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byline: Bernie Niemeier

Letter from the Publisher

In the wake of the tragic collapse of Baltimore’s Francis Scott Key Bridge, the Port of Virginia stepped up to offer its support and immediately began taking on any cargo needing to be redirected our way.

Apparently caused by a power outage aboard the container ship that collided with the Key Bridge, the accident shut down the Port of Baltimore entirely for more than a week. As of early April, Baltimore was opening temporary shipping lanes for smaller barges and tugboats, but it may take until at least late May before shipping there is restored to its usual levels and Baltimore can handle larger container ships again. In the meantime, it has added stress on the East Coast supply chain.

The accident highlights the critical importance of port access to our economy, but it’s also a testament to Virginia’s ongoing efforts in making the Hampton Roads maritime ports wider, deeper and safer that the Port of Virginia is able to absorb the extra container capacity without strain.

That capability is the result of significant investments. Wider and deeper channels come at a cost; it is the oceangoing equivalent of taking a well-worn path and converting it to a superhighway.

In March, the port finished widening Thimble Shoal Channel West, providing the berth needed for the biggest container ships to move two ways simultaneously. Meanwhile, a dredging project scheduled for completion in 2025 will give the Port of Virginia the East Coast’s deepest and widest harbor, allowing the largest modern container ships to make Virginia a fully loaded first port of call. And what’s more, the Virginia Department of Transportation is working to finish its $3.9 billion Hampton Roads Bridge-Tunnel Expansion project by early 2027, alleviating regional traffic congestion and continuing to ensure that container ships calling on the port are free of overhead draft restrictions.

All of this results in a huge competitive advantage for the commonwealth’s ports system, which ranks among the top ports of entry and egress for East Coast imports and exports.

Virginia’s maritime industry is vibrant and innovative. Offshore wind turbines and the accompanying supply chain necessary to construct and supply them are also developing opportunities. That’s not to say that all these prospects don’t come with obstacles such as global supply chain disruptions, sea-level rise, and labor shortages. These factors all present challenges that Virginia’s maritime, logistics, economic development and educational institutions are working collectively to address.

Our hope is that the 2024 Virginia Maritime Guide will provide you with a wealth of information on each of these investments, opportunities, challenges and more. To compile this guide, we worked closely with the Virginia Maritime Association and the Port of Virginia. We thank them for their assistance and look forward to the maritime industry’s ongoing success in the commonwealth.

Bernie Niemeier

President & Publisher

Virginia Business

How’s your confidence?

Business always has its up and downs. We’ve all been through more than a few. As au courant as the dot-com economy might seem, that bubble floated skyward decades ago, bursting in 2002. It wasn’t just a small dip. Between 1995 and its peak in March 2000, the tech stock-heavy Nasdaq index rose by 800%, only to fall by 78% from its composite total by October 2022. Many companies that were household names disappeared. The dot-com bust was further compounded by the 9/11 attacks.

Then, in late 2007, the subprime mortgage crisis collapsed the U.S. housing market, resulting in the Great Recession. Falling real estate asset values contributed to a global financial crisis. Strong fiscal stimulus was required. Industry bailouts, near-zero interest rates and government spending reached unprecedented levels. As a result, the economy was restored to a growth trajectory for the next decade.

In March 2020 came the COVID-19 pandemic and more unprecedented fiscal stimulus. Borrowers are likely to be more comfortable than lenders with near-zero interest rates, but most everyone should be at least a little nervous about industry bailouts and deficit spending.

On the other hand, what were the alternatives? Let’s face it, business failures and massive unemployment just aren’t that attractive. While recessionary data points are unquestionably a bit dark, equally important are what happens leading up to and in between recessions.

Prior to the dot-com bust, the 1990s were the longest growth period in U.S. history. After Sept. 11, 2001, the economy expanded for more than six years, and following the subprime mortgage crisis, our economy expanded for 10 more years. After the steep declines of the pandemic through early 2021, growth returned on an unprecedented basis, with the U.S. leading the world economy.

Macroeconomics are important, but U.S. and global metrics don’t necessarily tell the story of an individual local business. Beyond the data, anecdotal information is important. Consumer sentiment and business confidence do more to drive politics and market prices than any objective set of economic facts.

