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byline: Joan Tupponce

Staying strong

No one could have predicted 2020 would bring such dramatic changes. Civil unrest after the police killing of George Floyd in Minneapolis, coupled with a once-in-a-century pandemic, is accelerating social and economic changes around the country, including in the Richmond region.

Once the capital of the Confederacy, Richmond began creating a blueprint for the future last year with the renaming of Arthur Ashe Boulevard and the debut of Kehinde Wiley’s sculpture, “Rumors of War,” at the Virginia Museum of Fine Arts.

This summer, amid weeks of protest, Mayor Levar Stoney hired Newport News-based Team Henry Enterprises to remove several Confederate statues, most prominently along Monument Avenue. (This excludes the Robert E. Lee statue, which is state-owned. Gov. Ralph Northam plans to remove it also, pending resolution of litigation brought by some local homeowners.)

Other changes began in mid-March, when the COVID-19 pandemic made its way to Virginia, prompting Northam to declare a state of emergency and place restrictions on businesses and close schools.

Sledge

The coronavirus has created an enormous impact on the business climate in Richmond “due to the uncertainty of when and how people and businesses would resume ‘normal’ pre-pandemic activity and routines,” says Leonard L. Sledge, Richmond’s director of economic development.

Although businesses across the commonwealth have suffered financial misfortune, it was particularly severe in Richmond, where restaurants, craft brewers, hair and nail salons and other small businesses take up a considerable amount of real estate.

Christine Chmura, CEO and chief economist at Chmura Economics & Analytics, wrote in an Aug. 2 column for the Richmond Times-Dispatch that “it is going to be a slow recovery as long as social distancing and fear of contracting the virus continue.” The hospitality and leisure sector in the Richmond area lost 40%, or about 28,000, of its jobs between February and April, she said, and there’s a ripple effect of about 7,000 more people losing their jobs.

At the onset of the pandemic, the city formed a coalition of localities, economic development organizations, chambers of commerce, businesses, financial institutions and other interested parties throughout the Richmond region to get out critical information to help businesses respond to COVID-19.

One of the key outcomes of the coalition was the launch of ForwardRVA.com, an online resource to help businesses safely reopen and continue operating. “The coalition is an outstanding example of regional collaboration and the collective work done to support businesses throughout the region,” Sledge says.

As a means of support, the city’s economic development authority created a $1 million fund to start a disaster loan program for Richmond businesses. As of the end of July, 48 businesses received approval for $934,920 in loans, and the EDA said the loans would be converted to grants with the use of CARES Act funds, so businesses would not have to pay the money back.

Blue Bee Cider, an urban cidery and event space in Richmond’s Scott’s Addition neighborhood, was one of the businesses that received a disaster relief grant from the city of Richmond. Photo courtesy Richmond Region Tourism
Blue Bee Cider, an urban cidery and event space in Richmond’s Scott’s Addition neighborhood, was one of the businesses that received a disaster relief grant
from the city of Richmond. Photo courtesy Richmond Region Tourism

Several industries are represented, but restaurants, breweries, tourism and retail dominate the list. Businesses that received the grants ranged from Blue Bee Cider, a cidery in the city’s popular Scott’s Addition area, to Dr. Jacqueline Johnson-Curl, a dentist with a family practice in North Side. 

The city also partnered with more than 50 local restaurants to provide meals to on-duty first responders during the pandemic.

“This program allowed us to directly support the restaurant industry, which is an important part of our economy, and also support our public safety personnel,” Sledge says.

Using funding from the federal CARES Act (a $2.2 trillion economic stimulus bill signed into law in response to the economic fallout of the pandemic), the city is preparing to launch a $3 million grant program for small businesses that had financial losses due to COVID-19.  

There still remains the lingering question of whether companies will reduce their physical footprint and adopt longer-term virtual work models or whether they will increase their physical footprint to allow for “effective social distancing in the workplace,” Sledge says. “I believe Richmond is positioned to benefit on either side of the spectrum.”

The protests that have taken place in the city during the past few months have also changed the face of business, resulting in more companies “large and small emphasizing the importance of equity and inclusion in their business practices,” Sledge says. 

Area companies such as Altria Group Inc. and Dominion Energy Inc. are both making $5 million donations to address systemic racism and support social justice and equality. Other businesses are following suit.

“Whether it is the impact of COVID-19 or the protests in the city, businesses are ready and willing to move innovative solutions forward … and figuring out what they need to do to change to be successful,” Sledge says.

Lara Fritts, president and chief executive officer of Greater Richmond Partnership, is hopeful the upcoming year will see improvements in the economy.

This past fiscal year, Greater Richmond Partnership exceeded its “goals in [economic development] investment,” says Fritts. “We were on a roll, and then we saw it halt. Now we are starting to see activity pick back up.”

The industries seeing initial growth — manufacturers, data centers, food and beverage manufacturing — are key industry sectors for the region, which is great news, Fritts says, adding that she’s optimistic that projects put on hold will come back by the fourth quarter of this calendar year and “be ready to make decisions.”

Due to the pandemic, The Jefferson Hotel in Richmond was closed for spring and summer, with plans to reopen in mid-September. Photo courtesy Richmond Region Tourism
Due to the pandemic, The Jefferson Hotel in Richmond was closed for spring and summer, with plans to reopen in mid-September. Photo courtesy Richmond Region Tourism

Tourism takes a hit

In late January, The New York Times listed Richmond as one of 52 Places to Go in 2020. “Our restaurant and beer scene was driving our notoriety,” says Jack Berry, president and CEO of Richmond Region Tourism.

But then COVID-19 brought travel to a virtual standstill. Since May 31, the region’s hotel occupancy rate has been down 30%. “Everybody has been affected,” says Berry. “But in the Richmond region we are uniquely positioned better than most destinations.”

That prime positioning, he says, is thanks to the region’s four pillars of travel — family and friends, business, tourism and transient traffic. Each plays a strong role in bringing the area through difficult times.

