Already the largest project ever tackled by the Virginia Department of Transportation, the $3.8 billion Hampton Roads Bridge-Tunnel expansion will kick into gear later this year when a $70 million custom-built tunnel boring machine (TBM) begins carving out an underwater path for twin two-lane tunnels.
Construction on the HRBT expansion, which will increase tunnel and roadway capacity along 9.9 miles of Interstate 64 between Hampton and Norfolk, began in October 2020 and is scheduled for completion in November 2025.
It’s only the fourth time that a tunnel boring machine will be used on a U.S. roadway project, including tunnels in Seattle, Miami and the Parallel Thimble Shoal Tunnel under construction at the nearby Chesapeake Bay Bridge-Tunnel.
Standing the height of a four-story building and measuring the length of a football field, the TBM’s front end consists of a 46-foot-diameter rotating cutterhead that bores through soil and rock strata as it creates an approximately 45-foot-wide opening for the new tunnels. Virginia Beach middle schoolers dubbed the machine “Mary” after Mary Winston Jackson, the late NASA mathematician and aerospace engineer depicted in the 2016 film “Hidden Figures.”
Hampton Roads Connector Partners, a joint venture led by Dragados USA Inc., is the design-build team for the project. It contracted with German firm Herrenknecht AG to fabricate the boring machine, which arrived at the Port of Virginia aboard three vessels in December. Crews have been preparing a 70-foot-deep launch pit on South Island, near Norfolk, where the TBM will be assembled and readied to start excavation by mid-2022.
“We are working aggressively to get the launch pit ready,” says James Utterback, VDOT’s project director for the HRBT expansion. “This is one large project that has a series of big projects inside it and lots of unique construction operations that need to come together.”
Once underway, a hydraulic cylinder will move the TBM about 50 feet per day as the cutterhead bores a two-lane tunnel to North Island, near Hampton, a process expected to take about a year. At North Island, it will take 4 to 6 months to rotate the machine on a specially built turntable in preparation for its return trip, boring a parallel twin two-lane tunnel to South Island. The return trip is expected to take 10 to 12 months, with the total process taking about 2½ years.
Commuters are on board with Hampton Roads Transit’s plans to extend The Tide, its 7.4-mile light rail system, according to recent public discussions about proposed new routes.
This fall, HRT held one virtual discussion and three pop-up sessions at transit stations in Norfolk to gather public input about expanding the light rail to Sentara Leigh Hospital and Military Circle Mall, both in Norfolk. A light rail stop at Military Circle would tie in with Norfolk’s plans to transform the struggling mall into a mixed-use community of hotels, parks, offices and residences. The 2.2-mile extension would take light rail from Newtown Road, crossing under interstates 264 and 64. Modifications would also be made to the Newtown Road station.
“The response has been very positive,” says Sam Sink, HRT’s director of transit development.
Extending The Tide to Military Circle would enhance transportation options in one of Norfolk’s most flood-resistant areas. “We view that corridor as high ground in Norfolk,” notes Jared Chalk, the city’s economic development director. “It’s 13 feet above sea level and much more resilient than other parts of the city.”
Chalk believes light rail service between downtown Norfolk and Military Circle will increase ridership on The Tide. “It’s a compelling way to get between these two nodes, as well as an opportunity to extend what was a very short segment and maximize its value.”
However, commuters said during the public meetings that they were disappointed that plans do not include taking The Tide to Naval Station Norfolk.
“We always wanted to see it extended that far,” Sink says, “but the level of ridership didn’t support it. It wasn’t necessarily the bang for the buck we would like to see.” Instead, HRT plans to launch a bus rapid transit (BRT) line connecting the eastern end of The Tide with Naval Station Norfolk. The bus route would have prepay stations, dedicated traffic lanes and fewer stops than other HRT buses.
“We think we will serve that need effectively with the BRT,” Sink says, adding that a timeline for adding the rapid route has not been established. Once the final survey results are tallied and shared with HRT stakeholders, the agency will begin environmental assessments in early 2022.
“These projects take a long time,” Sink notes. “We might be looking at six or seven years before we break ground on light rail to Military Circle.”
Breeze Airways has been flying out of Norfolk International Airport less than six months, but the startup is steadily attracting passengers eager to satisfy their pent-up wanderlust.
Founded by aviation entrepreneur David Neeleman, the Salt Lake City-based airline began offering nonstop, low-cost flights out of 16 cities last spring. Service from Norfolk started June 10, with flights to Tampa, Florida, and Charleston, South Carolina. By August, the startup also had routes to Providence, Rhode Island; Hartford, Connecticut; Columbus, Ohio; Pittsburgh; and New Orleans.
Targeting leisure travelers, Breeze flies out of Norfolk two to four times a week. More than 18,000 passengers traveled on Breeze flights into and out of Norfolk during summer 2021, including 2,457 passengers in June, 5,159 in July and 10,523 in August. Charles Braden, Norfolk International’s director of market development, credits the spike to increased name recognition.
Still, the August numbers represent only about 3% of the airport’s passengers. “Breeze is relatively small compared to other airlines,” Braden notes.
Launching a new airline amid a pandemic is not the norm, he acknowledges, but from Breeze’s perspective, he explains, “the pandemic is a greater reason to start because of their intention to bring low-fare service to the public.”
Breeze, which focuses on smaller, secondary airports with routes averaging fewer than two hours in the air, is on track to invest $5.2 million in an operations center in Norfolk, creating 116 jobs, says Gareth Edmondson-Jones, the airline’s director of corporate communications. “There’s lots of growth to come,” he adds. “We look at where there is opportunity and the most demand. Norfolk fits that bill.”
The 116 employees include flight crew and maintenance personnel, Braden notes.
Some of Breeze’s 80 new A220 Airbus planes serving routes longer than two hours’ flight time could land in Norfolk after they enter service in spring 2022. “It’s safe to say you will see the A220 flying into Virginia,” Edmondson-Jones says, adding that the airline also plans to add cities to its network in 2022. Currently, Breeze flies a larger version of regional jets.
Braden believes the airline will continue to attract more Norfolk passengers. He notes that Breeze is one of five airlines started by Neeleman, including JetBlue Airways. “That gave the industry, as well as our local community, great confidence. There’s strong financial backing and strong management behind the airline, and their future is bright.”
Situated on a bank of the Hague, the Y-shaped inlet off the Elizabeth River that shares a name with the city in the Netherlands, Norfolk’s Chrysler Museum of Art is no stranger to the impacts of high tides, as well as flooded streets and parking lots during heavy rainfalls.
Right now, flooding is mainly a source of annoyance, says Chrysler Director and CEO Erik Neil, but it’s also a threat to the art, which the museum has addressed with renovations and moving artwork from the ground floor to second-floor space.
