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byline: Joan Tupponce

Grayson lands three deals in two months

Grayson County Administrator Jonathan Sweet can attest to the old saying that good things come in threes.

In July and August three companies — Independence Lumber, Hansen Turbine and Core Health — announced plans to expand facilities in the county.

“Three qualified projects don’t close in the same quarter without a seasoned team approach,” he says, noting the county worked with the regional economic development organization (Virginia’s aCorridor) and Virginia Economic Development Partnership to develop proposals “that meet both the company’s needs and the county’s capacity. If it weren’t for the confluence of all of these factors at the right time with the right companies, Grayson County may not have been able to have announced the three projects and benchmarked a banner year for economic development.”

The county competed with North Carolina to keep Hansen Turbine and Independence Lumber, which suffered a devastating fire in November 2012. In its deal, Independence Lumber will invest more than $5 million, retain 57 current jobs, create 25 jobs at the site and purchase 90 percent of its timber from Virginia forests. “We won the deal because of the relationship we have with our existing industries,” says Sweet.
Hansen Turbine, a manufacturer of coating spray applications for the aircraft and turbine parts coating industry, is investing $2.5 million to expand its operations. Its sister company, Falcon Turbine, will relocate from North Carolina to the facility to produce specialized aluminized coatings. The project will create 25 new jobs. “We had a foot in the door to compete for their North Carolina operation,” Sweet says. “We were able to meet their needs.”

The most challenging project for the county was Core Health & Fitness LLC, which develops and markets advanced strength and cardio equipment. The company is investing $2 million to expand the former Med-Fit operation in Grayson. The facility has made Nautilus commercial products for more than 34 years. “This was the toughest project I have ever worked on,” Sweet says. “It was a challenge to find a viable suitor that wasn’t a private-equity firm. We worked hand-in-glove with the turn-around team.”

The goal was to find a suitor that would partner with the county and agree to keep the operation and jobs in Grayson. “We had to vet Core and reach a level of comfort that they weren’t going to take the intellectual property and franchise agreement and manufacture the strength equipment in China,” Sweet says.

As a result of negotiations the plant in Grayson will make Chinese components, adding 150 to 250 jobs. “That’s a wonderful conclusion,” Sweet says. “The Nautilus name is synonymous with fitness. If we had lost the Nautilus brand, we would have lost a lot of pride.”

‘Canopy tour’ is a first for Virginia state parks

Visitors to Shenandoah River State Park in Warren County now can glide through the trees on a zip line, thanks to a course built by Virginia Canopy Tours. The course, which opened in April, is the first of its kind in a Virginia state park.

Virginia Canopy Tours, a sister company of North Georgia Canopy Tours, approached the state through the Public-Private Education Facilities and Infrastructure Act of 2002, which gives companies the opportunity to submit proposals for projects. “We can negotiate with any we feel are appropriate or worthwhile,” says Gary Waugh, public relations manager for the Virginia Department of Conservation and Recreation.

The department looked at the company’s offerings and sent personnel to Georgia to check out the course in place there. “It seemed compatible with what we do in our state parks,” Waugh says. “We felt it was a nature-oriented type of offering as well as a family-oriented offering. We decided it was worth giving it a try.”

Virginia Canopy Tours started construction on the course in July 2013. The company contracted with Bonsai Design in Grand Junction, Colo., to design and build it. “They have been building courses since 1992,” says Bonnie Nicklien, office manager for Virginia Canopy Tours in Bentonville. “They use recycled materials and steel frames. They are eco-friendly.”

The course is designed to hug the trees. As the trees grow out, the platforms will expand around them. “They won’t cut off growth,” Nicklien says of the platforms. “We wanted to highlight the ridgelines and utilize the natural resources.” 

The course includes eight zip lines, two bridges, two nature hikes and a rappel. “It takes about two and a half hours,” Nicklien says. “There are two certified guides that handle all the equipment and take care of the gear and harness. We also do an eco-tour of the park.”