During the second half of last year, I had many conversations with business leaders and salespeople who expressed worries about inflation, recession and declining consumer confidence in 2024. So far, those concerns appear to have been unfounded.

U.S. gross domestic product increased at significantly higher rates during the last half of 2023, increasing at a 3.3% annualized rate in the fourth quarter. Inflation concerns heated up last summer but cooled by year-end. In January, the U.S. consumer price index stood at 3.1%, higher than the Federal Reserve’s inflation target of 2% but a step down from January 2023’s 3.4% rate and way down from 7% in January 2021.

Meanwhile, the U.S. unemployment rate is currently 3.7%, well below the long-term average of 5.7% since 1948, and Virginia’s unemployment rate is 3%. The commonwealth’s long-term average of 4.57% is a full point below the national average.

Fortunately, as if all our children are smarter, taller and maybe just a little closer to the perennially open spending spigots of Dee Cee, Virginia always trends toward above-average numbers.

While I always would personally rather give peace a chance, it doesn’t hurt the commonwealth’s economy to have two hot wars in Ukraine and Gaza calling upon the military-technology complex of Northern Virginia and Hampton Roads to supply their needs.

So, how’s your confidence? I’m admittedly a glass-half-full kind of guy, and expecting the worst rarely leads to the best. Rather than anticipating recessions, let’s look at the time periods between them. Based on that analysis, we are still in the early years of what should be a significant period of growth and expansion.

Let the good times roll.  

Got news?

If you’ve been missing out on some local news events lately, it’s likely because local news is increasingly underreported. A report from the University of North Carolina found that between 2005 and 2020, the U.S. lost 2,100 — or roughly one-quarter — of its local community newspapers. Four years later, this trend toward “news deserts” continues unabated. In Virginia, many local papers have reduced both their number of print editions and full-time journalists. Having spent more than 30 years in the newspaper industry, I saw the beginnings of this firsthand, but never thought the downfall would come this hard or this fast.

The consequences of this unraveling of local newspapers are increasingly obvious in an age of misinformation.

As then-”Meet the Press” host Chuck Todd interjected during an interview with Trump White House counselor Kellyanne Conway in 2017, “Alternative facts are not facts — they’re falsehoods.”

Similarly, last year, Fox News reached a $787.5 million settlement agreement in a lawsuit brought against the network by Dominion Voting Systems for airing false claims that the companies’ voting machines had rigged results in the 2020 election. Fox acknowledged the claims to be false without granting an apology, seeming to indicate that some media news outlets may not have the best interests of their audience or American democracy in mind.

While it’s unimaginable that our nation’s Founding Fathers would have been so naive as to think that lies couldn’t come from the lips of politicians or be promulgated by newspapers, they did envision our free press as a primary and essential check on the integrity of our democracy. There is a reason why the First Amendment comes first. As the saying goes, “The pen is mightier than the sword.”

Behind our founders’ reliance on robust news reporting was the assumption that those efforts would be supported by equally robust advertising. This too has changed. Tech titans like Google, Meta and X (formerly Twitter) are arguably today’s biggest publishers. Make no mistake: Big tech is in the business of content and advertising, with artificial intelligence-powered algorithms making content curation decisions about what viewers do — and don’t — see. The growth of news deserts demonstrates what happens when local talent is scraped away by tech companies. Local news becomes the proverbial baby thrown out with the bath water.

Congress introduced a bipartisan bill in July 2023 addressing the issue somewhat. The Community News and Small Business Support Act would provide local newsrooms with funding over five years to support hiring and retaining reporters. Additionally, small businesses could receive tax credits of up to $10,000 over five years for advertising in local news outlets. However, that bill is still making its way through Congress, and legislators haven’t taken action to regulate how big tech firms can use local news content. Meanwhile, Canada and Australia have grappled with forcing social media companies to pay for republishing local news, with mixed results.

If all of this sounds pretty dark, that’s because it is. On the other hand, dark clouds can have silver linings. At Virginia Business, our audience is the commonwealth’s business community. As others have pulled back from business reporting, we’ve leaned in and added to the magazine’s staff and coverage over the past few years. Both subscribers and advertisers are heading in our direction.

