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byline: Jenny Kincaid Boone

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Meat, coffee creamer, frozen fruits and chocolate.

These commodities represent some of the bread and butter business lines, literally, of Devon Anders’ mega storage and supply chain logistics company, which is based in Mount Crawford and has other state locations.

Interstate 81 is the backbone for distribution in the valley and has helped the manufacturing sector there remain strong, says Jay Langston, executive director of the Shenandoah Valley Partnership. Photo by Norm Shafer
Interstate 81 is the backbone for distribution in the valley and has helped the manufacturing sector there remain strong, says Jay Langston, executive director of the Shenandoah Valley Partnership. Photo by Norm Shafer

The success of InterChange Group Inc. rises and falls on the health of the Shenandoah Valley’s manufacturing industry, and that’s due in large part to the performance of the local food and beverage sector, which includes companies such as Cargill Meat Solutions, Perdue and Hershey Co.

In 2019, InterChange opened a 250,000-square-foot cold storage facility, housing multiple spaces ranging in temperatures from minus 10 degrees to 34 degrees Fahrenheit. It’s planning a third-phase expansion of the facility that will include blast freezing capability (a rapid freezing process), mostly for meat storage.

“Our business has grown based on the growth of manufacturing in the valley,” says Anders, president of InterChange and a Pennsylvania native who moved to the Shenandoah Valley to attend Eastern Mennonite University in Harrisonburg. After graduation, he worked as a certified professional auditor before shifting to the packaging and logistics businesses.

InterChange’s story is a microcosm of the business environment in this agriculture-rich and mountainous western part of Virginia, where a population of approximately 370,000 relies on a mix of food manufacturing, agriculture and agribusiness — industries that build on one another to keep the economy moving forward. More than 5% of the Shenandoah Valley’s labor force comprises manufacturing, and it’s also the top region in Virginia for agriculture products sold, according to the Virginia Economic Development Partnership.

One reason for the valley’s manufacturing success is its location, says Jay Langston, executive director of the Shenandoah Valley Partnership. The Shenandoah Valley is situated along Interstate 81, serving as sort of a gateway to areas north, south, east and west. This proximity to many markets has “allowed the manufacturing to stay strong over time,” Langston says.

But a significant challenge is attracting people to fill the region’s many manufacturing jobs. That effort has been a major focus for economic development offices throughout the Shenandoah Valley — and it is ramping up.

The food chain

Manufacturing is the largest private sector employer in the Shenandoah Valley, and that’s unusual, compared with other regions, Langston says. Shenandoah Valley Partnership works to attract new businesses to the valley, expand existing business and increase workforce development opportunities.

Much of the region’s manufacturing growth in recent years has been in the food and beverage industry.

Take Hershey Co., which announced in July that it planned to expand its Stuarts Draft plant by about 90,000 square feet and add 110 jobs. It is the company’s second expansion in Augusta County in two years. The facility, which employs more than 1,000 people, is considered Hershey’s second largest in the country. Hershey Chocolate of Virginia has operated in Stuarts Draft for 38 years.

“We are proud to continue to invest and grow in an area that gives our employees a great place to live and work,” said Jason Reiman, senior vice president and chief supply chain officer at The Hershey Co., in a news release issued by Gov. Ralph Northam’s office. “Increasingly, Augusta County and Virginia are critical to our company’s growth and ability to deliver iconic and beloved products to consumers around the world.”

The region also is known for poultry manufacturing. In Rockingham County, Cargill Meat Solutions, Perdue, Pilgrim’s Pride Corp. and Virginia Poultry Growers Cooperative are among the top employers, with more than 500 workers each.

French
French

Slightly further north, in Mount Jackson, Bowman Andros Products LLC, a French company that processes applesauce, is expanding its production facility. It’s one of the county’s largest employers, with more than 500 employees, says Jenna French, director of tourism and economic development for Shenandoah County.

“We’ve actually seen a lot of our manufacturers, [despite] the pandemic, still going strong,” she says.

Food and beverage companies typically perform well, regardless of the state of the economy, Langston says.

“That’s an advantage for us,” he says. “People like their sweets, they like their beer, they like chicken and poultry.”

But it’s not only about food manufacturing in the Shenandoah Valley. Other manufacturers in the valley are growing and expanding.

They include Merck & Co., a global pharmaceutical company with a manufacturing operation in Elkton. Last year, it announced a $1 billion investment to expand its manufacturing operation to increase production of the human papillomavirus (HPV) vaccine. It employs about 900 people in Elkton, where it has been located for 75 years.

Agricultural innovation

From chickens to cows, the Shenandoah Valley houses four of the five top agriculture-producing counties in the state. Specifically, Rockingham County and Harrisonburg are the state’s agribusiness powerhouses, producing about 13,122 jobs, according to the Shenandoah Valley Partnership.

Rockingham, Augusta, Page and Shenandoah counties were among the top 10 farm income-producing counties in the state, based on the U.S. Department of Agriculture’s 2017 Census of Agriculture. The state’s poultry industry has long been concentrated in the Shenandoah Valley.

Within this thriving industry, there have been some innovative ideas in the Shenandoah Valley. In 2014, Corwin Heatwole, a sixth-generation farmer, launched Shenandoah Valley Organic, a network of privately owned poultry farms mostly housed in the valley. The idea was to work with family farms that did not want to sell poultry through larger corporations such as Perdue and Cargill. The Harrisonburg-based company sells its products under the Farmer Focus brand.

Corwin Heatwole runs Shenandoah Valley Organic, a poultry network that is building its second facility in Harrisonburg, creating 110 jobs. Heatwole photo courtesy Shenandoah Valley Organic
Corwin Heatwole runs Shenandoah Valley Organic, a poultry network that is building its second facility in Harrisonburg, creating 110 jobs. Heatwole photo courtesy Shenandoah Valley Organic

In November 2020, Shenandoah Valley Organic announced plans to establish a second, 75,000-square-foot facility in Harrisonburg, creating 110 jobs. The expansion will increase the company’s production capacity and retail packaging abilities.

The organic poultry company is a significant success story and employer for Rockingham County, says Josh Gooden, economic development and tourism coordinator for the county. Gooden did not know the company’s total employee count, and Heatwole could not be reached for comment.

“Farmers have always been sort of the unsung heroes, but they have evolved based upon the marketplace,” Langston says. “They are addressing the needs that people want in the marketplace.”

Attracting the right workforce

One of the Shenandoah Valley’s primary challenges in recent years has been finding the workforce to fill a rising number of manufacturing jobs.

“We are trying to educate,” says Langston. “Our manufacturing has grown throughout this pandemic. [Companies] are screaming for workers.”

The valley’s population is projected to grow by 2.5% during the next five years, and Langston says the growth rate might be closer to the 3.6% the region has seen since 2015. But, he adds, that still probably won’t be enough to meet employers’ labor demands.

“Business needs in general are growing at a higher level from a workforce perspective than we have workforce to fill it,” Langston says. “Part of that is we need to do a better job of selling the opportunities in the valley.”

Also, some manufacturing companies struggle to fill jobs because of a negative perception of those careers. Many people don’t know about the different kinds of jobs that are available through manufacturing nowadays, compared with what may have been available years ago, Langston says.

The partnership and other economic development offices across the region are working on new efforts to market the Shenandoah Valley as an attractive area to live and work. The partnership is in the process of creating a website to advertise the valley’s livability.

