Virginia Economic Review: Second Quarter 2019

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LIDL LAUNCHES EXPANSION INTO U.S. Jay Timmons The National Association of Manufacturers John Reinhart The Port of Virginia




PERSPECTIVES FROM N ATION AL M ANUFACTURING EXECS: Advanced Materials | Aerospace | Autonomous Vehicles | Food & Beverage Nuclear Energy | Semiconductors | Shipbuilding | Transportation Equipment | Wood Products

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Contents 14 The Future of Manufacturing in America Perspectives from national manufacturing executives on how automation, big data,

04 Facts & Figures 06 Virginia Wins 10 T he State of Modern Manufacturing

the Internet of Things, human capital development, and speed to market requirements are changing their industry

34 The I-81 Corridor Regional overviews of the companies,

52 Manufacturing Throughout Virginia 58 B uilding the Capacity for Greatness at The Port of Virginia

people, and programs along Virginia’s thoroughfare of manufacturing excellence

46 Inside Virginia’s Record-Setting Micron Project

62 Southern Virginia Showcases Next-Level Manufacturing Talent Pipeline 66 Manufacturers in Virginia

A look at one of the largest manufacturing investments in Virginia history

68 A Skilled Workforce Supports Virginia’s Manufacturers 76 P BE Group Expands its International Presence 80 It’s Fast Forward for Workforce Credential Training in Virginia 82 Economic Development Partners in Virginia

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The Future of Manufacturing in the United States ... and in America’s Top State for Business The Commonwealth of Virginia is on a roll. Just a few months after Amazon selected Virginia for HQ2, CNBC named Virginia America’s Top State for Business. Equally encouraging, Virginia’s top overall ranking largely was based on CNBC’s determination that Virginia ranks No. 1 for Education, No. 1 for Workforce, and No. 3 for Business Friendliness in the United States. What do education, workforce, and business friendliness have in common? They are top factors emphasized by leading manufacturing executives as essential to retain and attract high-quality manufacturing operations. In this issue of Virginia Economic Review, we explore the future of manufacturing in the U.S. as envisioned by C-level executives at some of America’s leading manufacturers. While highlighting the importance of education, workforce development, and business climate, these executives also animatedly described accelerating changes afoot, including automation, increased capital/technology intensity, the Internet of Things (IoT), and additive manufacturing, as well as a growing need for tech-savvy workers (e.g., computer science grads).


We also feature two thought leaders helping to enhance manufacturing competitiveness in the U.S. Jay Timmons, president and CEO of the National Association of Manufacturers, has been praised for his work to strengthen America’s global leadership position in manufacturing. Recently named to the International Maritime Hall of Fame, John Reinhart is CEO and executive director of The Port of Virginia, which has become one of the world’s most advanced ports during his tenure. I have been amazed by the diverse array of leading manufacturers producing world-class products across Virginia. In this issue you will learn about some of these companies and the regions in which they are thriving. Best regards,

Stephen Moret President and CEO, Virginia Economic Development Partnership


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Facts Figures


Information Technology & Innovation Foundation, 2017

State with Most Value Added in Manufacturing

Site Selection Magazine Prosperity Cup, 2019

The Most Competitive State-level Economic Development Group in the U.S. 4


CNBC, 2019

America’s Top States For Business

Colliers International, 2019

Shenandoah Valley/I-81 Corridor One of the 10 Emerging U.S. Industrial Markets to Watch in 2019

Industry Week, 2017

One of the Top 10

Manufacturing Programs in the U.S.

Global Trade Magazine, 2019

One of the Top 6 Most Advanced Ports in the U.S.


Virginia Wins Merck & Co., Inc., a publicly held global health care company, plans to invest up to $1 billion in stages over the next three years to expand its manufacturing operation in Rockingham County. The company will add 120,000 square feet to its existing 1.1-million-square-foot operation in Elkton, Virginia, to increase production of its human papillomavirus (HPV) vaccines. The project will create approximately 100 new jobs. Merck has operated its Elkton manufacturing plant in Rockingham County for over 75 years and currently employs approximately 900 workers at the site. As part of the expansion, Blue Ridge Community College (BRCC) and James Madison University (JMU) will collaborate to address Merck’s short- and long-term workforce needs through the development of a custom workforce solution. BRCC and JMU will establish a pipeline of biotechnology engineering and computer science talent that will allow the Shenandoah Valley to accommodate the future growth of Merck and other life science industries and manufacturers in the region.

Our strong partnerships with local and state elected officials, educational institutions, and organizations throughout the Elkton community help us sustain our commitment to the area’s economic growth. SANAT CHATTOPADHYAY Executive Vice President and President, Merck Manufacturing Division, Merck & Co.


M.C. Dean, Inc., a leading electrical design-build and systems integration firm for mission-critical organizations, will invest $25.1 million and create 100 new jobs to incorporate a new product line at its fabrication and distribution facility in Caroline County. The expansion will double the company’s manufacturing capacity to support high-growth, mission-critical customers such as data centers, airports, and health care facilities. The site of the expansion was renamed the Caroline County Center for Innovation and Industry and adds more than 220 new acres of ready-to-develop land to support future expansion. “The Center for Innovation and Industry is a strategic investment to grow our modular production and manufacturing capabilities to meet customer demands for speed to market, improved quality, and more reliable pricing.” Bill Dean, CEO

Preferred Freezer Services, one of the largest public refrigerated warehousing companies in the world, will invest $60 million to construct a 200,000-square-foot cold storage warehouse in the City of Portsmouth. The new facility will be used to import, export, process, and distribute a variety of food products, positioning the company to meet the growing demand for cold storage space. “Our Chesapeake, Virginia, location arguably has the best team of people in our entire network, and we look forward to adding the same caliber of people at this waterfront location.” Brian Beattie, President

Microsoft Corporation will create 100 new jobs and inject significant capital investment to expand its enterprise data center in Mecklenburg County. The project is Microsoft’s sixth expansion at the facility since 2010 and will allow the company to further enhance its ability to serve customers in the U.S. and across the globe. “As demand for cloud and online services continues to grow, Microsoft is investing in Virginia as a strategic location to help us deliver for our customers.” Noelle Walsh, Corporate Vice President, Cloud Operations + Innovation



Selected Wins Central Virginia

Hampton Roads

Klöckner Pentaplast

Cloverleaf Cold Storage

Jobs: 34 new jobs CapEx: $25 MM Locality: Louisa County

Greater Fredericksburg M.C. Dean, Inc.

Jobs: 100 new jobs CapEx: $25.1 MM Locality: Caroline County

Greater Richmond Anord Mardix (USA)

Jobs: 51 new jobs CapEx: $907,500 Locality: Henrico County


Jobs: 20 new jobs CapEx: $1 MM Locality: City of Richmond

Greater Richmond/ Virginia’s Gateway Region G.D. USA, Inc

Jobs: 33 new jobs CapEx: $21 MM Locality: City of Chesapeake

Preferred Freezer Services

Jobs: 60 new jobs CapEx: $60 MM Locality: City of Portsmouth

Northern Shenandoah Valley

Shenandoah Valley

Career Builder

Jobs: 44 new jobs CapEx: $592,000 Locality: Rockbridge County

Jobs: 250 new jobs CapEx: $2.5 MM Locality: Frederick County

Northern Virginia Incentive Technology Group (iTG), LLC

Jobs: 128 new jobs CapEx: $5.1 MM Locality: Arlington County

I81-I77 Crossroads Clarke Precision Machine, Inc.

Jobs: 12 new jobs CapEx: $750,000 Locality: Wythe County

Zantech IT Services, Inc. Jobs: 120 new jobs CapEx: $317,853 Locality: Fairfax County

Dynovis, Inc.

Flow Alkaline Spring Water

Jobs: 51 new jobs CapEx: $15.5 MM Locality: Augusta County

Merck & Co., Inc.

Jobs: 100 new jobs CapEx: $1 B Locality: Rockingham County

South Central Virginia Microsoft Corporation

Jobs: 100 new jobs Locality: Mecklenburg County

Southwest Virginia Polycap LLC

Jobs: 48 new jobs CapEx: $7.7 MM Locality: Russell County

Speyside Bourbon Stave Mill in Virginia, Inc. Jobs: 45 new jobs CapEx: $114,000 Locality: Bath County

Roanoke Region

Scholle IPN Packaging, Inc.

Jobs: 42 new jobs CapEx: $10.29 MM Locality: Smyth County

Pratt Industries, Inc.

Jobs: 50 new jobs CapEx: $20 MM Locality: Botetourt County

Smyth County Machine, LLC

Jobs: 35 new jobs CapEx: $2.1 MM Locality: Smyth County

Jobs: 26 new jobs CapEx: $5.7 MM Locality: Chesterfield County

The Results Companies

Jobs: 600 new jobs CapEx: $1.5 MM Locality: Chesterfield County

Roanoke Region New River Valley

Southwest Virginia I81-I77 Crossroads



Northern Shenandoah Valley

Washington, D.C.

Northern Virginia Shenandoah Valley Central Virginia

Greater Fredericksburg

Greater Richmond

Northern Neck

Middle Peninsula

Lynchburg Region

Eastern Shore South Central Virginia

Southern Virginia

Virginia’s Gateway Region Hampton Roads

Greater Williamsburg

The State of Modern Manufacturing A Conversation with Jay Timmons Jay Timmons is president and CEO of the National Association of Manufacturers (NAM) and chairman of the board of the NAM’s Manufacturing Institute. The NAM is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector.

Stephen Moret: Tell me about the NAM. What drew you to the organization and what’s kept you here? Jay Timmons: Being able to advocate on behalf of not just manufacturers, but really on behalf of what makes America exceptional. We talk a lot about the pillars of an exceptional America. Those are free enterprise and competitiveness, individual liberty, and equal opportunity. Manufacturers embody all of those pillars. We have such a rich history in the development of this nation, of building the economy, and also of lifting people up all across this country. It’s a wonderful industry to be associated with. Moret: You were chief of staff for Governor Allen, who was responsible for creation of the Virginia Economic Development Partnership. How well has that played out?



Timmons: I work with all 50 states, so I can’t show favorites. But I do think the other 49 understand that I have some allegiance to Virginia because I was involved in it for so many years. I think the best thing that Virginia has going for it is the quality of the people. The drive and spirit of the people of Virginia is truly unrivaled. And every community in every part of the state has its own identity, its own culture, and every single one of them are attractive places to be. Moret: It’s a special place for sure. Timmons: It is, there’s no question. Moret: Looking at manufacturing in the U.S., it’s one of the dominant drivers of our economy. One of the things I think that the NAM has helped to do is tell the story that it’s not just about all the great direct manufacturing jobs. When you consider the impact on so many other industries across the economy, manufacturing really is responsible for roughly a third of the entire U.S. economy. At the same time, a lot of people don’t realize how important manufacturing is to the economy, to our competitiveness, to our growth as a country, and opportunity in the country. What do you think we can do to better get the word out about the importance of manufacturing to the U.S.? Timmons: I think it’s really important to look at data. When you’re looking at manufacturing, you realize it’s not just one of the most important factors in driving the economy. It’s really the most important factor of any economy, of any country in the world. In the United States, for every dollar that’s invested in manufacturing, $1.81 of spin-off economic activity occurs. That is the highest multiplier effect of any sector of the economy in the United States. For every job that’s created in manufacturing, another four to five jobs are created in other sectors. The tangential effects of manufacturing investment and job creation are enormous. But I think your real question here, and it’s a question I hear all the time, is why don’t people take manufacturing more seriously? I’ve heard so many people say, “Oh, manufacturing is dying, you don’t want to go there. You want to go into technology.” Guess what? Technology is manufacturing, manufacturing is technology. They’re fused together.

a state, or a nation, and you want to think about traditional types of powering our energy needs versus the future of how we’re going to power energy needs, that’s all manufacturing. Manufacturing today is really all about the future. When we tell that story to young people, they get pretty excited about the possibilities. One of my jobs here is to help recruit more young people into manufacturing, because we have almost a half a million jobs today that are open because we don’t have folks with the right skills. And that number is going to grow to 2.4 million in the next 10 years. Moret: We can’t have a conversation about manufacturing without talking about the skills gap. I’m curious about your thoughts on that, and what you think we could do better, both in states and localities, to better align what our educational institutions are doing with the needs of the workplace. Timmons: We have a huge misalignment in terms of our educational products and the needs of manufacturers. In that regard, I will say that community colleges and technical schools are very adept at moving their curriculum forward and working with local employers to discuss what the needs are. We don’t adapt as well or as quickly, perhaps, in primary and secondary education. I think our four-year institutions have a hard time making course corrections as quickly as perhaps we need them in the economy. That’s not to say they’re not willing. I have a tremendous affinity for our system of higher education in Virginia. Frankly, I think it’s probably the best in the country. Again, a little bit of a bias there, and I’m very proud of our primary and secondary education systems. Moret: It really is remarkable, what’s happening in Virginia in education. One of the things that impressed me shortly after I started was learning that Virginia’s goal is to be the most educated state in the country, and that the way we’re going to measure that goal is not just by what percentage of our population has a bachelor’s degree or higher, but also what percentage has some kind of post-secondary work-relevant credential or higher, including certificates, associate degrees, and a whole range of technical programs. Timmons: I think that’s exactly the right way to approach it.

I think the story of modern manufacturing is not told particularly well. People think of your grandfather’s manufacturing. Manufacturing today is very modern, it’s very sleek. You think in terms of new inventions, new creations. Think in terms of pharmaceuticals, think in terms of better health care and medical devices. That’s all manufacturing.

Certainly, some jobs in the economy and even some jobs in manufacturing need that four-year or advanced degree. But there are a tremendous number of jobs that you might need a few years of technical training or community college for, or for which a high school degree may be enough. And we’re talking about average salaries of over $80,000. Depending on whether you go to college or not, you may not even have any college debt with that.

Think about the transportation of the future. That’s all manufacturing. If you want to talk about powering a city, or

Manufacturing jobs are not only very attractive for the money, but they’re also attractive because of the innovation and the things


that you get to do in those jobs. You’re helping to create the future. They’re exciting and they can be the career of a lifetime. Moret: When we talk about globalization and where manufacturers choose to make things, we often think of China or the lower cost countries as taking U.S. jobs because of cost. And that’s certainly been part of what’s happened. But the other part that’s been really interesting is that over time, some of these shifts are less about low cost, but about the sheer availability of that technical workforce being greater in some other places. It’s something we’re trying to put more attention on in Virginia. And I think in general, the country, we could argue, needs to have a balanced focus in terms of post-secondary education. Often, people think everybody needs to go to college, everybody needs a bachelor’s degree, right? But real workforce needs are a little bit more balanced with more sub-baccalaureate and bachelor’s together. Timmons: I would agree with that. I think on your China point, and the point of investment outside the United States, a lot of that over the course of the last 20 years has been a result of an imbalance in tax and regulatory policy. Over the last 18 months, manufacturers have argued successfully for a more competitive tax policy, one where we were not below average, or even just average. We’re above average now. We argued for regulatory certainty. We’ve been given both of those things by this administration. Now, in my mind, manufacturers have an obligation. We made promises that if we got those things, we were going to invest in the United States, we were going to hire more American workers, we were going to raise wages and benefits. We’ve done all of those things. We would make sure that the air was cleaner, the water was cleaner, the environment was healthier. That’s on us. And we’re delivering and I’m really proud of manufacturers for doing that. Over the course of the last two years, we’ve had the best job


creation in manufacturing that we’ve seen in a long time. You compare that to 2016, where there was actually a decrease in manufacturing jobs. The last two years, we’ve created almost half a million jobs in manufacturing. Now, as we talked about earlier, we can’t fill all of those because we don’t have necessarily the folks with the right skills; we can’t find them. But it’s obviously a lot of great opportunity for manufacturers, and I think for Americans, because of the right policies. Moret: As you talk to companies, are there particular occupations that come up frequently or types of skill sets that are concerns? Timmons: I’ve tried to drill down on that, no pun intended, to find out exactly what it is folks are looking for. And what we get back oftentimes is it’s a whole range. You definitely will find a need for technicians; electrical, industrial maintenance and, certainly, welders and machinists. I don’t think the fact should be lost that manufacturing includes a lot of other jobs which might not be in folks’ minds considered traditional manufacturing jobs. You think of HR and marketing and accounting. We struggle to find folks for those jobs, too. Those technical jobs seem to be the toughest because we have misalignment right now in our educational needs and system. Moret: Certainly, when I’ve talked to the manufacturers, overwhelmingly it’s skilled positions that seem to be the dominant thing folks struggle with. Timmons: No question about that. Just to be very blunt about it, manufacturers have a responsibility, too. It’s one thing to say we need more CNC machinists, but we need to help some of these community college or technical schools actually purchase some machinery to be able to have the students learn on the job, or perhaps bring them in as apprentices to our operations so they can learn and earn at the same time and get college credit for what they’re doing at work.


