Please ensure Javascript is enabled for purposes of website accessibility
Upcoming Event

Best Places to Work in Virginia

Hamburger Menu Hamburger Menu

byline: Joan Tupponce

Insuring your good name

AT&T, Accenture and Gillette dropped their sponsorships with pro golfer Tiger Woods after his string of extramarital affairs was revealed in 2009 and 2010. Around the same time, Toyota recalled up to 10 million cars because of problems with “unintended acceleration.”

Those events might seem very different, but both reflect the fallout that can take place when a brand’s reputation is tarnished. Over time companies can suffer significant financial damage when people or products connected to their brand go awry. That’s one reason an increasing number of companies are searching for ways to mitigate reputational risk.

Last year, reputational risk landed on the Allianz Risk Barometer’s list of the 10 biggest risk concerns in the U.S. It’s one of the “top risks that worry corporate risk managers” the most, says Bill Bolling, a former Virginia lieutenant governor who is managing director of Virginia operations for Baltimore-based RCM&D. “Ten years ago people weren’t talking about it. Now it’s a hot topic in 2015.”

In March, the Risk & Insurance Study Center at Virginia Commonwealth University sponsored a conference taking an in-depth look at reputational risk. “We pick a different topic each year, and we try to pick something in the way of an emerging risk, something that is new that insurance companies are responding to,” says Tim Cook, the center’s director. More than 200 people registered for the event, making it “one of the most attended conferences we have had,” Cook says.

Bad publicity’s cost
Bad publicity can hurt a company’s bottom line and its share price. For example, Tiger Woods’ affairs cost eight of his sponsors about $12 billion in shareholder value, according to a study by researchers at University of California, Davis.  After Toyota’s recalls, its sales dropped 20 percent and its stock price fell about the same percentage.

Events like these tarnish a company’s brand as well as its reputation. “A brand is who you are and what you have established in the marketplace. It’s very important,” says Cook. “You have to have a brand before you have a reputation.”

Once a brand is established, a company has to rely on its reputation to keep the brand intact, he says. Threats to a company’s reputation can be the result of events ranging from data breaches and product recalls to the behavior of spokespeople and class-action lawsuits.

Social media can add fuel to the fire. “That can blow everything out of proportion,” says Roy Bucher, president of Chas. Lunsford Sons & Associates Inc., an insurance brokerage based in Roanoke. “Just about everybody is a candidate for this because of the way social media works.”

An embarrassing cyberattack at Sony Pictures Entertainment last year disclosed on social media employees’ salaries and disparaging email comments about some of the studio’s biggest movie stars. “That was about as dramatic as I have seen,” says David Schaefer, president and CEO of Leesburg-based AHT Insurance. “The damage to Sony is incalculable. They are still dealing with the fallout from the bad press, and they continue to see information released months after it happened.”

Coverage hard to find
Companies looking for insurance that specifically covers reputational risk may have a difficult time finding it. Cyber liability, employment practices liability and directors and officers liability coverage, however, can include crisis-response components that are “designed to aid in the reconstruction of a company’s reputation,” Schaefer says. “Crisis management support can help a company manage its message and minimize the effects of the negative event.”

Few insurance products are solely focused on reputational risk partly because “it’s hard to quantify what that reputational value is and what that means in terms of coverage,” says Chandra Seymour, senior vice president with Marsh Risk Consulting in Washington, D.C. “When we look at reputation, you have to ask the question: What is the basis of your reputation?”

A company’s brand is an intangible asset but “a very important asset,” says Schaefer. “We trade on our good name every day. If your name is damaged in a way that causes people to lose faith in a product or the organization, that can be a category killer for you in terms of implications for the business. Over time companies have become more sensitive about protecting and defending their brand.”

A company’s reputation can be based on many things, including its products or social responsibility or the vision of its leadership. “When we talk with clients, we take a look at the organization and try to identify what it’s built on and make sure the company can protect those things as best they can,” Seymour says.

A company doesn’t have to be a multimillion dollar corporation to have its reputation damaged. Any size company can be affected. The cost of handling a crisis can run from up to a half  million dollars to hundreds of millions of dollars, depending on the size of the company and the scope of the incident.

“No matter what, it’s going to have a cost impact on the company,” says Jeanmarie Giordano, chief underwriting officer for professional liability at AIG in New York. A hit to a company’s reputation can be catastrophic “particularly to a small company that could lose its customer base, or it could result in layoffs of employees. It can bring regulatory scrutiny or loss of public trust.”

Help during a crisis
AIG is one of the few insurance companies that offer a product — ReputationGuard — specifically targeting reputational risk. If there is a crisis, the insured company can reach out to one of two crisis management firms that can help manage the event. “They have access to all their services such as crisis preparedness and media coaching. They can help make sure there is a plan in place,” Giordano says. “It’s designed to address the events you never expect to happen.”

Other insurance companies also are designing products that can provide “longer-term management and public relations support management to a business,” Bolling says. “I see that becoming more and more standard.”

Premiums for this type of coverage depend on a number of factors, including the type of industry, and can start at $2,500. “It’s a very wide range,” says Giordano.

There isn’t any coverage available that can fix a company’s reputation, however. “There is no amount of money that can do that or any magic bullet that can put you back to where you were before your loss,” Schaefer says. “But it can help you mitigate and attenuate the damage.”

Perhaps Warren Buffett summed it up best: “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.”

Making children ‘Happy’

Rhonda Ambrose, the principal of Campostella Elementary School in Norfolk, understands the challenges the 700 children in her care face each day. Two housing developments lie within the school’s district. “Almost 100 percent of our students are in the free lunch program,” she says.

Typically her pupils have limited opportunities for activities outside of the classroom. But last summer 50 fourth- and fifth-graders were chosen to attend one of the Summer of Innovation camps offered by From One Hand to Another (FOHTA), a Virginia Beach-based foundation.

The six-week camps provide project-based, hands-on learning opportunities. In one program, children learned how to take fingerprints and cast footprints with the help of the Virginia Beach police chief, while in another program they worked with teachers on journal writing and researching careers.   “We have a big need here,” Ambrose says. “Many of our students are one to two grade levels behind.”