“We’ve never had water rise into the building, but we all know that given the right set of circumstances, it’s in the realm of possibility,” Neil says.
Throughout Hampton Roads, many businesses, localities and institutions are formulating plans to enhance their resiliency in the face of sea-level rise, as well as frequent flooding during storms and heavy rainfalls. Scientists say that sea-level rise in the region is escalating at almost twice the global average due to a mixture of human-caused ocean warming and expansion, which melts glaciers that raise the level of all oceans.
A 2013 study by Old Dominion University scientists further states that a proliferation of manmade structures built on already depressed land on Hampton Roads’ coasts have contributed to faster sea rise locally. The sea level at Virginia Beach has risen nearly a foot since 1970, and it is expected to rise 3 feet by 2075.
There’s also more rainfall. Six of the 10 biggest storm surges at Norfolk’s Sewells Point over the past century have taken place within the last 20 years, says a new report produced by the Virginia Academy of Science, Engineering and Medicine for the General Assembly.
And funding flood mitigation is a major challenge facing the cities of Norfolk and Virginia Beach, as well as other Hampton Roads localities that have fewer tourist dollars.
Underfunded and at risk
Ann Phillips, a retired U.S. Navy rear admiral and Gov. Ralph Northam’s special assistant for coastal adaptation and protection, says that the frequent annoyance of flooding keeps public interest (and local governments) engaged in seeking solutions that will protect the region from future damage.
“We have a lot of infrastructure at risk,” Phillips says, noting that local military installations, NASA’s Langley and Wallops Island facilities and the Port of Virginia’s Hampton Roads terminals and yards are all at risk of flooding now and in the future. Also, the state has only recently begun dedicating funding to catastrophic flooding — including a flood-preparedness community fund created in 2020 by the General Assembly.
The state netted $40 million for the fund via carbon credit auctions earlier this year, but that’s a drop in the bucket compared with the nearly $5 billion anticipated cost of seawalls and related infrastructure needed to protect Virginia Beach and Norfolk from destructive floodwaters.
Although Hampton Roads has not experienced a major weather disaster since 2003’s Hurricane Isabel, the impact of Hurricane Ida on the Northeast in September — killing at least 40 people in New Jersey and New York City and causing hundreds of millions of dollars in damage — is a reminder of how destructive such a storm could be to Eastern Virginia.
“It’s a whole lot better than the previous nothing,” Phillips says of the community flood fund. But she notes that between the Army Corps of Engineers’ $98 billion national backlog in resiliency projects and the state’s minimal flood preparedness funding, a significant financial burden falls on localities like Norfolk and Virginia Beach to build expensive seawalls and other protective infrastructure.
The funding setup differs between Virginia Beach and Norfolk, Phillips notes, because Norfolk collaborated with the Army Corps of Engineers on its resilience plan and therefore will see 65% of its $1.75 billion project funded with federal dollars.
The city of Virginia Beach, however, is working from a plan produced by Northern Virginia engineering firm Dewberry. Because the Army Corps was not involved, the city does not get as much federal funding for the $3 billion project, although Phillips says Virginia Beach hopes to have about 50% of the budget covered by federal dollars.
“At the moment, Virginia Beach is on its own,” Phillips says. “The goal is to work with the federal government to bring in dollars. The most common thing is to work with the Corps. It gets you in line if there’s a large disaster.”
Meanwhile, the state’s Department of Conservation and Recreation, which manages the community preparedness fund, is also devoting attention to other flood-prone regions — Portsmouth, Chesapeake, Franklin and other areas — that have less money to spend on protection.
Bigger storms brewing
Meanwhile, storm intensity is growing, Hampton Roads localities’ current infrastructure is less capable of handling extra rainwater, and flooding costs the city of Norfolk alone $26 million a year, according to the August report commissioned by the General Assembly.
The state will release more information about so-called 100-year floods later this year in the Virginia Coastal Resilience Master Plan being prepared by Dewberry for release in November. The federal designation means that there is a 1% chance that a flood of that magnitude — currently rainfall of 9.4 inches in a single day — will occur in a given year.
The Dewberry study will include a projection of how quickly what previously were considered 100-year floods will have a 10% to 50% chance of occurring annually, says Jessica C. Whitehead, a member of the state resiliency commission and director of Old Dominion University’s Institute for Coastal Adaptation and Resilience.
With higher flood risks come higher expenses to the local economy. A 2016 study commissioned by the Virginia Coastal Policy Center at the William & Mary Law School predicted that the regional economy would shrink by $611 million the year after a 100-year storm, and if the sea level rises 0.75 meters over its current state in Hampton Roads, tax collection would fall by $309 million due to expected damage to residential structures.
Norfolk’s Vision 2100 strategic plan for responding to flooding and sea-level rise provides a blueprint for expanding the city’s flood protection system — including a downtown floodwall built in the 1970s. The plan includes how to improve transportation connections and diversify housing options, as well as fortifying major employers like the Port of Virginia, ODU, the Naval Station and Tidewater Community College.
In Virginia Beach, City Council last year approved the Sea Level Wise Adaptation Plan, which includes proposals for adapting buildings and infrastructure to enhance resiliency as well as restricting new development in the most flood-prone parts of the city.
“We’re at a critical stage because the sea level is rising and land is subsiding,” says Pamela Boatwright, deputy director of administration for the Elizabeth River Project, a nonprofit working to restore the environmental quality of the Elizabeth River. The organization is now building the Pru and Louis Ryan Resilience Lab on Knitting Mill Creek, which will be the state’s first urban redevelopment project built on a floodplain when it opens in 2023.
Adapting can be a daunting task, especially for businesses unable to relocate to higher ground. “If your business is situated 11 feet above sea level, you’re in great shape, but if your business is accessible via a road that’s two feet above sea level, that’s a problem,” Boatwright notes. “It’s going to be a big lift for everybody.”
‘We know it’s coming’
With 144 miles of shoreline, Norfolk ranks second to New Orleans as the U.S.’s largest city at risk from sea-level rise. Water levels in coastal Norfolk have risen more than 14 inches since 1930, and the National Oceanic and Atmospheric Administration (NOAA) predicts additional increases up to 4.5 feet by the year 2100.
The Larchmont neighborhood, plus parts of Ghent and Riverpoint, frequently sees standing water of 3 to 4 feet, even during moderate storms, Whitehead says. A 2013 study of recurrent flooding in the Hampton Roads region conducted by William & Mary’s Virginia Institute of Marine Science found that flooding presents traffic challenges and shoreline erosion that put roads at risk of collapse. Tunnels also are in danger of flooding if there’s a storm surge, and water supply and sewage utilities could be disabled if pumps are inundated by floodwater, the study adds.
