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Northrop Grumman to establish $200M Waynesboro facility

Falls Church-based Fortune 500 defense contractor Northrop Grumman will invest more than $200 million to establish an advanced electronics manufacturing and testing facility in Waynesboro, creating an estimated 300 jobs over the next five years, Gov. Glenn Youngkin announced Tuesday.

“Northrop Grumman’s expanding Virginia footprint sends a powerful message that the commonwealth is a magnet for investment underpinned by a next-generation workforce,” Youngkin said in a statement. “This global leader’s cutting-edge facility in Waynesboro will provide job opportunities that attract and retain high-quality talent and create a transformational ripple effect for the entire region.”

The 315,000-square-foot building will be on Shenandoah Village Drive, and Pennsylvania-based Equus Capital Partners will be the project’s developer, according to the governor’s office. Construction will “begin soon,” according to a Northrop Grumman spokesperson. The company anticipates the building will open in 2025 and be ready for production in 2026. The facility jobs will be varied engineering and manufacturing roles, according to the spokesperson.

Northrop Grumman employs roughly 95,000 employees — 6,800 in Virginia — and reported $36.6 billion in 2022 revenue. The company ranked No. 413 on Fortune magazine’s Global 500 list for 2023, and No. 113 on its annual 1000 list of U.S. corporations for the year.

“This new facility will increase capacity to manufacture and test advanced electronics and mission solutions to meet our customers’ growing needs,” Kathy Warden, Northrop Grumman’s chair, CEO and president, said in a statement. “We are pleased to expand our technology presence in the commonwealth and look forward to welcoming more people to our mission-driven team.”

The Virginia Economic Development Partnership worked with the City of Waynesboro to secure the project for Virginia. Youngkin approved an $8.5 million grant from the Commonwealth’s Opportunity Fund to assist the city. The Virginia Talent Accelerator Program, a discretionary incentive program that provides free customizable workforce recruiting and training services for eligible businesses locating or expanding in Virginia, will support Northrop Grumman’s job creation. The program is a collaboration between VEDP and the Virginia Community College System.

Rockbridge tent manufacturer to expand, add 60 jobs

Natural Bridge-based fabric shelter systems manufacturer XFactor Solutions Global has leased 34,000 square feet to expand in Rockbridge County, with plans to create 60 jobs, Cushman & Wakefield | Thalhimer announced Thursday.

The company, which acquired the assets of Creative Tent International in October, will use the industrial space at 70 Douglas Way in Natural Bridge Station for light manufacturing and warehousing of large commercial-grade tents, according to Carmen Elliott with Cushman & Wakefield | Thalhimer, who handled the lease negotiations on behalf of XFS Global.

The new facility offers an expanded footprint and enhanced capabilities including large format welding, fabric sewing and cutting, metal, weld and fabrication and the ability to kit products for customer requirements according to XFS’ website.

The 60 jobs will include welders, sewers and general assembly workers. XFS Global has a 10-year lease on the industrial space.

XFS Global moved Creative Tent International manufacturing from Las Vegas to Natural Bridge Station.

“Our new Virginia headquarters brings us much closer to our customers, and our new facility will greatly enhance our manufacturing capabilities,” Paul Wilcox, vice president of business development and market growth, said in a statement. “Being strategically located near our customers means reduced lead times, improved service team response times and further alignment with our strategic partners, ultimately leading to new product offerings, operational efficiencies and increased value for our commercial customers and their businesses.”

XFS Global serves military, government, commercial and industrial clients.

Democrats sweep Va. General Assembly

Updated Nov. 8

Democrats regained control of the Virginia Senate and the House of Delegates in Tuesday’s elections, likely putting a damper on Republican Gov. Glenn Youngkin’s legislative agenda and potential 2024 presidential aspirations. As of 11:45 p.m. Tuesday, according to the Virginia Public Access Project, Democrats won 21 out of 40 seats in the state Senate and 51 seats in the House, which has been held by Republicans for the past two years.

This electoral outcome will likely prevent Youngkin from passing most of his agenda, including placing a 15-week limit on abortions, which was a significant issue for many voters, particularly Democrats and women. It may also at least temporarily lessen his national standing, as he failed to deliver a red wave as he did during his 2021 election, which saw Republicans elected to the state’s top three offices and the GOP take control of the House.

The election also sets up Virginia House Minority Leader Don Scott Jr. of Portsmouth to become the first Black speaker of the House in the Virginia legislature’s 400-plus-year history, replacing GOP Speaker Todd Gilbert, who has presided over the House of Delegates since January 2022.

Virginia’s blue wave followed a national trend, as Ohio voters approved ballot measures guaranteeing abortion access and legalizing recreational marijuana use. Meanwhile, in Kentucky, voters granted a second term to Democratic Gov. Andy Beshear, who had campaigned on making Kentucky’s abortion laws less restrictive.

Republicans won 19 Virginia State Senate seats. The Associated Press called a Williamsburg-area nailbiter at 2:15 p.m. Wednesday in favor of GOP challenger Danny Diggs, who defeated Democratic incumbent Monty Mason. The final count saw Diggs with 32,764 votes, or 50.69% of the total, and Mason with 31,742 votes.

In the House, Republicans held 48 seats as of 2:45 p.m. Wednesday, with one race not yet called. Republican Del. Kim Taylor’s race against Democrat Kimberly Pope Adams in Petersburg and Dinwiddie County was too close to call, with Taylor ahead with 50.23% of the vote and less than a 200-vote margin over Adams. Taylor declared victory late Tuesday, but Adams had not conceded as of Wednesday afternoon.