FOHTA was founded in 2008 by Virginia Beach native Pharrell Williams, the Grammy Award-winning musician, record producer and entrepreneur whose song “Happy” became an international sensation. FOHTA is grounded in his desire to change the world one child at a time. “He wants them to have the experience that learning can be fun and to also empower them through new technologies, art and media,” says Louisa Strayhorn, FOHTA’s executive director.

Expanding program 
The organization began offering summer camps and after-school programs in 2012. The number of camps has grown from one to 13 this year in locations in South Hampton Roads and Titusville, Fla. FOHTA also runs after-school programs in Virginia Beach at Parkway and Bettie F. Williams elementary schools.

“In the last three years we have educated over 2,000 children in our after-school and summer camp programs,” Strayhorn says. In that same three-year span the foundation has trained approximately 150 volunteers and more than 150 teachers in the FOHTA’s teaching methods.

Schools in Virginia Beach and Norfolk are fully involved in the program, but that’s just the beginning for the organization’s aspirations. “The goal was never to only do a program in Virginia Beach,” Strayhorn says. “We have already started the expansion in Hampton Roads, and this year we will have a camp in Titusville, Fla. We are also looking at 10 or 12 other places around the country to have this program.”
This year FOHTA will serve over 1,050 children. It takes $500 to send each child to summer camp. The cost is covered by FOHTA, which relies on individual and corporate contributions, sponsors and in-kind services.

Mother’s influence
The foundation’s mission is a very personal one for Williams, who grew up in Virginia Beach’s Seatack neighborhood. “He has always had an interest in making sure that children had the same blessings he had in terms of support from teachers and the community,” Strayhorn says. “He felt that support from his family, teachers and the community was one of the reasons that he began a successful career.”

Williams’ mother, Carolyn, serves as the foundation’s board chair and director of education. She wanted to be a part of the organization not only because of her passion for education — she is a former educator and administrator — but also to help her son get his vision off the ground. “He’s always been a busy bee,” she says. “He gave the vision, but I felt like I needed to pull the details and intricate parts together. We utilized the skills of Stacey Lopez, our chief operating officer, to assist with logistics and implementation of our various components.”

Williams acknowledges his mother’s influence in creating the foundation. “The joy that my mom got in teaching children, and the spiritual reward that she got was probably inspiring on a more subconscious level,” says the musician, who currently serves as a coach on NBC’s “The Voice.”

“I didn’t know I wanted to share anything or teach … but the way my mom was about teaching and education and the way she was around people, it felt like the natural thing for me to do. Once you get older and you realize the things that really matter to you, then the things that have always mattered are things that will resonate with you, and the strongest will come to the top.”

For Williams, From One Hand to Another “is a way to express that gratitude” to his family, his teachers and his hometown community, he says. Their encouragement and guidance have given him the freedom to remain open to new ideas and concepts, and that’s a philosophy he hopes the students in FOHTA will embrace. “If you are not open, then nothing else new can make it in,” he says.

Playing music on iPads
His efforts to help his hometown began in 2004 when he donated back-to-school supplies to children and distributed Thanksgiving turkeys to residents in his old neighborhood.
After he founded FOHTA in 2008, it launched its first Summer of Innovation event in affiliation with NASA at Williams Farm Park in Virginia Beach. About 900 children gathered there to talk about technology and hopefully discover that learning can be fun.

Bishop Ezekiel Williams of Faith World Ministries in Norfolk participated in one demonstration, playing a “piano” using an app on an iPad. “We formed a band,” he says. “We were patched into the sound system, and it was amazing. After that, the young people could come up on the platform to use the iPads.”

FOHTA has grown rapidly since Strayhorn joined it in 2012. One of its most important advancements was the development of its STEAMM program (Science, Technology, Engineering, Art, Mathematics and Motivation). In addition to learning about science, technology, engineering and art, students also look at social issues and how they relate to their lives.

One of the foundation’s major supporters is New York-based MacAndrews & Forbes Inc., an investment firm owned by billionaire Ronald Perelman. He owns 15 companies, which range from Revlon to SG (Scientific Games), a firm involved in the lottery and regulated gaming industries.

Christine Taylor, executive vice president of corporate communications and external affairs at MacAndrews & Forbes, has visited FOHTA’s summer camps. “I came back so touched and inspired by these kids,” she says. “I was speaking to one of the kids and asked, ‘If you didn’t have this program, what would you be doing?’ He said, ‘I would be sitting in front of a television.’ ”

Chats with former astronaut
The foundation’s partners include NASA, Hampton University, the FBI, Tidewater Community College, Virginia Beach Parks and Recreation, the Virginia Beach and Norfolk Public school systems and EverFi, a critical skills education technology company based in Washington. D.C.

Hampton University’s College of Virginia Beach in Virginia Beach Town Center provides space for one of the summer camps. College administrators also serve as mentors. “We consider it an ideal partnership,” says John Waddell, director of the college. “Our president, William Harvey, believes in providing opportunities for young people to grow. These types of programs are important to him and the administration.”

NASA has presented workshops such as “Rockets to Racecars.” It explores the concept of drag (the force of the atmosphere opposing the forward motion of any object). Drag results in that object slowing down, unless additional thrust is added to overcome it.  Drag is “bad for racecars, but good for spaceships during descent and landing,” says Janet Sellars, director of the office of education for NASA Langley Research Center. “It helps the children understand science and the concept of drag in an everyday way.”

Former NASA astronaut Leland Melvin, a Virginia native who played football at the University of Richmond, has been very involved with FOHTA programs. Sellars recalls Melvin talking with students as he handed out backpacks with school supplies. “The kids were impressed with Pharrell but more impressed with having Leland, a black astronaut, sitting with them, talking about science and technology,” she says.

From One Hand to Another recently began a partnership with the United Negro College Fund, providing a $50,000 scholarship to a college student. The scholarship presentation aired on BET during UNCF/BET’s “An Evening of Stars” on April 26. Sara Jones, a Howard University senior majoring in computer science, was this year’s recipient.