“We know it’s coming,” notes Doug Beaver, Norfolk’s chief resilience officer. “The land is subsiding by 3.5 millimeters a year. Over a period of time, that becomes significant.”
Three years ago, Norfolk enacted a zoning ordinance to enhance flood resilience and provide incentives for businesses to locate in areas at lower risk of flooding, “one of the most innovative and forward-thinking zoning ordinances in the nation,” Beaver says.
He and his colleagues are pushing ahead with the city’s plan developed with the Army Corps of Engineers. First up: extending the flood wall toward Harbor Park, a $130 million project.
The city received nearly $113 million from the federal government for the project, but other big-ticket items may not get federal funding, Beaver adds.
While Hampton Roads has become nationally known for its proactivity in addressing sea-level rise, Whitehead adds that many in the region are reluctant to think about permanent land loss. “It’s very challenging to think systematically about what sea-level rise will do to the economy, social systems and community. Serious conversations must be had — not just in Hampton Roads but nationally.”
Phillips says that in the forthcoming state study, there will be a “strategic coastal relocation handbook,” Virginia’s first official guide to community relocation. “It’s the start of the conversation,” she says.
Although “relocation is Plan B,” Phillips says, Plan A — flood mitigation — is still in effect for even the most vulnerable areas. “We also realize that we can’t save everyone,” and some businesses and homeowners will ultimately need to move, she adds, noting that economically disadvantaged communities will likely bear the brunt of flooding and related financial damage.
Different solutions
With Hampton Roads at the forefront of sea-level rise in the U.S., entities throughout the region are joining forces to develop innovative resilience strategies. ODU’s Institute for Coastal Adaptation and Resilience brings together researchers from across disciplines to develop practical solutions for issues faced by coastal communities.
Sea-level rise poses different problems for Hampton Roads businesses, depending on their size and location.
“The port has tremendous infrastructure, so you have to determine a plan for when it gets permanently inundated over time,” Whitehead says, but the impact will be felt well before permanent inundation occurs 80 years from now.
“Higher sea levels mean we have less stormwater capacity until we retrofit stormwater systems,” she explains. “It takes a much less strong storm with relatively lower storm surge to produce a flood that impacts the same amount of land. You’ll also see greater reach of tidal flooding and stormwater flooding than you have in the past, long before you reach that permanent inundation.”
Although flooding may not directly affect the Port of Virginia’s terminals, Whitehead predicts that roads needed for cargo transport could be flooded. “Hampton Boulevard already floods due to high tide/hard rain combinations,” she says.
Phillips notes that the Port of Virginia has focused significant effort on sustainability and resilience — including collaborating on the Hampton Roads’ region’s resilience pilot project, the city of Norfolk’s storm risk management study and federal authorities’ efforts. But what the surrounding localities do — or don’t do — has a significant impact on the port, she points out.
“It’s not just [the port],” Phillips says. “If their people can’t get to work, they’re in trouble.”
The region’s economic development prospects are especially vulnerable, with sea-level rise and flooding affecting property values, insurance rates and basic business operations, says Nancy Grden, executive director of ODU’s Hampton Roads Maritime Collaborative for Growth & Innovation.
“If there’s regional flooding and if major utilities such as water, electricity and broadband are out, there’s loss of productivity. If customers are impacted by flooding, that’s going to change the pace and nature of their purchase. There are ramifications for businesses thinking about coming to Hampton Roads or expanding in the area.”
Having steered New Orleans’ Newcomb Art Museum through Hurricane Katrina, the Chrysler Museum’s Neil understands the devastating effects of flooding and the importance of contingency plans to protect assets.
Proposed solutions include raising streets surrounding the Chrysler to allow water to immediately drain underneath the pavement. The Army Corps has also considered building a floodwall to protect the Hague area from storm surges of 8 feet or higher at an anticipated cost of $160 million.
“If that doesn’t get built, we will have to seriously consider moving,” Neil says, “but we have time before we have to make that call.”
Read the feature on sea level rise in Hampton Roads.
Although local, state and federal government officials are leading coordinated efforts to combat flooding, other groups in Virginia see business potential from the crisis.
The OpenSeas Technology Innovation Hub, a collaboration between Old Dominion University and William & Mary’s Virginia Institute of Marine Science, is working with ODU’s Institute for Coastal Adaptation and Resilience (ICAR) to find commercial opportunities for resilience innovations.
“If it just sits on a shelf somewhere, it’s not providing social value,” says Jerry Cronin, OpenSeas’ executive director. “You go for the moon. Sometimes you get the moon.”
For example, OpenSeas is working with Ferguson Enterprises to develop sensors that detect groundwater inflow into wastewater treatment plants. “Most cities have a lot of freshwater that leaks into the pipes and goes to treatment plants which exceeds the plants’ capacity, especially during floods,” Cronin explains. “Nobody has been able to come up with a complete solution, but there’s the opportunity for someone in the future.”
Also, the Norfolk-based nonprofit RISE, which has awarded more than $5 million to support 34 startups and small- to medium-sized businesses in testing their resilience technologies since 2018, is also part of the Coastal Resilience and Adaptation Economy initiative to cultivate innovation and growth in the state’s water economy. Earlier this year, the initiative received a $2.9 million grant, funded in part by GO Virginia, to address rural and urban flooding issues.
“Initiatives dealing with sea-level rise not only focus on avoiding risks and mitigation, but there are also innovation opportunities,” says Nancy Grden, executive director of ODU’s Hampton Roads Maritime Collaborative for Growth & Innovation. “Broader collaboration and focus on using innovation to solve problems is really important to our region. No one group can solve it on its own because it’s a very comprehensive issue.”
Touting one of North America’s largest ports, congestion-free shipping channels and the nation’s highest percentage of maritime workers, Hampton Roads is charting a course to become the East Coast supply chain hub for the offshore wind industry.
Those attributes, say local leaders, set the region apart in the race to build the nascent carbon-neutral energy sector. The U.S. Department of Energy estimates that offshore wind farms under development off the East Coast will support up to 86,000 jobs and provide up to $25 billion in economic output by 2030.
Currently, the projects rely on a European supply chain for their massive turbines, blades, generators and foundations, but shipping those mechanisms overseas to the United States is expensive, time-consuming and risky. That’s why East Coast states are eager to cut out the middleman by manufacturing the components in the U.S. and delivering them to offshore wind projects along the Atlantic seaboard.
Hampton Roads’ deep, wide harbor, free of air-draft restrictions posed by bridges and other overhead structures, combined with its abundance of terminal facilities and waterfront industrial sites, as well as a large workforce skilled in shipbuilding and ship repair, give the region strong selling points for enticing companies involved in manufacturing, installing and maintaining offshore wind components. Plus, the state offers pro-business incentives such as lower taxes and labor costs and fewer regulations.