After a couple of decades of going down digital and social media rabbit holes, advertisers are tiring of measuring bots instead of people. The tech titans have frequently proven to be unstable in both measurement methods and leadership temperament. The quality of the context in which brand messages appear really does matter. Quality is defined by truthful, factual, timely and careful reporting.

As we enter 2024, Virginia Business remains strong. We thank you for your loyal readership and your unflagging advertising support. As always, we are committed to our mission of being Virginia’s source for business intelligence. Our hope is that the rest of the local news will also find its way to you. It is essential to our democracy.

Long-range forecast

In this 2023 issue of Hampton Roads Business, several experts give us their takes on what the region will look like in 20 years.

A lot of what we think about Hampton Roads surrounds its strategic significance to the U.S. military as home to the world’s largest naval base and the nation’s largest military shipbuilding business, not to mention the Port of Virginia’s importance to Virginia’s economy and international trade. There are also the region’s beaches and historical sites, which attract millions of visitors annually.

Building on that base, these experts in fields ranging from economic development and workforce training to sea-level rise, made mostly positive predictions for the region’s future growth in wind energy, defense, entrepreneurship and historical tourism, while acknowledging that coastal resiliency will remain a significant challenge for the region’s residents and businesses, as well as the Navy and the port.

Meanwhile, this year’s guide delves into the up-and-down residential and commercial real estate markets; the Hampton Roads Biomedical Research Consortium’s focus on moving scientific research to marketable products; commercial rocket launches on Wallops Island; and the latest on the region’s major transportation and construction projects.

Additionally, the local leaders featured in this year’s Executive Insights section discuss the current business climate in Hampton Roads from a variety of perspectives, including banking, health care, the Navy and higher education. And as always, this guide offers numerous up-to-date charts and lists to provide you with the business intelligence you need to get to know the region.

If you aren’t already doing business in Hampton Roads, you should be. The talent pool being produced by local colleges and universities is outstanding. There is an ongoing supply of well-trained people who are completing military service and looking forward to entering the civilian workforce, as well as a plethora of resources and networking opportunities available from local chambers and economic development offices.

We hope that you will enjoy reading the 2023 issue of Hampton Roads Business. Our goal is to help everyone better understand the area’s economy and connect with the businesses that drive its success.

A powerful history

Welcome to the fourth edition of the Virginia 500 — The 2023 Power List. Our hope is that you will find it to be an insightful and helpful guide to the commonwealth’s top leaders in business, government and higher education.

Virginia’s long reputation as a power center — producing eight U.S. presidents, including George Washington, Thomas Jefferson and James Madison — precedes us and continues to this day.

While a list of 500 leaders seems like it would allow us breathing room to recognize practically every significant leader in Virginia, it leaves only so much room in specific categories. For example, first and foremost, we want to make sure to include powerful leaders in the business community, which leaves less room for state government, academia and politics.

Overall, the Virginia 500 includes leaders across 20 categories, some broken into subcategories, with the number of listings in each category ranging from seven to more than 70. When we assembled the first edition of this list back in 2020, we had questions like, “How many people will be included in each category?” Well, that depends. There aren’t as many big players in an unquestionably important category like energy, while there are many more in other important categories such as banking or real estate. And given the commonwealth’s proximity to Dee Cee and the fact that four of the nation’s five largest defense contractors are headquartered in Northern Virginia, the federal contracting sector makes up our largest category.

Likewise, business density and proximity to the state and federal capitals means that there are more leaders featured from Northern Virginia, Richmond and Hampton Roads than places like the Shenandoah Valley or Southern or Southwest Virginia. Still, we aim to capture a solid picture of the powerful people who get deals done across all regions of Virginia.

Similarly, diversity and inclusion are challenges. Virginia Business is purposefully conscious of the need to highlight the achievements of women and ethnically diverse communities in our coverage. Still, despite the increasing diversity of Virginia’s business community, C-suite leadership and power tends to stay a step behind the changing demographics of the commonwealth.

Yes, 500 is a big number, but we have no illusions that this Power List is comprehensive or captures every powerful person in the commonwealth. This publication is, however, an impressive reminder that Virginia remains a remarkable place for fostering power and leadership.

