concentrate on port excellence, how to compete on an inter-port basis, and how to build a gateway port.

An additional attraction was to be able to take that total gateway approach and say, “How can I lead an organization and help it grow as a gateway port?” That’s what really drew me to the position. Moret: As you look at The Port of Virginia today, what do you think sets it apart from its peers on the East Coast, and how have some of the recent infrastructure and modernization investments affected its value proposition? Edwards: A large part of the U.S. population is east of the Mississippi River. The ports on the East Coast have this

A C O N V E R S AT I O N W I T H S T E P H E N E D WA R D S

opportunity to grow market share because a significant amount of business comes through California ports and is railed across to the Ohio Valley, the Midwest, and partly to the East Coast.

How are you identifying and mitigating the risks that are in front of an enterprise, and how do you sustainably grow? That’s a key one for us in Virginia. How do you sustainably grow port operations?

If we can provide excellent service, we can attract cargo to come through the Eastern Seaboard to get to the market where the population lives. The investments made here have improved the value proposition and made us so much more capable than they were only four or five years ago.

At the end of the day, if you’re in the private sector, you’re trying to build shareholder value. If you’re in the public sector, you’re trying to build shareholder value. In the case of The Port of Virginia, this wonderful enterprise, the shareholder is, of course, the Commonwealth of Virginia. The success of ports, whether you’re in the private or public sector, is to attract people to use the port.

Increasingly, ports have to be viewed as supply chain enablers. In today’s world, that’s where we can differentiate ourselves as a provider, by really providing that modern capability and service excellence that importers and exporters look for. Moret: You bring quite an interesting set of experiences that you’ve had around the world, which are relevant to this space and this leadership role. How does your experience in the private sector in the industry inform your philosophy with leading the port as a public entity in Virginia? Edwards: I’ve worked in publicly listed groups where you’re heavily driven by your share price. I’ve worked for some of the most sophisticated private equity groups and international investors where your share price may not be public, but you’re heavily driven by your shareholder value. I’ve worked for shipping lines and in the port and logistics sector. When it comes to dealing with shipping lines and their experiences as a customer, I hope to be able to translate some of that to the port as a provider for that same sector. If we think through what you need to do well to be successful, I’d start with good governance. Good enterprises have good governance. If I think about port operations, it starts with safety. Good governance, safety in operations — they’re the same if you’re in the public sector or the private sector.

The measure of shareholder value may be slightly different between the public and private sectors, because in the public sector, we may be more of an enabler than a pure financial play. But we have to meet our shareholders’ expectations, and the Commonwealth of Virginia is really going to look to the port to be a catalyst of economic growth and economic strength for the Commonwealth. And with that comes strong performance and strong returns. Moret: What kinds of things come to mind as some of the biggest challenges facing ports in the United States? Not just The Port of Virginia, but ports in general over the next several years and beyond. Are there some shared challenges that leaders of ports are going to have to tackle? Edwards: We’re in an industry that’s scaling up. The analogy I would use is when the airline industry decided to go to significantly greater sizes of aircraft. Airports had to extend runways or build greater passenger terminals. You have the same in our industry with the size of vessels. We’ve seen that recently in the news with the Suez Canal incident. What we’re seeing is significantly larger volumes of trade moving on individual vessels, and that creates infrastructure challenges of surge capacity — bottlenecks that can rear up quite quickly if proper planning isn’t in place.

XXXXXXXXXXX

If I were talking to a site selector or a CEO who’s looking at where to do business, what I would say is that The Port of Virginia is the most exciting port on the East Coast. STEPHEN EDWARDS CEO and Executive Director, The Port of Virginia

Virginia International Gateway, Portsmouth

The Port of Virginia’s Richmond Marine Terminal (RMT) is located adjacent to Interstate 95. RMT provides a maritime alternative to Interstate 64 by transporting goods on the James River via barges, removing container traffic from local roads and highways.

The investments that the port has made in modernization programs in the last years are really going to help. You not only plan for big surges, but how do you use technology to manage those surges? And how do you interact with your railway partners, with your trucking industry partners, with your third-party logistics companies? These are challenges that exist in any point of a transportation chain, whether you’re dealing with goods or with passengers, and whether you’re dealing with warehousing or container terminals.

them to accommodate these ships? Is there anything the U.S. should be thinking about at a national level in that regard?

away — they can just be 50 to 100 miles away — where we can distribute the cargo into the domestic freight network.