The course contains more than 3,000 feet of cable on the zip line. Zips range from 200 to 1,039 feet in length. “The course starts low and slow,” Nicklien says. “All of the zips are in the trees. The highest zip is 90 feet, and you get mountain views.”

The canopy tour, which costs $84 per person, is a revenue generator for the company and the park system. “We do get a percentage of the profits they make,” Waugh says, adding, “This is new to us. We are evaluating and seeing if it’s something worthwhile to try in other parks. We are still in that evaluation stage.”

Plant’s expansion will nearly double its workforce

Even though it has quite a few plants in Mexico, Germany-based Continental Corp. decided in August to expand its plant in Newport News rather than south of the border. “We had been in Newport News for 44 years,” says Dave Kilgore, plant manager in Newport News. “That helped us justify the expansion of the plant.”

The Newport News plant is part of Continental’s Engine Systems Business Unit in the North American region. The plant produces low-pressure gasoline injection and exhaust after-treatment products. It already has produced more than 265 million fuel injectors.

Continental approached the city about a possible expansion in January. “We asked if there was competition,” says Florence Kingston, the director of development for Newport News. “Back in 2008, this plant was in competition with South Carolina for a consolidation. We won that competition.”

The city’s support over the years was one of the factors that helped the company make its decision. “We were comfortable with the location and the workforce,” Kilgore says. 

The company will make an approximate $150 million investment in its Newport News facility over a number of years. The project is expected to create about 500 jobs, nearly doubling the plant’s current workforce. “We will have a whole range of jobs, from straightforward manual labor to highly technical engineering jobs,” Kilgore says.

The expansion will allow Continental to start three product lines for the automotive industry: high-pressure injectors, high-pressure fuel pumps and turbochargers.

The 360,000-square-foot plant can accommodate the expansion within its walls. “We don’t have to expand with bricks and mortar,” Kilgore says. “We are currently in the preparation stage, getting the facility ready. We will have product launches and most of our hiring in the second quarter of 2015.”

The company will start with two lines: high-pressure injectors and fuel pumps. “A couple of years later we will phase in the turbocharging business,” Kilgore says. “It will be the first time we are producing turbochargers in North America.”

GMU site shares space with community college

George Mason University has a new site in Loudoun County and a closer relationship with Northern Virginia Community College.

The university held a ribbon cutting on the Mason in Loudoun Instructional Site in October, four months after the location opened an office building at Signal Hill Plaza  in Sterling. GMU, which has had a presence in Loudoun since 2006, shares space with the community college at the new Sterling site.  GMU’s previous Loudoun site was on Ridgetop Circle in Sterling.

“It’s a great way to create partnerships and efficiencies,” says Una Murphy, director of outreach for regional campuses at George Mason. “George Mason and Northern Virginia Community College have a great relationship with each other … This is an excellent way to reinforce that connection.”

Signal Hill Plaza offers greater accessibility to students, she says. “There will also be greater availability,” Murphy says of the school’s offerings. “We will have a total of eight classrooms and six breakout rooms. We also have videoconferencing capabilities.”

George Mason is increasing the number of classes it is offering in Loudoun in IT, business, leadership studies, graduate education, executive education, and continuing and professional education. The school has a guaranteed admission agreement with Northern Virginia Community College that grants admission to students pursuing bachelor’s degrees who meet certain criteria.

“Traffic from Northern Virginia Community College students wanting to learn about transfer possibilities has increased since we moved,” Murphy says.

Offerings at Mason also include partnerships with Osher Lifelong Learning Institute for adults over 50. “They can take advantage of many of the professors that teach at George Mason,” Murphy says. “Students are mostly retirees, and they are incredibly engaged. They take [courses in] everything from public policy to jewelry making.”

Osher takes advantage of George Mason’s video conferencing equipment. “A lot of the classes originate in Fairfax,” Murphy says.

She feels the new location will be a boost for George Mason. “Loudoun is a growing community,” she says. “There are a lot of people that live there and want to learn there as well. This is a way to serve the community.”