Moret: Considering the policy reforms that have been helpful that have been made recently, is the skills gap kind of the top of the list at this point? Timmons: It is definitely at the top of the list. I would probably put concerns about trade as number two. If you think in terms of North America, it’s vital for manufacturers that the USMCA gets ratified, and ratified soon. Uncertainty of any type is a concern for any business. For manufacturers who have to make investment decisions months, even years, in advance, it can be detrimental. And it can hold back a lot of investment and job creation. We don’t want to see that happen. If you look at China — we talked a little bit about China and a lot of investment that occurred there. China’s big problem is, they steal. They steal our intellectual property, they force localization. I mean, they cheat. It’s not the way we do business. It’s not the way a market economy does business. I should add infrastructure is huge as well. We have called for a significant investment in infrastructure. We put out a proposal called Building to Win almost three years ago. It calls for over a trillion dollars of spending and it does what a lot of other proposals don’t do. It provides a lot of options as far as user fees that should be considered to actually pay for the needs we have. And you well know that a trillion dollars is only about half of the need out there. We’ve got a lot of needs in this country. And we’re way far behind our competitors. Moret: Let’s shift gears just a little bit. As you think about economic competitiveness for manufacturing at the level of states, what are some of the things you see that state leaders should be doing to not only support their existing manufacturing base, but to be competitive for future manufacturing investment? Timmons: Well, tax laws are always very important. The tax code of any state to the extent that localities are involved, that’s extraordinarily important. The regulatory environment is important as well. Certainty is critical. Making sure that those who invest in the state understand what the rules of the road are in the state. There’s nothing more disruptive to investment and job creation than having a sense of uncertainty. I think that can be done and should be done on a bipartisan basis. I would throw in something else I know is controversial, but I think it’s absolutely vital to who we are as a country. I would like to see states speaking up about the importance of the immigrant community on their success as a state, their communities, and their workforce. If we have 500,000 jobs open in manufacturing, we have 7 million jobs open economy-wide. We have more jobs open

today than we have Americans looking for jobs. That to me is an economic imperative. I think that manufacturers, in particular, have a special role in leading a discussion on immigration reform. We put out a proposal called A Way Forward, and it takes on the economic imperative, the national security imperative, the humanitarian imperative. And we think it’s a workable program. Immigration is important, not just for filling some of that workforce need we have, but really diversity and inclusion overall. Our manufacturers have found that the more diverse the workplace, the more productive we are and the more successful we are. Moret: One thing we haven’t talked about yet is energy. What are some of the big issues right now from an energy perspective relative to manufacturing? Timmons: Manufacturers use one-third of the nation’s energy output. Think about that; that’s a tremendous amount of energy we consume. So the cost of energy does matter if we’re going to be competitive as a country. The greater the mix of energy, the better our ability to contain the cost of energy. We need to focus on expanding all types of energy production so we’re the most competitive we can be as a country. Moret: In economic development, we often hear the term “advanced manufacturing” thrown around. But everybody seems to mean different things. I’m curious, if I say advanced manufacturing, is there a way to describe that, or is it more of a loose term? Timmons: The way I would describe it is, if you survived the recession, you’re advanced manufacturing by definition. And I really, truly mean that, because you were forced to be as competitive as you possibly could be. Moret: I realize there’s no way to pull out the crystal ball, but what are the big trends you see happening over the next five to 10 years in manufacturing? Timmons: If you asked me that five years ago, I couldn’t have predicted what we’re seeing today. I think the trends you’re going to see are more digitization, for sure. You’re going to see the importance of data more than ever. Robotics are going to become more and more important to the production process. But from a trend perspective, you’re going to need higher and higher skills for manufacturing workers. It’s why we pay more than any other sector of the economy on average, and it’s why we have this workforce skills gap and need for training of our workers. For the full interview, visit



THE FUTURE OF MANUFACTURING IN AMERICA What many call the fourth industrial revolution or Industry 4.0 is upon us. Disruptive technologies are changing the way modern manufacturers improve their processes, interact with their customers, and develop their workforce. Executives from major manufacturers offer their perspectives on how these trends will impact the future of manufacturing in Virginia and beyond.


For more than a century, HII’s Newport News and Ingalls shipbuilding divisions in Virginia and Mississippi have built more ships in more ship classes than any other U.S. naval shipbuilder. HII’s Technical Solutions division provides a wide range of professional services through its Fleet Support, Mission Driven Innovative Solutions, Nuclear & Environmental, and Oil & Gas groups. Headquartered in Newport News, HII employs more than 41,000 people operating both domestically and internationally. The company reported sales of $8.17 billion in 2018 and is ranked No. 371 on the 2019 Fortune 500 list. Mike Petters is president and CEO of Huntington Ingalls Industries, America’s largest military shipbuilding company and a provider of professional services to partners in government and industry. 16


Virginia Economic Review: What do you see as trends in your industry sector from a manufacturing perspective in the U.S. over the next five to 10 years? How are things changing? Mike Petters: The way I think about the business is three dimensions internally. There’s capital investment, there’s technology application, and there’s human capital. Those are the levers we have to work and pull, and I, frankly, believe there’s change afoot in all three, probably at a faster pace than we’ve seen in our careers to this point. Manufacturers that are going to be successful have to stay in front of that change. Capital investment is not around building a new version of what you used to do. It’s actually going to be investing in facilities and processes that give you better output than you had before — and maybe do it in a different way. Technology’s going to be part and parcel to that, where you’ll see more automation and automatic manufacturing. One of the big things that’s changing is additive manufacturing. You’re going to see the application of data analytics and artificial intelligence to the manufacturing process. You’re going to need to be able to stay on top of that, which brings you to human capital. Human capital is really interesting because I think it falls into two discussions. There’s a high-level, post-secondary, maybe even post-college, discussion about STEM and skill applications where companies have very high-end jobs available, and they don’t have qualified people to fill them. And another part is, frankly, that the majority of what we’re going to need are folks working on the piers. They’re going to be down on the docks, actually assembling our products. The skill set for a welder today is very different from the skill set for a welder just 10 years ago, much less 30, 40 years ago. The tools we’re providing them are very different than they were 10, 15 years ago. I’ll tell you, having been here in manufacturing in Virginia for 30 years, Virginia really does have a good understanding of this dichotomy. VER: Getting back to capital investment, are there particular kinds of shifts you’re seeing? Petters: Imagine a factory that’s 100% robots. How would you support that factory? Well, you’re going to need some planners and probably some engineers and maintenance people to take care of the robots. You’re going to need people who do different things than you had before. If you talk about a horizon of five to 10 years, certainly in my business we’re not going to be anywhere close to 100% robots. But we’re going to have more and more automation. Automated welding, automation in terms of pipe fabrication and machine shop digitization. We’re moving toward additive manufacturing in terms of foundry items, castings, and

things like that. We’re moving in a direction that’s changing what our workforce will be asked to do. And what we’re finding as we’re making that change are a couple of really interesting things that I don’t think we expected. A remarkable thing for us is to see folks who’ve done things a certain way, or who have built a career around the way that we’ve done things, take on this whole new approach to what their job is and love it. We’re now able to do that with some agility because of the new tools we have. We’re able to reset some of those conditions that actually empower our workforce to bring in better ideas. VER: What do you think states and regions could do to better position themselves to retain the manufacturers they already have and attract manufacturing investment in the future? Petters: First of all, I would try to separate what are federal things and what are state things to be done. At the federal level are discussions around tariffs and trade policy and those kinds of things. States may be able to weigh in on and suggest to help influence, but states probably aren’t going to get a lot of bang for their buck to get too involved. On the other hand, I think states can be deeply involved in education. Frankly, that pipeline starts when kids are 3 or 4 years old. At Huntington Ingalls, we provide scholarships to our employees so they can put their preschoolers and early childhood folks into schools, because 90% of your brain is developed by the time you’re 5, and we need to have in this next workforce generation people who love to learn. If you’re trying to teach a 15-year-old, or help a 15-year-old discover their love of learning, it may be too late. And even if it’s not too late, it will be expensive. VER: What do you think makes Virginia a compelling place for manufacturing? Petters: Gosh, where do I start? I think it does start with human capital. Virginia has a very coherent structure for workforce development from public school education, community colleges, and the four-year institutions. The whole system is nationally recognized as being top-tier. I think that’s where it starts. We have an education system that can provide that workforce. Secondly, I think there’s a pretty good track record of partnering with companies to attract them to Virginia. There’s a pretty good track record, at least with my business, of Virginia supporting our business.



Lynchburg is Framatome’s North American headquarters and home to Framatome’s Operational Center of Excellence for Nuclear Products & Services in North America. The fuel, installed base, I&C, and engineering and technology business units, as well as most corporate functions, operate out of three Lynchburg-based sites.

Gary Mignogna is president and CEO of Framatome Inc. Over his 40-year nuclear energy career, he has gained experience in engineering design and analysis, project engineering and management, product development and management, field services, tooling and process design, business development and management, and executive leadership.



Virginia Economic Review: When you think of manufacturing in the nuclear power industry in the U.S. over the next five to 10 years, what do you see as the major trends? How are things changing in your industry and manufacturing in the United States? Gary Mignogna: The nuclear market is a difficult one these days, but we’re holding our own. I don’t think anybody is going to be building what’s considered generation three or larger reactors anytime soon in the U.S. But we think there’s a strong case for smaller reactors. With the new smaller reactor designs that will be rolling out, probably the first ones starting construction in the 2022 time frame, I think it’s more feasible for manufacturers in the U.S. to produce the components associated with them because they’ll be smaller. Right now, the U.S. has really lost its infrastructure for the large reactor components. There haven’t been any built in the U.S. for a very long time. VER: Do you see smaller components where there’s still a good bit of activity? Possibly in replacement parts, things like that? Mignogna: Yes, replacement parts for sure. Flowserve is still making valve actuators. They’re located in Lynchburg, Virginia. We stock their parts and resell them to customers. A lot of times, they’ll be for safety-related applications. VER: What do you think states and regions could do to better position themselves to retain their existing manufacturing investment, as well as attract new investment in the future? Mignogna: The big thing is international competition. These days, investments require, really necessitate, an international view. I know particularly in our area, you’re not going to justify

investments based just on the U.S. market. You’ve got to justify investments based on the international market. VER: What do you think about the workforce of the future? Are there things states should be doing that they’re not doing now? Mignogna: In the past, everybody wanted to push young people into four-year college programs. Not every young person was really suited for that. They spent a lot of money and really extracted little value out of the experience. Once you remove that expectation that everybody has to go to a four-year college, you’re going to see a lot more people go into the trades. Trades are well-paying. You don’t need a four-year degree to have a good-paying job. VER: From your perspective, what do you think makes Virginia an attractive place for manufacturers? Mignogna: We have a fantastic environment here in Virginia to really create a good manufacturing workforce. We have an excellent college system, an excellent community college system. We have organizations like Beacon of Hope (BOH) here in Lynchburg that are counseling kids and encouraging them to go into some type of post-secondary education. If a four-year college is not for them, then go for a post-secondary education leading into the trades. We have all the right ingredients to make it happen. BOH gives them the resources to help them be successful and thus build the future workforce. We use a lot of what I would say are light manufacturers and machine shops to build parts for us. We take them, we integrate, assemble, test, and deploy. There’s really a very solid infrastructure of that in Virginia. Most heavy manufacturers need that kind of local capability to support them. So, we have a future workforce being developed and we have the infrastructure support necessary to attract larger manufacturers. 19


DuPont has operated its Spruance plant in Chesterfield County since 1929. For over six decades, Spruance has been a key site in the development of new fibers and resins, continuing to adapt to DuPont’s changing needs. Materials produced at the site include DuPont™ Tyvek®, Nomex®, Kevlar®, and Zytel®. Daryl Roberts is senior vice president and chief Operations & Engineering officer at DuPont. In this role, Roberts oversees global operations, including engineering, operational excellence and environment, and health and safety. Virginia Economic Review: When you look at your industry, what do you see as significant manufacturing trends over the next five to 10 years in the U.S., and how are things changing? Daryl Roberts: I would say we’re finding that as manufacturing has become more decentralized, sites have become smaller. I think if you go back 10 or 20 years, you would find larger manufacturing sites that were run by one company. Companies are now nimble. Being quick to market and being focused is much more important than being large. I think you’re finding a lot of companies that are focused on what their core technologies and businesses are, whereas you may have found 10 or 20 years ago that companies acquired in multiple segments. They ran units that may not have been part of their core businesses.



I would also say people are going where there’s low-cost energy, and that’s clearly helped the U.S. over the course of the last five to 10 years. That’s still the case as we look forward, but I’ll say people are trying to identify locations, and even spending money to move to locations, where they think they’ll have a long-term variable cost advantage normally driven by the cost of energy. VER: Are we still seeing a good bit of automation happening? Roberts: Without any question. I think that’s going to be one of the drivers of what we call the move toward Industry 4.0, which is, how do we take the digital footprint we’ve seen in other industries and drive it into the industrial arena? VER: Are there other things we might want to touch on as we think about the future of manufacturing related to Industry 4.0? Roberts: I think a couple of things are key. One, Wi-Fi clearly is commonplace in the U.S. right now. Not so much in the industrial space, but as we have smarter instruments in the field, in the use of what we call “big data” in analytics, I think those things are coming into the industrial space. So, for a lot of sites, first, you’ve got to have the basic infrastructure, which means, “How do I do Wi-Fi?” And in this age, “How do I do it safely so my infrastructure stays secure?” And then, how do we analyze it with the same big data-type technology we see being used for customer-focused data and take that to drive increased productivity at the site? VER: And when you say Wi-Fi enabled equipment, to some extent, you’re talking about the “Internet of Things”, right? Roberts: I would call that the “Internet of Things.” The things you’re seeing commercials about doing in your house with your thermostat and your refrigerator. You can do the same thing to understand when a pump may be going bad. You might have a tablet in the field that a maintenance mechanic is using. In the past, if he found something was broken, he may have had to travel to a storeroom to see what spare parts he had. Now that iPad can connect to that piece of equipment and tell that mechanic how it’s working and maybe what needs maintenance. He can press another button and see what type of spare parts he has in his storeroom without ever having to leave the work site. So, when you can do those types of things, turnarounds become quicker, maintenance becomes more effective, and productivity goes up. VER: What do you think states and regions interested in supporting current manufacturers, as well as attracting future manufacturing investments, can do?

Roberts: I’d say there are two or three things. One, energy drives so much of the chemical and material space, where we play in the specialty material space. But making sure that the grid is stable and reliable, that you’re efficiently incorporating renewable sources of energy, and especially that you’re competitive with your neighboring environment and neighboring states to be able to attract industry coming in. Second, I would say, is access to talent. For me, that means a number of things. It means having an infrastructure where, from early elementary on, we’re developing people who use technology. So, focus on STEM education at the high school level. Access to operators, maintenance mechanics, and other technicians who have been through some type of trade schooling is really critical. Access to a skilled workforce is one of the barriers to growth that I think we’re all seeing across the country. Also, if you think about those new graduates coming out today, having environments that people, quite frankly, want to live in. We want employees who want to come to a site and stay. For that reason, they need to be in a community where they feel like it’s advantageous for the type of living they desire. VER: When we talk to manufacturers, they talk about the skills gap, and the types of occupations they most struggle to fill are skilled trades. Is that your perspective? Roberts: My perspective is a little different. The other area is having the right level of skills for incoming operators to the system. Most of the control rooms we have now are very intricate and highly detailed. We’re finding it takes us a long time to train new operators. It’s just as important for operators to come in with some exposure to technology as it is for our maintenance and skilled people. VER: What makes Virginia a good location for DuPont? Roberts: We’re coming up on 90 years at that site in Chesterfield. It’s one of our largest sites in the world. We have some of our existing, most critical, businesses and storied brands operating out of that site, like Tyvek, Nomex, and Kevlar. We’ve always found that site to be one where we’ve been able to be part of the community. We’ve had workers there who really have focused on their own development in representing the company, even outside the plant. The Richmond environment has been one with a history in manufacturing, and we’ve been able to attract and keep really good long-term talent, which has been the key to our success at that site.



Micron produces memory and storage solutions used in automotive, industrial, and networking markets. Recently, the company announced a $3-billion investment in Manassas that will add 1,100 new jobs by 2030. Manish Bhatia is executive vice president of global operations at Micron Technology. He’s responsible for driving the vision and direction for end-to-end operations. Mr. Bhatia joined Micron in 2017.

Virginia Economic Review: What do you see as manufacturing-related trends in your industry, in the United States, over the next five to 10 years? How are things changing? Manish Bhatia: In our industry what we see is smart manufacturing becoming even more pronounced. The biggest trend for us in the semiconductor industry is how do we take advantage of the Internet of Things — sensors we can put on our equipment, data we gather from the product as it’s moving through the manufacturing process.