Edwards: One of the biggest advantages of The Port of Virginia is that on the maritime side, we have the natural harbor, the gateway of the maritime base of Hampton Roads. When it comes to building channels and wider berths and ports, we do that largely on a state-by-state basis. We’re competing with New York and New Jersey, Georgia, South Carolina, and Maryland.

Moret: The last year or so, the COVID-19 pandemic has obviously created some significant challenges for the industry here in Virginia, and nationally and globally. What steps do you think ports can take to help ensure supply chain viability for future crises?

Moret: I want to expand on that a bit. We’ve seen a big shift toward really enormous ships. We’ve also seen one of the unintended consequences with one of those big vessels in the recent Suez Canal incident. What do ports need to be doing in terms of infrastructure to allow

We have to concentrate our investments in a number of ports that can really handle these vessels well, and Virginia is superbly placed for that on the maritime side. Then we need to build highly efficient distribution networks into the right sites. Those sites don’t have to be 500 miles

Edwards: The Port of Virginia can largely say, “Job well done.” The port has operated throughout. That’s a credit to everybody involved in the port and its operations, and all the stakeholders. The lesson is really in the early part of the pandemic, with the ability of the industry to be declared essential. I think that was very important. Because the message was, “We’re going to continue to operate.”

A C O N V E R S AT I O N W I T H S T E P H E N E D WA R D S

It really was roll-your-sleeves-up time — how can we continue to do this in a way that we can keep people safe? Having a strong safety program, and the proper protocols in place to begin with, allowed that to happen. I think the one area that we’re still struggling with in international supply chains is the sea ferries, the people on the ships. There still are really no proper international protocols for those people. We need to take our hat off to them. They have been operating ships year-round, but the ability to do crew changes has been highly limited. How do you protect people who are in an international environment, operating far from home, at a time like this? Moret: What has your focus been in the first few months at the port? What are some initial broad strokes at some of the big goals you envision trying to tackle during your tenure? Edwards: I arrived in the middle of January to this role from Southern California. Getting to know people was a little different. You didn’t follow the novel playbook of leadership, which is to walk the floor and say hello and get out on site to meet people, because that wasn’t possible. I tried my best to meet most of my colleagues in person but, for a large number of them, it’s been virtual. When I look now going forward, we’ve got this opportunity in Virginia to really build off the foundational base of what we have in the port’s modernization. How do we build these strong partnerships with other players in the supply chain? And how do we build those alignments to make sure we’re all looking to grow the port? How do we organize the strategic growth, and how do we build those strong partnerships with the railroads, with the largest importers, the agricultural exporters? I think there’s a been a lot of good work done here on decarbonization. There’s more to do, and that will be a focus of

some of our future investments. How do we continue to improve our carbon footprint? Moret: When we spoke with your predecessor, John Reinhart, a couple of years ago, one of the things he talked about was the port’s long-term plan, looking decades ahead for future growth. Do you have any thoughts about near-term actions to help position the port for where it’s going to be two or three decades from now? Edwards: The port has a very sound, solid infrastructure plan to service the business. We now have two very modernized container port facilities in Virginia International Gateway, operating in Portsmouth, and Norfolk International Terminals. Both of those are operating extremely well and at high levels. It’s a great credit to the team here, having built — in the last five years — the second phase of the facility in Portsmouth, as well as completely rebuilding the Norfolk facility. Both went exceptionally well, and it really was a case of take what was originally built, enhance, and replicate. There are currently three projects going on in the next part of that plan. The first one, which is very important to the port as a whole, is dredging the channels coming in to make them deeper and wider. That’s to position the port to be capable of handling these large ships. It’s exceptionally important that we get that to completion with the right federal funding. That’s critical to make sure the channels are right for these large ships.