Two other close House races went in Republicans’ favor: District 57’s contest in Henrico County between Democrat Susanna Gibson and Republican David Owen, a race that received national press following revelations that Gibson had performed sex acts with her husband on a live streaming pornography website while soliciting tips from viewers. Owen won with 51.16% of the vote, gaining 17,878 votes to Gibson’s 16,912. In James City County and Williamsburg, Republican Del. Amanda Batten won a third term with 51.93% of the vote over Democrat Jessica Anderson.

Voters went to the polls Tuesday to fill all 140 General Assembly seats. Many candidates were new faces or, at least, less experienced than those who previously filled the legislature, thanks to the December 2021 redistricting process, which redrew political districts without prioritizing the residential addresses of incumbents. That led to an unprecedented wave of retirements and some primary defeats of longtime legislators.

Blue wave

In several of the most hotly contested races, Democrats came up victorious Tuesday night.

In Loudoun and Fauquier counties, Democrat Russet Perry, a former CIA officer and prosecutor, won Senate District 31 with 52.5% of the vote as of 10:28 p.m. Tuesday, according to unofficial results from the Virginia Department of Elections. She defeated Republican Juan Pablo Segura, a health care tech entrepreneur who founded a local doughnut chain. Segura received 40,835 votes compared to Perry’s 45,350 votes, and the Associated Press estimated 92% of votes had been counted by 10:25 p.m., when it called the race.

Segura conceded about an hour later. “We were outspent but not outworked,” he said in a statement. “We knocked on more than 100,000 doors and talked to many, many thousands of voters about their hopes, dreams and concerns. … I also want to congratulate Russet Perry on a hard-fought race, and I wish her the best of luck in representing this special place. Lessons are learned in losses, but I heard very clearly the deep desire from so many in this district for better representation from their government.”

Both were first-time candidates, and Perry outpaced all other state legislature candidates in fundraising more than $6 million by Oct. 31, while Segura raised a bit more than $5 million.

Del. Danica Roem, another Democratic delegate seeking a Senate seat, beat Republican candidate Bill Woolf for the 30th District seat in Manassas and part of Prince William County with 51.51% of the vote. Roem, who became the nation’s first openly transgender state lawmaker upon her 2017 election to the House of Delegates, won 29,713 votes to Woolf’s 27,794 as of 10:13 p.m., according to unofficial results from the Virginia Department of Elections. A former journalist, Roem currently represents House District 13, which includes Manassas Park and part of Prince William County. Woolf was formerly a detective with the Fairfax County Police Department.

“I’m grateful the people of Virginia’s 30th Senate District elected me to continue representing my lifelong home of western Prince William County and greater Manassas,” Roem said in a statement. “The voters have shown they want a leader who will prioritize fixing roads, feeding kids and protecting our land instead of stigmatizing trans kids or taking away your civil rights.”

In another key seat, Democratic Del. Schuyler VanValkenburg won Senate District 16 in western Henrico County with 52.69% of the vote as of 9:38 p.m. Tuesday, according to unofficial results from the Virginia Department of Elections. The Associated Press estimated more than 95% of votes had been counted by 9:33 p.m.

VanValkenburg received 27,469 votes to Republican Sen. Siobhan Dunnavant’s 24,544 as of 9:43 p.m. Although the incumbent, Dunnavant was redistricted into a slightly bluer district than her previous district, which had included part of Hanover County. The race was considered a key contest to watch this year and saw some of the largest fundraising among Virginia’s legislative races.

The Associated Press called House District 58 race in western Henrico County in favor of the Democratic two-term incumbent Del. Rodney Willett, a tech consultant and small business entrepreneur, who took 11,897 of votes, or 53.1%, over Republican challenger Riley Shaia, a physical therapist, who won 10,496 votes, or 46.9%. AP called the race with 95% of votes counted.
Off-off election year

Numerous incumbents retired or lost primaries after being drawn into the same districts as other incumbents. Particularly in the state Senate, longtime party leaders chose to bow out rather than face a primary battle, leaving younger and less moderate candidates running for office this fall.

Although 2023 was, at least in name, an off-off election year with no presidential or statewide races topping the ballots, legislative candidates in competitive districts saw a massive influx of money and heated rhetoric from both parties. High stakes, including Virginia’s status as the only Southern state without significant abortion restrictions, were riding on whether either party can take control of the commonwealth’s legislature, which is currently split, with Republicans running the House of Delegates and Democrats controlling the state Senate.

Although his name wasn’t on ballots, Youngkin’s presidential hopes also rested on Tuesday’s results, drawing national attention. If Republicans had won back control of the General Assembly, Youngkin could have mounted a plausible last-minute campaign for the 2024 GOP presidential nomination, politicos forecast. But with Democrats regaining power of just one of the legislative bodies, Youngkin will be unlikely to pass much of his stated agenda through the General Assembly, including a ban on abortions after 15 weeks and tax cuts for corporations, with the blue wave likely putting any presidential ambitions he has on hold, at least for 2024.

In a press conference Wednesday, Youngkin called the outcome “a razor-thin set of decisions” made by voters and noted the commonwealth’s recent history of changes in party control, downplaying Republicans’ disappointing results. “I think what that reflects is that we are a state that is very comfortable working together, working across party lines to get things done.”

In response to a reporter’s question about his presidential ambitions, Youngkin was predictably coy. “I have answered this question the same way for a long time. I am focused on Virginia. I have been in Virginia. My name is not on the ballot in New Hampshire. I have not been in Iowa. I am not in South Carolina. I am in Virginia, and I look forward to staying focused on Virginia, just like I have been.”

With issues such as parental influence in schools, reproductive rights, cannabis retail sales and corporate tax cuts in the balance, Democratic- and Republican-affiliated PACs sank millions into legislative campaigns this year. According to an Associated Press story, money raised by Virginia State Senate and House of Delegates candidates this year eclipsed totals from 2019. As of early November, Senate candidates had raised $80.8 million, compared to $53.6 million at the same point in 2019, and House candidates raised $77.5 million, compared to $67.5 million in 2019.