Also during April, the foundation received the Marian Palmer Capps Award from the Urban League of Hampton Roads Inc. for its community involvement, educational initiatives and support of interracial understanding and cooperation. “We give kids training at our camps and after-school programs in conflict management so they learn how to react to each other and to deal with conflict,” Strayhorn says.

Even with a busy schedule, Williams continues to have a guiding hand in the organization. He is involved in areas ranging from curriculum to program goals.

If he cannot attend a camp, he often sends the children videotaped messages. “He supplies the top vision for us,” Strayhorn says. “He makes decision about how many places we need to be in the country. He makes time. FOHTA is part of the whole group of businesses [which include the clothing lines Billionaire Boys Club and Ice Cream], he runs. We are grateful for that, and that we are not considered a stepchild.”

This year 150 students from Campostella Elementary in Norfolk will attend one of FOHTA’s camps, 100 more children than last year. “That means a lot to us,” Ambrose says of the additional 100 slots for her pupils. “It’s vital for us to have programs like FOHTA.”

CHART:
Donations by independent foundations, groups

A quiet partner

Patriot Group International Inc. prides itself on discretion in working with its customers, many of whom are involved in national intelligence. “We go to great lengths to make sure the services we provide are discreet,” says company CEO Greg Craddock. “Our mission is to provide unparalleled support to our customers.”

Being quiet, however, hasn’t kept the Warrenton-based company from growing. Its revenue increased 3,100 percent from 2010 to 2013, making it the fastest-growing company in this year’s Fantastic 50. Patriot Group also ranked No. 106 on the 2014 Inc. 5000 list and is a two-time winner of Northrop Grumman Corp.’s Performance Excellence award.

The company’s services include security, training, research and development, analytics and training exercise support services. Training services are varied, ranging from advanced marksmanship and protective operations to cultural awareness and sensitivity.

Patriot Group’s customers include the U.S. Department of Defense, the Department of Justice, the intelligence community and other federal agencies. “We have expeditionary capabilities. We move personnel and equipment to austere locations,” Craddock says. “We provide people with special skills and clearances.”

Most of the company’s personnel are veterans. “Our leadership team consists of experienced industry professionals with roots in U.S. military special operations and U.S. government intelligence agencies,” he says. “We know the unique challenges the government faces overseas. We provide conventional and unconventional solutions to those challenges.”

Craddock and a group of private investors bought the company in 2009, five years after it was founded as a government services provider. “When we got started we did elevator pitches trying to sell to a lot of clients,” he says. “Enough trusted us that they decided to give us a shot. When we got those opportunities, we were very responsive. We did what we said we were going to do. We created momentum.”

He and his leadership team ask topnotch experts in the field for recommendations of potential employees. “This is the community we came from and served with,” Craddock says. “It’s an important tool that we leverage.”

He says the company goes to great lengths to make sure that all company personnel are respected and well compensated. “We go the extra step to identify and vet talent,” Craddock says. “We take care of them on projects.”

When the company deploys employees on projects, it always keeps in mind that they are going on unaccompanied tours of duty. “Our personnel quite often leave their families and loved ones behind,” Craddock says. “We provide a high level of support to them and their families.”

One of the company’s biggest challenges is remaining competitive in the crowded field of government contracting. “There is no shortage of capable companies,” Craddock says. “Competing requires effort and energy. You have to manage your resources effectively.”

The company always is balancing the execution of a contract it has won with its efforts to seek new opportunities. “If you get too focused on winning new work, you start making mistakes on the contracts you hold,” he says. “You go on a downward spiral.”

Currently the company has just over 50 employees. “We work with a large number of contractors on a continual basis as well,” Craddock says.

Because of the company’s connection to the military, Craddock believes it’s important to give back to veteran-related organizations. It supports the PenFed Foundation, helping military personnel and their families in the areas of financial literacy and housing; Boulder Crest Retreat, a rural sanctuary for military warriors with combat-stress related injuries; and American Freedom Foundation, which provides grants to military organizations and scholarships to military spouses and their dependents. The company also sponsored the 2013 Holiday Charity Bash that supports the military, wounded warriors and their families.

Employee retention

Buryl Alfieri, president and CEO of New Bell Truck Lines Inc. in Chester, knows what it takes to retain its most precious assets — its truck drivers. 

“Our dispatcher works weekly with each of the drivers to make sure their needs are being met,” she says. “Our drivers are home weekly, and most of the time they are home on weekends. Many drivers from other companies are on the road for two to three weeks at a time. It’s important for us that our drivers get home to spend time with their families.”

New Bell’s trucks transport food, paper, plastics and other general commodities. “The truck backs up to the dock and picks up a full truckload and then takes it to its destination,” Alfieri says.

From 2010 to 2013, New Bell’s revenue increased 1,482 percent, making it the fastest-growing service company in the Fantastic 50.

Alfieri credits the company’s growth in part to her drivers, but finding qualified drivers isn’t as easy as it was years ago. Recruiting and retaining drivers is the biggest challenge facing the trucking industry today, she says. “There are not enough people that want to drive trucks anymore. It’s hard to find that demographic,” she says. “All trucking companies are competing for drivers.”

The pool of qualified drivers keeps churning. Driver turnover in most trucking companies is around 100 percent over the last two years. New Bell’s turnover is less than half that — 43 percent.

“Once you get them in the door you have to keep them,” Alfieri says. “We treat every driver as part of the family. Customers are important, but if we don’t keep drivers happy, then that affects our growth.”

Many times the company will work the schedule of its deliveries around its drivers’ needs. “With a shortage of truck drivers, you have to put drivers first,” she says.

Instead of having salaries or hourly wages, drivers are paid according to the number of miles they drive each week. New Bell drivers make 42 cents per mile.

New Bell works with drivers to maximize the miles they drive during the days they are on the road. “We make sure we spend the time looking at the miles to make sure they get as many miles as they can in order to make them happy,” Alfieri says.