Enjoy!

A new economy

Welcome to the inaugural edition of StartVirginia, a product of Virginia Business magazine. While our editors have chronicled the economy of our commonwealth for more than 37 years, it’s almost impossible to start at the very beginning. Our state traces its business beginnings to the Virginia Company, chartered in 1606 by King James I of England to colonize America’s East Coast. Needless to say, the ensuing four centuries have seen many business developments.

In recent decades, transformation of the commonwealth’s economy has been amazing. We’ve grown from the mining-based economy of Southwest Virginia to the high-tech juggernaut of Northern Virginia. The state government in Richmond, federal contracting around Washington, D.C., and the military might in Hampton Roads provide additive effects that keep our economy humming across all sectors.

Technology and economic cycles have transformed business. The old economic models, based on large companies and long-gone benefits like employee pensions, are increasingly supplanted by smaller startup companies working in less traditional ways. Rather than long-term guarantees, risk sharing in exchange for ownership equity is a new currency for attracting and retaining employees. In the post-pandemic economy, Zoom meetings and remote working arrangements are new norms. Collaboration is less about conference rooms and more about software platforms.

Over the past several months, Virginia Business has slowly previewed StartVirginia as a single page in its regular monthly issues. This inaugural annual special publication represents a full-blown acceleration of that work. In the following pages, you will find insights, profiles and stories about Virginia’s rapidly developing entrepreneurial ecosystem.

Our goal is to keep abreast of the latest trends in Virginia’s rapidly evolving business landscape. Welcome to the commonwealth’s new economy!

Bernie Niemeier
President & Publisher
Virginia Business

Crown jewels

The Port of Virginia and its surrounding maritime community are the crown jewels of economic development in Virginia. Fewer than half of U.S. states have any coastline at all, not to mention the combined industrial, commercial and military presence that makes Hampton Roads an enduring source of growth for the commonwealth and the nation.

Consistent investment and state-owned facilities ensure that every dollar spent goes toward the mission of growing Virginia’s import and export capabilities. Key investments are being allocated toward efficiency and sustainability to ensure future growth. Dominion Energy Inc.’s developing offshore wind farm is driving ancillary supply chain development at Lambert’s Point with Fairwinds Landing. Workers are now training for new offshore wind construction and maintenance jobs.

Trucking fleets at Estes Express Lines and other firms are moving toward electric vehicles. The Port of Virginia has set a goal of net-zero carbon emissions by 2040. As early as next year, the majority of the port’s energy consumption will come from renewable sources. These transformative environmental investments are further building Virginia’s long-established leadership position in the maritime and logistics industries.

Virginia’s maritime community is bigger than Hampton Roads, though — it’s statewide. Distribution centers across Southern Virginia on U.S. 460 and up and down the Shenandoah Valley on Interstate 81 serve as waypoints for cargo that moves across the entire U.S. The Virginia Inland Port facility in Front Royal serves as a transition point for cargo containers from rail to truck transportation. A proposed second inland port in Southwest Virginia would do the same. The Port of Virginia also manages the Richmond Marine Terminal.

Our hope is that the 2023 Virginia Maritime Guide will provide you with a wealth of information on each of these investments, opportunities, challenges and more. To compile this guide, we worked closely with the Virginia Maritime Association and the Port of Virginia. We thank them for their assistance and look forward to the maritime industry’s ongoing success in the commonwealth.

Bernie Niemeier
President & Publisher
Virginia Business

Is ESG another CRT?

In January, Virginia Attorney General Jason Miyares joined a group of 24 other state attorneys general in challenging a U.S. Department of Labor rule allowing fiduciaries to consider environmental, social and corporate governance (ESG) criteria such as climate change in making investment decisions for retirement funds. The AGs argued that ESG practices work against investment companies’ fiduciary duties to maximize profits for their clients.

Of the 25 plaintiff states, 22 are solidly red states; all but two have Republican governors.

In March, congressional Republicans, with the help of two moderate Senate Democrats, passed legislation to undo the Labor ESG investing rule. President Joe Biden issued the first veto of his presidency on March 20, preserving the ESG rule for now.