Both Republicans and Democrats emphasized the historic nature of the election, which could determine the state’s abortion, clean energy, education and tax policies for decades to come — although the parties differ widely on their overall goals.

Youngkin and state Republicans advocated to enact limits on abortions after 15 weeks, a rollback of Virginia’s current laws allowing abortions up to 26 weeks, although, in the third trimester, three doctors must sign off on the procedure as medically necessary. Democrats, meanwhile, have argued that the 15-week limit, posed as a reasonable compromise by Republicans, would be the first of many restrictions on abortion following the U.S. Supreme Court’s overturning of Roe v. Wade last year.

Parents’ involvement in their children’s K-12 education remained a hot topic, carrying on from Youngkin’s winning gambit in 2021’s gubernatorial race, when he focused attention on a Loudoun County sexual assault case, in which a 14-year-old male student sexually assaulted a female student in a school restroom and then was allowed to transfer to another high school, where he abducted and assaulted another student. The teen was later convicted in juvenile court, and in September, Youngkin pardoned one of the victims’ fathers, who had been arrested and charged with obstruction of justice and disorderly conduct at a county school board meeting.

Republican state Sen. Siobhan Dunnavant greets voters at a Henrico County polling place on Nov. 7, 2023. Photo by Katherine Schulte

Last week, the governor issued an executive order mandating that school districts inform parents within 24 hours of any overdoses involving their schools, after Loudoun County Public Schools waited more than 20 days to report that nine high school students had overdosed on pills suspected of containing fentanyl. Youngkin also has ordered schools to inform parents if their children use a different gender identity at school than is their assigned sex. He has also required that students participate in sports and use bathrooms based on their assigned sex, a mandate some school systems have refused to enforce — particularly in Northern Virginia.

A Washington Post-George Mason University Schar School of Policy and Government poll, conducted Oct. 11-16, showed a divided commonwealth going into the elections, with 47% of registered voters saying they would vote for a generic Democrat for delegate, and 43% for a Republican. Meanwhile, 70% of voters said education was the most important issue for them this year, followed by the economy at 68% and abortion rights at 60%.

According to VPAP, 789,848 people voted early across the state as of Monday, with Democratic voters making up about 60% of early voters, compared with about 40% for Republicans.

Virginia Department of Elections Commissioner Susan Beals said Tuesday afternoon that some localities’ ballots were longer than usual, with county supervisors, sheriffs and other local offices included, as well as state legislators. There was an issue with poll books reported at some Chesterfield County locations — but those were resolved by early afternoon, Beals said. At Williamsburg’s Matoaca precinct, where locally registered William & Mary students can vote, the Richmond Times-Dispatch reported “long lines all day.”

In Loudoun County, during Tuesday’s lunch hour at the town’s Ida Lee Park Recreation Center, West Leesburg voters turned out in a steady stream, which precinct chief Kevin Smith described as “one in, one out.” Morning was busiest, and 536 voters, out of a district of about 3,100, had cast their ballots by a little after 12:30 p.m., Smith said. Voters reported no issues or problems with machines, and the atmosphere outside, where the Loudoun County Republican Party had set up a tent to shade volunteers from the sun, was congenial as volunteers from either side of the aisle offered up sample ballots to would-be voters and shared occasional, friendly conversation across the sidewalk from folding chairs.
Steven Ritz, a retired Navy lieutenant commander voting at the recreation center, said he’s ordinarily a Republican but felt the party has strayed from the one he had known in the past, which he deemed “fiscally conservative, not rabid.” While he likened both parties to “monkeys flinging feces at each other,” he voted for Russet Perry, the Democrat who won the 31st District Senate seat. Perry, a former CIA officer who has also served as a county prosecutor, defeated Leesburg health-tech entrepreneur and District Donut co-founder Juan Pablo Segura in a race that focused largely on abortion and crime. Perry cast Segura in television ads as a “MAGA Republican” who wants to ban abortions; Segura volleyed back, casting his opponent as soft on crime and backed by “defund the police” groups.
Ritz voted with his gut. “Juan hasn’t been here in Leesburg that long. It looked to me opportunistic,” he said of Segura’s candidacy.
Other voters said they turned out particularly because of the abortion question. Shaun Meredith and his daughter, Rachel Meredith, said they voted for Perry. “Every woman should have a choice for her own body, to make that decision,” Rachel Meredith said.

In Virginia Senate District 16 in western Henrico County, voter turnout was steady overall with slight fluctuations throughout the morning in at least two precincts.

At about 12:50 p.m., the Echo Lake Elementary School polling location in the Coalpit precinct in Glen Allen had received 791 votes. “It’s been steady since we opened. There’s some periods where … we had a good little crowd for a while,” said Maurice Talley, a volunteer poll worker at the elementary school.

Incumbent Republican state Sen. Siobhan Dunnavant stopped at the school to greet voters as she campaigned at multiple polling locations during her ultimately unsuccessful battle against her Democratic challenger, state Del. Schuyler VanValkenburg. Voters who recognized Dunnavant or her name after an introduction were enthusiastic, she said. “They’re excited to be turned out. They say, ‘You’ve got this. This is great,’” she said.

Angie Madison, a Glen Allen Pilates instructor who said she isn’t loyal to one party and goes back and forth depending on the issues, said she voted for Democratic candidates Tuesday. “I’m trying to do my part by voting Democratic and trying to vote for abortion rights and all that stuff,” she said. “It feels like we’re going back in time versus forward in time, so I want to go forward in time.”