“Right now, the industry is being born in the U.S., and all states that have [offshore wind] projects have ambitions to gain economically,” says Matt Smith, director of offshore wind business development for the Hampton Roads Alliance. “We have a lot of advantages in Hampton Roads with the port structure and workforce, but we have to compete to have offshore wind become the fourth pillar of [the region’s] economy,” after the military, the Port of Virginia and tourism.
According to an economic impact analysis by Glen Allen-based Mangum Economics, the East Coast offshore wind industry would support approximately 5,200 Virginia-based jobs — primarily in Hampton Roads — as businesses help develop one gigawatt of new offshore wind energy generation annually. Cultivating offshore wind at that pace would generate $270 million in pay and benefits, as well as $740 million in regional economic impact, including $21 million in local government revenue for Hampton Roads and $18 million in Virginia state tax revenue.
Center stage
Many of those benefits will be derived from Dominion Energy Inc.’s planned 2.6-gigawatt, $7.8 billion Coastal Virginia Offshore Wind project. Slated for completion in 2026, the offshore wind farm will include about 180 massive wind turbines erected in federal waters 27 miles off the Virginia Beach coast. About 900 jobs will be created during construction and 1,100 for operations and maintenance during the project’s approximately 30-year lifespan. That could lead to roughly $210 million in local economic impact.
In addition, Hampton Roads is poised to support development of Avangrid Renewables’ 2,500-megawatt project off the coast of Kitty Hawk, North Carolina. That project is expected to produce more than 800 jobs, with a $2 billion impact on Virginia and North Carolina economies over the next decade.
About 625 job titles exist in the offshore wind industry, with more than 120 unique to the field, says Shawn Avery, president and CEO of the Hampton Roads Workforce Council. “It’s all [skill] levels, from high school graduates to community college and four-year graduates. It really does run the gamut,” he says.
Engineers and scientists, along with skilled tradespeople like welders and electricians, will be needed to support offshore wind farms.
About 90% of the skills required in the offshore wind industry match those in other local maritime industries. “Hampton Roads is built on those skill sets,” Avery says. “We’ve got a lot of assets to make us the prime location for the offshore-wind supply chain hub.”
Earlier this year, the state launched the Mid-Atlantic Training Alliance at Virginia Beach’s Centura College, the Mid-Atlantic Maritime Academy and Martinsville’s New College Institute, all of which will provide wind-related training courses certified by the Global Wind Organisation. Community colleges and universities also offer similar training opportunities.
Last year, Virginia, North Carolina and Maryland formed a partnership to promote the Southeast and mid-Atlantic as the hub for offshore wind’s supply chain. “Each state plays on each other’s strengths and works together so companies see us as a group of states that provide a cross section of strengths,” Smith says. “That makes us more competitive as a whole.”
With a satellite office in Germany, the Hampton Roads Alliance markets Hampton Roads’ assets to European companies considering manufacturing wind turbines and blades in the U.S. “We have a very robust business attraction,” Smith says. “We make sure companies understand our strengths as a region and can position themselves to be part of the supply chain.”
Smith notes that a study prepared earlier this year for the North Carolina Department of Commerce gave high marks to Portsmouth Marine Terminal and Lambert’s Point Docks Inc. for their readiness to support offshore wind manufacturing. Denmark renewable energy company Ørsted is already leasing part of Portsmouth Marine Terminal from the Port of Virginia to stage materials and equipment for its offshore wind projects in six states. And in August, Dominion reached an agreement with the port to lease part of Portsmouth Marine Terminal as a staging and pre-assembly area for the turbines needed for its Coastal Virginia Offshore Wind project.
Wind trade
Hampton Roads is also looking to capitalize on homeporting Dominion’s $500 million, 472-foot wind component installation vessel, Charybdis. Currently under construction in Brownsville, Texas, the ship is expected to enter service in 2023, when it will transport materials to two offshore wind farms under construction in New England. Charybdis is the nation’s first offshore wind vessel in compliance with the Jones Act, which requires goods shipped between U.S. ports to be carried on American-built ships. “Being the homeport for the U.S.’s only wind turbine installation vessel is just one thing that can help us become the center of gravity for the industry,” Smith says.
With tremendous economic benefits on the line, the next three years are critical to attract companies and develop the region as a supply chain hub, says Robert Crum, executive director of the Hampton Roads Planning District Commission.
This summer, the HRPDC board approved a resolution encouraging the General Assembly to create a $30 million economic development fund to help companies offset expenses for worker training and certifications, new product development and equipment upgrades. “Sometimes the process for businesses to migrate to supporting the supply chain costs money and is time-consuming,” Crum notes. “We think this fund will help companies offset costs.”
Companies checking out Hampton Roads’ offshore wind industry have an entry point into the region through the Virginia Offshore Wind Landing, a workspace in downtown Norfolk for maritime and offshore wind companies interested in establishing a presence in Hampton Roads to collaborate and access resources. The space is a partnership between Virginia Energy (formerly the Virginia Department of Mines, Minerals, and Energy); the Hampton Roads Alliance; and Old Dominion University’s OpenSeas Technology Innovation Hub.
“It’s a very convenient setup,” says Nancy Grden, executive director of ODU’s Hampton Roads Maritime Collaborative for Growth & Innovation. “Interested companies can come together and learn about what’s available here.”
Jerry Cronin, executive director of the OpenSeas tech hub, agrees, saying, “If we do our job right, we will see the growth of new companies, and existing companies will create new lines of business and attract new companies.” Formed to address challenges and opportunities in the maritime industry, the hub will help firms commercialize offshore wind innovations.
“There are broader implications,” he adds. “Something done with offshore wind could be useful for the ports or the Navy. Hampton Roads is where the game is happening.”
At the beginning of 2020, A Family Affair Event Management had already filled its schedule for the year with an array of weddings and corporate, social and destination activities. Then COVID-19 struck, wiping the Stafford event planning company’s calendar clean.
“It greatly impacted us,” says Tortica Anderson, owner of A Family Affair Event Management. “We had six destination events canceled and 10 other events on the books with seven canceled and three rescheduled. It was definitely devastating to us financially.”
The pandemic and resulting shutdowns dealt a destructive blow to small businesses across the nation, but challenges to stay afloat were compounded for Anderson and other Black small business owners, who on average have had more difficulty accessing pandemic financial relief on top of the existing U.S. racial wealth gap. According to a report by the U.S. House Committee on Small Business, Black business ownership in the United States declined by more than 40% between February 2020 and April 2020, the largest decrease among any racial group. The Federal Reserve Bank of New York also found that 58% of Black-owned U.S. businesses faced financial hardships before the pandemic, compared with 27% of white-owned businesses.