Gooden
Gooden

Similarly, Shenandoah County officials have worked with neighboring counties to study perceptions of the region, French says. The county also plans to launch a website to highlight its jobs, amenities and quality of life.

“It’s a struggle to find adequate workforce for a lot of our companies,” French says. “They often are competing against one another.”

In order to provide more training for manufacturing jobs, particularly those at Merck, Blue Ridge Community College and James Madison University in 2019 announced a partnership to offer curriculum and training programs in biotechnology, engineering and computer science. Also, Blue Ridge opened a new bioscience building in 2019 at its Weyers Cave campus, housing nursing, paramedic and bioscience-related programs.

“The whole partnership just shows that everyone in the valley wants to see everyone in the valley succeed,” says Gooden of Rockingham County.

Lending a hand

There were days during the past six months that some employees at F&M Bank in Timberville worked through the night.

At 3 a.m., they were uploading loan applications for clients onto the U.S. Small Business Administration’s online portal. During the day, the site was overloaded with others applying for loans through the Paycheck Protection Program, the federal emergency funding to help businesses reeling from the economic implications of COVID-19.

Meanwhile, business bankers at Benchmark Community Bank in Kenbridge were on the phone working with clients on PPP loan applications some nights until 9 and 10 p.m.

Benchmark Community Bank President and CEO Jay Stafford worries that hard-hit businesses may not survive without more support like the PPP loans.
Benchmark Community Bank President and CEO Jay Stafford worries that hard-hit businesses may not survive without more support like the PPP loans.

“It was a rush,” says Benchmark President and CEO Jay Stafford. “We were afraid the money was going to run out. We had to get this in quickly.”

Benchmark and F&M Bank are among the thousands of financial institutions in Virginia and across the country that experienced a surge in activity when the SBA rolled out its $349 billion Payroll Protection Program forgivable loans for small businesses in early April.

Capped at $10 million, the loans were designed to help small businesses with fewer than 500 employees cover payroll expenses, rent, utilities and other costs. The program was part of the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act, a stimulus bill passed in response to the economic fallout from COVID-19.

The loans were a lifeline for some businesses that were forced to close temporarily, lay off employees or operate at a much lower capacity due to the pandemic. But businesses weren’t the only beneficiaries of the emergency relief program. Financial institutions nationwide, and community banks in particular, benefited from the increased lending activity, largely based on the close relationships that many already had forged with business owners in their communities.

‘It’s personal to us’

During the first round of the loan program, community banks across the country issued more than 66% of PPP loans and 63% of the program’s approved dollar amount, according to the SBA.

In Virginia, businesses received 114,570 PPP loans for a total of $12.6 billion issued through Aug. 8, when the program ended after two rounds.

Community banks in Virginia issued loans to more than their existing business customer base, however. Some gained new clients, who in some cases say they were referred by larger banks that were overwhelmed by requests for federal funding.

This came on top of already massive shifts in banking operations to prevent the spread of COVID-19. Many community banks closed their lobbies to the public except by appointment and conducted as many transactions as possible through branch drive-thrus and by phone.

For instance, F&M Bank closed about 700 PPP loans, a record number for the institution compared with the roughly 465 loans it would write during a typical April to August time frame, says Mark Hanna, the bank’s president and CEO. Loans ranged from $161 to $3.7 million, issued to a variety of small businesses, from law firms and medical practices to construction companies and toy stores, he says.

Hanna
Hanna

Some Virginia community bankers anticipate a bump in revenue for the year from that increased loan activity — although it depends on SBA forgiveness of PPP loans. Banks usually receive small payments on the fee for writing a loan, spread out over 18 to 24 months, but when the SBA forgives a loan, the bank receives the entire fee.

“Once it’s forgiven, our income will jump up,” says Bryan Thompson, president and CEO of Highlands Community Bank in Covington, which issued approximately 200 PPP loans, ranging from $500 to more than $1.5 million.

For smaller PPP loans, the process is straightforward and streamlined. In early October, the SBA posted a simple forgiveness form for businesses that received loans of $50,000 or less. The turnaround period between a business submitting the form and receiving SBA forgiveness approval is about two or three weeks, Stafford says.

Larger loans, however, are more complicated for both banks and clients. As of early October, the SBA hadn’t established a forgiveness process for PPP loans greater than $50,000.

The U.S. Treasury’s General Accounting Office projects that the forgiveness application and review process for those loans will take the average business owner as long as four hours and that banks would spend seven to 10 hours reviewing each application.

With more than 700 large PPP loans and 175 employees, “we just don’t have the resources” to spend that much time on each application, Hanna says. Yes, banks stand to profit if their clients’ loans are forgiven quickly, but paying extensive overtime wages to review applications would “not be a fair return,” he adds. “It’s still probably early to say with any authority that from a bottom line perspective it is good.”

Stafford, Hanna and other bankers are hopeful the government will extend the easier forgiveness process to loans below $150,000, which would cover many of their customers — but the move is unlikely to come before the Nov. 3 election. “It’s Washington, D.C.,” Stafford says. “They just cannot get together.”

When it rains

Stacy and Rachael Rose, owners of three Harrisonburg-region restaurants in McGaheysville and Dayton, received a PPP loan through F&M. Only one of their establishments, Hank’s Grille & Catering, remained open at the height of the pandemic, largely because menu items such as barbecue and brisket could be easily adapted for family-sized takeout meals. Also, they could run Hank’s with just four people.

After the pandemic began, their restaurant sales fell to 10% of normal levels, and all catering was canceled, says Stacy Rose. The Roses employed about 74 people across all restaurant locations before COVID-19.

Until the couple received a PPP loan in the program’s first round, it was impossible for them to pay employees — and keep their business afloat.

Without federal funds, “I think we would have gone backwards as a business,” says Stacy Rose, who opened Hank’s Grille and Catering in 1997. “We keep a rainy-day fund. That would have been depleted.”

Rose would not disclose the amount of the PPP loan his family business received. But once the Roses received the funding, they slowly began to hire employees back and provide group box lunches for companies, in addition to their takeout and outdoor dining business.

“It gave me more confidence,” he says.

Now, all of their restaurants are open, and business is gradually increasing, but it hasn’t returned to pre-pandemic levels, Rose adds.

“Several businesses would have closed without it,” Thompson of Highlands Community Bank says. “Others would have really struggled. We saw it as an opportunity to inject capital to save jobs in our community.”

Thompson
Thompson

The bank’s 34 employees rallied to meet businesses’ PPP needs, stepping up to create documents, close loans and open deposit accounts in a “well-orchestrated” manner, Thompson says.
“It’s personal to us,” he says. “Almost all of us were born and raised here. Our kids are in school together. They are our neighbors and our friends. It was an opportunity to step up.”

Staying afloat

“The big question is, what happens tomorrow and the next day and after that?” says Lloyd Harrison, president and CEO of Virginia Partners Bank in Fredericksburg. “Businesses are hoping for this to end and some sort of normalcy to resume, but we don’t know when that is going to happen.”

Stafford (of Benchmark Community Bank) questions whether some hotels and retail businesses will be able to survive long-term.

At the beginning of the pandemic, Benchmark offered some of its customers a 90-day extension on loans. Community banks also doled out special services for customers during the tough economic time, such as suspending overdraft fees and offering deferrals on loan payments.