High stakes, high rollers

According to VPAP, the following state Senate candidates raised the most money, as of Oct. 31:

  • Democrat Russet Perry — $6,071,414
  • Republican Sen. Siobhan Dunnavant — $5,104,711
  • Democrat Del. Schuyler VanValkenburg — $5,069,960
  • Democrat Sen. Monty Mason — $5,043,533
  • Republican Juan Pablo Segura — $5,003,665

Among delegate candidates, Democrats dominated fundraising:

  • Democrat Joshua Cole — $3,816,605
  • Democrat Michael Feggans — $3,255,257
  • Democrat Josh Thomas — $3,198,811
  • Republican Del. Karen Greenhalgh — $2,778,182
  • Democrat Kimberly Pope Adams — $2,706,971

Not surprisingly, familiar names were among the biggest donors in the elections. The Virginia Senate Democratic Caucus donated $7.5 million for Democratic candidates, while Youngkin’s Spirit of Virginia PAC doled out $4.8 million to GOP candidates. Dominion Energy and the Clean Virginia Fund — a fund created by Charlottesville millionaire Michael Bills to dilute the political influence of Dominion — gave just over $4 million each to Senate candidates this year.

In the House races, the House Democratic Caucus donated $10.8 million, while the Republican Commonwealth Leadership PAC gave $4.1 million. Dominion and the Clean Virginia Fund made donations of $3.8 million and $3.6 million, respectively.

For those watching broadcast television in the days before the elections, negative ads ran thick and fast in competitive districts, and Youngkin blazed a trail across the state to get out Republican voters to the polls for early voting in October and early November. Democrats, meanwhile, called on Maryland Gov. Wes Moore, Department of Transportation Secretary Pete Buttigieg and gun-control advocate David Hogg to get out the vote.

In Richmond’s casino battle redux, Churchill Downs and Urban One, corporate backers of the proposed $562 million Richmond Grand Resort & Casino, sank more than $10 million into their campaign to pass the city’s second casino referendum, almost four times the amount spent in 2021 and more than for any individual candidate running this year. Ultimately, the second referendum failed by a 58% to 42% margin.

SWVA clean energy development could draw $8.5B in investments

Wise County and neighboring localities in Southwest Virginia may become home to a massive clean energy development that could attract up to $8.25 billion in capital investments, Gov. Glenn Youngkin announced Wednesday.

An agreement between Energy DELTA Lab, Dallas-based Fortune 100 energy company Energy Transfer and Wise County will involve the development of 65,000 acres of former coal mining land for “all-of-the-above” energy technology — including natural gas, nuclear, renewable energy and other emerging energy sources. That’s in alignment with the Youngkin-supported Virginia Energy Plan, which aims to fulfill the Virginia Clean Economy Act’s mandates by including a mix of energy sources beyond wind, solar and battery storage supported by Virginia Democrats.

The 2022 Virginia Energy Plan launched the nonprofit Energy DELTA Lab, which will be the primary developer of the Southwest project, and more than a dozen projects are under consideration for the land — they total $8.25 billion in potential private capital investment, according to the governor’s office, and could create 1,650 jobs and generate nearly 1 gigawatt of power. By contrast, Dominion Energy’s Coastal Virginia Offshore Wind project is expected to produce 2.6 gigawatts of power.

Energy Transfer owns the 65,000 acres, which is primarily in Wise County, and owns surface and subsurface rights, while Penn Virginia Operating Co. manages Energy Transfer’s land. Neighboring Lee, Scott and Dickenson counties and the city of Norton also could see development and have projects undergoing due diligence with the DELTA Lab.

Development could include wind, solar, nuclear, hydrogen and pumped storage hydro, as well as energy storage technologies.

“The commonwealth’s power demand is skyrocketing, and now is the time to make strategic investments in energy infrastructure to meet our growing needs,” Youngkin said in a statement. “This agreement will make Virginia energy more reliable, affordable and clean while transforming Southwest Virginia into a hub for innovation.”

The partnership plans to develop energy projects at scale, with its primary goals being creating jobs and local tax revenues. Other goals include creating career pathways for the regional workforce and manufacturing opportunities.

Readying industrial land

The Energy DELTA Lab is currently developing three industrial sites in Wise County, including on land owned by Energy Transfer: the 300-acre “Meade Fork” site, the 2,000-acre “Junction” site and the 4,000-acre “Bullitt” site.

The Meade Fork site is located near the town of Pound, and the Energy DELTA Lab is working with The Nature Conservancy and Sun Tribe Solar to locate a solar energy facility on it. The project received a $975,000 grant from the U.S. Office of Surface Mining Reclamation and Enforcement’s Abandoned Mine Land Economic Revitalization program, administered by the Virginia Department of Energy.

The Junction site, located near the town of Appalachia, will be a mixed-use development pilot combining four land uses on multiple sites of a singular property, including industrial, clean energy generation, agriculture and conservation uses. The initial focus is developing a 350-acre industrial site for a clean energy project.

The Bullitt site on the border of Lee County could hold multiple industrial projects with adjacent energy sites to power on-site demand, and the complex is situated over abandoned mines that contain nearly 10 billion gallons of water.

The team will develop the Data Center Ridge site on the Bullitt site, converting a 400-acre previously mined property to a 1-gigawatt, multitenant data center campus that will use the planned adjacent clean energy developments.

The lab’s “Oasis Mine-Based Water Cooling System,” an HVAC closed-loop water cooling system that uses water below 55 degrees Fahrenheit in underground mine cavities, can reduce energy requirements and costs for data center cooling. Data Center Ridge has a single deposit of nearly 10 billion gallons of naturally replenishing cold water.

The data center model is based on a 36-megawatt facility that would be owned and operated by the company it supports, such as Amazon Web Services, Alphabet or Microsoft. The 250,000-square-foot model has a raised floor space of 150,000 square feet to house IT equipment and servers, with remaining building space holding office space, telecom equipment, electrical/mechanical rooms, shipping/receiving areas and security.