Lightening the load

Jet fuel consumption is a hot topic for manufacturers of commercial jet engines. That’s why they are taking note of a new technology that will be used to make lighter-weight jet engine blades at the Hampton operations of Alcoa Power and Propulsion, a business unit of Alcoa. “Fuel is an airline’s largest single operating expense,” says Jack Bodner, company vice president and general manager of global industrial gas turbine airfoils.

The plant will use advanced manufacturing technologies that include robotics and digital X-ray in the production of jet engine blades. The technology will cut the weight of the blades by 20 percent and significantly improve aerodynamic performance and jet fuel consumption. “We have spent five years in development of the technology,” Bodner says.

Alcoa is investing $25 million to expand its Hampton operations. The company plans to add equipment for a new production line and modify existing machinery to produce the blades. The expansion is underway and is scheduled to be complete by the fourth quarter of 2015. Once production ramps up, the company expects to add at least 75 employees over three years.

The new blades will be used in engines for large commercial aircraft, including narrow- and wide-body airplanes. Bodner expects to see a growing demand for the product. “Boeing and Airbus have a backlog of airplanes to build,” he says. “Plus, there is a demand in developing countries that will grow larger as the middle class grows and wants to travel. They will need new airplanes and engines that improve fuel consumption.”

New York-based Alcoa is a global leader in lightweight metals engineering and manufacturing. The company pioneered the aluminum industry over 125 years ago. It currently has 60,000 employees in 30 countries.

The 500,000-square-foot Hampton facility employs 650 people. Employees currently operate two production lines — one that produces industrial gas turbine blades for the power generation market and one that makes large nickel and titanium structural castings for aerospace and military engines.

“This is our 40th year of operation in Hampton,” Bodner says, noting the facility opened in 1974. “The company relocated to Hampton from our operation out of Michigan because it wanted more of a presence in the Southeast. We have a good standing relationship with Hampton. It has a great workforce with good skills and it has a great education system.”

Customers at the Hampton operations include GE Power Systems, Siemens and Mitsubishi Heavy Industries for industrial turbine blades and Boeing Integrated Defense Systems, General Electric Aircraft Engines, Pratt & Whitney, Honeywell Aerospace, Lockheed Martin and Northrop Grumman for aerospace components.

Fifty-five percent of the Hampton operations’ revenue is based on foreign sales. Bodner expects to see an even bigger increase in foreign sales once the new production line opens. “There is a global presence of engine manufacturers,” he says. “Many are in the United Kingdom, France and Germany. We do business where those manufacturers are located and that is mainly Europe.”

The company does a great deal of business in Berlin but has little problem with language differences. “English is the accepted language of the aerospace and industrial turbine industries,” Bodner says. “That makes business for us easy to do.”

He finds Germans to be highly educated and data driven in their approach to business. “Europeans that are at a higher level of the organization are more formal,” Bodner says.

There is a technical exchange between the Hampton operations and its European customers. The Hampton facility holds classes for its customers on investment casting (where metal is poured into a mold). “The training is technically oriented,” Bodner says. “We bring in our customers’ design engineers. The class gives them insight to the physical capabilities of what they can design that we can manufacture.”

The company’s customers also offer turbine design classes for Alcoa engineers. “That helps our engineers see what our parts do in the engine,” Bodner says.

While Bodner communicates with customers through email, he prefers to visit them whenever he can. “It’s better when you see somebody’s lips move,” he says, adding that the context of an email can often be misunderstood. “Once people get to know one another, communication is much better.”

GLOBAL VIEW:

Economy of Berlin
Major employers in Berlin include Siemens AG, a global  player in electronics and electrical engineering, as well as state-owned railway Deutsche Bahn. Also on the list are car manufacturer Daimler,  motorcycle manufacturer BMW and Bayer Health Care as well as energy company Vattenfall Europe and Universal Music Germany.  The city’s economy is boosted by film production. It houses more than 1,000 film and television production companies. It also has several research and development organizations such as the Max Planck Society and the Gottfried Wilhelm Leibniz Scientific Community. Berlin is one of the centers for the European Institute of Innovation and Technology.