VER: When you say “smart manufacturing,” what do you mean? Bhatia: It means trying to understand what the manufacturing process is telling us. What are our tools telling us as the product moves through the line, what is the variability that we see telling us about the core process itself ? The smart part is really about learning from the signals and data that the process is giving us, the tools are giving us, or the product as it moves through the line is giving us, and then being able to feed that back to improve productivity and quality. VER: Is that something you see mainly or largely in the semiconductor industry, or is this happening across manufacturing in the U.S.? Bhatia: It’s absolutely happening beyond just manufacturing industries. It’s happening across mining industries. It’s happening across transportation industries. And it’s most valuable in areas where there’s, number one, a lot of data generated in the process. Whenever you have lots and lots of capital investment, and then you have the ability to get data from the tools, optimizing that capital investment becomes incredibly valuable. I see this smart manufacturing and Internet of Things trend across many different industrial verticals. It has probably had the most profound impact on manufacturing since the impact of robotics maybe 20-plus years ago. Everybody thinks about the impact that robotics had on labor content. But robotics really created more precision capability to improve the quality of production across almost every industry. I see the smart manufacturing and the Internet of Things deployment having a very similar impact on, first, being able to improve the quality of everything we do. Second, being able to improve productivity, but then eventually actually enabling us to develop and invent new process technologies that continue to enable more product functionality. With these new smart manufacturing techniques, we can deploy even more complex semiconductor architectures and technologies and make products out of them. And that’s just going to benefit consumers, businesses, all the way down, all over the downstream markets. VER: What do you think Virginia and other states and regions can do to better position themselves to retain and attract manufacturing investment in the future?

confidence that the policies we come to rely on are going to be there for us as we make 10-, 15-, 20-year investments. It starts with that partnership and us having the confidence to be able to invest for the long term, knowing that things aren’t going to swing back and forth administration to administration, or that there’s not going to be conflicts between the local and state levels when it comes to policy or support. That’s definitely the starting point. And then, as we think about some of the technologies we need to deploy, whether it’s in our core manufacturing technology or these enhanced smart techniques, what’s really important is that we have a highly skilled, highly educated workforce to tap into. That starts, to a large degree, with investment at the university level in both research and development on manufacturing process technology or material science technology or electrical engineering and signaling technology. All of those areas are critical to invest in. And then as you go down a level, making sure there are investments in vocational training to have really top-notch technician-level talent as well so we can operate these factories, whether it’s the facilities we run or the equipment itself. Third would be that we are able to see a really good ecosystem of attracting other companies into the area who could become our customers. In our case of technology, having multiple technology companies clustered into one area just helps to stamp the area as attracting similar talent into that region. It gives us access to tap into that talent. VER: As you think about those various points, how well do you think Virginia is currently positioned for additional manufacturing investment going forward? Bhatia: I think we’re very, very happy with the support we’ve received in Virginia, and definitely very well-positioned. The great thing is that Virginia’s got elements of both a tech cluster in software and hardware that’s very attractive to some industries, as well as long-term roots in several different types of industries which have grown up there over the last few decades. The blend of those two together makes it more attractive for people to want to work and live in Virginia. I think Virginia has actually done a really, really nice job of being thoughtful about which industries it wants to have and how to leverage its heritage for future growth.

Bhatia: There are a number of things. I think the Commonwealth has done a great job in many of them, really in all of them. Number one is creating a healthy, business-friendly environment, and there are a number of different elements to that. But certainly, having a group like VEDP and good support at local levels as well as the Commonwealth level. It gives us



With headquarters in Manassas, Aurora Flight Sciences is a leader in the development and manufacturing of advanced unmanned systems and aerospace vehicles. During the last decade, Aurora has collaborated with Boeing on the rapid prototyping of innovative aircraft and structural assemblies for military and commercial applications. John S. Langford, III, Ph.D., is president and CEO of Aurora Flight Sciences Corporation, a subsidiary of Boeing. He’s a member of the National Academy of Engineering and serves as president of the American Institute of Aeronautics and Astronautics (AIAA).


Virginia Economic Review: As you look at what’s going on in manufacturing in your sector, what trends do you see in the U.S. over the next five to 10 years? How do you see things changing in that time? John Langford: One of the avenues we see opening up, and it’s one of the reasons that Boeing and Aurora made such a good combination, is that urban mobility really starts to drive you into a space which overlaps where other transportation companies like automotive companies fall. If these vehicles play out, if the technology plays out, and the economic business models play out, then you’re going to be talking not about hundreds or thousands, but literally tens of thousands of these vehicles. That will be a very different scale of aviation manufacturing. Nobody in aerospace has built human-carrying vehicles at those rates since World War II. The entire U.S. general aviation industry builds 1,000 or 2,000 airplanes a year. You’re really talking about a space that nobody’s been in before.


VER: How soon do you think we’ll have a sense of how big this could become? Is it the next three years?

VER: What are the types of occupations or the types of skills that you have the most trouble keeping filled?

Langford: Well, it’s moving pretty fast. Boeing has made a big commitment to this. They set up a new division called Boeing NeXt to focus on it. Aurora is building NeXt’s Passenger Air Vehicles.

Langford: Anything related to robotics, perception, sensors, electromechanical actuators, software programming, machine language, machine learning, artificial intelligence. AI is the buzzword, but all the disciplines that go into that.

VER: What do you think states and regions could do to better position themselves to retain and attract manufacturing investment in the future, both to support their existing companies and attract new investments? Langford: The number one thing is clearly education. An educated workforce in the areas we’re talking about is by far the most important thing. This is not a competition for low labor cost. This is competition for people who are well-educated and highly skilled. VER: From your perspective, what do you think makes Virginia an attractive place for manufacturers like yours in aerospace? Langford: I would say again it’s education. Virginia has a good education system, investment in K-12, the university systems. The workforce is the number one thing. It’s a very good, livable climate in the sense that it has everything from the ocean to the mountains, and so there’s a lot of choice in that. It has certainly been good for Aurora because of a supportive business environment. A business-friendly environment is key to any of this. The city of Manassas has been exceptional. It has been a partnership of almost three decades. They took a chance on us when we were a very small startup, and they have been supportive all the way through in terms of facilities. They helped us find financing for putting up facilities, especially in the early days. VER: We hear a lot about the skills gap in the U.S. Can you talk about what you think is driving that gap, and what states and communities could do to close it?

VER: What do you think we could do to get the word out about the economic importance of manufacturing to ensure that we really maintain and enhance our competitiveness for manufacturing projects, not just in Virginia but across the country? Langford: People don’t have a good sense of what manufacturing means anymore. The other thing is people don’t realize how much manufacturing there still is in the U.S. It has really changed over the last couple of decades. The employment numbers have come down somewhat, not as much as I think people imagine they have, but somewhat. The solution to manufacturing in the United States is training to have a high-skill workforce and keep all the high-value stuff in the country, and automating the low-skill stuff. Pretty much every industry has a pretty high-tech end of it, whether it’s pharmaceuticals, printing, making cars, or any of that. That’s why the whole education thing is important. Starting very early and raising awareness of what it really means to have a modern manufacturing economy. VER: Do you see a future for personal vehicles where the pointto-point costs could be comparable to commercial travel? Langford: Yeah, definitely. They won’t make it if it can’t get to that point. We certainly believe that that’s where this autonomy comes in because this stuff has to be extremely safe, and it has to be highly automated in order for all of this to work.

Langford: That’s the question everybody wishes they had the answer to. Obviously, it’s hard to come up with programs that really work, but it’s not just at the top-tier university levels. A lot of it goes right through the vocational network and the community colleges, and then laying the foundation in K-12 that can get kids into those tracks. One of the things we’ve paid a lot of attention to as an industry is looking at apprenticeships, how the Europeans use a skill-based apprenticeship system, and how transferrable that might be to the U.S.



WestRock is one of the world’s largest paper and packaging companies, with multiple locations in Virginia, including corporate offices in Richmond and manufacturing facilities in West Point and Covington. In September, the company announced a nearly $250-million investment in its manufacturing operations in the City of Covington and Alleghany County. These investments will be used to purchase new equipment to improve productivity at the paper mill and extruding facility, as well as to increase employee training. Peter Durette is executive vice president of container and chief strategy officer at WestRock Company. 26


Virginia Economic Review: When you think about your industry specifically, what trends do you see now and think will develop over the next few years in the U.S.? How are things changing? Pete Durette: WestRock is a packaging company, so we’re pretty focused within our upstream business on making substrate that goes into packaging. As you know, we have a number of paper mills in Virginia. But we also have roughly 30 total paper mills around the country and world, and then we have hundreds of converting locations. So, technology is impacting different parts of our manufacturing ecosystem in a different way. Digital transformation is an underlying theme we’re seeing. Our equipment produces billions of data points every day. So how we tap into all that data is a big part of what we’re doing to improve the way we manufacture, the reliability of our equipment, and the quality of our products. We’re also seeing a need to continue automating more things within our factories. It’s very hard for us to find labor, skilled labor in particular. We need to automate some of those roles, particularly the ones that aren’t value-added, through robotics, conveyor systems, and automated shipping systems. Otherwise, we have trouble filling those roles in a consistent way. We’re also seeing a move toward more late-stage product customization and more mass customization. Some of that is actually doing a package for each individual item, so an item can get a box built expressly for it every time, including right-sized, right protection, and even late-stage printing on it. VER: With those trends in mind, what do you think are the things states and regions could do to better position themselves to attract new manufacturing investments in the future? Durette: I always start with the basics. Particularly in our space, where we operate in a highly competitive and global marketplace, we need to operate in parts of the world that enable us to be as competitive as any other place. That means having access to really high-quality workers, folks who can do the job we need done, and also a thoughtful regulatory environment. One of the great things about Virginia is that its mid-Atlantic location allows you to reach, from a shipping perspective, a big chunk of the United States in a day, as well as get to the port for export purposes. We export a lot of products, so having the right infrastructure from a transportation perspective; rail, road, and the port, is really important for companies like us that need to get their products to market.

Durette: The location is good. Because we have a lot of paper mills, having access to fiber is important. We’re in a great place in the state now. There have been a lot of thoughtful ways of encouraging us economically, and there’s a lot more fiber in the ground today than there was even 20 years ago. That’s been good for the environment in terms of how much CO2 it absorbs, but also for us because it’s a sustainable, renewable source of raw material for our facility. You need the right skills in workers, you need reliable infrastructure, low-cost freight, and access to ports. You need a smart regulatory and tax environment. If you have those things, that’s the good foundation for business, in my view. Virginia benefits as an attractive place where people want to live. That matters, particularly for this next generation of workers. They want work-life balance. VER: We hear a lot about the skills gap in the U.S., and it’s particularly acute in manufacturing. What do you think is driving that gap, and what could be done to close it? Durette: I think we’ve got an education system that tends to put, from a higher education perspective, most people through the four-year university system, often producing lots of grads who aren’t necessarily focused on the technical skills and capabilities we need. So we need a high school education system that isn’t geared to, “If you don’t go to four-year college, you’re lost,” but offers technical things you can learn at school, and then good community colleges that can skill folks up with the right capabilities to fit the jobs they want. And also, just letting people know that those are good jobs. I look at a country like Germany and their whole apprenticeship program. They’re teaching the next generation those skills and capabilities in technical jobs you don’t need a four-year degree for. You need some advanced skills and a lot of on-the-job training. We’re doing that in a number of our facilities with some success in different parts of the country, including here. I think there could be more done to prepare workers for these manufacturing jobs. Gearing the whole system from high school to junior college and community college in the right way can have a lot of benefit.

VER: When you think about Virginia in particular, are there any other things you would mention that make it a compelling place for manufacturing?




Nestlé USA is a subsidiary of Nestlé S.A., a leading global nutrition, health and wellness company. Nestlé USA operates 79 manufacturing facilities and employs 48,000 people in the U.S. Nestlé USA operates two Virginia manufacturing facilities in Danville and King William, and moved its headquarters to Arlington in 2017. Bill Cooper is chief technical officer at Nestlé USA.

Virginia Economic Review: As you look at Nestlé, what do you see as major trends from a manufacturing perspective in the U.S. over the next five to 10 years or so? How are things changing? Bill Cooper: The first thing is that the way people shop certainly has changed in many sectors. We have typically built our manufacturing to be in full truckload quantities to distribution centers to retail channels. We believe, over time, that’s going to change and require us to be much more custom than we’ve been used to. We see the manufacturing landscape needing to be more flexible with how we package and deliver products in the future. VER: Do you see automation and the internet being big factors as well? Cooper: Yes, technology is certainly exploding. Digital is the term we use that encompasses a lot. You’ll hear things like connected worker, connected line, connected factories. The ability to use information, to gather information, and put it in the hands of people in the factory who can make best use of it in real time is a direction that we, and most of the industry, are striving toward.

VER: What can states and regions do to better position themselves to retain and support existing manufacturers and attract new manufacturing investment in the future? Cooper: As we continue to go down the technology path, having an available workforce, or the ability to train the workforces we have, will be critical. That’s everything from skilled tradesmen able to work on equipment to the workforce skilled to use and exist with this technology going forward. The future is that operators and mechanics will have handheld computers giving them data and information. What I think states or regions can continue to do is really drive those types of programs, both education programs and training programs for existing workers. VER: What do you think makes Virginia a compelling place for manufacturing? Cooper: Virginia has been progressive in trying to offer an environment that’s good for companies to be in. Environment encompasses a lot of things, from available workspace to the right kind of tax environment. But it’s also about being a place where companies can get the right people, the right training, the right equipment, the right facilities. Certainly, what we’ve found in Virginia’s been very positive for us from that standpoint. Virginia is certainly near population centers. As we continue to drive initiatives to be closer to our consumers, there’s a large population base here on the Eastern Seaboard. Virginia is well-located to serve both north and south in population areas that are growing today. VER: We hear a lot about the skills gap in the U.S., which, I think, is considered particularly acute in manufacturing. Do you have a sense of what’s driving that gap and what states could do to close it? Cooper: I think what’s driving the gap is that in policy and society, going to a trade school or learning specific trades skills, whether that be around automation, or controls, or basic electrical and mechanical, that’s fallen just a bit out of favor for young people in the U.S. There just aren’t that many people aspiring to or able to get that kind of training. That’s what’s really created the gap. It really has almost become a cultural thing where we’re just not getting people growing up and thinking that’s a career path they want to choose. The reality is that there really are good jobs out there with good pay and good benefits. But it’s almost a numbers game now. We don’t have enough coming into the funnel to service the industry and the businesses that need it.



Liebherr manufactures large trucks for the mining industry, including the world’s largest diesel-electric mining truck. These gigantic machines are partly assembled, tested, and certified at the plant in Newport News with complete assembly carried out at the mine. One hundred percent of the vehicles produced in Newport News are exported. Liebherr USA, Co. headquarters and three of its eight divisions are also based in Newport News. Cort Reiser is executive vice president of Manufacturing & Warehouse Logistics of Liebherr Mining Equipment Company. Reiser has been with Liebherr for more than 16 years.



Virginia Economic Review: What trends do you see emerging from a manufacturing perspective? What’s changing and how will the landscape look in the next five to 10 years?

Nobody is obsolete, nobody is laid off. Instead, our people stay on to help improve the process and final product, by teaching the machine the best possible way to do the work.

Cort Reiser: As we’ve entered into the fourth generation of the Industrial Revolution, our workforce needs to be more skilled. We invest a lot to train our workforce, and we work with the local educational institutions to find and develop talent from K-12, to high schools, community colleges, and local universities.

We will never replace our human workforce with robots. We’re a long way from that, as a company and as a society. We still need that human touch, the attention to detail, the experience, knowledge, and foresight, which only a human can contribute.

VER: How is this fourth generation, or Industry 4.0, changing the way your sector manufactures? Reiser: Things are changing rapidly. As machines begin to talk to us and each other, we have to understand what that means for manufacturing and find new applications for such technology. Automation means we don’t have to stand and watch the work be completed; instead we are notified when it is done.

VER: What do you think states and regions can do to better position themselves to retain and attract manufacturing investments in the future? Reiser: Newport News and the area here is very attractive due to The Port. Importing and exporting from all around the world is happening just a few miles from our manufacturing facility, which puts us in a unique position. Liebherr — and other states and regions — looking to achieve these goals should invest in the smaller tiers of their supply chains, as well as acquiring a skilled workforce.

Even better, automation can provide preventative maintenance information, predicting an issue before it occurs. These shifts in the process allow more time for quality-checking and employee growth so that we are able to develop a more highly functioning team.

VER: So, you recommend recruiting smaller supply chain tiers, and hiring skilled employees?

Now we can adapt our focus to more upper-level tasks. Somebody has to program the automated machines, and who better than a person who’s done the job by hand? So, we’re taking our existing workforce and arming them with new knowledge and skills, training them to train the next wave of manufacturing technology.

Reiser: Not only recruiting them, but developing them, too. Some may not have the resources needed to achieve the best results. When a bigger company assists with training, the smaller companies benefit — and so do we. We all work from a supply chain, and it works better when we all collaborate.