Small Black-owned businesses “were struggling before the pandemic,” Anderson says. “We feel like we have to work twice as hard to prove we’re capable of being business owners and invest in ourselves to show we’re legitimate businesses. We always have to validate ourselves. Ultimately, I believe the race part has a lot to do with it.”
Anderson obtained a forgivable Paycheck Protection Program loan, established under the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act to help small businesses weather the pandemic. “That helped significantly to get us through that critical time of May through August last year,” she says, noting that she had to refund about $5,000 in customer deposits as the pandemic took hold.
Lending disparities
As of August 2020, Black women represented 36% of all Black business owners in the U.S. and made up more than 40% of new women-owned companies. Along with Anderson, that number includes Destinee Wright, owner of Destinee Marketing, a social media and marketing company that started in Charlottesville and moved to Charlotte, North Carolina. The University of Virginia graduate also launched the Charlottesville Black Business Directory in May to connect Black business owners with the community.
“The goal is to offer resources for Black business support and increase traffic,” she says. “More people understand the importance of supporting Black-owned businesses.”
Wright closed her first business, a mobile hairstyling salon, in March 2020 as the pandemic gripped the nation. She didn’t seek a PPP loan because she was overwhelmed by the program’s requirements. “The general challenge is access to information,” Wright adds. “There should have been more efforts to make sure the information was getting to marginalized communities. It’s important to make sure information is easy to access and easy to navigate for people at all different levels.”
Fewer than 30% of U.S. Black business owners received PPP loans, compared with 60% of white applicants. Critics say disparities arose because the U.S. Treasury Department and the Small Business Administration instructed banks to give preference to existing customers, putting Black business owners without previous banking relationships at a disadvantage.
“Relationships drive businesses,” says Glenn Carrington, dean of Norfolk State University’s School of Business. “Banking is a relationship to some degree. Banks believe in the people they’re making loans to, but many Black small businesses don’t have a history of relationships with banks.”
Many also were overwhelmed by PPP requirements. “In general, small businesses don’t have time to master the Paycheck Protection Program. They don’t understand how to work their way through the system,” Carrington says. “You had to submit applications in a timely manner, and many parties were involved. You can’t just learn that stuff overnight.”
Carrington is working with the 757 Recovery and Resilience Action Framework to develop a networking platform for business owners. “You can’t be on an island by yourself,” he says. “Most small businesses are a one-person shop, and there’s only so much they can do. They have to find a way to link in with the knowledge base.”
Launched by the Hampton Roads Alliance, the 757 Recovery and Resilience Action Framework is designed to accelerate recovery from the pandemic while building a more resilient economy.
“Entrepreneurship is important to the region,” Carrington says. “That’s where most of the jobs are. That’s why we’ve targeted making small businesses more resilient, especially underserved populations that generally don’t have networks to sustain themselves.”
Striving and thriving
Networking among Black business owners is one of Sheila Dixon’s goals as executive director of the Tysons-based Northern Virginia Black Chamber of Commerce. “I want to bring more of the Black community together from a business aspect at all levels and help our businesses prosper,” she says.
Dixon organized conference calls with Black business owners and staff from the offices of U.S. Sens. Mark Warner and Tim Kaine and U.S. Rep. Gerry Connolly (D-Fairfax County) to discuss coronavirus relief. “Those were great conversations. Trust increased,” she says, noting that some business owners had been reluctant to apply for aid due to skepticism that support would materialize.
The chamber also is using a grant from the Community Foundation of Northern Virginia to implement its BTR (Build Thriving Returns) Now program for young entrepreneurs. “There has been a definite increase in Black entrepreneurs during the pandemic,” Dixon notes. “That’s great, but there’s a difference between working for someone as an employee and shifting to being an entrepreneur. It’s definitely a learning experience, and you have to make sure you have the proper resources to do what needs to be done.”
Despite their struggles, many Black business owners found a silver lining in the pandemic, Dixon says. “They put their time into increasing their skill set, especially technology and leveraging social media and adding products and services in a broader way. They were able to revitalize and thrive.”
Ron Beauford, who owns an Amazon logistics trucking firm in Mechanicsville and co-owns Virginia Heritage Foods, an Ashland-based multibrand food distributor to supermarkets, military commissaries and club stores, says the pandemic actually helped his businesses. “People were eating more at home, and our sales grew close to 45%. That’s been sustained even with the country opening back up.”
Despite the pandemic’s devastating effect on restaurants, Tummy-Yum Yum Gourmet Candy Apples in Manassas prospered by expanding its menu to include cupcakes, chocolate-covered pretzels, funnel cakes and frozen bananas. Owner Sharita Rouse also turned to philanthropy, organizing police and local businesses to feed needy families in Prince William County. Police officers delivered meals, while businesses’ monetary and food donations fueled the program.
“Our net for the year 2020 was double during the pandemic,” she says. “We didn’t close our doors one day because we started feeding the community out of the store.”
Rouse estimates that she feeds 600 to 700 people a week. “When you make it happen for others, God will make it happen for you,” she adds. “I knew we were doing what God wanted us to do by feeding people. When the pandemic started, they couldn’t afford to purchase goods from me, but I knew I still needed to help them.”
Growing entrepreneurship
As the result of job layoffs and business closures, Black entrepreneurship grew during the pandemic, says Ervin Clarke, founder and chairman of the Central Virginia African American Chamber of Commerce. “Individuals are taking advantage of opportunities to test the waters and try to live their dreams.”
Most Black business owners are first generation entrepreneurs. “From that standpoint, they don’t have long legacies to fall back on,” Clarke adds. “Anyone without a deep heritage in a particular business could potentially have a problem because their pockets are not as deep.”
Libby Edwards-Allbaugh, co-owner of The Tax Ladies in Charlottesville, spent much of the past year guiding small businesses through the process of how to navigate PPP loans and similar programs. “We’ve seen Black businesses struggle more because they did not have the infrastructure to capitalize on loans,” she says, adding that she encourages clients to invest in support systems. “Don’t think of an accountant or an insurance person as an expense you can’t overcome. Those relationships give you resources to get what you need.”
Many also require training on how to organize and manage a business, Edwards-Allbaugh adds. “We have the motivation and ideas, but the execution is fly by night. We need a network of professionals to help when situations come up.”
That’s what Angela Reddix, CEO of Norfolk health care management and IT consulting firm ARDX, is doing with The Reddix Rules Fund, which provides grants to small businesses owned by women of color. Reddix launched the program to provide $2,020 grants to 20 female Virginia business owners last year during the pandemic. This year, Grow with Google, Atlantic Union Bank, KW Brown Ministries, Doctor SOS, Ferguson Enterprises and Ebony magazine have joined The Reddix Rules Fund to provide more than $20,000 in grants to female entrepreneurs of color.