“I go back to when 9/11 hit in 2001. It was a Tuesday and travel stopped completely. The following weekend we were sold out. We rebounded back within 12 months. When banks collapsed in 2008, it devastated travel. That took us five years to recover, but we came back faster than areas not dependent on those four pillars,” Berry says.

But unlike earlier disasters, it appears the coronavirus’ economic impact will continue to be felt, at least until a vaccine is produced and widely available.

Berry

The state allocated $866,000 in grants to destination marketing organizations in July though the Virginia Tourism Corp., including Richmond Region Tourism, which received $10,000.

The region is already seeing some forms of travel on the uptick. Sports tourism, for example, began picking up at the start of Phase Three of reopening. “This summer, we had over 30 different sporting events,” Berry says, adding he’s looking forward to the upcoming year.

“We will be ready when you are ready to travel,” he says, echoing the Virginia Tourism Corp’s statewide marketing message. “When you are comfortable with it, we want you back.”

Positive outlook in Henrico

Romanello

“As strong as ever” is how Anthony Romanello, Henrico County Economic Development Authority’s executive director, describes the business prospects in Henrico. “As of July 17, we are managing 49 live prospects. It continues to be very active,” he says.

After COVID-19 hit, the county landed IT and professional consulting services firm ASGN Inc., its fifth Fortune 1000 company. The company is investing $5 million to move its corporate headquarters from Calabasas, California, to Henrico, where it plans to create 121 new jobs, with salaries averaging $106,000.

Henrico ended its fiscal year on June 30 with $163 million in private investment. “It was a huge year, but it’s important to give that some context,” says Romanello. “While we did land many exciting projects, there are a lot of businesses that are still struggling. We know there is a lot more work to do for businesses that have been impacted like restaurants, entertainment, hotel and the travel industry.”

Once the pandemic took hold, the authority started reaching out to all Henrico businesses to “let them know we were here,” Romanello says. In April, the EDA made a $2 million deposit with Virginia Community Capital, enabling relief loans to 42 Henrico businesses, including seven minority-owned businesses and 10 companies owned by women. Additionally, the county offered a microloan program for small businesses and offered extensions on real estate taxes and other fees.

Chesterfield rolls along

Chesterfield County’s active project list also doesn’t look a lot different from how it did before COVID-19. Logistics, distribution-based and light manufacturing leads are still strong in the county, as are food and beverage manufacturers. “We have the No. 1 manufacturer payroll in the area,” says H. Garrett Hart III, director of economic development. “We have seen positive demand for our manufacturers’ products. They have expanded production.”

Hart

Several of the county’s manufacturers are pivoting to produce personal protection equipment. “Our existing manufacturers and logistics companies are continuing to hire at a healthy rate,” Hart says.

The way the county is interacting with companies has changed in light of COVID-19. It is doing more virtual site visits, drone photography and screen-sharing with prospects. “In theory, we are trying to stay steady with the customer service we provide prospects,” says Matthew McLaren, senior project manager at Chesterfield Economic Development.

The business community in Chesterfield is resilient, Hart adds. “County businesses are being creative and using ingenuity to provide for customers.”

The county created a web page, chesterfieldbusiness.com/eats, to promote and help the local restaurant community. The county also launched a grant program for businesses that couldn’t get any other form of assistance. It was funded through the federal CARES (Coronavirus Aid, Relief and Economic Security) Act. “We are in the process of a second round of the program that opens up to businesses that may have gotten federal assistance but still had a tremendous need. Many of our businesses are hurting, especially service businesses like salons, hair [salons], gyms and restaurants,” says Karen Aylward, deputy director of economic development.

Hanover builds on success

Hanover County has been able to weather the COVID-19 storm with more than $500 million in economic development projects announced during the last two years, led by a December 2019 announcement from Wegmans Food Markets Inc. that it will build a $206 million regional distribution campus in Hanover, creating 700 jobs.

Linwood

“We are really proud of that,” says E. Linwood Thomas IV, the county’s director of economic development.

The announcement was the state’s top distribution sector deal last year and contributed to Virginia’s Golden Shovel award last year from Area Development magazine, recognizing Virginia as a top state for job creation and investment.

Fiscal year 2020 was the county’s strongest year on record for “commercial construction permits, which totaled over $61 million, along with our most recent announcements, which will go into that pipeline for future development,” Thomas says. “Last year was our best year on record for net new jobs, which topped out at over 2,200. Even through the pandemic, we saw over 1,920 net new jobs for the fiscal year, which ended June 30.” 

Nevertheless, the closure this year of Kings Dominion in Doswell has presented difficulties for the local economy. The amusement park employs about 4,000 seasonal workers and generated more than $5 million in tax revenue in 2018.

Still, other sectors are thriving. The county currently has more than 1 million square feet of speculative development underway, with about 60% already leased. “That shows the economy is still fairly strong,” Thomas says.

The pandemic has also seen the county pivoting more toward virtual economic development marketing efforts instead of face-to-face meetings. “We started doing drone videos and virtual site tours before COVID-19 hit,” Thomas says. “Visiting prospects has turned virtual, but we are still finding cost-effective ways to position the county for success.”

 

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Creating space for startups to bring products to fruition

South Boston’s town manager, Tom Raab, was elated when Mid-Atlantic Broadband Communities Corp. announced in early summer its plan for a Southern Virginia Tech Hub adjacent to its Southern Virginia Innovation Hub.

“That’s big for South Boston and Halifax County,” Raab says. “The locations will have the fastest free Wi-Fi in Southern Virginia.”

The Tech Hub, which will provide makerspace for startups and tech ventures, is the vision of Mid-Atlantic Broadband President and CEO Tad Deriso. After MBC obtains enough equity from investors, the planned $3 million, 13,200-square-foot Tech Hub will be built next to the Innovation Hub, which is scheduled to open in December.

A prime downtown location, the building will be built in a federal Opportunity Zone and State Enterprise Zone, offering federal, state and local tax breaks for investors and various enterprise zone grants and rebates for companies leasing space in the Tech Hub.

“This is a great opportunity for small business development,” says Brian Brown, executive director of the Industrial Development Authority of Halifax County.