Northrop Grumman Innovation Systems, formerly known as Orbital ATK, headquartered in Dulles, builds and delivers space, defense, and aviationrelated systems including the Antares launch system, which handles resupply services for the International Space Station launched from Wallops Flight Facility on Virginia’s Eastern Shore. Northrop Grumman Innovation Systems employs approximately 15,000 people in facilities in 18 states and several overseas locations. Blake Larson is corporate vice president and president of Northrop Grumman’s Innovation Systems sector and is a member of the company’s Corporate Policy Council. Larson oversees the strategy, capture, design, build, and delivery of space, defense, and aviation-related systems to customers around the world both as a prime contractor and as a supplier. Virginia Economic Review: As you think about your industry sector, what do you see as the major trends from a manufacturing perspective in the United States over the next five or 10 years? How are things changing? Blake Larson: For us, it’s about a couple of things. Customer orientation … being responsive in an agile, affordable way to our customers. That drives manufacturing innovation in terms of how you might develop and implement a process, an inspection methodology, and a way to have quicker turn lead times to be more responsive to the customer. What we're seeing as a trend


is that historical ability that we’ve had to be responsive is getting even more important, as the market is demanding even faster cycle times. Safety and environmental stewardship are also core to what we do. When you have a fair amount of large manufacturing, some of which involves automated equipment, you have to make sure you implement in a way that it’s very safe for employees. And because we make things like rockets, we deal with energetic materials which are even less forgiving in a manufacturing environment, and you have to be extremely methodical, thoughtful, and disciplined about


safety. Along with those, you must also have the environmental stewardship to make sure we’re taking care of our environment and our communities where our employees all live and work.

talent pipeline ready and then it’s having the vibrancy and the businesses to give opportunities for people to use those skills and, for lack of a better way to phrase it, work on cool stuff.

VER: What does that manufacturing innovation mean in terms of changing skills, changing behavior both at the corporate level, but also on the workshop floor?

Then you think about the future workforce with not only diversity and bringing new people along with the people you have, but diversity and inclusion in the form of the broader community you can involve in the pool of opportunities, and making sure you're leveraging that. The more diverse ideas you bring to the table, and the more diverse experiences you bring to the table, the better you do. The better the ideas, the more you can leverage the opportunity that's out there for the future. So it’s forming that pipeline partly, and then it’s thinking about what that pipeline is in maybe a more holistic way.

Larson: We’ve done a fair amount of work in efficiency process and streamlining process automations. It's like taking historical Toyota lean manufacturing in a framework that we refer to as Performance Enterprise System internally, and taking that to the next level with all facets of efficiency in that process. You also have some other technological dimensions going on with emerging capabilities and things like additive manufacturing. On one end of the spectrum, it might be tooling, at the other end of the spectrum it’s high-temp metals that are embedded in products which can only be manufactured in a way that is allowed with an additive manufacturing methodology in mind. From a skillset standpoint, we’re looking for not only opportunities to insert that kind of technology in an existing product capability, but to also try to get our teams thinking of designing in that kind of environment as opposed to a legacy environment with limitations that additive manufacturing may not have. VER: What does that mean for the workforce of the future? What does that mean for what you’re going to need in terms of occupations, and skills in particular, and what are the things that states should be doing to prepare for that? Larson: States and companies alike need to be open to everything from early partnerships with local organizations to pre-employment relationships with educational institutions. In the case of Virginia, we have a number of partnerships with institutions like the University of Virginia, Northern Virginia Community College, James Madison, George Mason, the American Institute of Avionics, etc., and organizations like the Greater Washington Partnership. We work with them to foster technology credentials, and more trades-oriented skills development and curriculum development, to fuel the kinds of thinking and awareness of technology our industry needs. Some of those emerging people come out of the education systems more familiar with some of these new technologies, like additive manufacturing, virtual environments, or augmented reality, and how we can utilize those capabilities in our industry, than some of us are. We look forward to getting that vibrancy, and that ideation, and those diverse ideas into our employee population and the industry at large. For states like Virginia, I think it’s important to have a formative role in getting the

VER: How do you perceive the skills gap, and what’s driving it, and what is Northrop Grumman doing to overcome it? Larson: We are undertaking a very broad set of activities through each of the businesses. Space is a great example. People love to think about what’s the art of the possible when thinking about space. And you bring that down to, what does that mean for the next generation? You want to do what you can to inspire them toward the possibility of STEM fields in some cases, and toward skilled trades in other cases. We have a whole set of engagements aligned toward an integrated look at the future talent pipeline that hopefully helps what others are doing as well, so we can look at it all together in a way that supports trades, and STEM, and technical skills going forward. VER: What do you think are the biggest things states and regions can do to better positions themselves to retain the manufacturers that they already have, and also to attract manufacturing investment in the future? Larson: It’s having a business-cognizant environment so we can have dialogue together and understand, and try to align on mutual objectives, of which I think there are many. It’s making sure that we have the right kinds of infrastructure for where our employees and future employees want to live, and making sure that communities are attractive to them, not just from a job standpoint, but that they are appealing to growing families and future generations. And it’s having partnerships along the lines of technology investment, future skills development, research and development, and investing in what the future might look like. Realizing that not all of those things are necessarily going to pan out, but that you move forward in a focused way together, because then you have the benefit of leveraging collective efforts for a successful future.


The I-81 Corridor: A Thoroughfare for Manufacturing Success Connecting manufacturing excellence to markets

WHILE MANY DRIVERS ALONG THE INTERSTATE 81 CORRIDOR focus on the beauty of the surrounding mountains,

I-81 is the backbone that connects a thriving manufacturing industry. According to Transearch, more than one-third of all trucks and nearly 50% of the state’s value of goods are transported along this major north-south node of the East Coast’s freight network. Unlike many interstate systems, I-81 circumvents major metro areas to connect smaller and mid-size cities. But throughout those cities and scenic stretches of Blue Ridge beauty are manufacturing operations that support one another and buyers around the world. The I-81 Corridor runs for 325 miles through Virginia, making it the longest portion of the highway’s route through five states and the Commonwealth’s longest interstate. Along its route northward from Bristol through Winchester, companies develop products ranging from Volvo trucks to Little Debbie snack cakes and virtually everything in between. These manufacturers make the most of the advantages of low costs of living and doing business in the state ranked No. 1 by CNBC in 2019 in their rankings of top states for business in the U.S. A journey along I-81 reveals just how impressive a package Western Virginia offers manufacturers in almost any industry looking for a supportive region in which to expand. Recognizing the importance of the corridor to Virginia’s economy, the Virginia General Assembly and Governor Ralph Northam recently announced the establishment of dedicated funding sources to support a $2-billion improvement program approved by the Commonwealth Transportation Board in December 2018 to improve traffic flow along the route.


Grayson Highlands State Park, Grayson County

Gatorade, Wytheville Moog, Galax

WE BEGIN OUR JOURNEY where Interstate 81 enters Virginia 81



I81 - I77 Crossroads:

A Leader in Advanced Materials & Composites

at its southern border with Tennessee, near Bristol. Composed of six counties (Bland, Carroll, Grayson, Smyth, Washington and Wythe) and two cities (Bristol and Galax) with a total population of nearly 200,000, much of the area lies in picturesque valleys bordered by the Blue Ridge and Allegheny mountain ranges. Outdoor activities are abundant in the region, which is home to portions of Jefferson National Forest and the Appalachian Trail. The Virginia Creeper Trail, a 34-mile rail-trail running between Abingdon and Whitetop, has been described as the best mountain-bike trail in the East. Designated the “Birthplace of Country Music,” musical heritage is vitally important. Bristol’s Birthplace of Country Music Museum is a stop on the “Crooked Road: Virginia’s Heritage Music Trail,” and more than 40,000 visitors annually flock to the internationally known Old Fiddler’s Convention in Galax. The region is named after the point where interstates 81 and 77 merge in Wythe County, an intersection positioned to unlock markets to the south, including Charlotte and Atlanta via I-77 and Memphis and Nashville via I-81 and industrial markets in the Midwest via I-77. The Crossroads’ prime logistics infrastructure via road and rail has allowed a diverse manufacturing base to develop and thrive. The region has a long history in manufacturing and advanced materials. In 1924, Strongwell Corp. established its first plant in Bristol. Back then it was a furniture factory, but the company got a taste for advanced materials manufacturing during World War II when it produced carbon parts for weaponry. During the 1940s, the company began its work in reinforced plastics. Today, Strongwell is an industry leader in pultruded fiberglass products used in an incredible range of applications. The company operates two facilities in Virginia. At 398,000 square feet, the Bristol location is its largest manufacturing plant, with a second one located in nearby Washington County.


Strongwell, Bristol

The Bristol headquarters alone houses more than 35 pultrusion machines and a 10,000-square-foot laboratory capable of testing new fiberglass reinforced plastics to stringent ASTM standards. To fuel its operations, the company seeks to support and draw from the local workforce by sponsoring area robotics competitions and participating in career exploration events with local middle school students.

workshops and degree programs. Located close to its main production facility, Moog Components Group — Galax has been a tenant of the institute since 2012. The company manufactures printed circuit boards and has used the Crossroads center to help train its current and future workforce. It’s a process that demands intense training and attention to detail.

In addition to composites manufacturers, plastics processors also operate in the region. With an advantageous location in Wythe County’s Progress Park, a 1,200-acre certified site with the high- capacity infrastructure for advanced manufacturing projects, Amcor Rigid Plastics serves the adjacent 1,000,000-square-foot PepsiCo Gatorade facility and regional food and beverage manfacturers. The facility is one of 195 facilities that the global packaging leader operates worldwide.

Moog — Galax’s niche is in developing prototype fast-turnaround, low-volume production circuit boards. Custom products might feature 24 intricate layers of materials that still come in at less than half an inch thick, all built to commercial or military standards which meet modern high-speed technology requirements. The company notes that it constantly invests in new equipment for this facility to ensure it maintains its competitive advantage. That means there is constant need to train technicians on the use of the latest vacuum press laser routing technology or circuit testing instruments.

Advanced training opportunities abound in the region. Among other resources, the Crossroads Institute, established in 2005 in Galax, provides training and technology support to businesses. The institute combines services from Wytheville Community College and other regional partners to provide the state-of-the-art technology needed to support advanced manufacturing businesses as they grow. Its small business development center provides one-on-one support in business plan preparation, and its higher education center offers

Advanced materials companies like Moog, General Dynamics, Amcor Rigid Plastics, and Strongwell are continually giving back, developing their own workforce but also supporting education and training initiatives throughout the region. The same can be said of Scholle IPN, the Southwest Virginia Alliance for Manufacturing’s two-time (2017 and 2018) Manufacturer of the Year. The Illinois-based company manufactures

flexible packaging solutions for the food and beverage, agriculture, automotive, cleaning, personal care, and pharmaceutical sectors at its 100,000-square-foot plant in Chilhowie. In presenting the award, the Alliance cited the way the company engages employees in process improvements. The company’s unique program recognizes employee contributions that boost plant productivity. It’s a win-win for management and the employees who are challenged to contribute more to their jobs, making work more productive and engaging. And the success is tangible. In March, the company announced it will invest $10.29 million and add 42 new jobs to expand its production facility. Upon announcement of the project, Kent Kisselle, vice president and general manager of Scholle IPN’s North America region, stated, “Southwest Virginia is a strong fit in terms of highquality labor availability and runway for additional investment, led by a solid leadership group ready to execute our strategic initiatives.” While manufacturers often are thought to favor larger metro areas to have ready access to skilled workers, the company’s decision to expand operations in Smyth County suggests that a dedicated workforce and industry-leading training programs can offset apparent size advantages of bigger markets.


Red Rooster Coffee Roaster, Floyd

Volvo Trucks North America, Pulaski County




Virginia Tech

New River Valley:

A Hot Spot for International Manufacturing 38

Korona Candles, Pulaski County


find Virginia’s New River Valley, home to small-town communities and spectacular outdoor recreation along the mountains and the winding New River. The area’s charm and quality of life are among the attractions for international companies. The New River Valley consists of Floyd, Giles, Montgomery, and Pulaski counties and the City of Radford. It’s also home to Virginia Tech, one of the Commonwealth’s largest universities and a leading research center, as well as Radford University, and New River Community College. As a result, a large percentage of the region’s 180,000 residents are between 18 and 24 and contribute to the pipeline of talent for area companies. That pipeline has proven to be a powerful lure for a diverse number of international manufacturers. “There is a significant presence of international manufacturing companies in the region, including companies from Germany, Sweden, Brazil, Colombia, and Italy, among others,” explained Charlie Jewell, executive director of Onward New River Valley, the region’s economic development organization. Among the notable successes is Phoenix Packaging. The Colombia-based plastic injection molding manufacturer has been manufacturing plastic packaging for the food industry in the New River Valley since 2010. In the past eight years the company has expanded three times, adding a total of 585 new jobs and $106.2 million in investment. The most recent expansion occurred in 2017 and

created 145 new jobs and $48.7 million in investment. Virginia Tech’s focus on providing engineering, manufacturing, and transportation research (not to mention skilled college graduates) to local companies has encouraged many global manufacturers to call the region home. That research capability compelled InMotion, a manufacturer of electric motors and drives for electric and hybrid vehicles, to create a home in Montgomery County in 2014. The company invested over $5 million to establish its first U.S. manufacturing operation in Blacksburg. The subsidiary of Italy-based Zapi S.p.A. employs 80 people there. “Montgomery County has an outstanding combination of local talent and costeffective facilities, as well as improved access to Virginia Tech and its world-class electric vehicle research,” commented Mike Jellen, general manager of InMotion US, upon announcing the investment. “Our Montgomery County location, with its attractive standard of living, coupled with InMotion’s groundbreaking product development, will continue to attract and retain the industry’s best people.” Virginia Tech’s Transportation Institute (VTTI) counts Volvo Trucks among its stakeholders. The Swedish company’s 1.6-million-square-foot assembly plant in Dublin, Virginia, sits on nearly 300 acres, making it the largest Volvo truck manufacturing facility in the world. The plant produces all Volvo trucks sold in North America. And while the company

Red Sun Farms, Pulaski County

now boasts its own 1.1-mile Customer Experience Track for testing equipment handling, the company also works closely with Virginia Tech researchers. VTTI is supporting the global manufacturer in research on self-driving trucks, among other projects. While transportation companies make up only a part of the international players investing in Virginia, transportation certainly is part of the appeal. Being close to the customer “takes complexity out of the supply chain,” commented Korona S.A. Chairman Friedrich Rather, when the Polish candlemaker expanded into the U.S. The company invested $18.3 million in a manufacturing facility in Dublin and created 170 new jobs in the process. Korona Candles is one of the largest scented-candle manufacturers in Europe and produces private-label collections for many leading companies. Its executives’ decision to add a second production plant in Virginia expanded distribution worldwide, and gave the company the benefit of local employee training services available through New River Community College. Targeted machine training is critical in operating the technology central to the candlemaker’s processes. These international commitments help to grow local investments in the workforce and infrastructure. It’s a combination likely to continue to attract innovative employers, making it little wonder Zippia ranked the New River Valley the No. 6 top U.S. job market of 2018.