Out of 100 applicants, 10 were chosen for the program, which includes education in entrepreneurship as well as mental wellness coaching. Entrepreneurs also receive mentoring in preparing a business plan to pitch to executives from the sponsoring companies. The winning participant will receive $10,000, with the second- and third-place entrepreneurs getting $5,000 and $2,000 respectively. The remaining seven women each will receive $500.
“The program is not just to provide funds, but [to] teach business owners how to position themselves to take advantage of opportunities,” Reddix says. “If you don’t have examples of those who are successful to show you how to establish books and payroll, you’re not going to survive.”
And when minority businesses shut their doors, the entire community suffers, she adds. “Every time a Black business closes, that takes us in the wrong direction.”
With the COVID-19 pandemic exposing weaknesses in the global supply chain, Sentara Healthcare is ramping up efforts to diversify its vendors, committing executive leadership and resources to growing partnerships with local and regional suppliers, as well as companies owned by women, veterans and people of color.
“We are being intentional about seeking a broad range of vendors,” says Terrie Edwards, a Sentara corporate vice president. “We strive to work with vendors that reflect the communities we serve. That results in a richer, broader environment, yielding better outcomes and leading to suppliers reinvesting in jobs in each of the markets we serve.”
The Norfolk-based health system, which has 12 hospitals in Virginia and North Carolina, as well as dozens of outpatient facilities, spends about $2.4 billion annually on its supply chain, but the pandemic spiked that figure to more than $3 billion. With supplies constricted during the pandemic’s height, the company increasingly turned to local and regional vendors, like Suffolk-based Kerma Medical Products Inc., a veteran- and minority-owned manufacturer of nursing products, including digital thermometers and fetal monitor belts.
“COVID showed us how fragile our supply chain is, and we began to look for vendors closer to home,” explains Jennifer McPherren, vice president of supply chain and chair of Sentara’s Supplier Diversity Executive Council, which seeks to increase contracts with diverse local and regional firms. “Our goal is to bring things within our continental borders and regionally and locally. Kerma met our integrity standards and has been a great partner.”
Sentara’s initiative benefits diverse companies throughout the health care industry, says Kerma President Joe Reubel. “It provides access and refocused communication that has already demonstrated to be beneficial for immediate sales growth,” he adds. “It is exciting that together we can have an impact not only in the health care industry but also in our communities.”
Along with offering quarterly education sessions to help smaller suppliers navigate the bid process, Sentara recently hired a manager of supply chain diversity to expand the vendor base.
“We want to grow resiliency in the supply chain by aligning opportunities to ensure products get to where they are needed at the time they are needed, in the quantities needed, and do what is best for patient care,” Edwards adds. “If we can do that using suppliers in the Virginia and North Carolina markets, that’s even better.”
With high-speed subsea internet cables landing on Virginia Beach’s shores and massive wind turbines propelling off its coast, the state’s largest city is primed to welcome new businesses and industries generating high-end jobs.
“Virginia Beach is going to be the epicenter of economic development on the East Coast,” says Mayor Bobby Dyer. “I am convinced of that. That’s my personal mission.”
Focusing on technology and renewable energy, Virginia Beach seeks to attract more high-tech industries, including those that would use the trio of the world’s fastest subsea cables that come ashore at Telxius’ 24,000-square-foot landing station in the Virginia Beach Development Authority’s Corporate Landing Business Park. MAREA, owned by Microsoft, Facebook and Telxius, connects the city to Spain, while Telxius’ BRUSA cable links Brazil to Puerto Rico and Virginia Beach. Google’s Dunant submarine cable, which became operational earlier this year, connects Virginia Beach with Spain, Brazil and France. A fourth cable traveling from New York City to near Miami and branching off to Virginia Beach, Myrtle Beach, South Carolina, and Jacksonville Beach, Florida, also is in the works, and city officials have discussed bringing in 14 additional cables in the near future.
Located between General Booth Boulevard and Dam Neck Road, Corporate Landing Business Park is on track to become a mid-Atlantic hub for intercontinental subsea cables. Taking advantage of the park’s direct connection to the subsea cables, Globalinx and PointOne are developing data centers designed to attract large cloud computing companies along the lines of Amazon.com Inc., Netflix and Facebook, as well as military and government tenants. “Our facility is designed to accommodate customers who use subsea cables, but it’s also designed for local businesses that need data enterprises,” says Colin Clish, chief operating officer of Alberta, Canada-based PointOne.
Virginia Beach also wants to attract industries supplying components for East Coast offshore wind farms, including Richmond-based Dominion Energy Inc.’s Coastal Virginia Offshore Wind Project. In a pilot phase designed to generate energy for 3,000 homes, Dominion installed two massive, 600-foot-high wind turbines
27 miles off the Virginia Beach coastline last summer. By 2026, Dominion plans to build a major offshore wind farm there, erecting 188 turbines in adjacent waters — enough to power more than 650,000 homes. Achieving that ambitious goal will require establishing a wind energy construction supply chain that economic development officials foresee as becoming an East Coast hub as future offshore wind operations come online.
“With that plethora of technology, there will be potential job opportunities as we attract companies,” Dyer adds. “This is a really desirous location for a lot of businesses, and we’re going to roll out the red carpet for them.”
Cable ready
A technology and innovation task force, chaired by former Virginia Beach City Council member Ben Davenport, is examining the city’s ability to attract high-end tech jobs and increase workforce-training opportunities. “One of the problems we have in Virginia Beach is a lack of job opportunities for recent college graduates,” Dyer says. “We want to create situations where people’s children can find jobs here and keep families intact. That’s the ultimate economic development objective.”
Davenport, vice president of strategic development at Global Technical Systems, adds that the city is a prime location for technology enterprises. “We want to continue the momentum in building the technology ecosystem in Virginia Beach and ultimately in all of Hampton Roads,” he says. “If we continue down the road we’re on and make this an attractive place economically for internet ventures, we will have tremendous success. There are a lot of opportunities we are going to be chasing.”
Along with the subsea cables, Virginia Beach has one of the state’s lowest tax rates for data center equipment and one of the lowest municipal tax rates in the country, and officials worked with the U.S. Navy to establish the nation’s first cable landing protection area. “We’ve created a business environment that incentivizes the location of these activities,” says Virginia Beach Economic Development Director Taylor Adams.
Site work has been completed and the foundation poured for the first phase of NAP (Network Access Point) of Virginia Beach, a spec data center under development across from the cable landing station. The project was announced in late 2018, but work was suspended because of the pandemic. Now, PointOne is negotiating with potential tenants as it prepares to resume construction on the first of two 39,530-square-foot buildings on the 10.7-acre site. “We’re in the leasing stage with potential customers, but we don’t plan to start construction on the building until we secure a major tenant,” Clish says.