The Innovation Hub will serve as the headquarters for Mid-Atlantic Broadband. Microsoft Corp.’s TechSpark Virginia economic development initiative will also have an office in the building. There also will be co-working space for startups, a Microsoft Experience space highlighting Microsoft technologies and a partner event space. Richmond-based nonprofit CodeVA, which promotes computer science education and teacher training, also is a partner and will have a presence in the hub.

Startups at the Innovation Hub entering the maker phase can move directly into the Tech Hub, which is targeted for construction in spring 2021. Spaces in the Tech Hub can be leased on a monthly basis by new ventures that need a small-scale manufacturing space to produce products. The facility also will be available to outside startups.

“We are talking to everyone from Lighthouse Labs in Richmond to startups in North Carolina and Danville,” Deriso says. “It will be another regional hub where entrepreneurs can do what they do best.”

Raab sees the synergy between the SOVA Innovation Hub and the SOVA Tech Hub as a draw for innovative companies. “If you want to have a startup, we will be the place to come,” he says. “We are sitting at the right place at the right time.”

 

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Smoother flow

Just a year and a half ago, it wasn’t uncommon for a truck at the Virginia International Gateway to spend two to four hours waiting to pick up and drop off cargo. 

The Port of Virginia would open the gate at 1 a.m. and wouldn’t close until 10 p.m. “It wasn’t a sustainable system,” says Mark Higgins, director of motor carrier experience for the port.

But the Trucker Reservation System (TRS), introduced in March 2018 at Norfolk International Terminals (NIT), has improved turnaround times dramatically in the past year. As more truck drivers have registered and make reservations before coming to the terminals, speed and efficiency have increased. Trucks that serve the port now have radiofrequency identification (RFID) tags that connect with the port through the PRO-PASS trucker access portal system.

For the month of January, 53.86% of trucks at all terminals had a turn time of 30 minutes or less. Additionally, 90.64% of trucks at the port had turn times of under an hour.

The system has helped improve the productivity of port logistics provider NFI/California Cartage. “The appointment system has been very successful from my standpoint. Turn times have improved tremendously,” says Chesapeake-based vice president Tommy White, who runs company operations up and down the East Coast. “The Port of Virginia is more competitive with other ports now. Last year’s turnaround time was the best in four years.”

The speedier times are a huge shift from October 2018, which was one of the most challenging months at the port in recent history. During that time, 14.13% of all trucks at VIG spent two to four hours inside the terminal. In January, that number decreased to less than 1%.

Currently more than 75% of all moves are completed during mandatory appointment hours — 6 a.m. to 3 p.m. weekdays — at both NIT and VIG.

Thanks to the reservation system, the port is able to operate fewer hours a day and still be more efficient. In January, it pushed back the opening time from 5 to 6 a.m., with a closing time of 5 p.m.

“We used to open on Saturday, but because of efficiency we eliminated the Saturday gates and moved the opening hours,” explains Higgins. “We can do more containers per day.”

With less cargo moving during the coronavirus outbreak — including the period when the virus was largely contained in China — the port has been preparing for a quick comeback, says port spokesperson Joe Harris. He anticipates adding additional hours this summer to handle greater cargo volume.

Higgins notes that the TRS, which helps spread truck volume out during the day and largely eliminates rush hours, also helps the port make quick adjustments. “Now we have the flexibility if the volume is good to open on Saturday if we need to. For the motor carriers, it’s really about consistency and having a predictable experience.”

The port is also able to open slots at 9 a.m. for next-day appointments. “That allows us to organize the yard in an efficient manner,” Higgins says.

The elimination of rush hour at the gates in early mornings and late afternoons is one of the benefits of the appointment system, including for commuters who used to get caught in traffic backups, Higgins says.

Ed O’Callaghan, president of Audax Transportation in Norfolk, an agent for Century Express, acknowledges that it was a challenge in the early days of TRS to get appointments at the port. “But between March 2019 and March 2020, the lines had dropped down,” he says. “It was much easier to get an appointment the same day.”

The system still isn’t perfect, Higgins says. “We have learned a lot in the course of the last year and a half, and we are still learning. Sometimes motor carriers don’t get the schedule they want. But by the end of the day they deliver more containers than previously in a much more efficient manner.”

John Reinhart, CEO and executive director of the port authority, told the trucking community that he was going to make changes to the system, adds Higgins. “We were good to [keeping] that promise. The trucking community is happier.”

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Eggs in several baskets

Southern Virginia ended 2019 with some of the largest investments the region has seen in recent years and strong economic momentum — a far cry from 15 to 20 years ago when the area experienced downfalls in employment and capital investment after the textiles industry moved operations outside the country.

Last July, the positive energy could have turned negative as the city of Danville and Pittsylvania County were once again facing the loss of a major employer. Ikea announced it would close down shop at the end of the year, resulting in an expected loss of approximately 300 jobs. But the two localities bounced back quickly with one of the largest regional economic deals in the past few decades — a $57.8 million investment by Michigan-based step-van manufacturer Morgan Olson LLC that will create up to 1,000 jobs, making it the largest private employer in Pittsylvania County. (Read story here.)

Morgan Olson, North America’s largest manufacturer of walk-in delivery vans, will more than double the number of jobs lost, “and the wages will be higher,” adds Matt Rowe, Pittsylvania County’s director of economic development.

Morgan Olson was just one of four deals the two localities co-announced for Regional Industrial Facilities Authority properties, such as the 3,500-acre Southern Virginia Megasite at Berry Hill, where Dominion Energy Inc. is building a 500-megawatt combustion turbine peaking plant. The $300 million project will create five jobs and is expected to come online in 2022.

Litehouse Foods in Airside Industrial Park should begin construction for an expansion this spring.

With tax revenues generated from the plant, the Megasite is “immediately a revenue generator,” Rowe says, noting Dominion would be the first tenant to locate in Berry Hill. “We had been putting money into the site and had no revenue until this.”

New Jersey-based AeroFarms, a world leader in aeroponic vertical farming, has selected Cane Creek Centre, a joint industrial park for Danville and Pittsylvania County, for a 150,000-square-foot facility. The company will invest $42 million and create 92 jobs. The company is looking to break ground this spring.