Wabtec, Salem


Carvins Cove Natural Reserve, Roanoke County

Eldor USA, Botetourt County




Roanoke Region:

Transportation Equipment Manufacturing Keeps Rolling 40

transportation manufacturing has gained a strong toehold, employing more than 5,100 people in 25 firms within the region. “While manufacturing as an overall sector has declined [nationally] in terms of employment, largely due to increased automation, transportation-related manufacturing has actually grown in the Roanoke region,” Doughty said. “The sector has consistently contributed to new investment and new jobs here.”


the Roanoke region has become a hub for transportation equipment suppliers. “There’s a long legacy of transportationrelated manufacturing in the region [because of I-81’s] access to northern and southern automotive manufacturers and the availability of skilled labor,” explained Beth Doughty, Roanoke Regional Partnership executive director. The success of these companies adds credibility to the region’s reputation as a location for companies looking to invest in new facilities. With 325,000 residents, the Roanoke region is the largest metropolitan area in Western Virginia. Figures recently released by the Council for Community and Economic Research show the Roanoke region’s cost of living is lower than 75% of participating metros with an index of 88.7, well below the national average of 100. Yet quality of life is high. As a recreation destination, Roanoke’s burgeoning outdoor industry thrives from assets such as the Appalachian Trail, James River, Blue Ridge Parkway (the most visited national park in the U.S.) and Smith Mountain Lake, Virginia’s largest. The region — which includes Alleghany, Botetourt, Craig, Franklin, and Roanoke counties and the cities of Covington, Roanoke, and Salem — is home to a diverse manufacturing base. But

There’s certainly reason to encourage this growth. According to the National Association of Manufacturers, for every one worker in manufacturing, another four people are hired elsewhere. It was quite a coup when in 2016 Eldor Group, an Italy-based automotive industry supplier, committed $75 million to building its first U.S. manufacturing facility, 250,000 square feet on 53 acres, in Botetourt County. Eldor executives spent nine months evaluating more than 160 sites across six states. Stefano Concezzi, president and CEO of Eldor Automotive Powertrain USA LLC, said that I-81 was fundamental in the company’s decision to locate in the Roanoke region, as was access to The Port of Virginia. Eldor’s search for the home of its U.S. production facility was initially centered on finding a prepared site that would speed construction. The site in Botetourt Center at Greenfield was pregraded and could be expanded. Eldor company leadership also appreciated the expansive mountain scenery and were at ease in the community because it reminded them of the beauty of their Italian headquarters in Orsenigo (Como, Italy). Another important component of Eldor’s search was a sustainable talent pool that could supply hundreds of skilled employees. With multiple automotive and manufacturing companies already clustered in the region, Virginia Western Community College had a mechatronics and manufacturing curriculum in place to serve Eldor’s current and future workforce needs. In September 2018, 120 went to work on the first production lines, with plans

already in place to grow to 350 employees within five years. While the Eldor investment brings a new player into the region, the area is also home to several legacy operations that have benefited from the region’s easy accessibility and access to skilled labor. For example, Graham-White Manufacturing, now a subsidiary of Wabtec Corp., was founded in 1914 to produce components for locomotives and rail transit vehicles. Today it has diversified to producing parts for trucks, buses, and military vehicles. The Yokohama Tire Corp. manufacturing facility in Salem has undergone a number of changes since it was built by Mohawk Rubber Co. in the 1960s. For starters, the facility has expanded to 1.2 million square feet with over 800 employees producing high-performance car and light truck tires. In 2015, the Salem facility celebrated a few major milestones: its 25th year in operation, the production of its 80 millionth tire, and becoming a zero-landfill operation. Altec Industries also has been a driving force in the transportation manufacturing industry’s growth. A leading provider of products and services to the electric utility, telecommunications, tree care, lights and signs, and contractor markets, Altec has been in the region since 2011 manufacturing its telescopic boom and truck cranes in Botetourt County. Since then, the company has expanded five times. In 2017, its latest investment of $30.2 million made room for 180 new jobs. “We’re able to grow in Virginia and in Botetourt County because this is a probusiness environment with the logistics and infrastructure to help Altec succeed,” commented John Herrig, plant manager for Altec Industries, in announcing the expansion. From suppliers for passenger cars and heavy trucks, to manufacturers of components for rail cars and more, products made in the Roanoke region keep America rolling.





The Shenandoah Valley:

Food & Beverage Manufacturing Finds a Recipe for Success

Red Wing Roots Music Festival, Mt. Solon Woodstock Brewhouse, Shenandoah County

Virginia Military Institute



known as the Bread Basket of Virginia for nearly as long as there have been bread baskets in the Commonwealth. The region’s agricultural past and present is strikingly evident in, and intertwined with, its concentration in food and beverage manufacturing. The region’s seven counties (Augusta, Bath, Highland, Page, Rockbridge, Rockingham, and Shenandoah) and five independent cities (Buena Vista, Harrisonburg, Lexington, Staunton, and Waynesboro) are home to a wide variety of manufacturers supported by a labor force of 175,000. The region has a track record of success in manufacturing, including the recently announced $1-billion expansion by Merck and the recognition by Colliers as one of the top 10 emerging U.S. industrial markets to watch in 2019. Among manufacturing companies in the region, food and beverage companies stand out. The region’s employment in

Filibuster Distillery, Shenandoah County

food manufacturing is more than four times the national average. And 10 of the companies on Food Processing’s annual list of the top 100 food and beverage companies in the United States and Canada call the Valley home. While those 10 leaders — Anheuser Busch InBev, MillerCoors, Cargill, Pilgrim’s Pride, Perdue Farms, DanoneWave, Hershey Chocolate of Virginia, McKee Foods Corp., CocaCola Bottling Co., and Dr. Pepper — are certainly noteworthy, the region is also home to a range of successful specialty producers, many of whom integrate local agricultural products into their recipes. Sarah Cohen opened Route 11 Potato Chips in 1992 using potatoes from nearby farms. In 2008 the company expanded into a facility in Mount Jackson, chosen largely for its proximity to I-81. Then in 2015 the company took advantage of a grant from the state’s Agriculture and Forestry Industries Development fund (AFID) — a fund inspired by the potato chip manufacturer — and expanded its footprint yet again. This time the company grew into a 25,000-square-foot facility designed for 50 employees. From this location, Route 11 serves several thousand small accounts across the nation and the world. Of course, Route 11 Potato Chips wasn’t the only one to benefit from the expansion. Under the terms of the AFID grant, the company agreed to buy at least 40% of its potatoes from Virginia farmers. Add to that the fact the company sources 100% of its sweet potatoes from one of the state’s organic producers, and Cohen estimates that it fries up 1.5 million pounds of Virginia potatoes each year. Route 11 Potato Chips is proof that snack food manufacturing is hot in Virginia. But beverage manufacturing also has a major presence in the valley. The Shenandoah Valley Partnership reports 180% more jobs in beverage manufacturing in this region than the average region in the U.S.

Like Route 11, Old Hill Hard Cider benefits from local agriculture. The Timberville-based company grew out of Showalter’s Orchard and Greenhouse, which had produced sweet cider for 40 years before Shannon Showalter and his wife, Sarah, decided to add hard cider production into the mix in 2012. That decision proved prescient. According to the Virginia Association of Cider Makers, national cider sales have grown an average of 73% annually over the past five years, and the trend seems set to continue. In 2018, with support from Rockingham County and the state’s AFID program, Old Hill Hard Cider invested in a production facility expansion to meet this growing demand. That investment came with a promise: the company pledged to source 100% of its apples from Virginia farms over the following three years. Sarah Showalter explained that the investment will help the company better take advantage of the growth and momentum of agritourism along the welltraveled I-81. “The resources will allow us to double our production volume, as well as construct a retail space that will better serve our customers,” she said. The Shenandoah Valley is a case study in the national growth of agritourism. The region’s agricultural roots are marketed through an award-winning agritourism program, the Fields of Gold Farm Trail. This trail represents over 200 open farms, wineries, breweries, roadside stands, farm B&Bs, farm-to-table restaurants, farmers markets, festivals, and more. Local farms (including orchards and vineyards), working in close concert with the region’s food and beverage manufacturers as well as restaurateurs, are building up local agritourism and the region’s reputation for excellence. A 2019 Vogue article predicted the Shenandoah Valley might be part of the South’s new foodie hotspot. And why not? It’s already the South’s hot spot for food and beverage manufacturing.


Worlds of Work, Frederick County

O’Sullivan Films Inc., Winchester

Shenandoah Valley


Kingspan Insultation, Winchester




The Northern Shenandoah Valley:

Setting the Stage for Continued Manufacturing Success 44

I-81 CORRIDOR IN VIRGINIA, the Northern Shenandoah Valley is growing fast. The region’s population is projected to grow by more than 40% by 2030, and it’s easy to understand why. A mere 70 miles outside of Washington, D.C., the region’s mountain vistas are easily accessible to city dwellers and commuters. But that combination of accessibility and an available workforce also makes the area attractive to manufacturers.

Infrastructure is a major advantage for the region that encompasses Clarke, Frederick, and Warren counties and the City of Winchester. The Virginia Inland Port in Front Royal provides intermodal transportation service and connections to ocean shipping and U.S. Customs clearance. WashingtonDulles Airport, a major international gateway, is less than an hour’s drive away. The region offers quick access to the nation’s capital and other major metro areas. The area draws from an extended labor force of over 500,000 that supplies a pipeline of talent for the diverse industry base. “Businesses know we’re committed to creating a skilled

Cove Campground, Frederick County

workforce and often share with their outof-state colleagues and headquarters that we’re well ahead of other regions with planning and program implementation,” said Patrick Barker, executive director of the Frederick County Economic Development Authority. Barker added, “Our qualified and reliable workforce was a deciding factor in recent expansions.” Barker noted that Winchester Metals’ decision to expand its Virginia plant in 2017 was based in part on the abundance of support for training new and existing workers. The addition of laser/punch combination equipment expanded capacity and allowed for the addition of a third shift and 17 new jobs. In addition, the company retrained 29 existing employees to operate new robotics systems. Company President Josh Phelps explained that these investments, the largest in the company’s 42-year history, were made possible with the Virginia Jobs Investment Program (VJIP). Toray Plastics America Inc. shares a similar story. In 2016, the company invested $45 million to expand its Front Royal facility. The global manufacturer of highperformance synthetic fibers and textiles added capability and a new production line and created 30 new jobs in the process. Workforce development and existing industry engagement is a cornerstone of economic development here. The region launched a number of activities and competitions to get local youth thinking about local careers. For example, the Frederick County EDA’s Career Pathway program has connected students with career paths for more than 20 years. The

focus began with on-site industry tours for middle and high school students, providing an inside look at career opportunities and the education and training needed to work in those careers. The Career Pathways program has grown to include The Widget Cup® competition, an annual design/ build event for local high school career technical education students where they design, build, and present a predetermined widget for a local customer, all within a six-hour window. As Career Pathways continued to grow, the Frederick County EDA sought a way to bring together business and education leaders to identify barriers to workforce development. These regional conversations resulted in the creation of The Workforce Initiative. This partnership seeks to bring together businesses, public schools, colleges and universities, nonprofits, and government agencies to grow the skilled workforce by 2023 to better meet the needs of local employers and ensure the community is supportive of all career paths. The goal is to close the skills gap for businesses like manufacturers with a focus on training for technical skill sets. The Initiative emphasizes work-based learning through internships, apprenticeships, mentorships, and more to build awareness of the types of careers and workplace experiences available in the region. Another initiative, Manufacturing Week, aims to raise awareness of local career opportunites in manufacturing to middle and high school students across the region by providing an inside look at 24 area manufacturers. Winchester’s Employer Expo, targeted for those actively seeking

employment, encourages students to attend. The regional comprehensive hiring event features companies with immediate openings, professional workshops to help applicants get hired, and resource areas featuring fast-track training providers. And then there’s WoW! The Worlds of Work Expo, a career exploration event that gives approximately 3,000 local seventh graders a sense of what a future in 10 industry sectors looks like. “WoW! helps students direct their interest and aptitude, and tours provide a glimpse into the real work world,” Barker explained. The event is billed as a hands-on exploration of industry careers. Students can climb into heavy equipment and manipulate machinery as they talk to local manufacturers about the skill sets they’d need to pursue various career paths. Since its inception, the EDA’s Career Pathways program, through tours, The Widget Cup, Workforce Inititaive events, and partnership in the annual Worlds of Work, has engaged more than 15,000 students, 1,500 educators, and 550 businesses. “The key to our success is communication, partnership, and collaboration,” said Barker. “Businesses know we’re committed to this work and have invested in all of our programs.” The same could be said along the entire Interstate-81 Corridor. Investments in infrastructure and workforce development are giving the Commonwealth’s western population the tools they need to compete on a global scale.


Inside Virginia’s Record-Setting Micron Project When memory chip maker Micron Technology, Inc. committed to expand its operations in the City of Manassas in Northern Virginia, the headlines rattled off one impressive number after another: 1,100 new high-skilled jobs. Some 100,000 square feet of additional space. A $3-billion investment. All to be completed within a decade.




creativity and cooperation among the Commonwealth of Virginia, the City of Manassas, Dominion Energy Virginia, and the company at the center of it all, Micron. Here is a closer look at the initial opportunity (and challenge) posed to these entities, the plan of action that emerged, and the upshot that will continue to build momentum in Manassas, Northern Virginia, and the Commonwealth through 2030 and beyond. THE OPPORTUNITY (AND CHALLENGES) Before breaking down the dollars and cents of Micron’s expansion into Northern Virginia, it’s important to know a few things about the No. 4 global semiconductor manufacturer by market share, according to Gartner.


Micron, which was founded in 1978 and is headquartered in Boise, Idaho, arrived in Manassas in 2002, taking over the Dominion Semiconductor facility owned by Toshiba Corp. With a focus on manufacturing memory chips, the 123-acre Manassas plant today hosts a 1,500 person-strong workforce, a number high enough to earn Micron the title of Manassas’ largest employer. “Their presence underpins our tax base, underpins our utility system, and underpins our workforce,” said Patrick Small, economic development director for the City of Manassas. “They’re a stabilizing force in all those areas.” Micron’s economic contribution extends well beyond Manassas’ 10 square miles and 43,000 residents. Not only is the company among the largest exporters in Virginia, but with this expansion (which represents one of the largest manufacturing investments in

the history of Virginia), the Commonwealth will increase exports by more than $1.4 billion as a result, a roughly 3-5% jump in Virginia’s statewide exports. As the years of Micron’s presence in the community grew, disparate tracks emerged in parallel paths. On one hand, Micron’s workforce was making Manassas its home in every sense of the word. “They are a strong contributor to the social infrastructure of the area,” Small said. “They’re active in PTAs, church groups, and athletics.” Micron was exhibiting all the traits of a strong corporate citizen, investing time, resources, and funding in building STEM education for area schools and colleges, including Northern Virginia Community College (NOVA), which had already established a workforce pipeline with the company.


But there was also a nagging feeling of anxiety. While equipment was updated, the plant itself was never expanded. Also, the facility was ultimately undersized, relative to both Micron’s other plants and similar semiconductor facilities around the world. “Whenever your community is heavily dependent on one company, dislocation is a tragic event,” Small said. “Dislocation fears were an undercurrent in the city. Those of us who live and die by these things had this horrible feeling in the pit of our stomachs.” Soon whispers became reality. Micron would seek out an expanded facility to manufacture memory chips, including those for self-driving and autonomous vehicles, in which the company is a market leader. Manassas and Virginia lay at the juxtaposition of opportunity and challenge of winning this expansion — with at least

two other U.S. states, Singapore, Japan, and reported front-runner Taiwan also vying for the business. It was time to emphasize the reasons a Virginia location makes sense for Micron, including proximity to a leading international air cargo gateway in Washington Dulles International Airport (IAD) and access to a workforce with the second-highest concentration of technology workers in the country according to Cyberstates 2019. Virginia’s workforce is also one of the most educated in the country — 38% of the population has a bachelor’s degree or higher, ranking No. 6 in the U.S. in educational attainment. It was also time to sharpen the pencils and brainstorm some creative solutions “First and foremost, this is not an inexpensive place to do business,” said Small of his locality, and the gap was far greater when compared to the likes of Taiwan. Another challenge was the available labor force for highly skilled and technical manufacturing positions. While Northern Virginia boasts a cluster of tech firms and talent, relatively speaking, Manassas is not a large manufacturing city. There were also utility obstacles to traverse. Not only was Micron a massive electric user — the company had years earlier worked out a deal with Dominion Energy to keep costs manageable — but water and sewer capacity were also potential issues. There was one more challenge to consider as well: the other suitors. While the VEDP-led team was able to conduct online research, and has a nuanced understanding of major incentive packages that states and cities offer, performing the same analysis for Taiwan and other locations proved to be more difficult.

equipment up for sale and put a padlock on its door.” THE PLAN “There was a shared recognition from the outset by local and state leaders as well as our utility partners that the potential Micron expansion represented a high-quality, unprecedented opportunity to strengthen our hightech manufacturing base in the Commonwealth of Virginia,” said Stephen Moret, president and CEO of VEDP. “Everyone worked collaboratively together to get it done.” This characterized Virginia’s collaborative approach to vying for the highly coveted Micron expansion. Yes, all key players had teamed up to create a uniquely attractive incentive package addressing each of the challenges inherent in the project, but there was also a rare focus and cohesiveness to the joint effort. Stan Blackwell, director of customer solutions and strategic partnerships with Dominion Energy Virginia/North Carolina Power, echoed this sentiment, “Through collaboration and extensive engineering analysis, the teams from Dominion Energy, Manassas, and Micron developed a plan that ensured the Virginia location would be a top contender for the expansion based on the electric supply.” Manassas’ Small agreed: “We built a team of very qualified and very capable individuals who were all motivated for the same goal.” This included Micron, the company at the center of attention. The willingness, energy, and rapport were all in order to fuel a strong team approach.