“Right now, the question will be, what’s going to happen in three to six months when the money is out?” says Stafford, whose bank issued 971 PPP loans for a total of $45 million.

Harrison
Harrison

Still, not all businesses needed a PPP loan to lift declining sales activity. Business at T&E Meats, a slaughterhouse and meat processing plant in Harrisonburg, exploded at the beginning of the pandemic as a result of meat shortages across the country and the increasing number of people who were eating at home instead of restaurants.

T&E Meats co-owner Joe Cloud used a PPP loan issued through F&M Bank to keep his employees working for eight weeks at an additional $3 an hour for hazard pay. Due to safety concerns, two of the company’s 25 employees quarantined at home during April and May, and the loan allowed Cloud to continue paying them.

“I was looking at this onslaught of demand” for meat when grocery store stocks were low due to the pandemic, says Cloud, who also used the PPP loan to purchase new equipment. “It was good for my business, and it was what the public needed, too.”

Hanna says that several businesses that took out loans from F&M Bank repaid the funds because they didn’t experience as severe a financial downturn as expected.

But other customers as well as bankers are still waiting to get crucial answers about PPP loan funds, including whether another round of stimulus payments will come out of Congress. And while the federal government has stated that forgiven PPP loans will not be included in taxable business income, it’s not clear whether that same policy will apply to state corporate income tax in some states. Virginia has pending legislation introduced by Del. Joe McNamara, R-Roanoke County, to exclude forgiven PPP loans from state taxation. The issue will likely be decided during the 2021 General Assembly session.

“The whole thing’s been confusing pretty much from the get-go,” Thompson says.

Regardless of any rough edges, PPP loans were a necessary short-term fix, Harrison says. After all, with approximately 50 employees, Virginia Partners Bank is well-suited to understand the challenges facing the small business community. The bank issued more than 600 PPP loans, and the majority were for less than $150,000.

“I know what it is like to think about making a payroll,” says Harrison. “We understood this at an existential level. We knew that if someone wasn’t helping the small business community, there would be an awful lot of people who would fail.”

Virginia Business Deputy Editor Kate Andrews contributed to this story.

 

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Slowdowns ahead

When the COVID-19 outbreak began in March, projects at Howard Shockey & Sons, a Winchester-based commercial construction company, kept moving forward. After all, construction is considered an essential business, and unlike some other states, Virginia did not restrict construction activity at the start of the pandemic.

But while Shockey’s work continued, albeit with some hiccups due to the pandemic, the 124-year-old company has an uncertain outlook on its business performance in the next year.

Some of its planned projects are delayed because of economic uncertainty created by COVID-19, and the company is bracing for revenue losses in 2021.

“The unpredictability of it makes it harder to do revenue projections and manpower projections,” says Shockey President Jeff Boehm.  “Neither the public sector nor the private sector is sure what’s coming next.”

Shockey’s outlook is a microcosm of the construction industry in Virginia and in the country.

Nationally, construction output dropped significantly in the second quarter of 2020, while industry leaders’ confidence in sales, staffing and profit margins also declined in July, according to reports by Associated Builders and Contractors, a national trade organization. During the next six months, less than 29% of contractors expect their profit margins to increase, while more than 47% expect declining profit margins, according to the organization.

By July, the construction industry had recovered about 56% of the 975,000 jobs it had lost during March and April, according to ABC stats. But as companies adjust their spending plans and pull back on capital expenses to make up for recent losses, construction companies will begin to see the impact of these reduced and lost construction starts in 2021 and 2022, according to construction economic analyst Ed Zarenski’s Construction Analytics blog.

“While many contractors will continue to work through backlogs for the balance of 2020, it may be difficult to secure work for 2021 as fewer projects are bid out and project starts become increasingly rare,” Anirban Basu, ABC’s chief economist, said in a statement.

In Virginia, certain kinds of projects — such as new hotels, office buildings and retail construction — are on hold or nonexistent, says Patrick Dean, president of Associated Builders and Contractors of Virginia. Along with COVID-19, there is uncertainty related to the upcoming presidential election and government spending for 2021, Dean says.

Doubt among developers, caused by an uncertain COVID-19 economy, is the biggest challenge for Shockey, Boehm says. The company is moving forward with some public sector jobs, such as two new elementary schools on which it recently broke ground in Loudoun County. But many of Shockey’s projects for the private sector, of various types, are on hold indefinitely.

“In each case, the project is not canceled,” Boehm says. “They want to build but not start quite yet. All have an uncertainty about whether COVID-19 will allow the level of demand for their services that they can count on in their pro forma.”

The situation is similar for Barton Malow, a Michigan-based firm with locations in Richmond and Charlottesville. Some of the company’s largest clients in Virginia are universities. But since the pandemic began, new construction jobs have slowed in higher education, says Dan Buchta, vice president of Virginia operations for Barton Malow.

“The higher education clients have definitely tapped the brakes in rolling out more RFPs, trying to get certainty on their revenue streams and classes,” he says. “We are still waiting to see.”

Even so, some projects that the company started in Virginia before COVID-19 remain on track. To be sure, those include student health and wellness centers at two universities — the University of Virginia and the University of Richmond.

“It’s new project starts and new work acquisitions that have been more challenging,” Buchta says.

Supply chain slowdown

Finding and obtaining necessary construction materials in a timely manner during a pandemic has made it difficult for some businesses to keep projects on track.

The pandemic has created delays for key supplies, some of which may take twice as long to obtain, says David Yergin-Doniger, president of Manassas-based WG Construction Co. Inc. Photo by Will Schermerhorn
The pandemic has created delays for key supplies, some of which may take twice as long to obtain, says David Yergin-Doniger, president of Manassas-based WG Construction Co. Inc. Photo by Will Schermerhorn

Right now, it takes about twice as long to obtain certain supplies, compared with before COVID-19, says David Yergin-Doniger, president of WG Construction Co. Inc., a Manassas-based firm that specializes in major road construction, including work to widen Interstate 66.

In April, as some manufacturers shut down for a time and various states limited interstate travel because of the pandemic, obtaining materials was nearly impossible.

Additionally, positive COVID-19 cases among concrete-truck drivers and other construction crews affected supply routes, Yergin-Doniger says.

Some supply issues have improved since the spring, but delays in obtaining some materials, particularly overseas shipments, remain.

“The best thing we can do is get all of the materials to the jobs before we get there,” Yergin-Doniger says.

Similarly, to avoid delays, there is a requirement that all materials are pre-purchased and stored ahead of time for a fast-track renovation project next summer for Clancy & Theys Construction Co., says Bill Goggins, vice president and CEO of the firm’s Virginia division in Newport News.

In particular, Pennsylvania’s lockdown in the spring caused delays for manufacturers who work with Clancy & Theys.

“It’s not the way it was before,” Goggins says. “Every day, multiple times a day, we have to think about the impacts of the virus and what it’s going to do to us. We are certainly not back to normal.”

Safe job sites

Like businesses throughout the country, construction companies have had to step up and change safety measures at job sites and in offices to keep employees safe and to mitigate the spread of the coronavirus.

For WG Construction, this includes daily, mandatory temperature checks for employees, face coverings and paperless timesheets. Employees also carry their own pens for signing paperwork.