LOCAL VIEW:

Economy of Hampton
Hampton is connected to more than 250 ports in more than 100 countries, thanks to its proximity to the Port of Virginia. The city’s major employers include custom manufacturer Craft Machine Works Inc., Langley Air Force Base, NASA Langley Research Center, the National Institute of Aerospace, sensor manufacturer Measurement Specialties Inc. and Science Systems and Applications Inc., which provides science and technology analytics services. The city also is home to the Hampton University Proton Therapy Institute, one of only 12 proton beam cancer centers in the U.S. The 98,000- square-foot facility is the largest freestanding facility of its type in the world. The city’s business parks include Copeland Industrial Park, Langley Research & Development Park, Central Park and Hampton Roads Center North Campus near Langley Air Force Base.

Shipbuilder to create health-care centers for employees

The management of Huntington Ingalls Industries looks at health care the same way it looks at workforce development. “We look at the future,” says Bill Ermatinger, corporate vice president and chief human resources officer. “If you look at our workforce, we have people who have been here 40-plus years. We hire second and third generations.”

The company announced in July it will create onsite health-care centers for its Ingalls Shipbuilding and Newport News Shipbuilding employees and their families. “This is an investment in families, and that’s an investment worth making,” Ermatinger says.

The Newport News health-care center, with up to 20,000 square feet, will house doctors, nurses, physical therapists, wellness coaches and nutritionists. It also will have a full-service pharmacy as well as labs and radiology.

A Mississippi-based health-care center serving Ingalls Shipbuilding employees will be approximately 5,000 square feet smaller. Both centers are scheduled to open by mid-2015. “We don’t have a hard date,” Ermatinger says.

The company is creating the health-care centers as a way to invest in its employees by promoting healthier lifestyles. Individual health-care costs are normally driven by behavior, access, the environment and genetics, according to Ermatinger.

“We wanted to focus on behavior and access,” he says. “We are addressing behavior by providing comprehensive, innovative patient care with a focus on wellness, and the onsite center eliminates the problem of access. It’s a whole different model.”

The company has around 23,000 employees in Newport News, divided almost equally between salaried and union-eligible employees. Salaried employees will be the first group to use the new health-care center. Health care for union-eligible employees is dictated by a contract “that has to go through the bargaining process,” Ermatinger says.

Salaried employees and their dependents will pay $15 for each visit to the health-care center. “There is no co-pay and no deductibles, etc.,” says Ermatinger. “This is an additional choice they have. We also offer a health-care plan, and you can intermix the two. It’s not exclusive. You don’t have to take one over the other.”

The company also has rolled out a telemedicine program called Teladoc.

The program allows em­­ployees to talk to physicians by telephone or Skype 24 hours a day, seven days a week, for $10 a visit. That service is in addition to the health-care centers and the regular health plan. “We now have three avenues for employees,” Ermatinger says.

The company is looking at various sites for the health-care centers and has awarded a contract to Wisconsin-based QuadMed to manage them. “They will definitely be very close to our shipyards, just outside the gate because dependents have to have access to them,” Ermatinger says.

Strasburg survey provides guidance for downtown

A recent survey has given Strasburg leaders a clearer understanding of what new steps it should take in reviving its downtown.

The survey revealed local residents’ desire to have a public open space downtown. “What you see in a lot of revitalized downtowns is open space,” says Kimberly Murray, Strasburg’s economic development and planning manager. “We really wanted to hear from the public about that.”

Most people participating in the survey listed a farmers market or performance venue/amphitheater as their top choice for the open space.

“We need some type of public space that will invite and entice people to come downtown,” says town manager Jud Rex, noting that the survey also shed light on shopping patterns. “We also found that people were interested in parking. We have plenty of spaces, but it’s a matter of navigating to the businesses and other areas downtown. We need to find a way to help folks better navigate around.”

The survey was conducted as part of a $35,000 block grant the town received from the Virginia Department of Housing and Community Development.

“We applied for the grant about a year and a half ago to explore ways to jumpstart downtown,” says Rex. “We wanted to look at what types of businesses the market might handle and other things we could do to help downtown.”