“The company’s aeroponic growing technology is 390 times more productive than field-grown plants,” Rowe says. “AeroFarms won Time magazine’s 2019 best invention award. It was the first time a food company received that designation.”

Pittsylvania County also landed Gefertec, a small German technology company that makes additive manufacturing machines. The $1.9 million investment will create eight jobs.

This year the county’s economic development efforts are focused on key areas such as automotive, aerospace and precision machining. One of the benefits it offers is cost savings. “Our numbers get to where we are 30 to 40% cheaper than other communities such as Canada, the northeast and certain areas of South Korea,” Rowe says.

Danville

Companies are also looking at Danville. Last year, the city scored nearly $450 million in investment and 968 jobs. It landed Idaho-based Litehouse Inc., a leader in refrigerated salad dressings and other consumer packaged goods. The company is investing $46 million to acquire and expand Sky Valley Foods and establish its first East Coast production facility in the city. The project will create an additional 160 jobs over the next five years.

The city also announced its first hospitality project in the historic district where Roanoke-based developer Ed Walker and his team are investing $7.5 million to convert two historic buildings into a 41-room boutique hotel.

International manufacturers continue their interest in the area based on several factors: the attractive cost of doing business (18% below the national average), the long-term appreciation for manufacturing and an investment in workforce training programs and infrastructure.

The progress in the region over the past year has been “truly amazing,” says Corrie Teague Bobe, Danville’s interim director of economic development, who took over when the city’s former director, Telly Tucker, left to head Arlington County’s economic development department in January.

“Through strategic investments in workforce training, we have been able to attract new businesses that will bring living wage jobs to residents within our community,” Bobe says.

During the past five years, the region has invested more than $50 million in developing a workforce program that assures businesses will find skilled labor to meet their needs and “be able to access talent for years to come,” she adds.   

Martinsville-Henry County

“Consistent” is the key word for Martinsville’s economic development efforts. For the fiscal year that ended June 30, 2019, the region had more than $80 million in investments and added 550 jobs. Of those projects, six were in calendar year 2019, with 167 jobs and $41 million in investment.

Last year saw the opening of the Commonwealth Crossing Business Centre and its new tenant, Press Glass, which is starting to fill more than 200 jobs. The company’s meet and greet in September drew more than 400 people, says Mark Heath, president and CEO of the Martinsville-Henry County Economic Development Corp.

The area continues to look for larger projects for Commonwealth Crossing in industries such as plastics, metalworking, food processing and aerospace. “We’re working with several consulting firms that specialize in those projects,” Heath says.

Foreign investments include Advanced Revert, an aerospace recycling firm in Sheffield, England, making a $5 million investment and creating 30 jobs over the next few years for its first U.S. operation, which will be in Henry County. “They are buying a former property and converting it into a recycling operation,” Heath says.

British Columbia-based forest products company Teal-Jones Group is investing $21 million and creating       67 jobs at its Henry County facility, where it manufactures Southern yellow pine dimensional lumber.

The area has also seen a number of expansions, including Eastman’s most recent expansion with an all-capital investment of $7.7 million.

Halifax County

2020 is going to be an “interesting year” for Halifax, says Brian Brown, executive director of the Halifax County Industrial Development Authority. The county is making workforce training a priority.

It is home to South Boston’s Southern Virginia Higher Education Center, with its R&D Center for Advanced Manufacturing and Energy Efficiency and the IT Academy. Located in a new 10,000-square-foot facility downtown, the center serves about 50 clients, offering companies the “ability to go from prototype to small production runs for manufacturing and development,” Brown says.

Additionally, the county is just months away from breaking ground on a shell building in Southern Virginia Technology Park and is continuing to work toward foreign direct investments from England and other European countries. “We are very confident in terms of where we are,” Brown says.

South Boston

Technology is also an important focus in the town of South Boston, where Mid-Atlantic Broadband Communities Corp. and Microsoft Corp. are partnering to build the 15,000-square-foot SOVA Innovation Hub downtown. Ground has already been broken on the $5 million project.

Microsoft, through its TechSpark initiative, will use the space to encourage innovation and spur economic opportunities in the region. The facility will also bring together local nonprofit organizations across Southern Virginia to offer programming for digital skills education and workforce training.

“We are hoping it will be up and running by September or October of this year,” says South Boston’s town manager, Tom Raab.

Additionally, the final phase of Imperial Lofts in the historic Imperial Tobacco Building, with 26 market-rate apartments, should be completed this spring. The facility also has 11,000 square feet of commercial space rented to the R&D Center.

On the tourism front, the town received an $876,000 grant last year from the Virginia Department of Conservation and Recreation for a motorized boat landing on the Dan River located at the entrance into the downtown area. The project should be complete by 2021 and provide “easy access to the Dan River,” Raab says.

As the saying goes, it takes a village to accomplish great things and over the last 10 years, the region has benefited from supportive leadership at the local, regional and state levels. The goal now, says Bobe, is “to become the region of choice for businesses in search of a skilled workforce and residents in search of a great quality of life.”

The Hail Mary

Football isn’t the only occupation in which a wild, slim-chance pass can deliver a win. Last fall, the Virginia Economic Development Partnership and Danville and Pittsylvania County officials launched a Hail Mary economic pitch that landed a $57.89 million expansion project from Michigan-based van manufacturer Morgan Olson LLC.

Morgan Olson is establishing a walk-in step van assembly operation in the 925,000-square-foot plant formerly owned by Swedish furniture retailer Ikea, which shut down its operations there in December. The October 2019 announcement from Morgan Olson came about 90 days after Ikea said it would be leaving Danville and laying off around 300 workers.

Morgan Olson President and CEO Mike Ownbey said in February that the company may create as many as 1,000 jobs at the plant.

VEDP began courting Morgan Olson in May 2019. North America’s largest van manufacturer, Morgan Olson had plans to expand operations into two locations. Ownbey says they hadn’t found what they needed, given the assembly line’s specific needs, including ceilings 48 feet or higher and 150 to 200 acres of parking space.