The attempts to overturn the Labor rule are part of ongoing GOP efforts to oppose corporate use of ESG standards in making financial decisions like loans and investments. This comes despite widespread ESG support from big business and arguments from some financial experts that anti-ESG stances could hurt state retirement funds.

In Republican-controlled Texas, for example, the legislature has prohibited most of its state agencies and local governments from entering into contracts with firms that “boycott” energy companies using fossil fuels. This led to Texas state worker pension funds pulling investments from big mainstream companies like BlackRock.

Eyeing a potential presidential run, Virginia’s Republican governor, Glenn Youngkin, has fallen into line and spoken out against ESG, just as he’s taken predictable stances banning teaching “critical race theory” in state public schools (which, arguably, wasn’t happening anyway). Additionally, he mandated that public school students play on sports teams and use locker rooms matching their assigned-at-birth genders.

In January, the governor took credit for blocking a $3.5 billion Ford Motor Co. electric vehicle battery plant from bringing 2,500 jobs to Pittsylvania County over concerns the factory would be, in Youngkin’s words, “a front for the Chinese Communist Party.”

He also supported state legislation to ban abortions after 15 weeks, although that effort was doomed to fail in the Democratic-held state Senate.

Politicians often propose such “brochure bills” that have a better chance of appearing on a campaign flyer than making it through a committee and being passed into law. They go through the motions to satisfy their party’s base and donors. Think of it as a process of checking off boxes for electoral reasons, not for governing or legislating.

Youngkin’s checked most of these boxes lightly and only once, just enough for a campaign ad. This is political gamesmanship that values talking points over policy and substance.

However, it’s doubtful whether this gambit will pay off for Youngkin, who lagged far behind former President Donald Trump and Florida Gov. Ron DeSantis in a March poll by Roanoke College of Virginia Republicans’ choices for the 2024 GOP presidential nominee.

Meanwhile, the business community, once almost entirely aligned with Republican positions, has shown little interest in wading into such culture-war conflicts. The U.S. Chamber of Commerce, which spent $81 million on lobbying last year, has in recent years begun endorsing some Democrats. It’s also supported ESG and immigration labor reform and opposed the Trump administration’s trade war with China. Because of these evolving stances, House GOP leaders, including Speaker Kevin McCarthy, have refused to take meetings with the chamber and considered launching a House investigation into the chamber over its endorsements of ESG criteria.

Big corporations, which largely comprise the chamber’s membership, have gradually trended toward more progressive positions on social issues, including gender-based rights, diversity, equity and inclusion, and ESG policies. Some Republicans rail against this as “corporate wokeness” — whatever that means.

It’s time to get politicians out of our bedrooms, bathrooms, doctor’s offices and classrooms. And let’s also keep them out of our boardrooms and financial investment decisions. Fiduciary responsibility means considering all risks and opportunities, including those related to ESG.  

A library of business intelligence

Admittedly, many of my personal business memories start from more than just a short while ago — pre-internet days to say the least. Now that everything is online, we don’t hear much about libraries anymore, except maybe in the case of public schools. Politics aside, I’m delighted people are still interested in reading words on a page, regardless of topic or platform.

When it comes to business libraries, I spent many of my early career days as a graduate student and business researcher gleaning information from reference books.

When media companies were still flush with money, they had in-house research departments replete with voluminous business libraries. Ours had dark wood shelves arranged around a large reading table. Stocking the shelves were decades of annual publications on pertinent topics like nationwide newspaper circulation, ad rates for newspapers, television and radio markets, and ZIP code demographics for the entire U.S. Even more obscure were reverse telephone directories, where you could look up a phone number and find a corresponding name and street address for each listing.

In the days before everything became searchable, downloadable, sliceable and diceable, corporate libraries such as these were where business information was warehoused, waiting to be turned into business intelligence.

After the internet became ubiquitous, however, these company libraries were superseded by desktop computers in every office, laptops in every briefcase and smartphones in every pocket.

Looking at the immediate horizon, artificial intelligence programs such as ChatGPT are predicted to provide all life’s answers. Think of it as big data and technology replacing big libraries and thoughtful research.