connect to the wider domestic supply chains in Richmond using the barge networks, or farther inland, using the Norfolk Southern and the CSX rail networks, so that we can attract supply chain or exporting industries to the Commonwealth? Moret: You’re really going to have your hands full in the next few years. Is there anything else you want to share for context? Edwards: If I were talking to a site selector or a CEO who’s looking at where to do business, what I would say is that The Port of Virginia is the most exciting port on the East Coast. What drew me here was the ability to say, “Look, you’ve got the capability to oversee the entire gateway.” But it’s also doing so with the most modern facility on the East Coast. I would hope that site selector or that CEO would look at Virginia and say there’s a high degree of confidence in these port operations — and not only in that they will work, or that they do work, but a high degree of confidence that we’ve built resiliency and decarbonization into this process. We know how to stay ahead of the demand curve so they can take their business, bring it to Virginia, and say, “We’ve got the confidence to do business in the Commonwealth as a whole because we know we can bank on the port.”

We hope to commence, in the middle of this year, expansion and modernization of the Central Rail Yard at Norfolk International Terminals. We’ve already fulfilled that at VIG, but we’re building a more modern rail facility on the Norfolk side of the harbor.

Moret: You’ve made a very strong, positive impression so far with the business community and public leadership of the Commonwealth, and we’re very excited about The Port of Virginia’s impact on Virginia’s economic development in the years ahead. Thank you for joining us today. We look forward to continuing to cover your leadership during your tenure, as well as continued developments at the port.

Perhaps, more importantly, we’ve got to start looking at the inland piece. How do we take the port to Interstate 95 and

For the full interview, visit www.vedp.org/Podcasts

Four Virginia State Parks have earned the International Dark Sky Park designation from the International Dark-Sky Association. Those parks and countless others, including Natural Chimneys Park and Campground in Augusta County, are excellent places to view the night sky. Virginia’s total of five International Dark Sky Parks 46 surpasses that of any other state east of the Mississippi River.

Without a doubt, talent was the driving force behind Valley Guard Supply’s decision to locate its operation in Harrisonburg…Our plans for growth and expansion can rely on a steady stream of top talent. ANDY PERRINE Strategic Advisor, Valley Guard Supply LLC

BESPOKE EXPORT SUPPORT

Virginia offers best-in-class export assistance for companies’ complete life cycle EXPORTING CAN BE A STRONG

strategy for connecting companies with demand or diversifying their market bases to better weather economic conditions. However, the export process also carries a tremendous range of unknowns. More so than just communication challenges and compliance hurdles, there’s the question of how to find the right opportunities among millions of potential customers.

MOST EXTENSIVE TRADE DEVELOPMENT OFFERINGS OF ANY S TAT E I N U . S . Global Defense Program (GDP) International Market Research State Trade Expansion Program (STEP) Grant

The good news for Virginia businesses is that they don’t have to answer these questions alone. VEDP supports more than $500 million in export sales from Virginiabased companies each year through its range of resources dedicated to helping companies navigate international trade.

Trade Missions and Shows

“Our decades of international trade expertise are available to help companies export and grow their international sales faster, more efficiently, and at a lower cost than if they did it on their own,” said VEDP Vice President, International Trade Stephanie Agee.

Regional Export Program

Trade Show Program Virginia Leaders in Export Trade (VALET) Export Publications & Training

Global E-Commerce Program

SIMPLIFYING GLOBAL SALES The challenge for many companies is knowing where to start. “A lot of companies think they have to go out there and start looking for business themselves, then they get timid or pull back because they’re not sure of the opportunity,” said Chris Millar, CEO of Gatekeeper Security, Inc. The Northern Virginia-based provider of intelligent inspection and border security systems turned to VEDP to help jumpstart its export business. Millar added: “VEDP does a great job in providing the certainty that companies need to go forward.” VEDP provides a wide range of resources to support companies in identifying international opportunities. These diverse offerings ensure resources are available for companies at every stage of their development. Gatekeeper, which has relied on export business for up to 90% of sales at various times in its nearly 20-year history, sits on one end of that life cycle. At the other end are companies like Floral Genius. The Shenandoah Valley-based manufacturer of sustainable metal flower holders began exporting on a small scale in 2018, shortly after it was acquired by sisters Stephanie Duncan and Jessica Hall, and began seeing larger orders from foreign floral shops, leading the company to seek out VEDP’s Global E-Commerce Program late last year. The program supports companies with online business development tools that simplify the export process. Companies in the program can receive up to $10,000 in reimbursements for export-related expenses, including internationally tailored marketing, from Google ads to online shopping cart features that support international orders. The result, Duncan says, is a more streamlined process that simplifies shipping and export compliance for the internal team while also creating a smoother customer experience. “It’s empowered me to really go after that B2C customer,” Duncan said. “This is a whole new way for me to lift my business.”