However, Ikea’s pullout spurred Danville and Pittsylvania officials to make another run at landing Morgan Olson.

It was late in the game for the Morgan Olson deal, but “we got to throw the ball,” says Telly Tucker, former director of economic development for Danville. (Tucker took a job as Arlington County’s economic development head in January.) “Putting together a deal of this size and magnitude in three months is unheard of. It’s a testimony to how VEDP is attuned to what the industry needs and how responsive the state needs to be to get consideration for these projects.”

When state officials took Morgan Olson officials on a tour of the Ikea plant, which is located in Pittsylvania County just outside Danville, “we liked what we saw, and we stopped our search and focused on this area,” Ownbey recalls.

Landing the company was a collaborative effort that also included state, local and regional partners such as Virginia Secretary of Commerce and Trade Brian Ball and Linda Green, executive director of the Southern Virginia Regional Alliance. VEDP and the Virginia Community College System created a workforce training program at Danville Community College specifically geared toward Morgan Olson’s needs.

The Port of Virginia was a major negotiating chip because Morgan Olson imports steel rolls. “We were able to demonstrate that we could bring larger shipments into Virginia, and they could be in Danville in four hours,” Tucker says.

When Ikea employee David Aaron heard Morgan Olson was taking over the plant and creating more jobs, he felt hopeful. He had been working at the manufacturing facility for two years in engineering and process improvement. “This is the second plant closure for me,” he says. “I was shocked because Ikea was a global company.”

Some people at the plant took the attitude that the closing marked a time for a new opportunity, and Aaron decided to see it that way as well. “Sometimes we need that push to grow, and this was that push for a lot of people,” he says.

Ikea also lent a hand to the state’s search for a new occupant for its plant. “They wanted to leave things in the best possible posture to the community that had supported them for so long,” Moret says. “I give Ikea credit for selling the plant at less than open market [rate] and for working with us on a timeline and letting Morgan Olson do due diligence and environmental reviews.”

The entire experience was one that VEDP President and CEO Stephen Moret had never seen before — having a plant closure announced, thinking a deal was lost and then having that same employer come in and resurrect a plant within three months was “amazing,” he says.

A history of service

Jim Lang’s motivation for joining Pender & Coward after a 25-year career in the U.S. Navy remains as true today as it did when he interviewed with the law firm 14 years ago.

“When I was in the Judge Advocate General’s Corps in the Navy, I could count on and trust another JAG to make things happen, and that’s what I wanted in a law firm,” says Lang, who’s now Pender & Coward’s chief operating officer.

Dave Arnold, then an associate and now the Virginia Beach-based law firm’s CEO, assured Lang he would find exactly what he was seeking at Pender & Coward. “Everything Dave told me is right,” Lang says.

This year, Pender & Coward celebrates its 130th anniversary. Founded in 1889 in Norfolk by William Dorsey Pender, the firm served as a boutique law firm focusing on insurance defense before a three-way merger in 1982 that broadened its services. “We became a full-service law firm,” says Arnold.

Undergoing multiple name changes over the years, the firm adopted its current appellation in 1982, a move that proved “fortuitous” because it delivered such strong name recognition, says Arnold, who started with the firm in 1990 as a law clerk. 

The importance of keeping the Pender & Coward name intact was stressed to Lang during his hiring, he recalls: “I was told no matter how well you do here, you will never see your name on the letterhead.” 

Today, Pender & Coward has  41 attorneys working in 25 practice areas, with offices in Virginia Beach, Chesapeake and Suffolk. Its clients primarily hail from Virginia and northeastern North Carolina.

Kelly Thorp, president of Norfolk-based federal contractor Atlantic Comm­Tech Corp., appreciates the way the firm thoroughly researches issues, meets deadlines and maintains transparent billing practices.

“As a government contractor, we have worked with Pender & Coward on a variety of matters over the last five years with consistently successful outcomes, including a complicated bid protest on a $400 million procurement,” says Thorp. “Working with Pender & Coward makes our life easier.”    

The firm has produced six federal and/or state judges since 1931. In 2019, shareholder Richard E. Garriott Jr. was elected president of the Virginia Bar Association, the oldest voluntary membership organization of attorneys promoting advocacy and volunteer service.

With only 14 attorneys in 1986, the firm recognized that smaller Virginia firms needed to level the playing field in competing against larger law firms. So Pender & Coward partnered with colleagues throughout Virginia to found Commonwealth Law Group, a network of smaller law firms that could leverage resources to match the staffing and practice areas of larger firms.

One constant throughout Pender & Coward’s history is its commitment to create strong communities in its service areas. “We do a tremendous amount of volunteer work serving our communities,” says Lang.

In 2016, firm employees worked together to develop a community service project, Restore the Shore. Lang and a team of attorneys cleaned up a floating junkyard — derelict vessels clogging the waterway in the Elizabeth River.

After the cleanup, the firm partnered with the nonprofit Elizabeth River Project to clean up the shoreline and plant natural grasses. “Pender & Coward is an ‘all-in’ partner that provides action and financial support for the restoration of the Elizabeth River,” says Pam Boatwright, the nonprofit’s deputy director of administration. Pender & Coward has also sponsored Elizabeth River Project events, including the annual RiverFest eco-festival and the Annual River Stars Business Recognition Luncheon, which showcases corporate environmental stewardship.

The law firm’s staff and family members also participate in service projects such as cleanups and planting wetlands, she adds. “Pender & Coward is a role model whose efforts benefit returning wildlife and provide a legacy of a healthy river for the next generation.”

To celebrate the firm’s 130th anniversary and in keeping with its tradition of community service, this fall Pender & Coward donated and planted 130 trees in the Southside Hampton Roads region.

“Studies show that improving the tree canopy expands wildlife habitat, diminishes urban heat islands, improves water quality, reduces stormwater management costs and improves air quality, thereby bettering the quality of life for all of us who call this area our home,” says Mancha Stanton, the firm’s director of marketing and client services. 