On average, New Bell drivers received 36 percent more pay last year than the national average for drivers working for publicly traded trucking companies, Alfieri says.

“Our drivers average about $64,000 compared to the national average of $47,000 per year,” she says.

This year the company will add profit sharing to its list of employee benefits. “This should be a great boost for retention,” Alfieri says. “I am excited to be able to give back profit to the people that have helped us grow.”

She founded the company in 2010 after working 28 years for a trucking company as its vice president of operations. “I watched that company get off the ground,” she says.

Alfieri decided to start her own business after she noticed a shortage of trucking companies after the 2007-09 recession.

Her initial costs included the purchase of trucks and trailers. “A new truck costs over $100,000 and a new trailer over $30,000,” she says. “At the time the banks were not lending money. I was fortunate in that I had a generous 401(k), so I self-financed the company. I bought two used trucks and two used trailers. I had enough money for payroll and cash flow left over.”

She hired a safety manager to ensure the correct handling of driving, hiring and maintenance issues. “The Department of Transportation visits each new trucking company during the first six months to make sure all government regulations are being followed or they can shut you down,” she says.

Alfieri worked to build a loyal customer base in Central Virginia. She was able to secure more business each time she increased the size of her fleet. “We also recruited owner/operator drivers that own their own equipment to help us in servicing our customers,” she says. “By the end of the first year, we had enough drivers on board and were busy enough that I hired an operations manager.”

The company now has 25 trucks and 10 owner/operators as well as eight office/administrative employees.

New Bell’s trucks travel to all 48 mainland states “but we try not to go to the Northeast,” Alfieri says, noting that staying out of the crowded Northeast traffic is another benefit that her drivers enjoy. “If you can’t compete in the drivers’ market, you can’t grow.”

Focused growth

When Marathon TS opened in 2009, its owners decided to focus the information technology firm on two customer groups, federal government agencies and the large system integrators that serve them.

“When we looked at the market, we saw the need to shift from the commercial sector to the federal government,” says Alan Siek, Marathon’s executive vice president.

He founded Marathon with his wife, Pamela, and business partner Mark Krial. They previously owned Cornell Technical Services, an IT firm serving commercial customers which was sold to Monster.com in 2001.

Marathon’s focus on large integrators in the federal market helped it become the fastest-growing technology company in the Fantastic 50 for 2015. 

The company provides its customers with IT professionals who are proficient in application development, secure networks and network engineering. “We are responsible for the entire execution of a contract,” Alan Siek says. “We provide operations and maintenance support. We are like a help desk.”

Marathon has two divisions: The Consulting Services Group (CSG) and The Federal Services Group. CSG provides IT services to major integrators such as IBM and Lockheed Martin that have won large contracts from the federal government.

“There are about 20 large integrators that are major players in the federal space. They have vast needs,” Siek says. “They rely on subcontractors. It’s a good place to start if you need immediate growth.”

Federal integrators are required to work with small-business partners, including woman-owned companies. “Being a woman-owned company made us attractive to the companies that required those types of teammates,” Siek says.

Since its inception, the company has seen rapid revenue growth. It was ranked No. 163 on the 2014 Inc. 5000. Marathon is the eighth fastest-growing woman-owned business on the list.

The company had four-year revenue growth of 2,508 percent, increasing from $261,582 in 2010 to $6.8 million in 2013. “We closed 2014 with $10.2 million. We will probably do $15 million this year,” Siek says.

The key to the company’s growth is its ability to provide recruiting and staffing capacity. “They are looking to you to provide staff,” Siek says. “We are able to generate a lot of our growth just by doing that.”

The company currently has 95 employees, 90 percent of whom are located on clients’ sites.

Marathon works with integrators all across the U.S. “We have had staff in 25 states since we started,” Siek says.

The people assigned to projects work for Marathon as part a of subcontract with the integrator. As an example, an integrator may need 20 network engineers in 10 locations.

Working with federal integrators accounts for 75 percent of the company’s business. The remaining 25 percent focuses on the federal government under The Federal Services Group. “We have several prime contracts with the federal government,” Siek says. “We started with the U.S. Department of State and have been building on that.”

In addition to the Department of State, the company also works with the U.S. departments of Homeland Security, Energy and Defense. “Those are generally the most well-funded agencies with the largest budgets. We will be focusing a lot of our resources on the federal side over the next three years,” Siek says, noting that he would like to see the federal government work grow to 50 percent of the company’s business.

In February, the U.S. Air Force awarded Marathon a contract to provide information technology support services to the 30th Medical Group located at Vandenberg Air Force Base in California.

The company founders bring a variety of skills to the business. Siek is an expert in application development and network engineering. Pamela Siek, Marathon’s CEO, has expertise in sales and software engineering. Krial, the company president, has a strong background in IT sales. “We all have practical experience,” Siek says.

Keeping things moving

When crews were dredging the Houston Ship Channel, their trucks would get stuck when they tried to move through the wet muck. “We took six to 10 Morookas in to move the dirt, and not one got stuck,” says Kenneth Byrd, president of Ashland-based Morooka USA.

Basically a large dump truck on rubber tracks, Morooka carriers can traverse most any type of condition. Their beds can be removed so the vehicle can carry attachments for other applications, such as transporting people or crane equipment.

Morookas have been used in gold mining operations in South America. “They were taking huge amounts of soil from river and creek beds and loading it into a Morooka to go to a processing center to sift through for gold,” Byrd says. “It’s a very hilly area. Before, they used donkeys and carts.”

This type of equipment is popular in gas pipeline construction. Pipelines often go through swamps and up and down hills. “When anything gets stuck, it slows down the process,” Byrd says.

The company started in 2005 when it completed a distribution agreement with the Japanese manufacturer Morooka Co. Ltd. It was first awarded distribution for the eastern half of the U.S. Now it has distribution rights for the entire U.S., Canada, Mexico and Central and South America. It landed its first dealer in Mexico in 2011 and had its first sale there in 2012. It followed with sales in Colombia the same year.