“Every day, multiple times a day, we have to think about the impacts of the virus,” says Bill Goggins with Clancy & Theys Construction Co. Photo by Mark Rhodes
“Every day, multiple times a day, we have to think about the impacts of the virus,” says Bill Goggins with Clancy & Theys Construction Co. Photo by Mark Rhodes

People working on job sites for Clancy & Theys now sit in their trucks and use their phones and iPads for remote meetings rather than gathering in an enclosed trailer, Goggins says.

“We will err on the side of safety,” says Goggins, whose Raleigh, North Carolina-based company employs about 100 people in Virginia.

In the past few months, several employees at WG Construction were suspected of having COVID-19, and crew members who had contact with those employees quarantined for 14 days, says Yergin-Doniger. With the manpower interruption, it wasn’t easy to keep some jobs on schedule, he adds.

“If a key person gets sick, that is very concerning,” he says. “It’s like a domino effect.”

Dean of ABC Virginia says he has been impressed with the safety measures that companies in the state have put in place at job sites.

“I have been on 35 job sites in the past month [July through August],” he says. “I am seeing wash stations, and masks are everywhere. Everybody wants their employees to go home safe every day. There is a balancing act between ‘we want to be safe’ and ‘we need to continue to build the project and complete the job.’”

Even so, keeping a consistent work crew is a challenge during the pandemic. Across the state, Dean says, contractor productivity is down about 20%. “You’ve got some individual challenges,” he says. “Quite often crews aren’t 100% manned. One day a job gets shut down and 40 electricians get quarantined. Overall, everyone’s suffered somewhat.”

Shockey also has seen significant fluctuations in manpower during the pandemic. At the beginning of the virus outbreak, some employees didn’t want to work because they were nervous about potential exposure to COVID-19, Boehm says.

Some of these challenges continue.

“In our industry, COVID-19 hasn’t stopped,” Boehm says. “We are still dealing with illness and quarantine and all of those things. It’s become a more routine part of what we do, but it hasn’t gone away.”

To be sure, not all construction projects have been significantly impacted by COVID-19. For WG Construction, the Interstate 66 widening project continues, along with the demand for data center construction in Northern Virginia.

“The path to those projects being built was in place for the past couple of years,” Yergin-Doniger says. “Public work never stopped.”

But how will public projects look in the next 12 months? Yergin-Doniger says he tracks economic indicators regularly and in particular Virginia’s unemployment numbers, with more than 265,000 Virginians still out of work as of late August.

“There are a lot of signs that the economy is about to take a major nosedive,” he says.

Dean expects demand for health care projects to remain high and he believes that some building activity could shift to interior renovations for office buildings, which may be reconfigured because more people are working remotely.

“Until we get a vaccine that works, I think we are in a challenging [environment] for a while,” Dean says. “But there are opportunities.”

 

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California PPE supplier sues Chain Bridge Bank

A California medical supply company is suing McLean-based Chain Bridge Bank, alleging the bank was responsible for destroying the company’s reputation and making it lose a $600 million state contract for personal protective equipment.

In the lawsuit, Blue Flame Medical claims that Chain Bridge Bank told California officials that Blue Flame could be “fraudulent,” leading California’s state government to cancel a contract for 100 million N95 masks and demand the return of a $456 million down payment.

In response to the lawsuit, Chain Bridge bank spokesperson Rich Danker said in a statement that “the bank acted properly and fulfilled its legal and regulatory responsibilities.”

The Washington Post reported in May that the U.S. Department of Justice opened a criminal investigation into Blue Flame. Neither the Justice Department, nor Blue Flame’s attorney, would comment on the report’s validity.

Blue Flame alleges that Chain Bridge abruptly removed funds from Blue Flame’s account and closed it, a violation of Virginia law, according to the lawsuit filed in the U.S District Court for the Eastern District of Virginia. A hearing has not yet been scheduled.

Republican political consultants Mike Gula and John Thomas launched Blue Flame in March in response to the coronavirus outbreak. They did not have previous experience in the personal protective equipment business.

“They both saw that there was this need in the marketplace,” says Blue Flame’s attorney, Ethan Bearman. “There were cries for help to get PPE, and I know that these guys thought that they would be able to help get PPE to people who needed it.”

Gula chose Chain Bridge Bank for a corporate account because he was a longtime customer.

The lawsuit alleges the bank’s actions caused Blue Flame significant harm, ranging from the cancellation of a $19 million-plus contract by another state government to death threats following intense press coverage.

“Chain Bridge set off a chain reaction of unbelievable negativity in the marketplace that directly interfered in contracts,” Bearman claims.

In July, Blue Flame was trying to appeal Maryland’s decision to cancel a $12.5 million contract with the company after the state said Blue Flame failed to provide ventilators and protective masks on time.

Meanwhile, Blue Flame continues to do business in California.

“The most important thing is we want the bank to be held accountable for what they did wrong, and we want the reputation of Blue Flame Medical restored,” Bearman says.

 

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Cash crop?

Petunias, plants, strawberries, meat, tomatoes and more have been the primary revenue sources for Rolling Meadows Farms during the past 31 years. Tim Belcher took over the 400-acre Martinsville family farm in 1989 after his father retired.

Now, the farm has a new product line and Belcher has high hopes that it could run neck and neck with his produce, plants and meat business — eventually.

The new line, coined Virginia Pharm Health, includes cannabidiol (CBD) oils and creams made from hemp that Belcher grows at the farm and processes at a Blacksburg facility. The products are meant to relieve pain, and Belcher says they are working. For example, one of his customers purchased the cream to relieve her husband’s knee pain after doctors could not help him.

“The first day, it knocked his pain out,” says Belcher, who sells the products online and at the Historic Roanoke City Market, where he is a regular vendor. “She says it’s the only thing that works.”

Belcher is one of more than 1,300 growers in Virginia registered to grow industrial hemp, a strain of the Cannabis sativa L. plant typically grown as a fiber or as edible seeds. Belcher’s story is a microcosm for the hemp industry in Virginia, where the number of growers is surging and processing facilities are cropping up to meet the demand.

The number of people who registered to become industrial hemp growers in Virginia started off at 589 in April 2019, right after state legislators legalized industrial hemp production, says Elaine Lidholm, director of communications for the Virginia Department of Agriculture and Consumer Services (VDACS). (Virginia requires that all industrial hemp growers, producers and dealers register with VDACS.)

By the end of 2019, there were 2,200 acres of hemp planted in Virginia, with the largest acreage concentrated in Chesapeake and Mecklenburg and Caroline counties.

“It’s a unique crop and one that growers find a lot of potential in,” says Erin Williams, a senior policy analyst with VDACS who was involved in reviewing the state’s hemp legislation. The 2014 and 2018 federal Farm Bill, adopted by Virginia, requires that industrial hemp contain less than 0.3% THC, the compound found in cannabis plants that gives marijuana its psychoactive properties.

It’s still early to determine the future of the commonwealth’s hemp growing industry, Williams says. As of late February, Virginia had submitted its state hemp plan, which establishes regulations for the next year, to the U.S. Department of Agriculture for approval.

Comparing data from the first couple of years may provide a sense of whether the hemp industry will be sustainable in the commonwealth, she says.

One of the largest hemp growers in Virginia, TruHarvest Farms in Montgomery County plans to begin developing its own CBD products, says Kelli Scott,
TruHarvest’s coordinator of production and marketing.