For Wise County, one 36-megawatt facility is estimated to create $15.7 million in real estate and property tax revenues over the first five years of operation, support 2,048 jobs during the 18-month construction period, and create 40 data center jobs and support 59 additional jobs once data center operations begin, according to a Mangum Economics analysis.

“This is opening up land that otherwise would not be developed,” said Will Payne, managing partner of Coalfield Strategies, director of InvestSWVA and adviser to the Energy DELTA Lab. “That’s a huge game changer for them and their own development and the surrounding area.”

Energy Transfer is the largest operator of natural gas pipelines in the U.S. by revenue, according to Fortune, and reported $89.9 billion in 2022 revenue.

Energy DELTA (Discovery, Education, Learning and Technology Accelerator) Lab is a 501(c)3 nonprofit focused on deploying new and clean energy technologies to diversify Southwest Virginia’s economy and provide energy companies speed to market with testing and project development. The lab is a collaborative effort of energy industry companies, electric utilities, business development initiative InvestSWVA, Southwest Virginia Energy Research and Development Authority and the Virginia Department of Energy.

Food/bev distributor opens $275M Caroline County center

Food and beverage distributor World Class Distribution has opened its nearly finished $275 million, 1.2 million-square-foot distribution center in Caroline County with 400 employees, the county’s board of supervisors announced Tuesday.

Gov. Glenn Youngkin initially announced the project in November 2022, at which time WCD expected to add 745 jobs. The company now plans to hire 1,000 employees, which would make it the largest employer in Caroline County, according to a news release.

“The opening of World Class Distribution is another step forward for the logistics industry in the commonwealth, one of North America’s premier supply chain destinations,” Youngkin said in a statement. “With plans to hire 1,000 employees, the company is well on its way and already providing opportunities for hardworking families in Caroline County.”

The 400 employees the company has hired so far are working on-site in the Caroline 95 Logistics Park in Ruther Glen while the remaining sections of the building’s interior are completed.

“World Class Distribution is another major new business in Caroline, hiring more citizens and creating even greater revenue for the county,” Caroline County Board of Supervisors Chairman Floyd Thomas said in a statement. “This is one of the businesses, along with … M.C. Dean’s 169,000-square-foot expansion, the Lingerfelt 325,000-square-foot building in Carmel Church and the $6 billion Amazon data center project near Thornburg that is making 2023 a banner development year for Caroline.”

Founded in 2009, World Class Distribution is a subsidiary of Tact Holding. It distributes food and beverage products, including canned foods, dry foods, candy, grocery, beer and wine, frozen foods and other refrigerated products. WCD manages 11 distribution centers throughout the country and has more than 4,500 employees in eight states.

The next frontier

You come down with coldlike symptoms. Flu season is here, and a new COVID subvariant is circulating. As the illness lingers, you question whether you should see a doctor.

Imagine putting your symptoms into a chatbot connected to your doctor’s office or health system that can retrieve your medical records, evaluate your information and recommend next steps.

“It could make recommendations on … should you be seen by one of our providers in the emergency room? Should you have a virtual visit with a provider? Should you have just a conversation with a triage nurse? Or do you need to schedule an appointment with a provider?” says Dr. Steve Morgan, senior vice president and chief medical information officer at Roanoke-based health system Carilion Clinic.

Such a scenario isn’t science fiction — it exists now, through artificial intelligence-powered tools like Microsoft’s Azure Health Bot. 

“Although we don’t have it now, we’re building the infrastructure to be able to employ that type of technology,” Morgan says. Carilion has already embraced other AI software, like a dictation system for medical notes.

One year after ChatGPT came on the scene, redefining expectations for AI capabilities, industries have already begun adopting AI chatbots in varying forms, including creating their own models. In this Wild West of rapidly developing tech, companies’ workforce training methods range widely, from encouraging employee exploration to structuring rollouts.

Generative AI tools like ChatGPT — AI platforms used to synthesize new data, rather than just analyze data as AI has been traditionally designed to do — are built on large language models (LLMs) that are essentially “glorified sentence completion tools,” says Naren Ramakrishnan, the Virginia Tech Thomas L. Phillips Professor of Engineering and director of Tech’s Sanghani Center for Artificial Intelligence and Data Analytics.

“They sound so realistic and so compelling because they have been trained or learning on a ridiculous amount of data,” enabling the AI engines to learn which words make sense in context, he explains.

OpenAI’s ChatGPT became a household word shortly after OpenAI released a demo of the conversational AI platform on Nov. 30, 2022. ChatGPT is capable of performing many of the same tasks as human knowledge workers — ranging from drafting emails, business letters, reports and marketing materials to performing paralegal duties, writing computer code, putting data into spreadsheets and analyzing large amounts of data — and it can produce finished work in as little as one second to a few minutes, depending on length and complexity. In March, OpenAI released an updated model, ChatGPT-4, available to subscribers. GPT-4 scored better than 90% of human test-takers on the Uniform Bar Exam, the standardized bar exam for U.S. attorneys.

Generative AI has garnered huge investments. Microsoft has reportedly invested $13 billion in OpenAI since 2019, and Amazon announced in September that it would invest up to $4 billion in Anthropic, an OpenAI rival that has also received $300 million in funding from Google.

In a survey of 1,325 CEOs released in early October by KPMG, 72% of U.S. CEOs deemed generative AI as “a top investment priority,” and 62% expect to see a return on their investment in the tech within three to five years.

Generative AI is developing at a blistering pace. On Sept. 25, OpenAI released a version of ChatGPT that can listen and speak aloud. It’s also able to respond to images.