Clear and present dangers

In March, a Seattle software engineer hacked into Capital One’s servers, stealing personal data belonging to 106 million of the McLean-based bank’s customers and credit card applicants. Prosecutors would later say that the hacker was also found to possess terabytes of stolen data from 30 other organizations, including companies and universities.

Cyberattacks and data breaches such as these aren’t limited to Fortune 500 companies, however — just look at the National Bank of Blacksburg, which resolved an insurance dispute in January over the 2016-17 theft of $2.4 million by suspected Russian hackers.

According to a study released this summer by British cybersecurity firm Comparitech, Virginia ranks ninth out of the 50 states for the most data breaches. And with global financial damages attributable to cybercrimes anticipated to top $6 trillion by 2021, it’s no wonder that more and more companies are purchasing cybersecurity liability insurance.

“There’s more demand,” says Dan Knise, president and CEO of Ames & Gough Insurance/Risk Management Inc. in McLean. “The risks associated with hacking are becoming more real to businesses of all sizes. It’s unbelievable how broad it is. Small companies have the same issues as larger companies.”

Realizing they’re vulnerable to cyberattacks, “most businesses, hospitals, schools and municipalities realize they have to budget to purchase that coverage,” says Roy Bucher Jr., chairman of Lunsford, a Trustpoint Company, in Roanoke.

In fact, Baltimore’s city government announced in October that it was purchasing $20 million in cyber liability insurance — the first time it had bought such coverage. The transaction followed a widely publicized May ransomware attack that shut down or seriously disabled many city government offices and functions.

Dozens of insurers are currently writing corporate cyber coverage. As a result, premium rates are competitive but “I don’t think that will last,” Knise says. “Eventually the rates will go up, but for now it’s particularly cost effective.”

Insurance companies are
charging higher premiums to
accept emerging cyber risks related
to “fraudulent impersonation
and social engineering schemes,” says Denise Perlman of Marsh & McLennan Agency. Photo by Shandell Taylor

Insurance companies are charging higher premiums to accept emerging cyber risks related to “fraudulent impersonation and social engineering schemes,” says Denise Perlman, executive vice president for business insurance and national partnerships at Marsh & McLennan Agency in Richmond. In these schemes, a hacker sends phishing emails impersonating someone in the company in an attempt to trick the recipients into giving out private information or transferring funds.

Forecasting rates

Apart from cybersecurity coverage, 2019 is proving to be a mixed bag when it comes to commercial insurance rates. “Generally, we are seeing rates move up slightly, at a moderate level of 3% to 5%,” Knise says, adding there are exceptions to that moderate increase.

Businesses with vulnerable coastal properties and a larger risk for weather-related claims, he says, will see higher rate increases of 5% to 10%.

Weather events with multimillion-dollar damages can play havoc with insurance rates. This year Mother Nature has been kind to Virginia. September’s Hurricane Dorian was the only hurricane that barreled up the East Coast. “It didn’t do a lot of damage, and it didn’t do anything to the market,” says Bucher.

But that wasn’t the case in previous years. From 2016 to 2018, there were a historic number of billion-dollar weather disasters — hurricanes, wildfires, severe storms and droughts, according to the National Centers for Environment Information.

Verisk’s 2017 Wildfire Risk Analysis notes that losses from wildfires during the past 10 years amounted to $5.1 billion. Almost half of the homes in the U.S. identified at high risk of wildfires were in California, where this July both the Mendocino Complex Fire (the largest fire in the state’s history) and the Carr Fire (one of the state’s most destructive) occurred.

“Large property accounts with weather and brush exposures are being hit hard. In general terms, we’ve seen increases in catastrophe-prone areas with massive losses in wildfires, flood and hurricanes,” Perlman says.

Some of Bucher’s clients are also considering earthquake coverage, especially given the 5.8 magnitude earthquake that hit Louisa County in August 2011. “Some companies and historic buildings are taking out earthquake coverage,” he says. “It’s definitely something people are looking at.”

#MeToo continues

Businesses are continuing to see increasing rates for employment practices and management liability insurance. The higher rates, Knise says, are a result of the #MeToo movement and sexual harassment claims.

Since the movement to expose workplace sexual assault and harassment became more widespread in 2017, the number of claims filed due to complaints of inappropriate workplace behavior has risen. “It’s a societal shift,” Knise says.

In fiscal year 2018, the U.S. Equal Employment Opportunity Commission received 76,418 charges of workplace discrimination, including 7,609 sexual harassment charges, a 13.6% increase from FY 2017.

Claims against businesses can also be the result of traffic accidents, which are covered under a company’s business auto coverage. Companies buying business auto coverage this year are seeing rising rates. “Auto insurers are paying more and more claims with crowded highways and distracted driving,” Knise says.

Distracted driving claimed  3,166 lives in 2017. That number jumped to 4,637 in 2018, according to the National Highway Traffic Safety Administration and The Zebra, an insurance comparison site.

Losses are still outpacing “rates, making business auto coverage an unprofitable one for insurers,” says Perlman. “Carriers are reducing their capacity for the trucking market.”

Trucking insurance risks are seeing “higher increases,” whether they have had losses or have never had a loss, Perlman adds.

Many businesses are requesting higher umbrella or excess liability limits, which can supplement coverage offered by commercial auto liability insurance, general liability insurance and/or an employer’s liability insurance. The higher umbrella limits can cover issues such as property damage claims and third-party bodily injury. Large companies such as hotels may carry hundreds of millions of dollars of excess liability coverage as protection.

“This type of insurance depends on your overall insurance budget,” says Bucher.

Board member coverage

Nonprofit organizations are also scrutinizing their budgets as they recognize the need for liability insurance for the organization’s directors and officers.

“If you are serving on a board, you want to make sure the organization has D&O coverage,” says Bucher. “It protects for wrongful acts of the organization and loss from mismanagement of the organization’s board of directors.”

Roy Bucher Jr. of Lunsford, a Trustpoint Company, says companies need to stress safety to save money on insurance. Photo by Don Petersen

This type of insurance has become more prevalent in the last 20 years. “Now more 501(c)(3) organizations are purchasing that coverage,” Bucher says. “Many people will not serve on a nonprofit board without D&O coverage.”