Additionally, the center will be able to accommodate growth from the existing cables, as well as new cables landing in Virginia Beach. “Virginia Beach is absolutely going to see two to five new cables in the next three to five years,” Clish adds.
Although there is room for more subsea cables, the city does not have available land to house massive data centers like Facebook’s 500-acre Henrico facility. “Virginia Beach doesn’t have that possibility,” Davenport acknowledges. “But we can work with other regional localities with more available landmass. As the region succeeds, our city succeeds.”
Wind energy
Virginia Beach also is spearheading efforts to boost Hampton Roads’ role in constructing a supply chain for the offshore wind industry. “Virginia Beach is a leader, but it’s too big of an initiative for any one city to act alone,” Adams says, noting that Dominion Energy’s offshore wind farm is one of eight to 10 similar projects on the East Coast. “There certainly is enough volume to see some of the suppliers locally here. I don’t think anybody fully knows the ultimate opportunities of companies coming here.”
Dominion Energy’s offshore wind farm also could help Hampton Roads attract data centers, adds Davenport. “Data centers are huge consumers of power,” he notes. “Dominion’s project paints the perfect picture of why Virginia Beach and Hampton Roads are one of the best places in the country for data centers. There will be an abundance of clean, renewable energy off the coast. Most in the data center industry see that as a big-time plus.”
To ensure local labor is prepared to support these emerging industries, the city has allocated $1 million for a Tidewater Community College program to teach skills to support offshore wind and is engaging with TCC and Old Dominion University to address high-tech workforce issues. Virginia Beach also is working with the military to ensure the more than 13,000 officers and enlisted personnel leaving the Navy each year can transfer their experience into local jobs.
“Many of those individuals come out with skill sets that are perfect for the technology industry,” Davenport says. “We have to create a technology economy here in Hampton Roads and ensure that we place them in opportunities where they will stay in Virginia Beach.”
Meanwhile, the city is partnering with Naval Air Station Oceana to explore economic development opportunities around the massive installation. Freeing up land around Oceana would help reduce the base’s overall costs and bring additional tax revenues to the city, says Dyer. “It’s still early in the process, but there is a plethora of potential there that the Navy is embracing with us.”
Overall, Virginia Beach’s economy remains strong despite the COVID-19 pandemic. Last year, more than 1,700 jobs were created in the city, representing a nearly $228 million investment and projected tax revenues of $55.8 million over the next two decades. “We’re really an economic engine for the entire region,” says Adams, noting that manufacturing, defense, logistics, office and tourism sectors continue to perform well, while the city’s unemployment rate is recovering from the pandemic. “We’re confident we’re on the road back to where we were.”
Engine trouble?
Dyer attributes Virginia Beach’s economic growth to business owners’ tenacity and resilience. “A lot of credit goes to the strength of Virginia Beach and the people of Virginia Beach who live, work and have businesses here,” he says. “Our strengths are our people, [who] make Virginia Beach a true, desirable destination where people are welcomed.”
One of the state’s top tourism destinations, Virginia Beach recorded the country’s highest hotel occupancy for 18 consecutive weeks last year amid the pandemic. “Once the beaches opened, that certainly helped,” Dyer says. “People could come to the beach for a healthy weekend.”
Many visitors attend events at the $70 million Virginia Beach Sports Center that opened last fall at the oceanfront. Featuring 12 basketball courts, 24 volleyball courts, a 200-meter track and seating for 5,000 spectators, the 285,000-square-foot facility has already welcomed several NCAA tournaments. “It hit the market during the pandemic and has been fully booked,” says Adams.
Expectations are high that Atlantic Park will enjoy similar success. A $325 million public-private partnership between the city, Venture Realty Group and music superstar Pharrell Williams, the project will include a surf park, apartments, retail offices and an entertainment venue on 10 acres between 18th and 19th streets. Construction is expected to begin late this year.
“Atlantic Park is a very big part of the oceanfront’s future,” says Dyer. “If you give people things to do that are fun and entertaining, it makes for a better situation.”
Tourism is one of Virginia Beach’s major economic engines, but the luster has faded in some areas of the oceanfront. In response, the city revived its Resort Management Office to enhance the 40-block commercial district. The office will interact with visitors, promote safety, address homelessness issues and encourage property owners to update signage, awnings and other infrastructure.
Safety at the oceanfront has come under increased scrutiny after two people died (including a cousin of Williams who was shot by a police officer) and eight others were injured during a chaotic night of gunfire in late March. In response, City Council approved a $1.87 million public safety plan, including adding security cameras and lighting and a gunshot
detection system.
Still, local officials stress that the violence was an isolated event, and they tout rankings in recent years listing Virginia Beach as one of the country’s safest large cities. “The city is being proactive, and we’re confident we will have a safe season going forward,” Dyer says. “We want people to come to the oceanfront, but we expect them to respect the law and each other.”
While President Joe Biden will likely strike a more diplomatic tone with China than his predecessor, economists and other observers believe the United States’ rocky trade relationship with its biggest economic rival will remain contentious — which will impact Virginia’s economy.
Under former President Donald Trump, the U.S. and China were immersed in a grueling trade war marked by sanctions and escalating tariffs and amplified by the COVID-19 pandemic. The trade battles presented significant challenges to the Port of Virginia, which counts China as its top trading partner for imports and exports. In retaliation for the Trump administration’s increased tariffs on Chinese imports, China raised taxes on U.S. exports, many of which were shipped from Virginia, including soybeans and lumber. Tariffs on world trade, coupled with the pandemic, led to a more than 4% drop in the Port of Virginia’s 2020 cargo volumes.
During the 2020 presidential campaign, Biden had suggested that he would scrap the tariffs, setting the stage for a reset in the two nations’ tense relationship. However, recent indications point to Biden staying the course — at least in the short term.
“It’s not going to be a wholesale reversal of the Trump administration’s trade policies,” says Robert McNab, director of Old Dominion University’s Dragas Center for Economic Analysis and Policy. “The Biden administration has not said it is going to dismantle tariffs and restrictions on Chinese goods imported into the U.S.”
Trump actually did Biden a favor by taxing Chinese imports, adds McNab, who conducts an annual economic forecast for the state. “Tariffs are now something for the new administration to negotiate with. If China doesn’t agree to reforms, the Biden administration will have no choice but to keep those tariffs.”
McNab says that the new administration will pursue closer ties to U.S. allies, including relaxing tariffs on European goods, while reminding competing nations, such as China, that they must follow the norms and traditions of the international trade system. “The hope is that China will democratize and be a force for good government in the world.”