“One of the toughest things is cracking the South American market,” says Curt Unger, the company’s vice president of sales. “The dollar is strong now against most South American currency, and that makes the cost of our machines higher. Projects are slowing up, but we have lots in the wings.”

Morooka USA is one of three construction-related companies held by the Richmond Group LLC. The others are Dominion Equipment Parts and Morooka USA – Rents. Morooka America, a separate company under different ownership, manufactures Morookas in Glen Allen.

Morooka USA sells more Morookas than “any other company in the world,” says Buck Seymour, the company’s vice president of operations. In 2014 it sold 337 of the carriers.

The company rents and sells vehicles in the same markets. It has approximately 40 employees, including eight traveling salesmen. “I can’t say enough good things about the people that work for this company,” says Unger. “They are the reason we are successful. We have people that have been here since the beginning.”

The company’s largest industry markets include oil and gas, utilities, environmental and construction. “In the last three years the number one market area has been the Northeast for both sales and rentals,” Unger says. “New York and Pennsylvania are big markets for the company because of the oil and gas business there. Eighty-five to 90 percent of our machines in the rental fleet go to the natural-gas industry for installation of pipelines.”

Morooka USA is expanding its rental fleet in Canada. It recently opened a warehouse in Alberta. “We are also trying to get more business in the U.S. from Colorado west,” Unger says. “Canada and the western U.S. are potential growth areas for us.”

The company grew 364 percent from 2010 to 2013. “2014 was 4 percent higher than 2013,” Byrd says.

Currently sales are constrained by restrictive engine emission requirements overseen by the Environmental Protection Agency. “Small manufacturers can’t keep up with the changes,” Byrd says. “Morooka is a small company that doesn’t have research and development money. They have to switch from Tier 3 to Tier 4 engines and upgrade to newer technology in order to burn emissions cleaner. We are limited in the number of machines we can sell due to current engine regulations. We will be fully compliant by 2015.”

A beer ‘epiphany’

Steve Crandall, co-founder and CEO of Lexington-based Devils Backbone Brewing Co., wasn’t a beer connoisseur until he and his wife, Heidi, vacationed in the Italian Alps 20 years ago.

He decided to try a stein of wheat beer from the oldest brewery in the world, Weihenstephan, established in 1050. “The beer touched my lips, and I had an epiphany,” he says. “It had no additives and no preservatives. It was a clean, wonderful beer. I fell in love with it.”

After returning home to Virginia, Crandall traveled to the West Coast for business (he also owns the high-end residential and commercial construction company, Tectonics II Ltd.) There he discovered craft beer.

A light bulb went off, he says. “It came to me that we needed a brewery at the base of Wintergreen Mountain.”

The Crandalls teamed with another couple, entrepreneurs Rod and Martha Ferguson, to buy 100 acres of land near Wintergreen and develop a brewery. “A lot of people told us we were crazy,” Crandall says.

“We called up the Brewers Association in Boulder, Colo., and we got a book on how to build your own brewery.”

That initial research led to the opening of the company’s brewpub, the 6,000-square-foot Nelson County-based Basecamp, in fall 2008. In January 2012, the company began production at The Outpost, a 35,000-square-foot brewery in Lexington. It brewed 9,000 barrels in its first year.

The company now is installing a 120-barrel system at The Outpost as part of a roughly $6 million expansion in Lexington. “As fast as we can build the facility we will be utilizing the capacity,” Crandall says.

Last year, The Outpost brewed 45,000 barrels of beer. “This year we expect to brew 65,000 barrels,” Crandall says, noting that the smaller Basecamp brews one-off beers in styles from all around the world. “We also have 16 different styles of beers on tap,” Crandall says.

The company’s 110 employees, evenly split between the two locations, include 14 brewers as well as Jason Oliver, the Basecamp brewmaster, and Nate Olewine, head brewer in Lexington.

The company has won many national awards and was named Mid-Size Brewing Company and Mid-Size Brew Team of the Year at the 2014 Great American Beer Festival.

Many of the company’s products are “session” beers that contain a lower alcohol level. “They are very easy drinking and true to style,” Crandall says. “Our flagship beer is Vienna Lager. We have won gold medal after gold medal for this beer. It represents about 50 percent of our sales.”

When the company created its Striped Bass pale ale, it decided to donate $1 to the Chesapeake Bay Foundation for every case sold. “We have raised over $100,000 for them,” Crandall says.

The company now sells beer in Virginia, Maryland and Washington, D.C., and will be moving into North Carolina, Tennessee and West Virginia later this year. It may expand eventually into Ohio, Kentucky and Pennsylvania.  “We want to keep it as a regional footprint,” Crandall says, in describing sales. “By 2020 we would like to be in a 500-mile radius.”

The company has a market for its beer in Bermuda, and it also does contract brewing for Banks’s Brewery in England. “We sell in over 930 J. D. Wetherspoon pubs in England,” Crandall says. 

The company’s original business plan for The Outpost projected it would produce 30,000 barrels of beer in 10 years. “We did 25,000 barrels in our second year,” Crandall says. “We have been growing triple digits since we opened up. We are one of the fastest-growing craft breweries in the country and the most-awarded craft brewery in the country for the last three years.”

From 2010 to 2013, the company’s revenue grew 278 percent. “We will do close to $21.7 million this year with both facilities,” Crandall says. “We expect to be at 250,000 barrels by 2020.”

Why retail isn’t following rooftops downtown

The face of downtown Richmond is becoming more residential. While high-rise office towers, multi-use projects and hotels fill the skyline, older office buildings are being retrofitted into loft apartments and condominiums.

The trend is boosting the area’s population.  In fact, the downtown population is higher than it has been in recent history, rising from 14,973 in the 2010 U.S. Census to 18,466 in 2012, according to the Richmond Regional Planning District Commission. Today the estimated population is “closer to 20,000,” says Lucy Meade, director of marketing and development at Venture Richmond.

It’s not just the downtown area seeing an increase in population. According to the Census Bureau’s latest data, the population of the city of Richmond was 217,853 on July 1, an increase of 6.7 percent since the 2010 census.