AI is already changing the work landscape, says Sharon Nelson, president of Fairfax-based cybersecurity and IT firm Sensei Enterprises. “It’s a bolt of lightning. … We’re seeing it go at the speed of light, and I can only imagine that it will go faster still.”

McGuireWoods is providing training on AI basics, ethical use and prompt engineering, says Peter Geovanes, the firm’s chief innovation and AI officer. Photo courtesy McGuireWoods/AI background illustration by Virginia Business staff

Power players

As the tech has quickly progressed, large Virginia companies have formally adopted AI tools and are creating standard AI training policies and processes for their employees.

Reston-based Fortune 500 tech contractor Leidos is providing varying levels of training for employees based on their needs, ranging from those who need to build awareness of AI to subject matter experts. Leidos builds curricula with a mix of external courses from suppliers like Coursera and in-house content, says deputy chief technology officer, Doug Jones.

Like many companies, Leidos is creating an internal AI chatbot, although the company also plans to offer it to customers. The chatbot will focus on IT and software questions, allowing workers to search for answers specific to the firm.

Businesses with troves of documents can easily adapt an LLM to be specific to their documents and processes, Ramakrishnan says: “I’m noticing everybody wants to create their own LLM that’s specific to them that they can control. Because they certainly do not want to send their data out to OpenAI.” Because ChatGPT learns from its interactions with humans, information entered into the tool could be shared with another user.

Businesses are also taking advantage of generative AI tools built specifically for their industries.

Virginia’s largest law firm, Richmond-based McGuireWoods, is beginning to use CoCounsel, an AI tool designed for attorneys and built on GPT-4 that should allow attorneys to enter client data securely in the near future. Thomson Reuters acquired CoCounsel’s developer, Casetext, in April for $650 million in cash.

CoCounsel has a range of uses, like drafting a discovery response or helping an attorney brainstorm questions for a specific deposition. An attorney preparing to depose an expert witness could feed the tool the expert’s published papers and ask it to summarize them or ask it whether the expert has ever taken a position on a particular subject in them, explains McGuireWoods Managing Partner Tracy Walker.

A widening reach

ChatGPT isn’t always a reliable source, as it sometimes can fabricate detailed answers, a phenomenon referred to as “hallucinations.” One attention-grabbing misuse of ChatGPT that demonstrated this problem occurred when lawyers representing a client in a personal injury case against Avianca Airlines cited six fabricated cases as legal precedent, based on research using ChatGPT. A federal judge fined the firm — Levidow, Levidow & Oberman — and two lawyers $5,000 apiece.

Walker stresses that responsible attorneys will look up and read cases cited by an AI chatbot, but CoCounsel also provides a safeguard, says Peter Geovanes, McGuireWoods’ chief innovation and AI officer: It’s been instructed not to provide an answer if it does not know it.

McGuireWoods is taking a two-phased approach to CoCounsel’s rollout. The first phase, which started in September and is running through the end of the year, is a pilot program with about 40 attorneys. While Casetext completes its security review of CoCounsel, McGuireWoods’ pilot group is using only public data to test hypothetical uses of the tool. Starting in early 2024, McGuireWoods’ phase two testing will likely expand to about 100 attorneys.

In the meantime, Geovanes is leading foundational training about generative AI. The firm’s first brown bag webinar session was set for Oct. 17. Although the curriculum is designed for attorneys, recordings will be available for any interested employee. McGuireWoods also plans to offer outside courses about the responsible and ethical use of generative AI.

For attorneys selected for the pilot program, the firm will also offer specialized training from Casetext on “prompt engineering” — how to phrase questions to the chatbot to get the desired responses.

In Roanoke and the New River Valley, Carilion is preparing to pilot a new layer of an existing AI-powered transcription tool built for clinicians. The system has used Nuance’s Dragon Medical One, which transcribes clinicians’ notes as they speak, for “a number of years,” Morgan says.

Microsoft purchased Nuance for $19.7 billion in March 2022. In March 2023, Nuance launched Dragon Ambient eXperience (DAX) Express (now DAX Copilot), which is based on GPT-4. It listens to a clinician-patient conversation and drafts clinical notes seconds after the appointment. Morgan hopes to begin piloting DAX in the first quarter of 2024. Because they’ve used Dragon, practitioners likely won’t need much training to adjust to DAX, he says.

Additionally, Carilion is participating in a pilot test of an AI component in the MyChart patient portal offered by Carilion’s electronic medical records vendor, Epic. The AI tool is designed to draft responses to patient questions sent through the portal, taking into account a patient’s medications and medical history. Six Carilion practitioners are participating in the pilot, which started in September, receiving on-the-fly training from Epic and providing feedback.

Examining new terrain

Smaller Virginia companies with fewer resources seem to have taken a more cowboy approach to the new AI frontier, setting ground rules before encouraging employees to explore generative AI tools on their own.

Will Melton, president and CEO of Richmond-based digital marketing agency Xponent21, is also leading a regional work group focused on preparing Richmond’s workforce for AI. Xponent21 initially used Jasper, an AI software tool for writing and marketing, but the firm now uses ChatGPT for tasks like information analysis and developing initial copy, which then goes through human editors.

“I think that the biggest thing that these tools give us is freeing up time that is … spent on monotonous activities that don’t have a lot of value,” like helping employees spend less time writing social media posts or blogs and more time speaking with clients, he says.

Ben Madden, board president for the Northern Virginia Society for Human Resource Management, has begun using ChatGPT in his HR consulting work, asking the AI tool to draft job descriptions and synthesize information for presentations and policy documents.

“Having it be able to do tasks that may take longer without having the support of supercomputers behind it is where I continue to probably see it being used and being able to make my life easier as either a business owner or even for my clients,” says Madden, whose one-person consultancy, HR Action, is based in Arlington County.