As a result of the survey, two public sessions already have been held: one to share the survey data and the other to conduct a charette, a planning session.

Town leaders say they were extremely pleased with participation in the survey. They received 638 responses; 436 were collected on the Internet through Survey Monkey and 202 were paper surveys. “What was eye opening about the survey was the response,” Murray says.

Approximately 12 percent of Strasburg households (estimated at around 3,000) responded to the survey. “That’s quite amazing,” Murray says. “It’s hard to get 100 people to respond.”

Response to the first public input session in July was high as well. “Surveys collect quantitative data, but the public input gave us qualitative data. It gives us the narrative behind the survey results,” says Kelly Hall, associate planner for Community Planning Partners Inc. in Richmond, which conducted the survey.

The town hopes to apply for a full grant from the Community Development Block Program in the spring. “That will help us get implementation funds so we can design a space for a farmers market or a performance space,” Rex says.

N.C. food firm finds new opportunity in Danville

Dennis Daniels, CEO and co-owner of food manufacturer Sky Valley Foods, looked at more than 200 facilities across the United States before making the decision to move the company 15 miles — from Yanceyville, N.C., to Danville.

“None of the [other] facilities  were designed with the infrastructure we needed as food manufacturers,” Daniels says.

One of the key selling points was Danville’s access capacity for potable water and wastewater treatment — 10 million gallons a day of each. “Food processing is a heavy user of water,” says Linwood Wright, consultant to the city’s Office of Economic Development.

The building that will house Sky Valley’s operation previously was occupied by Shorewood Packaging. The structure was acquired by the Australian packaging company Amcor. It closed the facility and vacated the building earlier this year.

The Industrial Development Authority of Danville bought the building in June and now is installing a drain system. The city provided a $100,000 grant to help defray part of the cost of the installation. Sky Valley will move in once work is completed.

The company approached the Office of Economic Development about moving to Danville six months ago. “They had outgrown their facility in North Carolina, which is about 15 miles south of Danville. We agreed that we would purchase the building and provide a loan to purchase the property that would be amortized over whatever period met their capital requirements,” Wright says. “After they have reduced the principal to zero, they can buy the building for $10.”

Sky Valley will expand its operations when it moves into the 132,000-square-foot building within the next four months. “We will have two new high-speed lines,” Daniels says. The company now has 60 employees but hopes to increase that number to 100 by the end of next year. “Most of our current employees live in Danville now,” Daniels says.

The Office of Economic Development continues to look for prospects like Sky Valley, but the market is different than it was when the city was attracting Fortune 500 companies such as Goodyear.

“Those kinds of relocations are traditional but are not happening with great frequency,” Wright says. “We have much more activity with smaller to midsize companies, and we have a fair amount of entrepreneurial activity.”

The city’s bigger projects “tend to be foreign,” Wright adds. “We have an active China strategy, and we are working with some European companies, but they are not as aggressively involved in expansion as they had been previously. We’ve also been working with Turkish and Israeli companies.”

Entrepreneurial endeavors have gotten a boost from The Launch Place, which offers business-consulting services to existing and newly established businesses in Southern Virginia.

Thanks to a $10 million grant from the Danville Regional Foundation, The Launch Place is also offering a variety of services that include “preseed” and seed funding.

“We are actively creating and supporting a culture for entrepreneurship, which is so important in attracting and sustaining startups to the Danville area,” says Eva Doss, the organization’s president and CEO.

Shifts at Advance Auto lead to execs’ relocation

Roanoke-based Advance Auto Parts Inc. plans some dramatic organizational changes in the wake of the $2 billion acquisition of Raleigh, N.C.-based General Parts International.

Those changes will keep Advance’s headquarters in Roanoke but move three top executives — CEO Darren Jackson, President George Sherman and CFO Mike Norona — to the company’s Store Support Center in Raleigh.

The transition of corporate functions will take place gradually during the next 12 to 18 months. “We would have preferred the jobs stay here,” says Joyce Waugh, president and CEO of the Roanoke Regional Chamber of Commerce. “We hate to see any jobs leave.”