New revenue stream

It’s clear that some hemp growers in Virginia are finding early success in the young industry. In particular, tobacco farmers in Southern Virginia are growing hemp to supplement declining tobacco sales. There are different reasons for the sales slowdown, including increased tariffs on international trade and a general decline in cigarette consumption, says Tony Banks, senior assistant director with the Virginia Farm Bureau’s Department of Agriculture Development and Innovation.

“We saw some massive declines in tobacco production last year,” Banks says. “We lost about 35% of the production we had the year before. Folks in the tobacco belt are looking at hemp as a possible replacement.”

But it hasn’t been a boom crop for all. Some growers are concerned that the market became oversaturated too quickly. There is still much uncertainty with hemp and its business potential.

“The market is almost still being birthed,” Banks says. “We are far from having any sort of maturing market. It’s very fluid.”

In the past year, Matt Hagan, owner of TruHarvest Farms in Montgomery County, jumped headfirst into the hemp business. The champion drag racer and beef cattle farmer not only expects to plant more hemp this year, but he is building a 30,000-square-foot greenhouse for in-house propagation of the plant.

Last year, TruHarvest grew 85 acres of hemp, making it one of the largest hemp farms in Virginia. In 2020, it plans to add 15 acres, says Kelli Scott, coordinator of production and marketing for TruHarvest.

Hagan, she says, “was looking at this as a way to diversify the farm, to get a potential new revenue stream. It’s an innovative, interesting industry to get into.”

As of mid-February, TruHarvest had not yet produced products made from its hemp. This year it plans to develop topical products, such as creams and items for oral consumption, Scott says. Some of that production could happen at the farm in the future.

“It’s like farm-to-table, going from field to a shelf-stable product,” Scott says.

Small beginnings

Other Virginia farmers are growing hemp on a smaller scale.

Belcher planted five acres of hemp, but he has plans to increase his sales of the crop in various forms. He is building two greenhouses to support all of his farm’s business, including hemp. Right now, he is experimenting with making coffee containing kief, a powder derived from organic compounds and cannabinoids found on cannabis flowers.

Belcher got his start by growing hemp clones, which are seedlings, and selling them to farmers to cultivate. In fact, Belcher and some hemp growers formed their own co-op about a year ago, and they hope to turn it into a full-scale hemp operation.

Starting small is key, says Jackson Cox, who in 2018 founded a side venture, Nelson County-based Rockfish Hemp, dedicated to the crop. He works as a subcontractor with farms looking to get into the business. Cox, a carpenter who grows and sells plants, initially began working with James Madison University to grow hemp for research.

“The business sprouted up on its own,” Cox says. “I saw a need for consultation. Farmers want somebody to come and tell them what they could do to diversify what they already have growing.”

Several hemp-processing facilities are opening or have announced plans to open across the commonwealth.

One of these, Appalachian Biomass Processing, an industrial hemp fiber processing center, announced in October its plans to open in Wythe County. During the next three years, the company plans to buy more than 6,000 tons of industrial hemp grown in Virginia at a value of more than $1 million. TruHarvest Farms in Montgomery County is also adding processing capabilities. Other processors in Virginia include Shenandoah Valley Hemp in Elkton, which is processing hemp into CBD oil products, and Solidarity Hemp, a Floyd County growers’ group that is working on creating a CBD processing facility. A Colorado hemp processing company was also exploring locating operations in Chesapeake last year.

When and whether more of these facilities open will be telling for hemp’s future, Banks says.

“Processing is the big bottleneck for a market to take off for hemp,” he says. “Once the Food and Drug Administration begins to make announcements regarding how they may treat foods and dietary supplements that contain CBD, that’s going to provide some clarity. That may encourage some processors to go ahead and begin to open facilities.”

Flooded market

“It’s hard on a small scale to make money with [hemp],” says Michael Frank, owner of 6-acre Full Moon Farm.

Still, some farmers are hesitant about jumping into hemp cultivation.

It requires steep investments in time and resources and could be risky for some farms, particularly small operations. Michael Frank, owner of the 6-acre Full Moon Farm in Sperryville, is a registered Virginia hemp grower, but he’s not confident that he will make money from the plant.

He planted hemp seeds and has grown them to sell as seedlings, but he hasn’t yet had them tested for CBD or THC content, an expense that could total about $100 a plant, he says.

“It’s hard on a small scale to make money with it,” says Frank, whose farm focus is producing and processing culinary food grade essential oils and dried herbs. “The market is now flooded; and a lot of people don’t even know what to do with the product that we have.”

Even so, a flooded market isn’t all bad, says Jason Amatucci, founder and executive director of the Virginia Industrial Hemp Coalition, a grassroots advocacy organization.

“It’s part of a free market economy,” says Amatucci, who started the coalition in 2012. “There will be winners and there will be losers.”

The coalition is pushing for the state to increase the 0.3% limit on THC content required for industrial hemp to 1%. That’s because it is difficult for some growers to keep hemp’s THC below the 0.3% threshold, Amatucci says. Increasing the limit would keep growers from having to destroy their crop if the THC content is on the cusp of the limit. Marijuana has a 15% to 20% THC content, says Amatucci, who argues that people cannot get high using a product with 1% THC.

A team at JMU continues to seek answers about the industry and its future.

Samuel Morton, an associate professor of engineering, along with students and other faculty at the university, plan to research the hemp market and the state’s production infrastructure with a yearlong grant from the state’s GO Virginia economic development initiative. The program provides incentives for collaboration between businesses, education and government to strengthen the state’s economy.

Morton and his team will look at best practices for hemp growing, production and infrastructure by studying Shenandoah Valley hemp growers.

“Our goal is to help the entities that will be making those decisions have the best information to make them,” he says. “What I don’t want to have is a lot of farmers who get out into this high-risk space with insufficient information and find more financial trouble than what they began with.”

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Steady as she goes

A presidential election. International trade conflicts. Fear of recession.

There are plenty of circumstances that could shift the stock market and shake up investments in 2020.

Yet consumers should not allow developments nationally and globally to influence their investment choices, say some Virginia wealth advisers who are listed as America’s Best in State for 2020 by SHOOK Research. Though some events are significant, making financial decisions based on emotions is not a sound move, they say.

“If it’s an election year or if you like the candidates or not, those [factors] have a short-term impact on investment,” says Kim Luu-Tu, a private wealth adviser with Ameriprise Financial Services Inc., and CEO of Generations Wealth Management, a division of Ameriprise, in Vienna. “When you are making decisions, you have to be unemotional.”

Luu-Tu and other financial advisers predict another bull market in 2020. It would be the 11th consecutive year for a bull market — the longest stretch in the country’s history. (The average bull market lasts about 4.5 years.)

“We are in a very positive period economically,” says Paul Pagnato, founder and CEO at PagnatoKarp, an independent wealth management firm in Reston. “I think the markets will continue to be robust and be abundant in all asset classes.”

Similarly, in Bankrate’s 2019 Fourth-Quarter Economic Indicator survey, financial experts estimated that there is a 35% chance that the U.S. economy will enter a downturn between now and the November presidential election. That is a decrease from 41% in the survey’s previous quarter, revealing growing optimism in the financial market for 2020.