The surge in people living in the downtown/Shockoe Bottom area has spurred new restaurants and bars but very little service-related retail. People living downtown can grab a meal but would have trouble finding a nearby dry cleaner or options for grocery shopping.

So why has service retail been slow to follow the bump in population? It’s a complex issue driven by several factors such as low foot traffic after dark and on weekends, limited land availability and multiple land ownership.

“Residential has to get there first, and we have been having residential growth,” says Connie Nielsen, a senior vice president at Cushman & Wakefield|Thalhimer in Richmond. “Retailers breed retailers. You have to get one or two to step up.” Once those pioneering retailers succeed, brokers predict, others will follow.

The lack of retail isn’t due to a lag in downtown development.  Millennials (people born between 1981 and 1997) and baby boomers have been flocking to multi-family projects, which represented more than $1 billion of total investment during the past year. In the past two years, 1,381 loft apartments were completed, and there are 1,288 lofts underway now, says Meade. New developments under construction include Reynolds South, the 17-acre site of a former metals plant in Manchester that’s being converted into a mixed-use project. It will include an office and residential tower, with 250 apartment units, and eventually a retail section of 34,000 square feet at Fourth and Hull streets.

California-based Stone Brewing Co. chose Richmond for a retail and manufacturing project: a new restaurant and brewery. Site work is underway on Stone’s 12-acre brewery site in the Greater Fulton area. A second phase of development will bring a restaurant and retail beer garden to what is now the Intermediate Terminal Building on the James River — amenities expected to spur more retail opportunities downtown.
Increased tourism should help new hotels such as the combined Marriott Courtyard and Residence Inn hotels at 14th and Cary streets and the still-to-be-completed Hampton Inn & Suites and Homewood Suites at 700 East Main.

National supermarket chain Kroger sees potential in the downtown area. “We want to penetrate some of the areas east that we don’t serve,” says Fenton Childers, head of real estate for Kroger Mid-Atlantic. “We are definitely interested in being part of that overall redevelopment. We are just waiting for developers and landowners to get a plan together that respects the historic nature of the area and where we could all co-exist.”

Kroger was part of Richmond Mayor Dwight Jones’ November 2013 proposal for a mixed-used project that included a new baseball stadium in the Shockoe Bottom area. The mayor later withdrew the proposal after encountering stiff resistance from the Richmond City Council. Some members wanted more information about the finances behind the project, and there was possible opposition to locating a baseball stadium in the heart of a historic area where slaves were once sold.

Yet, Kroger remains interested in a downtown location. When long-term plans are formulated, “then we are ready to step in and get serious about negotiating and planning,” says Childers.  “We are standing ready to do our part.”
Currently Kroger’s most urban store is located on Lombardy Street in the Virginia Commonwealth University (VCU) corridor. “That store has been a real success for us,” he says. 

The VCU area of the city, located just a few miles from downtown, has seen a huge boom in retail development in the last few years with national retailers such as Barnes & Noble, Starbucks, Chick-fil-A, Einstein’s and IHOP moving in. VCU also constructed a Walmart on Campus in a seven-story office/classroom building on West Grace Street that was scheduled to open in April. The new store is part of a pilot plan to put smaller Walmarts on college campuses.

Smaller grocery stores are aware of the potential possibilities downtown. “I have had it on my radar,” says Josh Walls, director of real estate for Aldi. Walls recently worked with a Midlothian-based development firm, The Rebkee Co., on the store’s upcoming Boulevard site, scheduled to open next year.

Development on the Boulevard, another close-in location to downtown, is a prime example of retail development following housing. The area has seen an influx of new lofts in addition to housing that already was in place. “We look for strong retail corridors, areas where shoppers are going,” says Walls. “There is great density in that area.”

Charlie Diradour, president of Richmond-based Lion’s Paw Development Co., brought Growlers to Go, En Su Boca and Starbucks to the Boulevard. His company also has a lease with Buskey Cider on a nearby Leigh Street building.

He sees a need for retail that benefits people on a day-to-day basis, whether they live on the Boulevard or downtown. “We need to think about how we get people to start businesses and not just restaurants, because everybody has the same bottle of Jack Daniel’s,” he says. “You have to get your [housing] down and when that is in place now you have to fill in with retail.”

While he sees downtown Richmond as a prime location for service-related retail, Rob Hargett, a partner in Rebkee Co., understands that bringing it in is a slow process because of a lack of land availability and “increased land values,” he says. “There are no big parcels of land.”

He finds that many large suburban-market grocers may say they want to go urban, but they don’t want to scale down their footprint to fit into an already existing building.   “We are not to the point where we will see a store like Harris Teeter is in Washington, D.C., on the bottom floor with apartments above,” he says.

Creating a tenant mix downtown is difficult because of multiple individually owned properties. “It’s all individual efforts,” says Brett McNamee, a senior vice president with Divaris Real Estate Inc. in Richmond. “Retail does follow rooftops, and those rooftops are scattered downtown. It’s difficult to create synergy.”

In the 1990s, when Tobacco Row was developed from old warehouses on East Cary Street, there was one major owner, Forest City, involved in the downtown project, recalls McNamee, who worked in the re-lease stage of the development. Forest City created a broad public/private partnership and a plan to finance and redevelop the warehouses, while preserving their historical significance. “They were successful in getting a drugstore and grocery store,” says McNamee.  

It was much the same story in the 1980s when Shockoe Slip had two primary owners and developers. “They worked hand-in-hand picking retailers for downtown. Now you have multiple ownership with different interests.”

Two areas primed for retail are the iconic Main Street Station and 17th Street Farmers’ Market. The station’s train-shed project, currently under construction, will transform the building into a multimodal transportation center with retail and other entities using the space. Restoration is projected to be complete in mid-2016. Renovations also are planned for the farmers market that will transform it into a new urban square market after funding is secured.