Gatekeeper Security, Inc., used VEDP funding to exhibit at trade shows in Germany and Singapore.

VEDP I N T E R N AT I O N A L TRADE BY THE NUMBERS

329

Companies enrolled in VEDP International Trade development programs in 2019

$478M Existing international sales attributed to VEDP International Trade programs and services

$315M New or increased international sales in 2019 attributed by companies to VEDP International Trade programs and services

$793M Total international sales attributed to VEDP International Trade programs and services

$1.6M

Average increase in international sales attributed by companies to VEDP International Trade programs and services

A DEEPER DIVE INTO EXPORTS Companies that are ready to dig deeper into export expertise tend to gravitate toward the Virginia Leaders in Export Trade (VALET) program. This exclusive two-year international business acceleration program provides businesses with up to $30,000 in reimbursements for export-related expenses and a wide array of professional services provided by private-sector partners, along with assistance in developing and implementing an international sales strategy. VALET companies include those looking to take exports to the next level and companies like Chantilly-based MAC Aerospace Corp., which has been selling aircraft logistics solutions internationally for much of its 30-year history. In the 1990s, the company utilized support from the U.S. Department of Commerce to participate at expensive international trade shows and then discovered a similar Virginia offering. In 2014, that support expanded when MAC secured a spot in VALET. “Through VALET, VEDP did a lot of research to help us find partners in overseas markets,” said MAC Aerospace President and CEO Jay Rodriguez. VALET participation also covered the cost of trade mission participation, where company representatives could connect with potential partners in person. Those resources, Rodriguez said, have been invaluable in helping the company promote itself farther afield than had been previously possible.

IN-COUNTRY CONNECTIONS Trade missions are a boots-on-the-ground solution for connecting with vetted potential partners or customers in new markets. In a trade mission, VEDP representatives might escort a small number of company representatives to an international destination to meet face to face with prequalified potential customers. “With trade missions, you generally get about 10 quality appointments over five

days, which can quickly lead to revenues,” says Jeff Spink, CEO of Analytics Corp., a chemical analysis lab based in Ashland that parlayed trade missions to South America into long-term partnerships and a new facility in Brazil. These big connections don’t necessarily happen right away. In many countries, the expectation may be for several face-to-face meetings to take place to build trust. “I think the key to export is being patient,” said Amit Kapoor, president and CEO of First Line Technology, a manufacturer of disaster preparedness and emergency response equipment with headquarters in Fairfax County and a manufacturing facility in Stafford County. First Line was “scattered all over the place,” Kapoor said, in building its export base before connecting with the state’s resources. It wasn’t until its first state-supported trade mission to the Middle East that the company gained the insight needed to crack into exports. Kapoor likens the trade mission meetings to speed dating, as a number of introductions are made over the span of a few days. However, he learned quickly that these initial contacts were laying the groundwork for relationships with potential distributors and customers. His patience paid off, with strong success in that Middle Eastern market coming two years after that first meeting. Shortly after completing VALET and using its resources to tailor corporate marketing materials for an international audience, First Line won a contract in Australia that strengthened its position there and in Singapore.

RESOURCE AND COMPLIANCE SUPPORT Fairfax County-based consulting firm Dynamis had a similar experience. After the 2016 Brussels bombings, the Belgian government contracted with

BESPOKE EXPORT SUPPORT

MAC Aerospace used VALET assistance to exhibit at Expodefensa 2019 in Bogotá, Colombia.

the company to provide a platform for their national crisis management system. However, due to the sensitive nature of the software, Belgium wanted a domestic subsidiary managing the contract after its implementation. Through VALET, Dynamis connected with American and Belgian attorneys and accountants who could help the manufacturer navigate tax laws in both countries and the movement of currencies across borders while helping with translation. “That contract is worth a little over a million a year, and we won that in large part because of the support from VALET and VEDP,” Dynamis Vice President, International Dave Klain said. “Within our two-year window of the VALET program, we more than doubled our international sales.”

