RICHMOND, Va. — As Virginia renews its focus on job creation, officials are using lessons learned from lost opportunities and the importance companies place on saving money to better attract new businesses and help current companies grow.
According to state data obtained by The Associated Press, Virginia lost more than 175 economic development projects totaling about 56,000 jobs and company investments worth $22.5 million since 2005. During that same period, Virginia lost about 78,065 jobs because of business closings and layoffs.
By contrast, officials have announced projects promising the creation of more than 127,550 jobs with total investments of more than $18 billion since 2005.
“State economic development folks … never like to lose, so it’s not a fun situation to find yourself in,” said Liz Povar, director of business development for the Virginia Economic Development Partnership, an organization created by the General Assembly in 1995 to promote the expansion of Virginia’s economy.
“We recognize that there are a broad number of factors that influence a company’s decision about where they want to locate. … Ultimately if the company doesn’t make a good business decision, they won’t be in business at all,” she said.
Of the projects Virginia lost since 2005, many of the companies cited factors related to other existing facilities, financing, market proximity, and logistics as the reason for going elsewhere. Other projects were lost because publicly owned facilities or mega sites and/or required infrastructure such as gas and rail were not available.
Many of the lost projects ended up going to neighboring North Carolina, with others going to places like Pennsylvania, South Carolina and Maryland, or as far away as Singapore and Canada, according to information provided by the partnership.
“It’s not surprising that we would end up competing and maybe even being finalists for some of the same projects,” said Dale Carroll, North Carolina’s deputy secretary of commerce. “There are probably a lot of things that bring us together in the final stages of site searches.”
Both states share many of the same attributes, including similar geography, being well-positioned in the mid-Atlantic region, and having a good quality of life for its residents.
The recent Great Recession created the worst economic downturn in Virginia since the Great Depression. The loss of potential jobs and the closing of businesses helped push Virginia’s unemployment rate from more than 3.5 percent in 2005 to around 6.5 percent.
Lt. Gov. Bill Bolling was tapped by Gov. Bob McDonnell a year ago to spearhead his administration’s job creation efforts.
“Economic development had not been a top priority of state government in a number of years,” Bolling said. “As a result of that, we had fallen farther and farther behind the states with whom we compete with on a regular basis.”
Over the last few years, Virginia has created new tax credits for creating jobs, given itself more flexibility in how it awards incentives, and made it easier for companies to obtain permits and establish businesses, Bolling said.
Virginia also changed its tax laws and has increased the number of sites with roads and infrastructure in place to handle large facilities. Those changes have resulted in projects like software maker Microsoft Corp.’s plan to invest up to $499 million and create 50 jobs at a data center in Mecklenburg County.
While Virginia can work to address some of the factors that influence where a company sets up shop, there are others, like population size or geographic location, that are out of its control.
Povar also said the economic landscape involving businesses coming to Virginia has changed: “The branch plant of yesterday announcing 50 jobs, employing people who assemble things is not the future.”
Instead, the state is seeing more high-tech and specialized product companies looking to locate here.
In some cases, however, economic development officials made the decision not to pursue projects because they believed incentives sought by the company wouldn’t generate the right return on revenue for Virginia.
For example, Povar said, the state elected to walk away from a $115 million manufacturing plant computer maker Dell Inc. proposed to build in 2004. The project went to North Carolina, which offered more than $300 million in incentives.
The decision turned out to be a good one for Virginia as Dell closed the Winston-Salem plant last year after a six-year run that failed to reach the economic promises floated at the beginning.