Jeannie Welliver, project development manager for the city’s Department of Economic and Community Development, says Richmond is starting “to tip to where Target and Walmart types of retail are starting to have interest,” she says. “A lot of national retailers are changing the way they see our market. If your city grows in market size, they start looking at ways to be there.”

Nielsen of Cushman & Wake­field|Thalhimer says one of the city’s biggest problems is that “no one walking is around. We bring in national folks and they say, ‘Where is everybody?’ We have a daytime population, but that empties out at night.  That hurts us.” In places like Charlotte and Washington, D.C., there’s plenty of foot traffic, adds Nielsen. What retailers see when they visit downtown Richmond is businesses shutting down around 5 or 6 p.m. These retailers don’t want five-day businesses. They want seven-day.”

As more people move downtown, there’s been an uptick in outdoor activities, such as walking and biking, which helps create energy in the area. In September, Richmond will enjoy national media exposure when it hosts the UCI Road World Championship bike races, with some of the race route including downtown streets.

Nielsen says Richmond is on the fringe when it comes to bringing in national retailers. “I am starting to see retailers interested or at least willing to take a look,” she says. “A year ago it was, ‘No, thank you.’”

Conscious capitalism

When Kip Tindell and his college roommate, John Mackey, attended the University of Texas they never discussed business philosophies. Now, Tindell, the chairman and CEO of The Container Store Group Inc., and Mackey, the co-CEO of Whole Foods Market Inc., both are leading proponents of “conscious capitalism,” a concept they had no idea they shared in their college days. “We didn’t talk about it in college,” Tindell says. “We talked about girls.”

Tindell will discuss conscious capitalism in his keynote speech at the Tom Tom Founders Festival, which will be held in Charlottesville April 13-19. “Conscious capitalism is something I am passionate about. It’s synonymous with our principles at The Container Store. It’s our business philosophy,” he says.

Conscious capitalism centers on treating all of a company’s stakeholders — including employees, vendors, customers, shareholders — with respect.

“People are brought up to believe business is a zero-sum game, but someone else doesn’t have to lose in order for you to win,” says Tindell, whose book “Uncontainable” outlines the concept of building a business where everyone thrives. “People make the most money creating win-win-win situations with other stakeholders. We believe [that if] you take care of employees better than anyone else … they will take care of customers better than anyone else.”

Publicly traded companies such as Whole Foods, Southwest Airlines and Costco that practice conscious capitalism outperformed the S&P 14-to-1 during a 15-year period, according to the book “Firms of Endearment.” The Container Store, for example, generates about $800 million in annual revenue and pays its full-time sales associates an average salary of $50,000, much higher than the in­­dustry stan­­dard. The company sells stor­­age and or­­ganization products.

“We have single-digit turnover in an industry that has triple-digit turnover,” Tindell says. “Herb Kelleher, [co-founder and former CEO] of Southwest Airlines, told me ‘Kip, you can build a much better business based on love rather than on fear.’”

A fan of the classic holiday film “It’s a Wonderful Life,” Tindell believes everyone creates a wake in life similar to a boat’s wake. “Everything you do and don’t do impacts the world around you,” he says. “If you are mindful of this wake, you will behave differently and move from going mindlessly through life not paying attention to the people around you.”

Tindell believes leaders have a “huge moral responsibility” to make sure employees look forward to coming to work every morning. He touts a leadership style that highlights transparency and communication. “Treating employees that way and managing that way connects with the human spirit,” he says.

Belief in this concept has to come from the top. “You need a leader that leads with intellectual IQ as well as emotional and social intelligence who can be a servant leader,” says Audrey Robertson, The Container Store’s vice president of cultural programs and community relations.

When people work for companies that treat them well, they feel fulfilled. “A lot of self-worth has to do with what we do for a living. If we are nurtured and developed and allowed to succeed, our esteem goes up and we are most productive,” Tindell says.

Prince William takes a leading role

Corey Stewart calls Prince William County a “snapshot of the future of America.”

The chairman of the county’s Board of Supervisors has watched it grow and diversify. “This community once was the red-headed stepchild of Northern Virginia, and now it has really prospered,” he says.

Prince William now is the second-largest county (trailing only Fairfax) in Virginia. It is home to about 425,900 residents and has a median household income of $97,000. “Our percentage of residents with higher degrees [38 percent] is more than double other parts of the country,” Stewart says.

Ethnic and racial minorities represent 51 percent of Prince William’s population, making it a “minority-majority” county. “As the county has become more diverse, we have become more prosperous,” Stewart says. “We’ve been moving up even as other counties in Northern Virginia have flattened out.”

The county’s attributes — accessibility; a lower cost of living in comparison with other Washington, D.C., suburbs; good schools and a high quality of life — are as much a draw to businesses prospects as they are to new residents. The county has more than 70 parks, a minor-league baseball team, a performing-arts center and top-rated golf courses. This summer the Robert Trent Jones Golf Club in Gainesville will host the Tiger Woods Foundation’s 2015 Quicken Loans National Golf Tournament.

The county’s economy continues to flourish. Prince William followed 2013’s $1 billion in new capital investment with more than $500 million in investment last year. “We are moving from a more traditional place as a residential community to an employment center much like Fairfax did in the 1960s and 1970s,” says Jeffrey Kaczmarek, executive director of the county’s department of economic development.

The value proposition
Business and residential development stretches across the county. The western areas historically have been perceived as more rural and agricultural, but growth has brought in a mix of industrial, retail and residential projects.

Prince William Parkway has had a huge impact on the county. “One of the biggest things the board has implemented in the past 20 years is very aggressive road construction,” Stewart says. “Better roads help build business as well as taxpayer satisfaction.”

One current road construction involves a 12-mile stretch of Route 1 in the North Woodbridge and Triangle areas. Part of the Potomac Communities Initiative, expansion of the road to six lanes, is expected to spur new development. “Prince William is soon to become perhaps the only locality on the East Coast of the U.S. that has redeveloped an entire stretch of Route 1,” Stewart says.