Stay the course

Paul Pagnato, CEO of Reston-based PagnatoKarp, says all signs point to a continued bull market and healthy economy for 2020. Photo by Stephen Gosling

To be sure, that doesn’t mean that investors should throw caution to the wind when it comes to taking risks and making strategic investments, Pagnato says.

“The guidance we give clients is to be true to themselves and the plan that they’ve done,” and don’t let ephemeral market changes dictate decisions, he says. “It’s really important to stay the course with a plan.”

Some industries are stronger than others for investment this year, advisers say.

Technology companies performed well last year and are likely to continue at that pace, says John Higgins, managing director of investments at the Higgins Private Wealth Management Group of Wells Fargo Advisers in Charlottesville.

Biotechnology is another attractive industry from a valuation standpoint, says Luu-Tu.

“You have to be very selective at this point,” she says. “If you consider being more diversified and tactical, you should look at industries that are opportunistic.”

Emerging fields within tech and biotech, such as cloud computing, genomics, autonomous driving and 3D printing, are also strong, Pagnato says.

“We love what we call disruptive innovations,” he says. “We love the sectors and the industries and the companies that are growing exponentially and are able to take advantage of the massive computing power that we have.”

Pagnato cautions consumers about investing in the energy sector, big banks and the traditional automobile industry because of rising competition from newer, more efficient concepts, from solar power to electric vehicles.

“We’re in a period of time where you have to take risks as a company,” he says. “You have to be innovating, you have to be experimenting. You need to be developing and employing and leveraging technology. If you don’t, your competitors are going to.”

Go global

Investors should consider rebalancing their portfolios with more international investments this year, counsels Wendy Payne with Centurion Wealth Management in McLean. Photo by Stephen Gosling

It’s also a good year for consumers to consider investments in international stocks, rather than U.S. stocks. International stocks are at a historic price average, while U.S. stocks are over the historical average, says Wendy Payne, founding partner of Centurion Wealth Management in McLean.

In general, “the trend is it’s a good time to recalibrate your allocation” from the previous year to rebalance portfolio drift, she says.

Similarly, despite current global political tensions and trade conflicts, from a valuation standpoint, “you should be shifting some of your profits out of the U.S. and look for more attractive valuations anywhere you can find it,” says Luu-Tu.

But consumers should shy away from international investments in areas of the world that are experiencing active political unrest, such as the Middle East, she says. For those same reasons, oil as a commodity investment also may be volatile, she says.

Additionally, the results of this year’s presidential election could have a bearing on some future investment choices. Depending on which party wins the election, investors should be defensive in the industries that the winning party — Republican or Democrat — targets aggressively, Higgins says. Those industries could include health care or infrastructure-related investments.

Time to refinance?

Interest rates likely are a bright spot for the year. Mortgage rates already are low and Payne doesn’t believe the Federal Reserve will raise rates this year. In fact, 62% of economists in Bankrate’s Fourth-Quarter Economic Indicator survey says they expect the Federal Reserve to cut rates in 2020.

As of late January, 15-year fixed mortgage rates were 3.2%, while 30-year fixed rates were 3.7%, according to Bankrate.

“We have time before we will see some [rate] increases,” Payne says. “When we do get to that point, I am confident that there would be slow and steady increases.”

Refinancing is a smart investment move when rates are low, she says.

As consumers make goals for the year, they should evaluate what happened with their financial goals in the previous year, making sure that they replenish any savings that they used, says Nancy Popovich, managing director of Popovich Financial Group at Baird in McLean.

“My biggest fear is when people try to overcommit funds that they don’t have when the market has done well in the prior year,” she says. “Sometimes it’s hard to do. You are so excited to participate in the investments. Look back before you look forward.

“If you’re secure in what you need right now, you don’t have to worry about what’s going into the markets,” Popovich adds.

Storm on the horizon?

Overall, the key to smart investing is to be cautious when chasing big returns and making risky investment decisions, advisers says. Too often consumers decide to invest based on an investment’s performance in the past, Payne says.

But it may not be a good move now, she says. Consumers should be sure that their portfolio is well diversified.

Lately, more clients want to take risks by buying stocks at high prices, particularly after reading news articles predicting that there will not be a recession this year, says Luu-Tu.

“I am against taking more risks,” she says. “You can win more by losing less. The highest-return opportunity may not be the best approach. Sometimes taking lower risks until you get to keep more of what you want may end up getting you to the destination.”

Plus, she says, “I urge people not to look at the news every day.”

Even though the market is experiencing growth, consumers should be prepared for an eventual correction, Higgins says. His firm expects muted returns this year, with a 7% or 8% rate of return in the U.S. stock market.

“We are in the longest expansion in the United States’ history, and prices and valuations are getting expensive,” Higgins says. “This is the end of the market cycle that we’re in right now. Clients need to be tactical, with the understanding that maybe not this year, but the next year, a recession is coming.”

CHART: SHOOK top wealth advisers in Virginia

Making its case

Lucy McGough received a handwritten outline about six months before her first day as the new dean at the Appalachian School of Law in Grundy.

It was a five-year plan to launch a natural resources law program that would teach future attorneys about the energy and mineral industries and legal issues facing businesses and residents across the country.

The plan makes sense for a private, nonprofit school like Appalachian, which sits in the heart of Southwest Virginia’s coal country, says McGough.

“We have a vital stake in these issues for our students, for our constituents, for our fellow townsmen,” says McGough, who came to Appalachian last year, after a 25-year stint teaching law at Louisiana State University. “We live what we’re teaching.”

Appalachian’s plan to create a natural resources program began in full force a year and a half ago. Officials at this school of about 260 students realized the growing need to devote more time and money to educating future lawyers about the intricacies of natural resources law, one of the country’s most heavily regulated industries, says Patrick Baker, an associate law professor and chair of institutional development and strategic planning at Appalachian.  He is one of several Appalachian professors who proposed ideas for the new program to McGough. In his former career as an attorney, Baker represented the mineral and energy industries at PennStuart, an Abingdon law firm.

It’s a noteworthy step for a school that suffered significant upheaval after a 2002 campus shooting rampage, in which a former student killed a dean, a professor and a student. Many feared that Appalachian, founded only eight years before, would not survive the incident. But more than 10 years later, the school continues to push forward with support from community donors.

The school previously offered some natural resources law courses, including a joint certificate of graduate study in natural resources with Virginia Tech. Also, many of its alumni practice in the field.
Still, there’s a continuous need for attorneys with natural resources law experience, particularly in the Appalachia region, where a host of energy companies operate within a 200-mile radius, says Gerald Arrington, who is Buchanan County commonwealth’s attorney and an Appalachian graduate.  Even general practice lawyers often have cases that delve into some kind of natural resources issue, he says.

Appalachian does not intend for its program to represent a certain ideology. Officials want students to understand all sides of the issues surrounding natural resources law, including how resources can be developed in a “prudent” manner, Baker says.

“We’re trying to occupy this site of rational discussion,” McGough says. Appalachian wants to be “a place where people can come and talk about these policy issues without having to be tagged as an industry mouthpiece or a conservation activist.”

Appalachian expects its full natural resources program, complete with its own physical location, to debut during the 2015-16 school year, Baker says. Right now, it’s ramping up class offerings with additions that include oil and gas law, coal mineral law and sustainable energy courses.