Keeping a firm stance
U.S. Sen. Mark Warner, who has long sounded the alarm on China’s unfair trade practices and serves as chairman of the Senate’s National Security and International Trade and Finance Subcommittee, is looking for certainty in Biden’s international trade policy. “It is evident that the status quo isn’t working for American businesses, but the slapdash strategy of escalating tariffs without clear policy objectives was never the answer,” he says. “I’m hopeful the Biden administration approaches this problem multilaterally in a way that gives industries in the U.S. a clear vision for a path forward.”
However, Maurice Kugler, professor of public policy in George Mason University’s Schar School of Policy and Government, says that the U.S.’s trade relationship with China is one area where Trump and Biden see eye to eye. Instead of appeasements, Kugler believes Biden will enforce Trump’s tough stance on China. “He is in no mood to accept empty promises and is not going to wait months and months for [China] to pussyfoot around,” Kugler says. “He will be patient up to a point. After that, he’s going to be very tough.”
While the Chinese government has aggressively pushed to reduce or eliminate tariffs, McNab predicts the U.S. government will seek other concessions, such as increased protections against technology theft and currency manipulation, as well as improvements in China’s human rights record. “We have to have tools to bring the other party to the table and convince the Chinese government we are willing to inflict some degree of pain to accomplish policy goals.”
In addition, the administration likely will take a much harder look at various Chinese goods arriving in U.S. ports, including the Port of Virginia, with the goal of producing some of those items domestically. For example, questions have arisen about the wisdom of importing large amounts of medical supplies from China. (This issue led the Trump administration in May 2020 to award Richmond-based drug manufacturer Phlow Corp. a $354 million contract to create an American supply chain for medicines and pharmaceutical ingredients that are now made mostly in China and India.)
“If a large part of the supply chain rests in China, there is increased vulnerability to decisions of the Chinese government,” McNab says. He adds that returning portions of the supply chain to the U.S. would benefit Virginia industries, such as advanced manufacturing.
Impact on Virginia
China was the Port of Virginia’s top trading partner in 2019, with approximately $2 billion in imports and $10 billion in exports. Last year, China was the second largest export destination for Virginia goods and the state’s largest source for imports.
“The trade war has had a huge impact on Virginia businesses,” says Warner. “These tariffs affected billions of dollars of goods across essentially every facet of the Virginia economy. In the short term, businesses either have had to pass these costs along to Virginians or eat the cost — meaning less investment, fewer jobs and limited growth.”
Virginia farmers are concerned about losing access to lucrative global markets, Warner adds. “Meanwhile, other countries, including China, have taken advantage of our haphazard trade policy to secure access to new markets and chip away at our influence in other parts of the world. It’s going to be a heavy lift for our producers to fully recover.”
Virginia’s exports to China declined from $1.7 billion in 2017 to $1.2 billion in 2018 and 2019 after tariffs were implemented, notes Stephanie Agee, vice president of international trade for the Virginia Economic Development Partnership. Decreases were especially evident in agricultural and forestry products, which China began seeking from other nations. China, however, remains an important trade partner to the commonwealth. It is routinely Virginia’s No. 1 source for imports, a distinction unchanged during the Trump-era trade war. “I don’t expect that status to change dramatically in the next few years,” she adds.
In January 2020, Trump and Chinese Vice Premier Liu He inked the Phase One trade commitment, which obligated China to purchase $200 billion in additional U.S. exports. Virginia’s exports to China rose to $1.8 billion in 2020, as a direct result of Phase One, Agee says. While the agreement initially curbed the trade war between Washington and Beijing, China quickly fell behind in its commitment, meeting only 58% of its 2020 purchasing targets.
“Phase One was viewed with high skepticism from the moment it was announced,” McNab says. “China was never going to fulfill the terms of the Phase One deal. In international trade negotiations, China has the habit of ignoring provisions of things it doesn’t like.”
American businesses’ underlying concerns were not addressed in Phase One, Warner says. “We need a real framework rather than vague purchasing commitments and an IOU from the Chinese Communist Party. I’m confident that once we have that framework, Virginia industries can get back to work rather than trying to parse when and if tariffs will be lifted.”
Kugler suggests bringing in the World Trade Organization to alleviate tensions and mediate a settlement between the two superpowers. He adds that WTO Director-General Ngozi Okonjo-Iweala, a Nigerian-American economist who joined the organization in March, is an honest and objective broker. “That would be the most conducive way of handling the situation. Otherwise, we will be headed for an economic catastrophe of losses of trillions of dollars for the world economy.”
Multilateral approach
The Biden administration has pledged to partner with U.S. allies to better compete with China while pressuring China to modify unfair economic policies. Warner believes that could be an effective tactic, as does Agee.
“It could force China to the negotiating table, but it’s complicated,” she says. Europe relies on China as a trading partner, while the U.S. has been embroiled in an ongoing dispute with its European trading partners regarding aircraft manufacturing subsidies that has also involved dueling tariffs. “That could impact the U.S.’s ability to bring allies to our side on China.”
Forging trade agreements with allies contrasts with Trump’s go-it-alone, America-first approach. “If there was one significant flaw with the Trump administration’s approach to China, it was that it was bilateral instead of multilateral,” says McNab. “The Trump administration was unable to bring the power of the global community to bear upon China.”
However, as tensions escalated with China, the U.S. set its sights on trade relationships with other Asian nations, which has opened new trade possibilities.
“Southeast Asia as a whole has become a market of greater interest for imports and exports,” Agee notes. For example, Vietnam has become an important export market for Virginia’s agricultural and forestry products as multinational companies seek lower-cost alternatives outside China to establish food processing and furniture manufacturing operations.
However, no other trade partner can rival China’s size. “Even if all those countries dramatically increase their imports, there are no possibilities of replacing China as the size of an export destination,” Agee says.
The Biden administration also must determine whether it is in America’s best interests to view China as a collaborator or a competitor. “Obviously, collaboration involves a trust factor on both sides,” says Michael Ligon, vice president of corporate affairs for Richmond-based Universal Corp., a leading global supplier of leaf tobacco.
Ligon chairs VEDP’s advisory committee on international trade, which partnered with other Virginia agencies in 2019 to develop the state’s International Trade Strategic Plan. One of the first international trade initiatives developed by a U.S. state, the plan seeks to increase Virginia exports by 50% by 2035. Achieving that goal could potentially add 150,000 export-driven jobs and almost $18 billion in annual exports to the $36 billion currently generated. During its 2021 session, the General Assembly allocated $1.5 million to further implement the plan.
“Virginia is now 41st in exports per capita,” Ligon notes. “We’re looking to move into the top 20, which would put us ahead of many Southeastern states.”
That could also lead to additional dealings with China. Regardless, American and Chinese economies will remain interdependent. “We can’t ignore China, and China can’t ignore us,” McNab says. “Given the close economic ties between the two countries, it’s in everybody’s interest to talk and resolve differences peacefully.”
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