The board chairman says the county’s consistency and business-friendly approach over the years also have been factors in its economic growth. “We never had a board that rubber stamped every development or declined every development. The business community knows what to expect for the most part,” Stewart says. “We are about 30 percent lower than other tax bills in Northern Virginia, including Loudoun and Fairfax.”

Kaczmarek says the county’s accessibility, tax rates and available land make it a value proposition for business prospects. Only about one-third of the county is developed. “We want to make sure we have land available to attract businesses but also protect our parks and rural crescent,” he says.

Industry targets
Prince William’s strategic economic development plan focuses on five industry sectors — information technology, life sciences, advanced manufacturing, the federal government and logistics/distribution. Subcategories such as cybersecurity and data centers also continue to be high priorities.

Prince William has been able to attract businesses in those groups because of its dense fiber network, abundant and redundant electrical power and a tax system that is advantageous to data centers. “We have 22 data center projects, and we have crossed the 2-million-square-feet threshold for data centers,” Kaczmarek says.

One of the newest industry clusters is advanced manufacturing. Prince William is working with a number of companies involved in 3-D printing, aviation and composite materials. “We are just in the early stages of seeing where we might be advantageous to them,” Kaczmarek says.

Technology also is one of the county’s strongholds, thanks to entities such as the Marine Corps Warfighting Laboratory and several federal and state research institutions. Innovation Park, a 1,500-acre location for life sciences and forensic research facilities, houses firms such as American Type Culture Collection, a global bioscience resource center. It is also home to the Virginia Serious Game Institute and Prince William Science Accelerator.

The Virginia Serious Game Institute (VSGI) is the only entity of its kind in the U.S. In addition to conducting research, the institute creates simulation and game solutions for the federal government as well as the private sector. It currently hosts seven startups, three of which were founded by George Mason University graduates. “We will have 14 total startups by the end of 2015,” says Scott Martin, the institute’s founding director, who also is director of the Computer Game Design Program at GMU. “We also hope to attract companies from outside of Virginia to locate near the VSGI.”

Since its opening last year, the institute has created 70 jobs. “Our goal is to graduate two companies each year and spin them out in Prince William to create more jobs and expand our economic impact,” Martin says, adding that the institute has created its own ecosystem with student-led companies hosting GMU interns. “When they graduate, they are either hired or start their own companies.”

The neighboring Prince William Science Accelerator focuses on attracting early-stage, life-sciences companies. It bills itself as the only public/private commercially available wet lab space in Northern Virginia. “We have leased the ground floor of the building and built out nine wet labs for use by life-sciences companies,” Kaczmarek says. The facility currently is home to one firm, and the county is in final stages of negotiation with two other businesses.

College campuses
GMU’s Prince William Campus is housed on 134 acres in Innovation Park. The Board of Supervisors began working with the school to establish a Prince William campus 20 years ago. “That has led to a lot of growth in the bioscience industry right around the campus,” Stewart says. “That marriage between economic development and George Mason University is really beginning to bear significant fruit at this point. It’s not unlike the Research Triangle area in North Carolina, with industry that blossoms around major universities.”

March marked the opening of a new life-sciences building on campus. The 75,000-square-foot lab building is dedicated to research. It will host companies involved in bioengineering, biochemistry, personalized medicine, and nanotechnology and cancer research. It also will house the Center for Applied Proteomics and Molecular Medicine. “One of the building’s special attributes is a state-of-the-art nanotechnology clean room,” says Emanuel Petricoin, the center’s co-director. “It’s a great attractor for company collaborations and other in-state universities in the area. We are really excited by that.”

The GMU campus is also home to a university spinoff, Ceres Nanosciences, which soon will offer a high sensitivity urine test for Lyme disease. “It is commercialized nanotechnology that we developed in our lab. We licensed the technology, and we created the product,” Petricoin says.

Ceres also is working with a program funded by the Bill and Melinda Gates Foundation to use its particle technology to develop a new method of detecting the Ebola virus. The company will collaborate with GMU and the U.S. Army Medical Research Institute of Infectious Diseases to assess whether the technology can help create a virus detection method using saliva instead of blood.

The county’s higher-education system also includes Northern Virginia Community College, which continues to strengthen its workforce development programs. Since 2013, the college has invested more than $460 million in its Prince William campuses near Manassas and Woodbridge. Next year it will open a new 55,000-square-foot, $22 million arts and science building as well as a new workforce development center on the Woodbridge campus. That campus also is expanding its HVAC training program to include smart building technology and the recertification of technicians working in the building trades.

“If you look at typical workforce centers, they are driven by the needs of workers,” says Sam Hill, provost for the Woodbridge campus. “We want to support economic development and the workforce needs of the business sector.”

Health-care expansion
Health care also is an important economic driver for the county. Sentara Northern Virginia Medical Center, the sixth-largest employer in Prince William, will open a new surgical pavilion next January. The move represents a $38 million expansion of the medical center. “It will bring in nine new, modern operating rooms and a more modern and efficient support area,” says Steve Porter, corporate vice president of Sentara Northern Virginia and president of Sentara Northern Virginia Medical Center.

Sentara also will complete the acquisition of Pratt Medical Group of Fredericksburg. The practice has eight offices in the Fredericksburg area as well as locations in Prince William. “They will integrate into our medical group practice,” Porter says.

Meanwhile, Novant Health Prince William Medical Center opened its new Novant Health Haymarket Medical Center last year. The four-story, 60-bed community hospital has a staff of nearly 300. The 221,000-square-foot facility brings care “where it is needed — in western Prince William County,” says Melissa L. Robson, president of the Novant Health Northern Virginia Market. Novant is also expanding its affiliations and creating additional sites of care.

“We are taking a community needs assessment and looking at how the community is growing,” Robson says.

Local officials believe all of these factors contribute to Prince William being a bright spot in the economic landscape of the commonwealth. “This is a hopeful place to be,” Stewart says.

Prince William County at a glance

Population (2013) Increase since 2010 Unemployment rate  (Dec.) Median household income % adults  (25+) with bachelor’s degrees White non-Hispanic population
438,580 9.10% 4.10% $98,071 38.10% 46.70%