Manassas’ Small framed a potential Micron move from their perspective: “It would not be a significant event for a global company like Micron to put its


W H AT D I D I T TA K E T O W I N ? project is being funded by the Growth its capacity with the additional demand. Build a pipeline of skilled and Opportunity for Virginia (GO The city turned to the cutting-edge workers: Filling more than 1,000 highly Virginia) economic development program, practice of retaining and then jettisoning skilled manufacturing jobs with right-fit and is being supported by Micron, as waste in a carefully calculated manner so technicians and engineers requires more well as the U.S. Army’s Night Vision and as to not disturb its fixed capacity. than “help wanted” posters and job fairs, as Sensors Directorate, and BAE Systems. the manufacturing labor gap is a growing The creative solution required a new national problem. According to Deloitte’s “We start with the end goals in mind when storage tank, one of many infrastructure 2018 Skills Gap Study, 2.4 million positions enhancements that the team needed we build these programs,” Partridge may be unfilled between 2018 and 2028. said. “This includes talking to companies, to work through the financing of — The good news is that Virginia is ahead of reviewing job descriptions, and looking at balancing incentives and Micron the curve when it comes to bridging this gap. top workplace performers to see what they contributions — in order to make its have in their background. Hopefully, the project bid as attractive as possible. “You can’t just have the Ph.D.s, you graduates we’re turning out are exactly need to have the technicians to make what the employer needs.” Develop creative incentives: The the economy work,” said Steven promise and potential of Micron’s Partridge, vice president of workforce hefty expansion, from export gains to Enhance utilities: Power and sewer development for Northern Virginia capacity — and lots of it. This is vastly job growth, proved enough to prompt Community College (NOVA). A two-year oversimplifying the challenge of supporting VEDP, Manassas, and Virginia’s college with six campuses, including the massive Micron expansion from a Major Employment and Investment one in Manassas, NOVA is one of utilities perspective, but it’s a solid starting Project Commission to develop a several schools — a group including point. When it came to power, Micron’s custom performance grant from the Old Dominion University, Virginia requirements were unique, prompting Commonwealth totaling $70 million, paid Commonwealth University, Virginia in two installments over the next two years. Dominion Energy to assemble a robust Tech and Hampton University — that team and significant resources early in the have built relationships with Micron. decision-making process. Specifically, the The value of Virginia’s comprehensive challenge for the utility included supplying solutions package to Micron goes “We’re a steady source of talent for them,” deeper than the custom performance the necessary reliability and redundancy said Partridge, citing an influx of hires from while dialing in workable costs, including grant. That’s because the solutions NOVA’s automotive program. Micron’s both upfront investment and a competitive came in so many different forms, partnership with the school ranges from rate schedule. What emerged was a from myriad utility upgrades to the providing internships to helping incubate aforementioned GO Virginia workforce complex contractual agreement that was NOVA’s SySTEMic programs. In fact, far from an off-the-shelf solution. development funding, and the creation Micron has supported NOVA SySTEMic, of attractive tax rates. a public-private partnership designed to “Dominion Energy was pleased to work support K-12 students pursuing STEM in close partnership with the City of Take Micron’s local tax bill, for example. degrees and certificates, since the program’s Manassas and Micron to deliver a launch in 2010. creative solution for the long-term “We hadn’t raised their tax bill in a decade,” energy supply of Micron’s new worldManassas’ Small said. “As their equipment NOVA is also doing much more to class expansion,” Dominion’s Blackwell came in and out, we adjusted the rate so prepare its students for the roles said. “The manufacturing of high-end we collected the exact same amount… Micron is seeking to fill, as well as other semiconductors requires an extremely That relationship allows Micron to predict advanced manufacturing and engineering reliable electric supply at a cost that is its costs and us to predict our revenues, operations. This effort is highlighted taking the volatility out of it.” competitive in a global market.” by the addition of mechatronics and engineering technology degree programs, Then there was a complicated sewer As the deadline for the bid approached, which launched in the fall 2018 semester. Virginia had put its very best deal forward. situation. While Manassas feeds into a In conjunction with these programs, plant in Fairfax County, which was one NOVA also received the green light THE UPSHOT of the most advanced treatment facilities to create a Fabrication Laboratory, or in Virginia, there was an issue when it At an August 2018 press conference “Fab Lab,” at the Manassas campus, a came to opening up access to an expanded the Micron expansion was announced. high-tech hub designed to bring together In addition to the headline-grabbing Micron plant. Manassas had a stake of today’s and tomorrow’s workforce. The ownership in the facility, but could exceed numbers, including Micron’s $3-billion

investment and creation of 1,100 jobs, other key details began rolling out. For example, there was Micron’s planned global research and development center for memory and storage solutions, where engineers would innovate the future of autonomous vehicles. And finally, the cherry on top of the workforce development piece: a $1-billion investment from the Micron Foundation in STEM education, with a focus on programs that support women and underrepresented minorities. Manassas and Virginia weren’t the only winners. Micron was also included among the victors. “Micron is grateful for the extensive engagement of state and local officials … to help bring our Manassas expansion to fruition,” Micron President and Chief Executive Officer Sanjay Mehrotra said in a statement. “We are excited to increase our commitment to the community through the creation of new highly skilled jobs, expanded facilities, and education initiatives.” As for Manassas’ Small, his 10 square miles are already buzzing with a frenzy of activity, with the expansion well underway. In the first six months since the announcement, the company had outlaid more than $100 million in capital expenditures and created 150 new jobs.


Manufacturing Throughout Virginia Virginia’s manufacturing base is substantial and spans a wide variety of products — ­ from craft beer and snack cakes, to steel beams and wood flooring, to semiconductors and rocket engines.

Aerojet Rocketdyne | Orange County Aeroject Rocketdyne produces propulsion systems and operates a technology development center and laboratories for solid propulsion, as well test facilities for rocket motors and airbreathing propulsion systems. The company is an aerospace and defense leader that provides propulsion and energetics to the space, missile defense and strategic systems, tactical systems, and armaments areas in support of domestic and international markets. 52


Abbott | Altavista Abbott is a global health care leader with a portfolio of products that spans the spectrum of healthcare, including diagnostics, medical devices, nutritionals, and branded generic medicines. Abbott’s Virginia location specializes in liquid nutritional product manufacturing.

Anheuser-Busch | James City County In operation since 1972, the 1.2-millionsquare-foot Williamsburg brewery brews and distributes more than 40 brands to the Southeast and Mid-Atlantic.



Canon Virginia, Inc. Newport News Canon Virginia, Inc. serves as the manufacturing, engineering, recycling, and technical support center for Canon in the Americas region. CVI produces new products while also serving as a factory service center providing expert customer service in the repair and refurbishment of numerous Canon cameras and office products.

Goodyear Danville In operation since 1966, Goodyear’s Danville plant produces medium truck and aircraft tires.



Mar-Bal, Inc. | Pulaski County

Munters | Buena Vista

Mar-Bal is a leading integrated compounder and molder of BMC Thermoset composite products and value-added finishing services that serves the appliance, electrical, industrial, food service, and transportation industries.

Munters is a global leader in energyefficient air treatment solutions. Using innovative technologies, the company serves customers in a wide range of industries, with the largest customers representing the data center, food, and pharmaceutical sectors.

Rubbermaid Commercial Products | Winchester

SteelFab | Emporia

Rubbermaid Commercial Products is a manufacturer of innovative, solutionbased products for commercial and institutional markets worldwide and is a global leader in the commercial cleaning industry. The company has a manufacturing operation in Winchester and a distribution facility in nearby Frederick County that serve customers worldwide.

SteelFab, one of the nation’s largest structural steel fabricators, operates a 120,000-square-foot facility near I-95 in Emporia. The plant produces 1,500 tons of structural steel per month.

Optical Cable Corporation Roanoke OCC is a leader in the engineering and manufacturing of a variety of high-performance, top-tier cabling and connectivity solutions. OCC is the second-largest manufacturer of multimode fiber optic cable for the North American enterprise market.

New Ravenna Northampton County New Ravenna is America’s premier designer and manufacturer of stone and glass mosaics for residential, commercial, and hospitality installations. The mosaics are made by hand at the company’s studio in Exmore on Virginia’s Eastern Shore.



Mohawk Industries | Carroll County Mohawk Industries is the world’s largest flooring manufacturer. Mohawk’s vertically integrated manufacturing and distribution processes supply carpet, rugs, ceramic tile, laminate, wood, stone, and vinyl flooring to customers around the globe.

Tadano Mantis | Tazewell County Tadano Mantis manufactures telescopic boom crawler cranes ranging in size from 30 to 130 tons.



TMI Autotech Halifax County TMI AutoTech, Inc. manufactures the Ariel Atom Supercar and the Ariel Nomad Urban Assault Vehicle. Both of these vehicles are built from the ground up at a 60,000square-foot manufacturing facility in South Central Virginia.

Premier Tech King and Queen County Premier Tech operates six locations in the U.S., including the King and Queen County facility that produces mixes of mulch, fertilizers, and growing media solutions.


Building the Capacity for Greatness at The Port of Virginia A Conversation with John Reinhart

John F. Reinhart is the CEO and executive director of the Virginia Port Authority (VPA). Prior to joining the VPA, Reinhart worked for the Maersk organization for 23 years. He served from 2000-2014 as CEO of Maersk Line, Limited (MLL) and as a member of the board of directors. Reinhart was recently inducted into the International Maritime Hall of Fame, which recognizes maritime visionaries who best exemplify the qualities of futuristic thinking that will guide the maritime industry in the 21st century.

Stephen Moret: This has been a transformative period in the history of The Port of Virginia. It’s been one certainly led by you and your team, but also supported to a very large extent by the General Assembly and multiple governors of the Commonwealth of Virginia. Can you talk about what’s happened over the last several years and where the Port is going right now? John Reinhart: Five years ago, we set a plan to reinvent and redevelop all of The Port of Virginia’s great assets. We have one of the best natural harbors anywhere in the world and we hadn’t been investing in the Port for a number of years. So, we reopened Portsmouth Marine Terminal, which was closed, to give us some room to move. And then we started a $320-million capital plan to double Virginia International Gateway. It’s a semi-automated terminal with state-of-the-art technology, and we’re completing that right now. It’ll be done this summer. At the same time, we went to our largest facility, Norfolk International Terminals, and we put together about a $400-million plan that was backed by the General Assembly. We have $350-million from the General Assembly to do that construction and it’s underway. We’re about 40% complete and we’ll finish that by fall of next year.


We’ve added a million containers of capacity. So, in order of magnitude, last year we did 1.7 million containers. We will add 1,000,000 containers of capacity by next fall. We also are going wider, deeper, and safer. And the General Assembly is also funding that as a $350-million advance so we can take our channels to 55 feet in the Inner Harbor and 56 feet out in the Chesapeake Bay. We can go from 1,000 feet wide to 1,400 feet wide, which gives us two-way traffic. Moret: One of the things I’ve been really impressed with in Virginia is the way all the Port facilities are coordinated under one big umbrella. Can you talk about both the multiple distinct Port facilities in Hampton Roads, but then also beyond Hampton Roads across the Commonwealth? Reinhart: We have four deep-water facilities in Hampton Roads. We have Portsmouth Marine Terminal, Virginia International Gateway, Norfolk International Terminals, and Newport News Marine Terminal. Those four are all deep water on the Inner Harbor. We have two inland port facilities. Up in Northern Virginia, we have the Virginia Inland Port served by daily rail service with Norfolk Southern. And then in Richmond, about a hundred miles up the James River, we have the Richmond Marine Terminal, which we serve by barge. We’re taking trucks off of Interstate 64. This year, we’ll probably do 41,000 containers there. If you think about it, that’s 82,000 trucks that were taken off our freeways to make them safer. It’s environmentally responsible because you have one engine pulling all those containers back and forth. It really is putting together a whole plan. We have all the same terminal-operating software now so we can harmonize the way we operate. It makes it much more effective to work with the marketplace. When we go down to the carriers as the ships get larger, we can move carriers from one terminal to another to facilitate berth availability. Moret: It’s an incredible array of assets. Reinhart: In just the last four years, there have been 160 announcements of Port users that have either relocated here or expanded here. More than $4 billion invested in Capex in Virginia, and 15,000 jobs. Moret: We’re seeing hundreds of millions of dollars of growth. We’re seeing advanced technology. We’re seeing growth in volumes across the board. It’s been a great success story. At the same time, it is a very competitive environment out there. So, we’re always trying to stay a couple steps ahead. I’m curious, John, as you think about competing with the other ports on the East Coast of the United States, what is it that sets The Port of Virginia apart today, and what are some of the things we’re doing to really help expand the leading position we have in the future?

Reinhart: Well, if we look back to June 2016, the Panama Canal opened its new channels. That allowed 14,400 TEU ships to come from Asia through the canal to the East Coast. We’re ideally situated in the middle of the East Coast port structures. All of our infrastructure has been accelerated so we can attract these larger ships coming through the Panama Canal or, as manufacturing goes to Southeast Asia and India, through the Suez Canal. We’re an attractive port for them to come on firstins, last-outs, and we’re going to be relevant in the future. It’s all about large ships. In January 2020, they all have to go to clean fuel. So, fewer stops. The carriers are looking at their networks to try to clean them up so they don’t have as much cost for fuel when they go to cleaner-burning fuels. We’re working with all the carriers to say we have a beautiful natural harbor, no air draft restrictions, direct access to the major deepwater facilities. We’ve added berths, we’ve added cranes, we’ve added infrastructure on land, and we’ve modernized and doubled our rail so that we can serve Midwest markets as well as the Commonwealth. Moret: It’s a great story and one we like to tell. I’d be curious to hear what trends you see or what sort of developments you see over the next few years in the manufacturing sector. Reinhart: Obviously, it’s going to be smarter manufacturing. They’re using more robotics all the time. They’re trying to get closer to the consumption market and still have access to other markets and their raw materials. I think that’s where we play in very well, because as those manufacturers look to situate themselves, they want to be in an area that has a good legal system, access to energy, access to the markets, access to a workforce that we have to continue to develop. Oh, and by the way, access to raw materials and to all those foreign markets. So, they could use the Port to ship finished product, bring in parts, add value to the product, and then re-export it. Moret: What do you think states and communities can do to position themselves to continue to be competitive for their existing manufacturers and also to attract future manufacturing investment? Reinhart: First is available workforce. Second is available sites that are ready to be configured. Third is communities appreciating the value of clean and modern manufacturing in their communities so that their population has a place to work and to stay. Moret: Shipping has seen a lot of changes in the last few years. We’re seeing probably, perhaps most notably, or most visibly, the shift toward larger ships. How much bigger are these ships going to get and what are the things that ports need to be thinking about in terms of future infrastructure investment? Reinhart: Well, all of the ships under construction now are 15,000 to 23,000 TEUs. The largest ships we have calling on the East Coast right now are 14,400. So, if you look at where they’re


New Investments in The Port of Virginia Total More Than $1 Billion: $700 MM to expand capacity by one million containers annually, and a $350 MM dredging project to make it the deepest port on the East Coast.

Virginia International Gateway, Portsmouth

building, they’re going to continue to deploy the very large ships in certain markets. You’ll see the 22s, 23s go Asia to Europe. That means they’re going to displace 18,000, 16,000 TEU ships that will need to find a new route or network. So, I think you’ll see some of the 18s start to hit the West Coast of the United States this year. And then, we’ve modeled and simulated to handle them here on the East Coast at The Port of Virginia. There’s one other interesting thing we haven’t touched on. There’s been a shift. Before, the West Coast handled almost 70% of Asia cargo inbound to the United States. Because of the Panama Canal expansion, because larger ships go on to the East Coast, you’re seeing that drop down to 50% on the West Coast and up to 42% on the East Coast. You’re starting to move toward parity. That’s good for us, because now when you look at population density, the largest percentage of population in the United States is east of the Mississippi. Who’s closer to them? Ports on the East Coast. Who can get the cargo to them faster? The East Coast. It’s longer water travel. The inland positioning is much more efficient and less costly. I think we’re sitting in a really good place for this balancing. Moret: One of the things that has really impressed me about The Port of Virginia and serving on the Virginia Port Authority is the focus on both strategy and execution, short term, medium term, long term. We’ve talked a lot about what’s happened in the last few years, which is really positioning the Port for the next decade and beyond, but there’s even a plan beyond that for the long-term future. Can you talk about that a little bit? Reinhart: We put out our 2065 plan. We have a road map of where we want to take the Port for the next five decades. We’re going to continue to modernize and build out our current infrastructure with the dredging. We’re building dykes off of Craney Island so we have a repository for clean material. We can build another terminal in 2034, 2035 in phases that by itself could do over 5 million containers. Moret: John, we learned from someone recently that you have been inducted into the International Maritime Hall of Fame. Of course, we were very proud of that because you’ve been such a great leader for us here in Hampton Roads, and really, for the whole Commonwealth through your role as the leader of The Port of Virginia. Reinhart: Thank you very much. Moret: Thank you for the great work you’re doing at The Port of Virginia. We look forward to chronicling this great success story in the months and years to come. Reinhart: Thank you, Stephen. It’s all the people that do it. It’s our team. So, thank you very much. For the full interview, visit 61

Southern Virginia Showcases Next-Level Manufacturing Talent Pipeline Former textile stronghold has pivoted to fuel the future of advanced manufacturing

THE GLOBALLY LAUDED COMEBACK STORY of Southern Virginia hinged on taking on a task that many communities attempted, but few have achieved: reinventing its workforce.