Advance’s acquisition of General Parts was completed in January. The changes taking place will keep approximately 1,600 employees in the Roanoke Valley with approximately 1,000 employees based at the Store Support Center. The long-term effects of the restructuring are unknown at this time. The company is keeping any future plans close to its vest.

What is known is that Advance Auto plans to create 600 jobs in Raleigh by the end of 2017 and invest more than $5 million in the city. It joins other major businesses in Raleigh and the Triangle (Raleigh, Durham and Chapel Hill) such as Martin Marietta Materials Inc., The Pantry Inc. and Quintiles Transnational Holdings Inc.

As the largest automotive aftermarket parts provider in North America, Advance was attractive to North Carolina because the state “wants to remain strong in the auto parts supply chain both in the retail and commercial mix,” says Kim Genardo, communications director of the North Carolina Department of Commerce.

North Carolina offered Advance Auto a Job Development Investment Grant that makes the company eligible to receive up to 12 annual grants that could yield the aggregate benefits of more than $17.4 million during that time period.

“If it was not a competitive project, we would not have considered the grant,” Genardo says.

Advance’s restructuring follows the “ebb and flow of mergers and acquisitions,” says Bob Kelley, assistant professor of management at Virginia Commonwealth University. “If you think about it from a logistics standpoint, Raleigh is a much bigger area that attracts bigger talent. It’s also an easier place to come and go. It’s more of a hub.”

The Raleigh area has a population of about 1.2 million, compared with about 312,000 in the Roanoke area.

Seeing Raleigh as a better place for their executives could be a “key reason why the company made the decision,” Kelley says, adding that this type of restructuring “is a fact of life. Cities will lose companies, and they will gain them.”

Gannett plan to split follows a national trend

McLean-based Gannett Co. Inc. has joined a growing list of media companies splitting themselves in two.

In August, Gannett announced its plan to create two publicly traded companies — one focused on broadcast and digital businesses and the other on publishing.

“It has been a trend for several years. It’s not new,” says analyst James Goss of Chicago-based Barrington Research. The list of companies going through splits includes giants like News Corp., Tribune Co. and Time Warner Inc. “Gannett is the last to go,” the analyst says.

As the largest U.S. newspaper publisher, Gannett’s properties include USA Today as well as 81 local U.S. daily publications and Newsquest, a regional community news provider.

Gannett says the separation will increase each company’s growth opportunities while allowing them to pursue strategic acquisitions. But profit, as you might expect, played a big role in the decision.

“Part of the reason for the split is that the growth rate and profitability of broadcast media is different from the profitability of publishing. It made sense for shareholders to split out the business,” says Gregory Fairchild, associate professor of business administration in the University of Virginia Darden School of Business.

Gannett’s broadcasting business, which includes 46 television stations it owns or services, will be the largest independent station group of major network affiliates in the top 25 markets. “Their stations reach a significant share of the country,” Goss says.

This year, Gannett’s broadcasting segment reported second-quarter revenue that was almost 88 percent higher than the same time period last year, mainly because of its acquisition of Dallas-based Belo Corp. During the same period, Gannett’s publishing segment saw a 4.1 percent decline in revenue. Overall, the company’s revenue growth was 12 percent.

“If you have a company that owns both publishing and broadcast, you have to blend the higher and lower figures together to get a composite value. Perhaps it’s less obvious where the value comes from,” Goss says. “If you split in two, you look at each asset uniquely. Instead of a blended multiple, we have two multiples separately.”

The Gannett name will stay with the publishing company after the split. Its broadcasting and digital company is yet to be named. “It’s not inconceivable that it would have Gannett in it,” Goss says, noting that Tribune’s split resulted in Tribune Media and Tribune Publishing.

He believes it makes sense to have the Gannett name associated with the publishing division. “Gannett started out as a publishing company. That is the part of the business the Gannett name has been associated with for the largest period of time,” he says. “It makes sense to leave that branding alone even if the other becomes Gannett Broadcasting.”