The classes fit well with the school’s newly launched certificate program in natural resources law, which allows students who earn a law degree (juris doctor) to specialize in this area. Appalachian also plans to offer a master’s degree program with a concentration in natural resources and energy law and regulation.

Other plans include opening a natural resources law practice clinic on campus where students can represent real clients under an attorney’s direction.

At least one challenge remains. The school needs a location to house its natural resources law program.

In 2010, Appalachian purchased a house at 1432 Walnut St., near its campus, for $625,000, according to the Buchanan County commissioner of the revenue’s office. But renovations to make the house complaint with Americans with Disabilities Act regulations are expensive, says McGough, who lives in the house.

Instead, the school has considered a campus building, the Booth Center, for this new Natural Resources Law Center, McGough says.

So far, the program’s costs have been paid by several contributions, including a dean’s discretionary fund and an endowment. McGough would not disclose the total amount of money that the school has raised or the names of the major donors. The school is not soliciting additional funds for the program, she says.

As the school’s natural resources law program rolls out, school officials expect Appalachian students like Taylor Corbett, who graduated in May, to reap the benefits. Corbett, who lives in Elizabethton, Tenn., wanted to work in natural resources law before he came to Appalachian. He gained valuable experience through several law jobs and even one of the school’s newly added coal and hard mineral law classes.

“The jobs are going to be unbelievable,” for future students, he says. “You don’t have people there teaching you who are one year out of law school. When they tell you something, you know it’s coming from personal experience.” 

 

Anchor retailer

This was a golden opportunity.

Virginia’s General Assembly had just passed legislation that would give Bristol, Va., compelling incentives for attracting national retailers. Bristol’s city manager, Dewey Cashwell, was giddy with the prospects.

The 2012 law allows Bristol and other Virginia cities that border other states to keep 100 percent of the sales taxes generated by a new retail center to pay for the development, if it meets certain criteria. It must have a capital investment of at least $50 million, generate at least $5 million in tax revenues annually and draw 1 million visitors a year.

“We were once again in a position to be competitive,” Cashwell says, referring to similar legislation passed in neighboring Bristol, Tenn.  Bristol, Va., officials feared that the new Tennessee law would make it easier for its neighbor to lure retailers and significant development away from Virginia.

“We’re off to the races now,” Cashwell recalls thinking, once Virginia had pulled even, legislatively,  with Tennessee.  Since then, the city’s plans have taken off. In the past year, one of the country’s largest outdoors retailers, Cabela’s, chose Bristol for an 85,000-square-foot store. Construction will begin this year, with plans for the store to open in the fall of 2014 as an anchor to a new $200 million retail center, The Falls.

But wooing this Sidney, Neb.-based retailer to Bristol was not a fast feat. Three years ago, Cashwell became Bristol’s city manager with a mission ― turn this Southwest Virginia Tri-City, known as the birthplace of country music ― into a retail destination. Bristol’s Exit 7 on Interstate 81 has grown into a bustling business hub, with Walmart, Home Depot, Starbucks and a host of other national retailers landing locations there.

Yet Bristol’s economic renaissance doesn’t stop at Exit 7. Plans are taking shape for The Falls, a shopping area that will stretch across 140 acres near Bristol’s Exit 5. It would house about 1.5 million square feet of space for stores, restaurants and hotels.

The groundwork for this project began in May 2011 when Cashwell and Andrew Trivette, Bristol’s director of community development and planning, former Mayor Ed Harlow and members of development firm Interstate Realty Advisors traveled to a ReCon convention in Las Vegas, a networking and deal making conference for the retail industry.

There they spoke with representatives for Cabela’s and one of its competitors, Missouri-based Bass Pro Shops, about considering Bristol for a store site. Bristol’s national parks, lakes and array of outdoor amenities would be the perfect spot for one of these retailers, the group thought.

“You sell what you have and that’s what we have,” Cashwell says. “We have a beautiful surrounding.”

Initially, Bass Pro representatives appeared interested in Bristol, he recalls. Then, the city’s conversations shifted to Cabela’s, which has 40 stores in the United States. Cabela’s “pushed our project ahead in their scheduling activities and got us through their process fast,” Cashwell says.

It included several visits to Bristol by top Cabela’s representatives. They looked at the site and talked about potential plans with city officials. Next to arrive was Cabela’s letter of intent, which is a statement that a retailer submits confirming its intention to open a store in a specific location. Bristol officials received the letter in July. “We were ecstatic,” Cashwell says.

In December, Cabela’s signed a contract to buy 10 acres of land for its Bristol store. The city has issued $25 million in general obligation revenue bonds for the project, and it will pay for the development through revenue bond financing, Trivette says. Cabela’s will pay the city $5 million for its land.

Cabela’s spokesman, Wes Remmer, would not disclose specific details about how and why the retailer chose Bristol as its first Virginia store, citing competitive advantages. “We look to open stores in areas where there is a loyal Cabela’s following and where outdoor recreation is popular,” Remmer said an email. “Not only do we love Bristol, but we love the entire region. So, it’s a great fit.” 

The Falls will be developed in three phases. In late January, Cashwell would not disclose the seven additional retailers slated for the project’s first phase. The city has spoken with such retailers as Dillard’s, Kohl’s, Costco and restaurant chain Buffalo Wild Wings about coming to The Falls, he says.

As for Cabela’s, the retailer is planning an addition to its Bristol store. It will be done with the chain’s signature log design exterior, metal roof and displays of wildlife memorabilia.

Along with hunting, fishing and camping gear, a gun library and a fudge shop, the Bristol store will house a power-sports section for boats, all-terrain vehicles and related accessories, Remmer says. The new power sports add-on will require the store to expand by 8,000 square feet.

Meanwhile, not too far away, a Cabela’s competitor is preparing to make an entrance — across state lines. Bass Pro Shops plans to open a store late this year or in early 2014 off I-81 in Bristol, Tenn., near the state’s welcome center. 

A mixed bag

The country’s largest online retailer of outdoor gear opens a new fulfillment center in Montgomery County, with the promise of 200 jobs.

In Franklin County, an existing window and door manufacturer expands, hoping to take advantage of a slowly improving real estate market.

Meanwhile, a military supplier of night-vision goggles cuts 201 jobs and a national craft beer brewer snubs Southwest Virginia for a North Carolina hub.

The Roanoke and New River Valley economies experienced a mixed bag of growth and retraction in 2012. While some companies, such as Backcountry.com are making bold moves in the region with new facilities and jobs, economic and industry challenges have forced others to pull back or to shutter operations altogether.

Still, economic development officials say the economy is improving gradually in the aftermath of The Great Recession.

Roanoke Valley
Businesses spent $50 million in the Roanoke Valley last year on real estate and equipment, down slightly from $52 million in 2011, according to the Roanoke Regional Partnership, an organization that markets the region.
The economy is “on the upswing,” says Beth Doughty, the partnership’s executive director. During the tough years of the recession from 2007 to 2010, the partnership announced only 100 to 200 new jobs annually, she says. It announced 549 new jobs in 2012, though that figure does not represent all new employment in the area.

The majority of economic development projects announced last year involved manufacturers, including Ply Gem Windows, a Rocky Mount company that makes window and door products. It will invest $6 million to $7 million in its facility and hire 200 more employees by the end of 2014, for a total of 1,100.