For the City of Danville, Pittsylvania County, and the broader area flanking Virginia’s border with North Carolina, tobacco and textiles had long fueled a vibrant economy accessible by major four-lane highways, as well as international airports in neighboring Raleigh and Greensboro, North Carolina But after the busy mills that once rolled out comforters and carpeting, and Levi Strauss denim left the area in the early 2000s, the area’s economy lost its momentum. Without skipping a beat, regional leaders gathered to write their own revival. And now, Danville is a trailblazer of note, attracting capital investment from enterprises both here and abroad. These include Overfinch North America and Harlow Fastec from the United Kingdom, Kyocera subsidiary Kyocera SGS Precision Tools from Japan, and Essel Propack from India “When we came to Danville, the decision was instantaneous,” said Jason Wells, Kyocera SGS president. “I can say 100% that the workforce pipeline was like nothing we’d seen in the United States.”

It adds up to Danville garnering the No. 8 ranking on the 2017-18 list of top U.S. micro cities by FDI Magazine. The momentum was also powerful enough to serve as a case study for other states. In August 2018, Arkansas Governor Asa Hutchinson toured the region’s programs with Virginia Governor Ralph Northam. How did Danville do it? By doubling down on its manufacturing roots. This time, it was future-proofed, led by advanced and precision manufacturing — paired with an open embrace of workforce training on Industry 4.0’s cyber-physical systems, the Internet of Things, as well as both cloud and cognitive computing. In other words, it wasn’t solely infrastructure and location that would draw companies to the region. It was a high-skilled workforce, one that was methodically reverse-engineered to possess the advanced manufacturing skill sets that employers operating on the cutting edge coveted. “This area didn’t wake up one day and just decide we wanted to be a home to manufacturing,” said Telly Tucker, director of economic development for the City of Danville. “We have a long history and we didn’t want to lose that. It’s very much in our DNA.”

Capewell Aerial Systems, Patrick County

Kyocera SGS Tech Hub LLC, Danville

Hardide Coatings, Martinsville

Eastman Chemical, Henry County

A REGION UNITED Make no mistake about it. Danville and Pittsylvania would not be held up as a shining example of how to create a manufacturing renaissance without wellgreased regional cooperation. Pooling the efforts of many, the city and county have built an attractive pitch to potential companies. Southern Virginia’s collaboration is evident in the shining edifice located in the heart of Danville’s Cyber Park: The Institute for Advanced Learning & Research (IALR). “Our mission is economic transformation,” said Mark Gignac, executive director of IALR. The 15-year-old campus, with a nearly 100,000-square-foot facility whose functions run the gamut from conference center to working regional nexus of industry and education, is undergoing two separate renovation and

expansion projects. Additions include the 51,000-square-foot Center for Manufacturing Advancement, which will allow advanced manufacturing companies to collaborate and enhance processes, improve quality, integrate emerging technology, and discover next-generation capabilities. IALR is also building its workforce resources, having launched the Advanced Manufacturing division in 2018. The new division partners with Danville Community College (DCC) to offer students a third year in the Gene Haas Center for Integrated Machining. While the IALR is the heartbeat, war room, and subject matter expertise hub for the Dan River region, it’s just one of myriad tools the area has to entice companies to call it home. Others include: Low costs: The area’s wages are 24% below the national average, according to BLS data.

A name-brand manufacturing base: While the region actively courts and welcomes new companies, it features a strong base of global employers to serve as a testament to its commitment to providing skilled manufacturing labor. These include Goodyear, Nestlé, ABB, and Eastman Chemical, among others. Agile and adaptable workforce solutions: Talk to the leaders driving the economic development agenda, and you’ll quickly learn that a cookie-cutter approach just won’t cut it. Adaptability and responsiveness are key. When tank truck manufacturer Amthor International had an immediate need for aluminum welders at its expanded Gretna operations, leaders hustled to create a customized fast-track welding course. The turnkey program was held at DCC’s new stateof-the-art welding facility and produced skilled workers who were hired in a matter of weeks.


Top-flight sites: While workforce has taken the lead among decision factors in site selection, infrastructure still plays a major role. In Southern Virginia site selectors will find a number of ready-to-go sites. This includes Cyber Park — home to IALR, the Gene Haas Center for Integrated Machining, and Kyocera’s new 30,000-square-foot facility — as well the Southern Virginia Megasite at Berry Hill. The certified megasite, the largest in Virginia, features 3,528 acres and is suitable for OEM manufacturing operations and other large industrial tenants. In Henry County, Commonwealth Crossing Business Center features pad-ready industrial sites and an on-site training facility available to companies who commit to locating in the park. Quality of life: Manufacturing reinvention isn’t the only headline touting progress in Southern Virginia. Danville’s revitalized River District has been infused with more than $150 million in capital investment, bringing dining destinations, retail, breweries, museums, and more to the area. A LOOK THROUGH THE PIPELINE What highly skilled jobs will there be a high demand for over the next 30 years? According to Troy Simpson, the IALR’s advanced manufacturing director, this was the key question Southern Virginia leaders needed to answer a decade ago. Simpson has been in the trenches of the very education system he was working to transform, both teaching and leading the charge to update the curriculum at DCC for 27 years. Building a training pipeline tailored to the careers employers were seeking to fill wasn’t enough, Simpson said. The effort needed to be scalable so it could expand based on local companies’ real-time hiring needs. “What sets us apart,” Simpson said, “is that it’s a very predictable pipeline.”


Here is a trip through this one-of-akind hub-and-spoke training pipeline developed by the region’s educators, economic leaders, and employers seeking out specific profiles and skill sets: E A R LY A P P L I E D L E A R N I N G AT C A R E E R CONNECTION LABS The newest additions to the region’s resources include two state-of-the-art middle school classrooms, one each in Danville and Pittsylvania, serving 6th through 8th graders. As part of a pilot program of the GO-TEC project (Great Opportunities in Technology and Engineering Careers), the labs introduce students to high-tech welding simulators, parametric modeling software, coding, and programing. There is also a 2-kg. Yaskawa Mini Bot Cell robot — a roughly $30,000 piece of equipment in a $300,000 lab — which Simpson believes is the only one in a middle school in the country. “We’re seeing kids perform at a very high level,” said Angela Rigney,

Amthor International, Pittsylvania County

director of career and technical education for Pittsylvania County. “Our data shows they excel,” crediting the role of applied learning versus traditional classroom lesson plans. For example, in Pittsylvania, students who go on to complete a Career & Technical Education program score above 99% on average for reading and math Standards of Learning tests, which is well above the 80% benchmark for both areas. B E S T- I N - C L A S S H I G H S C H O O L IMMERSION At both the Pittsylvania Career & Technical Center and Danville’s George Washington High School, students can apply for specialized tracks focusing on precision manufacturing technology, cybersecurity and IT, welding, and others that are built on industry’s current and future needs. It’s easy for precision machining technology instructor Porchia Russell to relate to her students, whether they’re watching their holiday ornaments churn out on a 3D printer or seeing if their

projects measure up in the inspection lab. That’s because she’s a graduate of the program. “Here they see that their career potential is truly limitless,” Russell said. A number of reminders drive this point home, including banners hung throughout the labs emblazoned with company logos from employers looking to hire graduates of these programs. You might even see industry representatives, who routinely visit the classrooms to speak with students. The motivation is by design. “Companies come in and say, if you finish the program, you have a job,” Simpson said. “And you can make $27 an hour to start.” More immediate gratification is also possible: leaving with 40-plus college credits and skipping the first year of college’s basic skills coursework. FULFILLING HIGHER ED POTENTIAL Walk through DCC’s Engineering & Industrial Technologies facility, their

brand-new double-sized welding building, or the Regional Center for Advanced Technology and Training, and the technology, as well as the work product, rival that of any college or university. It equals or outpaces professional shop floors and labs. Here, as many as 108 first- and second-year students can learn precision manufacturing technology in a fine-tuned real-world environment that can be expanded quickly with additional hires. This is where the manufacturing skills gap is filled. “We’re growing high-skilled talent not just to replace workers, but to have excess workers for investment,” Simpson said. BRINGING THE FACTORY INTO THE CLASSROOM During a recent visit to the Gene Haas Center for Integrated Machining, half the students had already landed jobs, and several months still remained in the academic year. In this state-of-theart facility, third-year DCC integrated machining technology students learn

cutting-edge shop equipment inside and out within a full-scale workflow cell simulating a real-world shop floor. Additionally, they’re given rigorous soft skills training through courses including industrial leadership and career development. “We truly believe we’re creating the future of manufacturing leaders,” said Tim Robertson, integrated machining technology instructor and graduate of the program.

W H AT ’ S N E X T ? Ask Southern Virginia’s leaders, and they’ll tell you that this is simply the beginning of the region’s economic transformation, not the end. “After all, it took seven years for us to work together and update manufacturing training from the ‘30s,” said IALR’s Simpson. Danville’s Tucker is also optimistic: “We took a ‘build it and they will come’ approach.” And that approach has led to success stories. Take Kyocera SGS, the custom tool manufacturer that opened shop in one of the IALR’s Quick Launch Bays before moving into its own HQ two years later. The company plans to hire 35 employees. But Wells say they’ve also planned for further expansion down the road. “This was the only community where they didn’t talk about what they wanted to do,” Wells said. “They showed us what they are doing today.”


Advanced Infrastructure and Exceptional Logistics to Support Manufacturing 275 471


Virginia’s strategic East Coast location connects companies to the U.S. and the world with exceptional road, rail, and port infrastructure, making it a desirable location for manufacturers. 79

The Commonwealth is also known for its world-class higher education system that provides a strong pipeline of talent from local and regional universities and community colleges. 64

West Virginia

Greenbrier Valley 64 B e c k l ey


Concord University

Hollins Univer

Roanoke-Blacksburg Regional Kentucky

Virginia Tech





Bluefield College

University of Virginia’s College at Wise

Roanoke College

Radford University



W y t h ev i l l e




King College



Tri-Cities Regional

Johnson City

East Tennessee State University

74 Appalachian State University

Kn ox v i l l e

McGhee Tyson

Ferrum College

Emory and Henry College Bristol

The University of Tennessee-Knoxville





Lincoln Memorial University

B l a c k s b u rg

Piedmont Tri International

Wake Forest University W i n s t o n - Sa l e m


G re e n s b o ro

B al t i m o re



7 Shenandoah University

Georgetown University

Washington Dulles International

Virginia Inland Port

Christendom College


Eastern Mennonite University


H ar r i s o n b u rg

Fre d e r i c k s b u rg

Shenandoah Valley Regional

Mary Baldwin College St au n t o n



C h ar l o t t e s v i l l e


Washington and Lee University


University of Richmond

Ly n c h b u rg

Liberty University Lynchburg Regional

Fa r m v i l l e



Longwood University 460

Virginia State University

Virginia Commonwealth University

Richmond Marine Terminal

College of William and Mary

Newport News-Williamsburg International

Pe t e r s b u rg


So u t h H i l l



W i l l i a m s b u rg

95 360


Richmond International



So u t h B o s t o n





Hampden-Sydney College



Randolph-Macon College Virginia Union University

University of Lynchburg

Christopher Newport University Port of Virginia

460 Hampton Roads Terminals

Hampton University Norfolk

Virginia Wesleyan College Norfolk International Regent University

Old Dominion University Norfolk State University Emporia

V i rg i n i a B e ac h



Averett University 501


Higher Education

North Carolina

Major Engineering Colleges & Universities




Virginia Military Institute Sweet Briar College Randolph College




Southern Virginia University

n o ke


Charlottesville-Albemarle University of Virginia

81 Lexington

Salisbury-Ocean City Wicomico Regional

University of Mary Washington




Ronald Reagan Washington National


James Madison University

Bridgewater College

United States Naval Academy

George Washington University Catholic University of America American University

George Mason University


University of Maryland

Wa s h i n g t o n , D. C .

Marymount University



Baltimore/Washington International

George Washington University

Additional Major 4-Year Colleges & Universities

85 University of North Carolina at Greensboro North Carolina A&T State University

Community Colleges Higher Education Centers

Duke University Durham

University of North Carolina at Chapel Hill

Raleigh–Durham International Raleigh

North Carolina State University

Illustrative Manfacturers in Virginia Central Virginia

Northern Shenandoah Valley



275 471

71 75


Shenandoah Valley

64 64

West Virginia

Roanoke Region St au n t o n




B e c k l ey

New River Valley Ly n c h b u rg B l a c k s b u rg


R o a n o ke

Southwest Virginia Wise




I81-I77 Crossroads

77 Martinsville

26 Johnson City

Southern Virginia

W y t h ev i l l e


Lynchburg Region Kn ox v i l l e



North Carolina

Northern Virginia B al t i m o re



Greater Fredericksburg

Wa s h i n g t o n , D. C .



Culpeper H ar r i s o n b u rg Fre d e r i c k s b u rg

Northern Neck

Eastern Shore

95 C h ar l o t t e s v i l l e

Greater Richmond




Middle Peninsula

W i l l i a m s b u rg Fa r m v i l l e

Pe t e r s b u rg




So u t h B o s t o n

So u t h H i l l

Greater Williamsburg Emporia

V i rg i n i a B e ac h

Hampton Roads South Central Virginia

Durham Raleigh

Virginia’s Gateway Region

John Tyler Community College

Huntington Ingalls Industries, Newport News

A Skilled Workforce Supports Virginia’s Manufacturers Diverse manufacturing operations invest in this shared critical resource


O’Sullivan Films, Winchester


its Winchester manufacturing facility in November 2018, its goal was to expand operations to speed production of its O’Sullivan brand surface products to market. But the quicker turnaround of these sheet products for automotive end-use applications would not be possible without the availability of the manufacturing industry’s most indemand resource: a skilled workforce. With national unemployment at 3.8% per the Bureau of Labor Statistics’ March 2019 numbers, many manufacturers can’t get enough talent onboard to complete increasingly digitalized tasks.

In fact, a 2018 report from Deloitte and The Manufacturing Institute noted that manufacturing job openings have grown at double-digit rates since mid2017 and are approaching the historical peak demand seen in 2001. The same study predicts an increase in the total of unfilled jobs in the U.S. manufacturing industry in the next 10 years from 2 million to 2.4 million. Yet across the Commonwealth, and its diverse array of manufacturing operations, companies are celebrating the availability of and state support for this invaluable human resource. Continental is a case in point. “As the Virginia location was already a sound base, with connections to all major customers, it started as a sound location

for expansion,” said R. Scott Krueger, CEO, president, and plant manager for Benecke-Hornschuch Surface Group, the Continental subsidiary behind the O’Sullivan brand. “However, I would say the biggest advantage the Winchester site has is the workforce. The company location has a sound and secure workforce, with a history of tenure.” Krueger explained that the state and region provided incentives to create 61 additional jobs and initiatives to train its 450 employees, incentives that encouraged the German company’s expansion in Virginia. But more than that, Krueger cites the variety of local colleges and a K-12 program that supports traditional higher education as well as career and technical education initiatives as a boon for manufacturers.


Newport News Shipbuilding, Newport News


M ANUFACTURING IS A MAJOR DRIVER OF V I R G I N I A’ S E C O N O M Y Manufacturers in Virginia accounted for over 243,000 employees in 2017, or 6.4% of the state’s workforce. Manufacturers account for 8.7% of the state’s GSP, according to the National Association of Manufacturers (NAM). Data published by the Virginia Manufacturers Association’s (VMA) Vision for a More Competitive Manufacturing Future report ranks Virginia as the fourth-most competitive state for manufacturing, and workforce plays a significant role in this strength. “Our data shows the $43-billion economic impact of manufacturing is broadly distributed across the state, but there are clear concentrations in Richmond, Hampton Roads, and the Shenandoah Valley,” said Brett Vassey, VMA president and CEO. The state supports industry by connecting manufacturers to trained workers in

Continental, Culpeper County

highly technical fields and supporting training that sets a clear career path for employee development. As diverse as the geographical makeup of the Commonwealth’s manufacturing base is the wide range of products created here. While there are some clear leaders, goods produced range dramatically from food and beverage products to aerospace components.

Running these lines are an additional 199 people all hired in 2018, making up approximately 20% of the plant’s workforce. Beckman noted that the hiring frenzy came through support from the Commonwealth of Virginia through its Virginia Jobs Investment Program (VJIP), Augusta County, and the Shenandoah Valley Workforce Development Board.

The Hershey Co. is among those diverse manufacturers. The sweets-maker’s Stuarts Draft facility occupies more than 600,000 square feet and employs about 1,000 employees in producing Reese’s, Hershey’s and Peter Paul (Mounds and Almond Joy) brand products.

“Their efforts and ongoing support have enabled us to expand our workforce through VJIP’s Virginia New Jobs Program, develop forward-thinking apprenticeship programs with the Valley 2 Valley grant funding, and retrain our existing workforce, which allows us to continue to expand our operations,” Beckman said.

“Within these brands, we have continued to add innovative new products over the past year,” explained Jeff Beckman, corporate communications director for The Hershey Co. “In 2018, we also added new production lines that have been installed and are now operating.”