Many companies today are looking at specialty coverages. For example, manufacturers and businesses with global ties are purchasing different specialty products, such as foreign liability coverage and workers’ compensation to cover employees traveling abroad to protect the company for a liability claim such as property damage or bodily injury.

Companies are also adding pollution liability coverage to protect  manufacturing plants, both domestic and foreign.

Bucher is also seeing an increase in the number of Virginia businesses and businesses in other states getting commercial general liability coverage and crop insurance for farming hemp plants to guard against crop loss due to pests and natural disasters. Hemp can be used in manufacturing items such as clothing, rope and cannabidiol (CBD).

The Virginia General Assembly amended state laws this year to allow the commercial production of industrial hemp in 55 Virginia jurisdictions. Farmers no longer have to be associated with a university research program to produce hemp, a plus for the agricultural community.

Regardless of the types of insurance they carry, however, businesses always want to save money on their insurance costs. One of the key ways they can do that is to conduct safety checks each quarter and “be mindful of any issues,” says Bucher. “Owners and management of companies need to emphasize safety from the top down. If management doesn’t believe in safety, then the employees won’t either.”

Looking ahead to 2020, Knise thinks “we will see more of the same. Insurance will remain widely available,” he says. “With interest rates remaining low, however, there will be a continued focus on underwriting profit, meaning insurers will continue to increase premiums.”

 

 

A strong defense

San Francisco-based cryptocurrency exchange Coinbase learned the effectiveness of its cybersecurity plan this May when it had to thwart off a cyberattack.

It was a well-thought-out attack, “potentially from a criminal organization,” says Joe DePlato, co-founder and chief technology officer for Charlottesville-based Bluestone Analytics, a cybersecurity consulting firm.

“It was a spear phishing attack,” he explains, a type of cybercrime in which the attacker emails a specific user base within an organization seeking potentially valuable access or information. “Nothing appeared malicious. When they opened the emails, they didn’t notice anything wrong.”

The opened emails allowed the attackers to leverage an unpatched vulnerability in the Firefox browser. Once the user clicked on a link, the intruders had access to the employee’s machine.

Firefox started another program that it should not have started. “That’s what alerted them to the issue,” says DePlato, allowing Coinbase to successfully defend against that attack. “What Coinbase did right was they took a security-first mindset to the way they deployed their security architecture,” DePlato says, noting that its employees were trained in best practices and the company had a dedicated security team.

Cyberattacks can happen to anyone at anytime. “All businesses are at risk,” says Stephanie Peters, president and CEO of the Virginia Society of Certified Public Accountants (VSCPA).

In a 2019 survey conducted by the VSCPA in partnership with Virginia Business to gain insight into current economic conditions, 100% of 282 Virginia CPAs who responded said cybersecurity is of significant or moderate concern to them.

And 18.79% of those CPAs said their businesses had been the victims of cybercrimes. Anecdotally, some said their clients had also suffered breaches, and many said they experience frequent attempted cyberattacks. “My monitoring system tells me that attempts are being made each hour of the day. It is only a matter of time that someone gets through. I try to limit what might be available,” one CPA wrote.

Risky to business
“CPAs are tuned into cybersecurity because of their clients,” Peters says. “A lot of the work they do is related to financial security. They have a heightened awareness of the risks that are out there for anyone.”

CPA firms aren’t at a greater risk than other companies, Peters says, but VSCPA members are “doing more to advise customers about these risks,” she says. “CPA firms can also go in and audit a company’s cybersecurity risk management program.”

The society conducted its own cybersecurity assessment, looking at all of the organization’s processes. “We made so many changes to how we do remote work,” Peters says. “Now when we go into the network, we use multifactor authentication security. We have at least two additional levels of security to get into our data.”

Employees are also trained on best practices. “A lot of small businesses don’t realize how much risk they have,” she says.

Computers and networks are getting attacked by malicious hackers at a rate of one attack every 39 seconds, according to a Clark Study at the University of Maryland. Most attacks (69%, per the Verizon Data Breach Investigations Report) are perpetrated by outsiders, while 34% involve internal hackers.

Most breaches (52%) in the report featured hacking, while 33% included social attacks, and 28% involved malware.

“We have seen an increase in cyberattacks and attempted cyberbreaches,” says Bartosz Wojszczyk, co-founder and CEO of SPARQ Global, a Virginia Beach-based cybersecurity firm. Damages from cybercrimes worldwide amounted to $600 billion in 2017 and it’s estimated to reach $6 trillion by 2021, he adds. “There is a growing intensity of cybercrime, and the resultant damages to companies and institutions, both private and public, will only escalate.”

There has been a large uptick in ransomware threats, as well as phishing attempts and compromised email accounts. “In both cases threat actors are financially motivated,” says DePlato. “We have seen a decrease in the overall cost of unlocking ransomware. Five years ago, you would hear about larger organizations compromised and [held ransom for] exorbitant fees. Now we are seeing many small organizations targeted” for less money each.

Earlier this year a mid-Atlantic organization’s computer systems were shut down for about two weeks while it was held hostage by a ransomware attack, DePlato says. “They didn’t have a dedicated security team or a user base with training,” he explains. “They didn’t realize the risks from a security perspective. They didn’t follow best practices.”

The organization had to rebuild from scratch. “You can imagine the cost,” he says, adding that if the right measures were in place, “they would have been able to successfully defend the attack.”
Industries frequently targeted by threat actors range from financial services and health care to public institutions and professional services firms. All are good targets because they contain “a treasure trove of personal information,” says Colleen Johnson, senior cybersecurity legal analyst at Suffolk-based cybersecurity firm Sera-Brynn.

One of the biggest threats to a company is an insider threat. An employee, “not necessarily for malicious intent but unknowingly, clicks on a link or email phishing attack,” says Anthony Russo, SPARQ Global’s chief information security officer.