Another Richmond-based business beginning to adopt AI is accounting firm WellsColeman, which updated its internet acceptable use policy to include guardrails for AI and ChatGPT usage, like prohibiting employees from entering client data into the platform.

Nevertheless, the firm has encouraged its employees to get familiar with ChatGPT, says Managing Partner George Forsythe. In full firm meetings, leadership will sometimes demonstrate how they’ve recently used ChatGPT, and staff can ask questions or discuss possible uses.

“We’re using [ChatGPT] as an initial step in gaining familiarity with areas that are not part of our everyday expertise. It’s an easy way to get a broad brush on any topic area,” says Forsythe. After verifying the information given, staff can use it as a starting point for their research.

Forsythe has consulted ChatGPT with general management questions like how to communicate with an employee having leadership challenges and has also used it as a marketing aid.

“When it comes to selling our services, I’ve asked it to put together a proposal and make it intriguing and have a hook,” Forsythe says, and he’s been pleased with the results.

Similarly, Winchester-based accounting firm YHB is using generative AI tools for marketing questions that aren’t firm-specific.

“Our team uses [ChatGPT] a ton to help understand and interpret tax laws and information like that,” says Jeremy Shen, YHB’s chief marketing officer. They’ll also ask the chatbot if a website post will have a high search engine optimization score.

The firm is working on selecting an AI tool to formally implement, whether ChatGPT Enterprise, Microsoft’s Copilot or another. For now, “we just kind of said, ‘We know you’re using it. We know people are using it. Here’s some guardrails … but discover and let us know if you come up with something useful,’” Shen says.

Carilion Clinic is participating in a pilot for an AI feature being tested by the health system’s electronic medical records vendor, says Dr. Steve Morgan, Carilion’s senior vice president and chief medical information officer. Photo by Don Petersen/AI background illustration by Virginia Business staff

The new steam engine?

Out of 31,000 people surveyed across 31 countries, 49% are worried that AI will replace their jobs, according to a Microsoft survey released in May. That same month, a CNBC/SurveyMonkey poll found that 24% of almost 9,000 U.S. workers surveyed are worried that AI will make their jobs obsolete.

It’s not an unfounded fear. In 10 years, AI automation could replace about 300 million full-time jobs, according to a March report from Goldman Sachs researchers, but it could also raise the global GDP by 7%, or nearly $7 trillion. In May, IBM CEO Arvind Krishna said AI could replace up to 7,800 jobs — 30% of the company’s back-office workers — over five years.

A refrain commonly heard among AI’s proponents is, “AI won’t take your job, but someone who knows how to use AI will.” It’s paraphrased from a statement made by economist Richard Baldwin, a professor at the International Institute for Management Development, during the 2023 World Economic Forum’s Growth Summit.

“I see some paralegals perhaps being replaced by AI, and only some, because there are some paralegals that have other advanced skills as well,” says Nelson with Sensei Enterprises, who is also an attorney and former president of the Virginia State Bar. Lawyers who do simpler tasks like drafting wills or divorce contracts might be vulnerable to being supplanted by AI, too, she says.

Comparisons to prior technological advances abound. “When the world switched from horse-drawn transport to motor vehicles, jobs for stablehands disappeared, but jobs for auto mechanics took their place,” Federal Reserve Board of Governors member Lisa D. Cook said in a September speech at a National Bureau of Economic Research conference. Workers’ adaptability will depend on their “portfolio of skills,” she said.

Supporters say AI will make employees more productive, which can help industries weather labor shortages and let workers put aside rote tasks to focus on higher-level work, which could increase their job satisfaction.

In the world of government contracting, the constraints on some workers, like getting security clearances and working in-person in a classified environment, can make hiring difficult, says Leidos’ Jones.

“We actually find sometimes we can take some of the tasks that are not as engaging for our own employees [like data entry] … off their plate, and they can spend more time doing the things that are really powerful and unique to humans,” he says.

Forsythe also sees AI as an aid to staff: “Right now, the war is for talent. … If we can’t find more people, one of the things we can do is try to change their roles … and support them in manners that make their jobs easier, not so that way they’ll do more work, but so that way they remain part of the firm and don’t feel overburdened,” he says.

Or it could just improve workers’ quality of life. In an early October interview with Bloomberg Television, JPMorgan Chase CEO Jamie Dimon predicted that time savings from AI could result in a universal 3.5-day workweek — though he also said that he anticipates that AI will result in lost jobs.

While AI will eliminate jobs, it will also create them, experts say. The Washington, D.C., region had almost 1,800 listings for AI-related jobs at the end of August, according to Jones Lang LaSalle. Leidos and Boeing were among the companies with the most openings for AI positions.

New roles are emerging, like “prompt engineers” who develop and refine prompts or queries for AI tools to get the most valuable and appropriate responses. At the end of September, OpenAI rival Anthropic was seeking a “prompt engineer and librarian” hybrid position in San Francisco with a salary range of $250,000 to $375,000.

“The people who study the future of work, they say that certain jobs will go away,” Ramakrishnan says, “… but then there will probably be new jobs created that we don’t know yet.

GDIT lands $450M CMS contract

Falls Church-based federal contractor General Dynamics Information Technology won a $450 million Centers for Medicare & Medicaid Services contract, the General Dynamics subsidiary announced Thursday.

Under the contract, GDIT will continue operating and modernizing CMS’ Healthcare Integrated General Ledger Accounting System (HIGLAS), an accounting system that standardizes federal financial accounting for the centers’ programs. HIGLAS processes approximately 4.5 million Medicare claims daily and more than $2 trillion in payments annually, supporting more than 147 million Medicare and Medicaid beneficiaries, according to a news release.

GDIT has worked with CMS for more than 40 years.