Ply Gem says it’s taking advantage of an improving housing market with the addition of new equipment, information technology and extrusion tooling. New jobs include assemblers, technicians, IT support and engineers, according to a news release.

Its expansion is funded partly by grants from Franklin County, Rocky Mount and the Virginia Tobacco Indemnification and Community Revitalization Commission, which promotes economic development in the state’s formerly tobacco-dependent communities.

A $60,000 state grant is helping to fuel an expansion at Donnie Montgomery’s Franklin County dairy. Homestead Creamery sells milk, ice cream and butter at grocery stores and operates a popular home delivery business.
In December, Montgomery, president of Homestead Creamery, said it would add cheese and yogurt to its retail lineup while selling more produce from the region’s farms.

“We’ve had some steady growth,” Montgomery says. “By adding cheese and yogurt, it fits our market well.”

The company’s $1.1 million expansion includes $60,000 from the Agriculture and Forestry Industries Development Fund, which offers incentives to companies that use Virginia’s agricultural and forestry products. Homestead Creamery has 35 employees, and it will add 20 jobs in the next three years.

Much of the Roanoke Valley’s economic growth in the past year involved small-scale job additions and expansions, says Jill Loope, acting economic development director for Roanoke County. 

The number of people unemployed in the Roanoke metropolitan statistical area declined in November 2012, to 5.6 percent, from 6.1 percent in November 2011, according to the Virginia Employment Commission.
Still, several Roanoke Valley companies shed significant jobs in the past year. Hanover Direct, a mail-order business, closed its Roanoke County distribution center last year, eliminating 189 jobs, according to a WARN notice filed with the Virginia Workforce Network. Roanoke County is marketing this vacant 650,000-square-foot building.

Also, ITT Exelis, a manufacturer of night-vision goggles and related gear for the U.S. armed forces, laid off 201 employees at its Roanoke County facility in October. Decreases in the country’s combat operations in Iraq and Afghanistan forced ITT to reduce its work force, says spokeswoman Mary Dudley.

ITT was one of the county’s three largest private employers with up to 999 employees. Now, it employs about 705 people, Dudley says.

Also, a new owner purchased Keagy Village, a 15-acre retail center in Roanoke County, last year, though it is too early to gauge its future. Ry Winston, a Charlotte, N.C., real estate developer and Roanoke native, bought the troubled shopping center on Route 419. It has struggled to land retailers since it opened in 2008, and it lacks an anchor tenant and houses only three retailers.

Winston says he’s confident that now is a stronger time economically to attract retailers. He already has spoken with several store and restaurant prospects.

Aside from layoffs, 2012 began with disappointing news. California-based Sierra Nevada Brewing Co. chose Asheville, N.C., for its East Coast headquarters, after Roanoke County wooed the craft beer giant for at least a year. “That was rather painful to lose,” Loope says. “At the end of the day, it was about camaraderie with the brewing industry. They were embraced by similar brewers in the Asheville area.”

Roanoke County wants to capitalize on the missed opportunity by marketing its water resources to breweries and similar businesses considering future expansion, Loope says. She declined to name specific companies. “It’s clearly an opportunity to promote ourselves,” she says.

New River Valley
Forbes Magazine ranked this region as the No. 5 best small city for jobs in 2012.

Area Development magazine named it one of the top 100 leading locations for business growth.

Homes.com chose the locality as the No. 1 place to raise a family, citing economic opportunities as a major attraction.

The New River Valley is a model area for creating jobs and luring new companies in the past year, at least according to recent accolades and positive job figures. For the past two years, job growth has picked up across the region, while unemployment has dropped, despite a challenging global economy. Unemployment was 5.4 percent for the Blacksburg-Christiansburg-Radford MSA last November, down from 5.8 percent in November 2011, according to the Virginia Employment Commission.

The Dish Network Corp.’s Christiansburg call center is among the hiring leaders, with the addition of 200 full-time employees last fall, ahead of busy television seasons.

The region’s other major wins include the opening of Backcountry.com’s 314,000-square-foot distribution center last August in Christiansburg. The online retailer will hire 200 employees in a two-year span.

Many smaller projects also characterize the locality’s economic development story. Inorganic Ventures, a manufacturer of certified reference materials used for measuring heavy metals and other products, expanded its Christiansburg facility by 20,000 square feet last year. Also, it hired six new employees to fuel the growth, and it will hire more this year, says Christopher Gaines, the company’s vice president of operations. It employs about 50.

Growing demand for the company’s calibrated instruments from pharmaceutical firms and the mining industry, notes Gaines, sparked the $1.3 million investment.

Aeroprobe Corp., which manufactures instruments that capture air flow data for several industries including the automotive and wind turbine sectors, will invest $5.3 million in the next five years for a new 20,000-square-foot manufacturing facility in Christiansburg’s Falling Branch Corporate Park.

In addition, social media company Heyo plans to spend $100,000 for a new Blacksburg location and add 50 jobs.

A veil of uncertainty has even lifted for a troubled, high-profile project in Blacksburg. New owners say they will build an entertainment complex at the struggling First & Main retail center. Plans include a theater with IMAX technology, a bowling alley, restaurant and arcade. Half of the stores and restaurants have closed at this 275,000-square-foot, open-air shopping center since it opened at the height of the recession.

Further southwest in Wise County, Dominion’s Virginia City Hybrid Energy Center, a 585- megawatt power station, began operating in July.  The $1.8 billion center will generate $440 million annually in tax revenues and benefits for the county, reports a Virginia Tech economic impact study.

Business growth and investments are rising as a result of a strong talent pool from nearby universities and success through the Virginia Tech Corporate Research Center, a research and science park, says Aric Bopp, executive director of the New River Valley Economic Development Alliance.

Brian Hamilton, Montgomery County’s economic development director, also credits the region’s low cost of living, outdoors amenities and a 15-minute or less commute to work.  Those are amenities that draw both employees and employers. 

Major employers by number of jobs

Carilion Clinic, Roanoke, 11,317 jobs

Virginia Tech, Blacksburg, 10,000+

HCA Virginia Health System, Throughout region,  , 1,000-2,999 jobs

Kroger, Throughout region, , 1,000-2,999 jobs

Wells Fargo Bank, Throughout region, , 1,000-2,999 jobs

Advance Auto Parts, Roanoke, 1,000-2,999 jobs

Radford University, Radford, 1,500-2,499

Allstate Insurance Co., Throughout region, , 1,000-2,999 jobs

Ply Gem Windows, Rocky Mount, 900-1,000 jobs

Celanese Acetate, Giles County, 600-999

Sources: Virginia Employment Commission, New River Valley Economic Development Alliance, Virginia Economic Development Partnership

Southwest Virginia’s recent deals

Ply Gem Windows, Rocky Mount, 200 jobs

Backcountry.com, Christiansburg, 200 jobs

Dish Network Corp., Montgomery County, 200 jobs

Virginia Transformer Corp., Roanoke, 100 jobs

Phoenix Packaging Operations LLC, Pulaski County, 100 jobs

John C. Nordt Co., Roanoke, 79 jobs

Virginia City Hybrid Energy Center, Wise County, 75 jobs

Advance Auto Parts, Roanoke, 75 jobs

GE Energy, Salem, 60 jobs

Balchem Corp., Alleghany County, 55 jobs

Source: Virginia Economic Development Partnership