Or sometimes, it’s because they mistakenly think they’re communicating with someone from within their organization. “A CFO, for instance, received a phone call from someone posing as the company’s CEO, asking for a money transfer,” Russo recalls. “The CFO ignored the controls.”

That’s why it’s critical for businesses to establish cybersecurity protocols and enforce the rules they put into place.

Cybersecurity needs to be a mindset, he adds. “That allows you to recognize new threats that are coming. There always needs to be a process. You have to advance your cybersecurity protections as technology advances.”

Putting the right measures in place
Businesses need to be proactive about cybersecurity. “We know that people don’t always do that,” says Wojszczyk. “Don’t skimp or save on cybersecurity protection. A successful cyberbreach can irreversibly impact its victims.”

Stealing or tampering with a company’s data and information can impact its performance and critical day-to-day operations. “Regardless of how small or big or what type of business, data security has to be from the top down,” Wojszczyk says. “It can’t be managed as an afterthought. It has to be strategic and it has to be part of the discussion.”

DePlato recommends that all businesses train employees on cybersecurity and follow best practices.

“You’ll also want to clean up your network,” DePlato says, using sophisticated antivirus and cybersecurity monitoring software developed by companies like Carbon Black or CrowdStrike.

He also recommends having a centralized logging location. “There are a number of different items that can compromise a firewall, network switches, wireless access points, servers, laptops and mobile devices,” DePlato says.

Each device by default logs what is going on in those systems to the device. “If we are doing an investigation and trying to determine point of detection, we go through log data,” DePlato says. “You want to have all your devices log to one location so your security team has everything in one place.”

Businesses also need to perform daily or weekly systems backups to a secure offsite server. “The best defense against ransomware is to have a robust backup system,” Russo says. “When we buy a house, we all buy the same thing first: homeowners’ insurance. We are protecting the asset against loss, with an ability to recover. The same thought is true in cybersecurity — protect your valuable data assets and have an ability to recover.”

Companies also need to be cognizant of their legal obligation regarding evolving cybersecurity laws. “On the legal side, you may be required to report an incident that you don’t know you are required to report,” Johnson says.

It’s also important for businesses to have an incident response plan in place, she adds. “Don’t wait until something happens.”

Solar farms are rising in Pittsylvania County

Pittsylvania County has a long history as an agricultural center, and farmers there, like others everywhere, are now looking for additional income. Many in Pittsylvania have applied for special-use permits for utility-scale solar farms, eight of which have been approved since 2017.

“The majority of those permits were granted in the last 12 months,” says County Administrator David Smitherman. A solar farm is a safe investment that “minimizes risk and guarantees returns,” he says. “A solar company will rent the land from 20 to 30 years.”

Pittsylvania County is a magnet for solar farm developers. It is Virginia’s largest county by landmass, with 969 square miles, and is well positioned to produce solar energy, says Jason Grey, Danville’s director of utilities.

Whitehorn Solar LLC is developing a 45-megawatt solar farm on 700 acres in Gretna. The solar farm, which is expected to begin operation next year, will power Amazon Web Services data centers.

Only one solar farm is currently operational in Pittsylvania: a 6-megawatt facility in Ringgold approved in 2016 that provides electricity for the city of Danville.

Aside from landowners earning income from solar farms, the county sees some financial benefits because the lower assessed agricultural land rate program switches to the regular property tax rate of 62 cents per 100 acres when land is leased for a solar project, notes Greg Sides, assistant county administrator for planning and development. “The solar company will also be charged a rollback tax for the previous five years.”

It’s not a windfall for localities, though, since solar companies pay just 20 cents on the dollar on a machine and tools tax, and once panels deteriorate over the years, their value depreciates.

The verdict is still out, says Smitherman, whether adding solar will be a net positive over the years for the county.”

So far, there hasn’t been any organized opposition or even concerns voiced by Pittsylvania residents, unlike in Culpeper County, where California solar developer BayWa faced fierce opposition from locals on environmental and property-rights grounds.

“Looking at it from a utility perspective, I don’t see a downside to solar right now,” says Grey. “At the end of the day that is why we do it — to drive our power cost down.”

Hershey boot camp gives new workers taste of success

At 20, Dalton Branch felt he wasn’t reaching his potential waiting tables at Applebee’s, so when a friend told him how much he had enjoyed The Hershey Co.’s boot camp at the Stuarts Draft plant, Branch thought he would give it a try.

“The classes were great life lessons,” says the Waynesboro High School graduate, now a temporary worker at the chocolate maker’s production line in Stuarts Draft.

Hershey’s boot camp is the brainchild of Debby Hopkins, chief workforce officer and program director at the Shenandoah Valley Workforce Development Board, which provides workforce services to prepare production workers for their new jobs.

“We give students examples of things that have happened that led to terminations and how to avoid them, and what specific behaviors will lead to a successful career at Hershey,” Hopkins says.

During two weeks of instruction this summer, Branch learned everything from how to operate power equipment to how to balance his budget. “I realized it would allow me to have a better lifestyle for myself and potentially give me a career in manufacturing,” he says.

The boot camp, which started last year with 11 participants, targets recent high school graduates and people who are underemployed, want to make a job change or have disabilities. Hopkins hopes to expand the program to other businesses.

Participants are hired and paid through the plant’s temporary labor contractor, System One. Graduates are first in line for full-time jobs, and seven people from the first boot camp in 2018 are now full-time workers at Hershey. From this year’s class in June, 24 out of 30 are still employed by System One.

“We wanted to find the best sources for our labor pool,” says Karen Van Curen, senior human resources manager for Hershey’s Stuarts Draft plant, and the company has embraced the program as it plans a major expansion in Stuarts Draft next year.

Right now, the local workforce is at 1,100 after 212 employees were hired in 2018. And the $104 million Reese’s Peanut Roasting Center of Excellence, Hershey’s advanced, high-tech peanut-roasting facility, is expected to come online around October 2020, creating 65 jobs, with the possibility of adding more later.

“Boot camp helped us realize there is a gap between a person who has been in manufacturing and one who hasn’t,” says Van Curen. “It’s quite a learning curve, and boot camp can soften that.”