DEVELOPING NEW TECHNICAL SKILL SETS While food production has its own level of demands, the state’s leading engineering universities and technical programs also make Virginia an attractive location for more technical production.

Rolls-Royce, Prince George County



Old Dominion University is developing curricula for engineers, IT professionals, and trades workers to ensure they’re prepared to incorporate new technologies in shipbuilding and that they’ll be able to constantly innovate and change as the industry is disrupted. ROB HOGAN Vice President of Manufacturing, Newport News Shipbuilding

In May 2018, Rolls-Royce Crosspointe in Prince George County celebrated a milestone: the production of its 10,000th rotative disc. It’s one of many precisionengineered engine components that the company manufactures in Virginia for some of the world’s most advanced aircraft manufacturers, from Boeing to Airbus to Bombardier.

and Virginia Tech, where we develop new technologies through joint research programs and cultivate recruiting pipelines of future talent.” The company also has established a stateaccredited apprenticeship program and has developed new learning programs with local schools, including John Tyler Community College.

Don Campbell, director of communications for Rolls-Royce North America, calls a reliable workforce pipeline “a key enabler for growth” at the Crosspointe location. “Rolls-Royce also maintains a meaningful public-private partnership with researchbased universities and technical schools in the area,” Campbell elaborated. “We have strong university relationships with both the University of Virginia

But it was the lure of dedicated manufacturing research that truly helped the company commit to a presence in Virginia. In 2007, the Commonwealth, the University of Virginia, and Virginia Tech launched a project to develop an applied research center that helped secure Rolls-Royce’s initial investment in the state. The Commonwealth Center for Advanced


Manufacturing is adjacent to RollsRoyce’s campus and serves as a place to collaboratively explore the latest technical research. Academia, government, and industry partner at CCAM to pursue directed research on state-of-the-art industry-scale equipment. Projects today are working to explore automated machinery that adapts to environmental input, new applications for additive manufacturing, new machining technologies, and strengthened surface engineering. Despite concentrations in certain regions, manufacturers have found benefits in siting locations across the state. For example, mining and construction safety equipment manufacturer PBE Group is growing its

export business from North Tazewell in Southwest Virginia. The company is able to recruit from local colleges, including Bluefield State College, Southwest Virginia Community College, and Virginia Tech. Chief Operations Officer Christa Glassburn noted that the relatively low cost of living allows manufacturer to more affordably pay a competitive wage. The result? “We can get skilled workers who stay — they’re high tenured — and we can have realistic wages that help us compete with international wages so we don’t get pushed toward outsourcing everything,” Glassburn said. (For more on PBE Group, see page 76.) P U R S U I N G A D I G I TA L T R A N S F O R M AT I O N Because digitalization is today’s new normal, some manufacturers are evolving to transform their processes, and enhance the skills of their workforces, to succeed in this new environment and increase the levels of complex machining they’re able to demand. While Huntington Ingalls Industries’ Newport News Shipbuilding division has been innovating in its field for the last 132 years, the company stands today at the precipice of a new era. The state’s largest industrial employer, with more than 22,000 employees, is focusing on enhancing its digital infrastructure. In June 2018, the company announced in plans to invest nearly $1 billion in its facilities and technology infrastructure, as well as employee training necessary to lead a digital upgrade in shipbuilding processes. The integrated Digital Shipbuilding project aims to empower the company’s workforce through improved ease of access to secure information, with new tools that include 3D work instructions as well as the augmented reality, modeling, simulation, and laserscanning technologies that are being proven in other market segments to help speed even the most complex designs more quickly and accurately into production. Training and hiring necessary to support this transformation is being supported by a unique partnership with the

Governor’s office and assistance from state agencies. The plan is not only to create a more digitally sophisticated workforce, but also to amp up manpower across its 550 acres to fulfill its contract to build components for new Columbiaclass submarines. Newport News Shipbuilding intends to hire nearly 7,000 people, with creation of 2,000 new jobs, over the next five years. The state has provided funding for the organization’s robust maritime prehire program that is operated through local community colleges. In addition to this program, the shipbuilder stands to benefit from a Growth and Opportunity for Virginia (GO Virginia) grant and state funding to Old Dominion University, which will develop a curriculum centered on the skills needed to succeed in digital shipbuilding. “Old Dominion University is developing curricula for engineers, IT professionals and trades workers to ensure they’re prepared to incorporate new technologies in shipbuilding and that they’ll be able to constantly innovate and change as the industry is disrupted,” Rob Hogan, vice president of manufacturing for Newport News Shipbuilding, explained. M A I N TA I N I N G I N F R A S T R U C T U R E T H AT CONNECTS BUSINESSES While Virginia’s workforce stands out to manufacturers, there’s another reason the Commonwealth attracts manufacturers in so many fields. As Beckman put it, facilities are “conveniently located near major interstates, which makes it easy to move raw materials and finished products into and out of the facility.”

manufacturing operations, consider the state infrastructure the venous system connecting manufacturers to raw materials and products to end-users around the world. When it’s time to send products out to market, the state’s international gateways, including The Port of Virginia and Washington Dulles International Airport, simplify the process of getting products not only across the country but around the world. These gateways provide the necessary logistical access to ship Virginia products to international markets, and with that access comes the international service industry to facilitate exports, such as freight forwarders, custom house brokers, attorneys, bankers, etc. However, Hogan pointed out that one of the reasons the state is an ideal location for manufacturers isn’t just the ease of getting products out, but the ease of bringing in materials. “There are lots of options to bring in materials through transportation networks, including rail, water, and road,” he said. SMALL BUSINESSS SUCCESS While easy proximity to international markets noticeably attracts large manufacturers, part of the Commonwealth’s strength in manufacturing lies in its diversity. VMA notes that 74% of the state’s manufacturers have fewer than 25 employees. Small companies not only supply components, research, and technology that their larger counterparts can put to use — with the right support, they can drive the innovation that will make them tomorrow’s large employers.

VMA’s Vision document highlights infrastructure as an important component in driving manufacturing growth. While the workforce development available through Virginia’s expansive network of four-year and community colleges and technical training programs may serve as the heart of a diverse range of


In Chincoteague, visitors to Virginia’s beautiful Eastern Shore enjoy chocolate-covered frozen bananas on sunny afternoons at the beach.

PBE Group

Expands its International Presence Exports give small business global reach

It’s kept many people employed in Southwest Virginia, because most of what they manufacture now goes overseas. CHRISTA GLASSBURN Chief Operations Officer, PBE

THE GREAT RECESSION held nothing in the way of good timing, but in late 2011 Prairie

Capital and Vierville Capital felt the pinch of retraction with particular pain. The investors had just partnered to purchase Pyott-Boone Electronics (PBE), a small manufacturer in Southwest Virginia, to help grow the sales of its mining and construction safety equipment. “Anyone from Virginia knows that 2012 was the worst year for both coal and U.S. defense,” recalled Christa Glassburn, chief operations officer for PBE Group. At the time, Glassburn estimated, the company sold 60% of its products to the U.S. coal mining industry and 40% to U.S. defense contracting. “The business went reeling in a downward direction very quickly,” she said. Investors acted fast. PBE Group had a plan in place to acquire businesses internationally as a pathway to expansion, and there seemed no better time than this to sell beyond the U.S. In 2012, the company acquired Minecom in Australia, bringing new product knowledge for underground communication equipment back home to North Tazewell to manufacture. It was the beginning of a major change for a company that had previously sold 98% of its products within the United States. Today that statistic is startlingly different: the company’s sales are 75% international, with sales offices in 12 countries and customers in more than 30 countries.



A NEW SKILL SET Tazewell, Virginia, with a population of just under 5,000, is home to several manufacturers, including PBE, Tadano Mantis Corporation, and Komatsu.

high-tech components, from standard environmental monitoring systems to custom-printed circuit boards. While the company’s employees are highly skilled when it comes to manufacturing, developing a global network of distributors and subsidiaries demanded an entirely new skill set.

PBE Group works to stand apart in securing local employees through robust training and employee support. The company provides a competitive After the acquisition of Minecom, wage, as well as undergraduate the company went into Canada and tuition, which Glassburn sees as an purchased Mine Radio Systems Inc., advantage in attracting employees. The a communications equipment leader company also supports its primarily selling to more than 30 countries. female manufacturing workforce with Suddenly, PBE Group had an instant internships for the children of employees. network of overseas customers. With that “We support our employees while they’re growth came a learning curve. supporting their families to better increase our trained workforce.” “Our manufacturing workforce was skilled, and they were capable of The result is a group of 90 highly manufacturing the products, but they tenured manufacturing employees skilled had to learn how to build products for at the delicate assembly process required other countries,” Glassburn said. That to build the company’s monitoring meant adapting to subtle wiring changes and communications equipment. The and understanding the codes and 42,000-square-foot facility houses a associated labeling requirements of small machine shop, but the focus of other countries. the manufacturing is light assembly of


There were also a range of administrative hurdles: selecting the containers for shipping freight to lower transportation costs; navigating duties; and creating the appropriate certificates of origin, electronic export information documents, and other paperwork that varied by destination. “Those are the costs and difficulties people don’t explain to you when you first begin exporting,” Glassburn said. “It’s difficult to understand the real cost of exporting your product until you start doing it.” A HAND IN I N T E R N AT I O N A L O U T R E A C H PBE found support from the state, including the Virginia Coalfield Economic Development Authority and VEDP’s collaborative Go Global with Coal and Energy Technology (GGCET) program. The company had participated in the state’s international trade programs since 2000, but this specific two-year program was designed to help Virginia coal and energy technology businesses expand internationally. Ultimately, it helped the



businesses involved increase sales by 38.4% and employment by 27% through export support services. Among other things, the program helped PBE secure a presence at trade shows in South America and the Middle East through assistance with expensive registration fees. These events provide the networking and branding that can help small companies new to a market get their foot in the door. Having graduated from GGCET, PBE is nearing the end of its two years within VEDP’s by-invitation Virginia Leaders in Export Trade (VALET) international business acceleration program. The program has helped PBE navigate the process of earning regulatory product approvals in new markets. With state funding support for these approvals, the company was able to speed into new markets relatively quickly. “We might not have focused on four countries at the same time because of the large cash outlay,” Glassburn said. “With

the help of the VALET program, we were able to focus on more countries and get the products approved to manufacture. It helped us to continue to develop jobs in the U.S. for international exporting.” As the company has gained expertise in exporting, it’s now developed a global network strengthened by its latest acquisition, the January 2018 purchase of Rutherford Group in Tomago, Australia. Today the company supports 350 employees globally, and 15 facilities. It has been an eye-opening shift for PBE’s Tazewell-based staff. They have had to adapt to being available to take Skype calls during off-hours and begun thinking about purchasing in currencies beyond the U.S. dollar.

phone call seem complicated, it’s crucial to getting a clear message across, she’s found. PBE is actively looking at applying these lessons to new partners as the company prepares for future acquisitions. Glassburn calls its export business “absolutely critical” to the company’s market strength. The shift from domestic to export sales has not only helped strengthen U.S. sales, she noted, but has been pivotal in supporting the Virginia workforce. In October, Governor Ralph Northam presented PBE with the 2018 Commonwealth of Virginia Governor’s Award for Excellence in International Trade. The award annually recognizes a business that has increased its international sales while promoting the best interests of its employees and the surrounding community.

“We’ve done a lot of training with our staff,” Glassburn said, but one simple piece of advice has proven invaluable. “Pick up “It’s kept many people employed in the phone. When you’re all working in Southwest Virginia, because most of what one small manufacturing facility, it’s easy they manufacture now goes overseas,” to get up and walk down the hall.” While Glassburn said. “Exporting has really planning around time zones may make a saved our Virginia operations.”



It’s Fast Forward for Workforce Credential Training in Virginia Students have earned more than 14,000 industry credentials since 2016


MATT POE ALWAYS had an affinity for

technology and cameras. Yet it wasn’t until he purchased a drone four years ago that he realized how much he enjoyed photography and videography. To hone his skills, the Abingdon resident began shooting footage of the mountainous region’s picturesque scenery. Before he knew it, friends were asking Poe to shoot photos and videos at special events, and they were willing to pay him. That’s when Poe realized he needed a license. He found a class at Virginia Highlands Community College in Abingdon that helps students prepare for the Federal Aviation Authority’s remote pilot airman certification test.

Poe paid about $80 upfront to enroll and spent three Saturdays, or about 21 hours, in class learning about general aviation and federal regulations governing unmanned aerial systems. He sat for the license exam in October 2017 and passed. “If I hadn’t taken the class, I would never have passed,” he said. Since gaining his certification, Poe’s hobby has grown into a small business. He uses his new credentials and skills to shoot photos and video for clients, which include commercial real estate companies. He reports that the business is growing by leaps and bounds. These skills are in high demand in Virginia as the unmanned systems industry grows. Poe is one of the thousands of people who have earned a workforce training credential courtesy of the state’s FastForward program since it began in July 2016. The program assists Virginians with skills training to fill jobs in highdemand fields that typically require more than a high school education but less than a college degree. To date, more than 14,000 credentials have been conferred. “The fact that 98% of the credentials are being awarded in Virginia’s top 12 occupations shows that the program is aligned in terms of what businesses are hiring for,” said Randall Stamper, assistant vice chancellor, career pathways and workforce programs, for the Virginia Community College System (VCCS). Those occupations include the skilled trades, logistics and transportation, welding and manufacturing, healthcare, education, business, and information technology. FastForward also has added a program to train workers in the rapidly developing field of solar energy. Funded by the General Assembly, the FastForward program offers more than 140 credentials through the state’s 23 community colleges. In fiscal year 2017, the state initially invested $4 million in the program, but it bumped that figure to $5 million because the courses were so much

in demand, said Stamper. The following year, $7.5 million was utilized for the program. For the 2019-20 biennium, the state has increased funding to $19 million. Virginia is the first state with a workforce training program that is “pay for performance,” noted Stamper. Students are required to pay one-third of the cost of tuition for their job training upfront. The state pays the remaining twothirds if the student passes the class and earns the industry-recognized credential. If the student doesn’t complete a class, he or she is responsible for the second third of the tuition payment, and if the student doesn’t earn the credential, the community college absorbs the final third and is not reimbursed by the state, he explained. The average cost for a class, which typically runs from six to 12 weeks, is about $3,100 and financial aid is available for eligible students. Those interested and enrolled have the benefit of consulting a career coach at each community college on options for workforce training and the affordability of approved training programs. So far, the class completion rate remains above 90%, while the credential completion rate is 65%. Reasons for the lower credential rate are numerous, with some businesses willing to hire someone without the credential, while other courses require hours of on-the-job employment before people are allowed to sit for an industry exam. To date, 40% of the credentials have been earned in rural areas, which have been hard hit by the loss of such industries as textiles and coal. The average student age is 36 years old and most have dependents. According to VCCS data, students who successfully complete a credential report increased pay, employer-sponsored health care, paid vacation time, and better work schedules.

partnerships and projects for VCCS. “It helps a person improve their life situation, and it helps an employer fulfill their needs to be viable and competitive. It’s a win-win.” Ken Garrison, executive director of the Heavy Construction Contractors Association in Manassas, said the program has been helpful in training a new pipeline of heavy equipment operators. His 170-member association worked with Lord Fairfax Community College in the Northern Shenandoah Valley to develop a program in December 2017 that trains students through the use of simulators. While infrastructure projects are booming in Northern Virginia, the industry’s workforce is aging, said Garrison, and it needs younger workers to replace ones who will be retiring. So far, 45 students have completed the training. “Association members have a huge appetite for hiring the graduates,” said Garrison. “This is not just a job, it’s a career. You can start out making $36,000 a year and get up to the $56,000 range very quickly.” Plus, there are opportunities to move into management as jobs become open for foremen and site superintendents. “Our industry has been thrilled at both the quality of what the community colleges are putting out and the drive of the workforce side of the system to put this in place. They see the need, they see the opportunity, and they are working directly with the industry to make this happen.” Looking to the future, FastForward credentials will continue to be delivered through noncredit training. The next step in the program’s growth is to align these credentials, comprehensively, toward credit-based outcomes as students return to college.

“It serves a dual purpose,” said Jenny Carter, director of workforce


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 In addition, VEDP regularly works with a wide network of statewide partners, including: State Leadership Partners

Project Delivery Partners


Center for Innovative Technology

General Assembly

Policy and Programmatic Partners 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

GO Virginia

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, 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 Planning District Commissions Virginia Rural Center


Virginia’s Technology Councils



Roanoke Region New River Valley




Southwest Virginia







I81-I77 Crossroads 77 58


Northern Shenandoah Valley


Washington, D.C.

66 81

Northern Virginia

211 33


Shenandoah Valley


Greater Fredericksburg

Central Virginia


95 81

Northern Neck







Eastern Shore

Middle Peninsula 13

Greater Richmond Lynchburg Region

60 288




Greater Williamsburg


Virginia’s Gateway Region




South Central 360 Virginia

Southern Virginia


58 501




Hampton Roads


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