A RESOURCE FOR EVERY NEED For many companies, the international trade resources available through VEDP provide a strong starting point to recognizing their blind spots. “Without VALET, we would have literally been forced to start Googling to try to find law firms and accounting firms in Belgium,” Klain said. It’s all too easy for companies to miss an opportunity. That’s why these business owners advise companies considering exporting to begin by reaching out to a VEDP representative. “You can waste a lot of time and a lot of money knocking on the wrong door,” Millar said. “If you go [international] without a plan, you can get lost in the maze and miss an opportunity or get fooled into believing something that’s just not real.”

You can waste a lot of time and a lot of money knocking on the wrong door. If you go [international] without a plan, you can get lost in the maze and miss an opportunity or get fooled into believing something that’s just not real. CHRIS MILLAR CEO, Gatekeeper Security, Inc.

VEDP’S GLOBAL NETWORK VEDP’s network of international research consultants in more than 75 countries provides in-country market research for Virginia exporters, specific to each company’s needs and opportunities.

Countries With VEDP Trade Representation

Illustrative Examples

PROFILES OF EXPORTERS

Chesapeake

VEDP offers a wide range of programs and resources to help companies begin an export program or improve export efforts. These companies found success in international trade with VEDP’s help.

Charlottesville

E X P O RT V I TA L S

Products exported: First-responder necessities, damage control products, and energy-saving devices

Products exported: Online solutions to improve student learning in math and science

Services exported: Program and project management, training for shipboard firefighters, operations analysis and experimentation, logistics, and engineering and installation of shipboard systems

EXPORT COUNTRIES

SERVICES Virginia services accessed for support: VALET program, STEP Grant, Global Defense Program, market research, trade missions, trade shows, webinars, seminars, training sessions Challenge: Determining which international markets to pursue and the right products to introduce, vetting potential partners Solution: Used VEDP resources to develop an international strategic plan and meet international sales goals; VEDP provided due-diligence reports for potential resellers

EXPORT COUNTRIES

SERVICES Virginia services accessed for support: VALET program, trade missions, market research, webinars, seminars Challenge: Finding and vetting partners and distributors, dealing with foreign government entities, understanding rules and regulations for each country Solution: Used VEDP services to run background checks on potential partners, prepare for conditions in individual countries, and write contracts appropriate for international services Result: International business increased by 25%; company leads are up 300% year-over-year

I N C R E A S E D I N T E R N AT I O N A L S A L E S

Result: International sales started at zero and now make up 15–20% of product revenue I N T E R N AT I O N A L S A L E S

15-20

OF PRODUCT REVENUE

Richmond

Tazewell County

E X P O RT V I TA L S

Services exported: Mobile technology strategy, design, and solutions

Products exported: Screen media for material handling and separation

EXPORT COUNTRIES

SERVICES

Virginia services accessed for support: VALET program, STEP Grant, Regional Export Program, market research, trade missions, seminars

Virginia services accessed for support: VALET program, STEP Grant, Go Global With Coal and Energy Technology program, Regional Export Program, Trade Show Program, market research, trade missions, trade shows, seminars

Challenge: Insufficient manpower to pursue overseas growth opportunities Solution: VEDP provided structured programs and representatives dedicated to helping the company maximize resources to achieve tangible goals Result: New partnerships in Qatar and South America, resulting in the company building a portal to facilitate relationships between American and Qatari businesses, which supports initiatives such as the development of mobile applications for the 2022 FIFA World Cup N E W PA R T N E R S H I P

Challenge: Language barriers, foreign taxes and fees, shipping documentation, financial transactions, market knowledge Solution: Learned best practices in dealing with export issues from VEDP programs; used VEDP market research to guide critical decisions Result: Company estimates that international sales have increased by 15% since engaging with VEDP

I N C R E A S E D I N T E R N AT I O N A L S A L E S

SOUTHWEST VIRGINIA

Virginia’s

Scenic Gateway As the trivia question goes, Lee County in far Southwest Virginia is closer to eight other state capitals than it is to Richmond. The westernmost corner of the Commonwealth is midway between Atlanta and Pittsburgh, Charlotte and Cincinnati, and Richmond and Louisville. That placement, along with strong nearby infrastructure — seven interstate highways run within close proximity to its borders, accessible via four-lane highways in the region — makes Southwest Virginia an advantageous location for companies looking to reach markets east of the Mississippi River. The region is known as Virginia’s e-Region because of its broadband access and focus on electronic information technology, energy, emerging technologies, education, and entrepreneurship. Major IT and data center companies such as Northrop Grumman, CGI, SAIC, SYKES Enterprises, Inc., and DP Facilities have chosen to operate in Southwest Virginia alongside leading manufacturers like Tempur Sealy International and Tadano Mantis.