Looking back, there was something especially nice about cozying up in a physical library with all that data in one place, copying numbers down on a yellow pad and using a calculator. This is a discipline that’s perhaps lost in the eternal now of today’s copy-and-paste world. The ability to instantly recalculate until an acceptable answer appears doesn’t really replace the innate talent of defining the right research questions at the outset. There is absolutely a difference between data and intelligence.

For me, all of this comes to mind each year when Virginia Business publishes our March issue, The Big Book.

Back during the halcyon days of physical business libraries in the 1980s and 1990s, our March issue served up the State of the State, reporting on the commonwealth’s economy across several industries. (Suffice it to say that we’ve long served as a source for business intelligence.)

In 2013, though, we replaced that annual State of the State report with The Big Book, expanding the issue to include roughly 50 different lists and charts with vital business statistics all in one place — creating an annual reference library of sorts for Virginia businesses.

And while Virginia Business has not yet moved into the realm of artificial intelligence, we have moved into e-commerce. Some of the key lists in this issue are available for purchase at virginiabusiness.com as downloadable spreadsheets in expanded formats beyond what’s included in the print version.

Whether digitized and downloaded or delivered as a paper magazine to your mailbox, think of us as your personal corporate library. Regardless of the platform, context is important, and that’s why we are especially proud to still be bringing you words on a page after 37 years. Enjoy!  

Reimagining the corporation

Welcome to the New Year! 2023 is a new one indeed. Business as usual isn’t so usual anymore. Tech companies are downsizing faster than local daily newspapers. Starbucks baristas are the new trend in organized labor. Amazon’s growth is slowing. Global consumption and supply chains can no longer be taken for granted. Twitter is, well, whatever. Travel, hotels and restaurants — the things we do in person — seem to be making a comeback. And yes, the kids are back in school, although colds and flu have been going around.

After a few tough few years, it’s worthwhile to rethink past assumptions. Many of our best guesses about the future have been dislodged or disproven by unforeseen events and circumstances.

When I first started working, getting hired by a large corporation was the gold standard. IBM was “Big Blue.” Does anyone remember mainframe computers now? In the ’80s and ’90s, McKinsey and Goldman Sachs were prime destinations for Wall Street’s wannabe rich and famous — that’s less the case today. Back then, all MBA schools waltzed to Milton Friedman’s mantra that the “social responsibility of business is to increase its profits.”

Looking back, I can’t help but think of an old Bonnie Raitt lyric: “I’ve had bad dreams too many times to think that they don’t mean much anymore.” The dream of a business world that was both fair and money-centric just hasn’t held up. I remember a well-respected boss who said, “I’ve tried fair, but life isn’t fair, and being fair just doesn’t work.” There may be some element of truth in that statement, but is that really a dream of how the world should be?

Among political and economic systems, capitalism is far and away the most successful driver of wealth creation. At the same time, in its purest form, capitalism derives significant motivational power from scarcity and inequality — it’s a world of winners and losers. As powerful as this is in its simplicity, a zero-sum game vastly understates the collective social problems faced by the world as we know it today. Think about pollution, energy, food scarcity, affordable housing or access to health care. In the long run, such social problems create significant new costs that are ultimately borne by the business world. Capitalism might do well to be a little less self-centered.

Today’s business environment is considerably different from past decades. Business is no longer just about profit. There is a growing recognition of the importance of a double or triple bottom line. Employees, customers and the community are gaining greater recognition for their indispensable value as inputs to financial success. Environmental, social and corporate governance (ESG) efforts are shaping investment decisions at a level not seen in the past.

Fortunately, capitalism has evolved to be more nuanced, more customer- and employee-centric. The best leaders realize that better results come when great people do good things in the best interest of customers and the community. This is a less self-interested and vastly more sustainable approach.

Reimagining the corporation means thinking differently about people. Companies are more complex than just an amalgam of labor and capital. Organizational structures are more complex than just divisions between management and employees. Today’s most successful companies think in terms of teams, teambuilding and placemaking. There is a much greater recognition that we are all in this together.

Most problems cannot be solved by a profit-only mindset. Going into the New Year, let’s strive to make work fun, respectful and profitable. Isn’t that a better approach?