SOUTHWEST VIRGINIA OFFERS Two popular historical driving trails that showcase the area’s culture — The Crooked Road: Virginia’s Heritage Music Trail and The Wilderness Road: Virginia’s Heritage Migration Route 56

An abundant natural resource base in timber, metallurgical coal, limestone, and natural gas, and growing renewable energy development

A cost of living more than 20% lower than the national average

Breaks Canyon in Breaks Interstate Park on the Virginia-Kentucky border, one of the deepest gorges east of the Mississippi River, is billed as “the Grand Canyon of the South.”

Technology companies like SYKES Enterprises, Inc., in Wise County are drawn to Southwest Virginia by the region’s communications infrastructure

Southwest Virginia is home to four colleges and universities — the University of Virginia’s College at Wise (pictured), Bluefield College, Mountain Empire Community College, and Southwest Virginia Community College

U.S. Routes 23 and 58 intersect in the city of Norton.

We have developed a strong relationship with the community, and we are fortunate to have a well-educated workforce committed to excellence in quality, safety, productivity, and environmental compliance. SCOTT THOMPSON Chairman and CEO, Tempur Sealy International Manufacturers like Tadano Mantis in Tazewell County benefit from a workforce ecosystem developed in part by groups like the industry-driven Southwest Virginia Alliance for Manufacturing

Economic Development Partners in Virginia VEDP works in close partnership with local and regional economic development organizations. For a full list of local and regional partners, visit www.vedp.org/Regions In addition, VEDP regularly works with a wide network of statewide partners, including: State Leadership Partners

Project Delivery Partners

Governor

Center for Innovative Technology

General Assembly

Policy and Programmatic Partners GO Virginia

Virginia Department of Housing and Community Development

Major Employment and Investment (MEI) Commission

Colleges and universities across the Commonwealth (e.g., UVA, Virginia Tech, William & Mary)

Secretary of Commerce and Trade

CSX, Norfolk Southern, and short-line railroads

Virginia Department of Small Business and Supplier Diversity

Secretary of Finance

Dominion, AEP, and other electric utilities

Virginia Department of Taxation

The Port of Virginia

Virginia Department of Transportation

Virginia Community College System Virginia Department of Agriculture and Consumer Services

Virginia Department of Rail and Public Transit

State Council of Higher Education for Virginia

Virginia Chamber of Commerce, as well as many local and regional chambers of commerce

Virginia Agribusiness Council

Virginia Economic Developers Association

Virginia Association of Counties

Virginia Farm Bureau

Virginia Business Council Virginia Business Higher Education Council Virginia Cable Telecommunications Association, Virginia Manufacturers Association, Virginia Maritime Association, Virginia Realtors Association, and many other trade associations

Virginia Tobacco Region Revitalization Commission Virginia Tourism Corporation

Virginia Department of Environmental Quality

Virginia Municipal League Virginia Association of Planning District Commissions

220

Virginia Rural Center Virginia’s Technology Councils

220

Roanoke Region New River Valley

460

Southwest Virginia

220

221

I81-I77 Crossroads 77 58

460

Northern Shenandoah Valley

Washington, D.C.

66 81

Northern Virginia

211 33

Shenandoah Valley

250

Greater Fredericksburg

Central Virginia

301

95 81

Northern Neck

360

Eastern Shore

Middle Peninsula 13

Greater Richmond Lynchburg Region

60 288

360

295

Greater Williamsburg

460

Virginia’s Gateway Region

460

501

South Central 360 Virginia

Southern Virginia

460

Hampton Roads

168

501

Virginia’s Top Export Destinations IHS Markit, Global Trade Atlas