“Our continued support of HIGLAS enables us to further advance CMS’ commitment to improve the quality, efficiency and fiscal soundness of its most mission-critical systems,” Kamal Narang, GDIT vice president and general manager for its federal health sector, said in a statement.

GDIT will also manage the day-to-day operation of HIGLAS and use artificial intelligence/machine learning to find potential anomalies in accounting data. The contractor will also host the system’s primary data processing and disaster recovery systems.

The contract has an eight-month base period with seven option years.

GDIT is a subsidiary of Reston-based Fortune 500 aerospace and defense contractor General Dynamics, which employs more than 100,000 people worldwide and reported $39.4 billion in 2022 revenue. GDIT has 30,000 employees, 8,000 of whom work in Virginia.

Third-party logistics company to expand in Pulaski County

Wytheville-based third-party logistics company Camrett Logistics will invest more than $2 million to expand in Pulaski County, creating an estimated 58 jobs, Gov. Glenn Youngkin announced Tuesday.

Camrett Logistics’ investment in its Dublin facility will include construction, renovating existing space and buying new forklifts and electric trucks.

“Homegrown Virginia businesses like Camrett Logistics keep the commonwealth’s economy on the move,” Youngkin said in a statement. “With this expansion and modernization, Camrett will strengthen its operations and Virginia’s supply chain industry ecosystem, securing continued longevity for years to come.”

Founded in 1995, the warehouse and third-party logistics services company operates 11 facilities totaling 1.8 million square feet in West Virginia and Virginia, including locations in Atkins, Rural Retreat, Wytheville, Dublin and Radford.

“This long overdue expansion will help revitalize an iconic World War II facility into a multi-use warehouse and usher the company into its new era as green supply chain experts,” Camrett Logistics President Cameron Peel said in a statement. “With four electric trucks, two electric spotters, a brand-new electric forklift fleet and motion sensor-activated LED warehouse lights, we are focused on sustainability and the future for the generations to come.”

The Virginia Economic Development Partnership worked with Pulaski County and Dublin to secure the project, for which Virginia competed with North Carolina, Tennessee and West Virginia. Youngkin approved a $230,000 grant from the Commonwealth’s Opportunity Fund to assist Pulaski County. VEDP will support Camrett Logistics through its three-year Virginia Jobs Investment Program, which provides cash grant reimbursements for associated human resources costs after a company has had new employees on the payroll for at least 90 days.

NNS funding helps launch ODU engineering program

Newport News Shipbuilding will be the lead industry sponsor of Old Dominion University’s program to graduate more engineers, the two organizations announced Tuesday.

NNS, a division of Newport News-based Fortune 500 military shipbuilder Huntington Ingalls Industries, will make a five-year financial commitment to the Monarch Accelerator Program to Engineering (MAP-to-E), ODU’s program to increase its number of full-time engineering and engineering technology majors and graduates,  particularly from underrepresented and underserved communities in Hampton Roads, enrolled in the public university. The university declined to provide the amount of the gift, citing NNS company policy.

The donation allows the university to launch MAP-to-E in fall 2024, according to a statement from Kenneth Fridley, dean of the Batten College of Engineering and Technology and interim vice president for research. After five years, ODU can request another five-year gift to support the program and potentially expand it.

NNS says it plans to hire more than 300 entry-level engineers in the next 12 months, so the program will ultimately benefit the shipbuilder. Currently, ODU graduates comprise more than 22% of its engineering workforce.

“As we grow our already strong partnership with Old Dominion University, the MAP-to-E program is a logical extension of that work,” Dave Bolcar, NNS vice president of engineering and design, said in a statement. “We’re designing and building the highest-quality aircraft carriers and submarines for the U.S. Navy at NNS, and we can’t wait to welcome more ODU students to that important national security mission.”

MAP-to-E works as an “academic redshirt program” for students who need more math education before they major in engineering. According to Fridley, MAP-to-E students will take two math classes before taking calculus, which is part of the engineering major.

“MAP-to-E will provide academic support, career preparation for early internship and co-op opportunities, and direct financial support for these students,” Fridley said. “Therefore, the MAP-to-E program aims to promote student success and development while also supporting students so that they do not accrue additional debt during their first year. Now to the redshirting analogy:  The MAP-to-E program is designed to welcome these students onto the ‘team’ while recognizing they need a little more ‘coaching’ to have them ready to succeed in engineering.”

The program will be cohort-based, and ODU’s initial goal is up to 20 students in the first cohort, according to Fridley.

“These are largely talented students with unrealized potential who have the ability, aptitude and desire to be successful in engineering or engineering technology but have not had the opportunity to take the necessary math and science classes while in high school,” Fridley said in a statement.

NNS has previously donated funds to ODU, partnering with the school in 2019 to establish the NNS Scholars program. Between 10 and 20 ODU junior, senior and graduate students majoring in programs related to engineering analytics, information technology and computer sciences receive scholarships of up to $5,000 annually. For the first five years, a yearly donation from NNS funded the scholarships, but beginning in 2024, an HII-endowed fund will become the source of funding.

Newport News-based HII is the nation’s largest military shipbuilder and Virginia’s largest industrial employer, with approximately 43,000 employees. Newport News Shipbuilding is the United States’ only nuclear-powered aircraft carrier manufacturer.

Located in Norfolk, ODU is a four-year public university with an R1 ranking. It has more than 23,000 students.

20-unit Daleville apartment complex sells for $2M

A 20-unit apartment community in Botetourt County sold Tuesday for more than $2 million.

Located at 151 College Drive in Daleville, the property’s first buildings were built in the early 1900s as a school, which was later affiliated with Bridgewater College before closing in 1933, according to Cushman & Wakefield | Thalhimer. The Daleville College Apartments were renovated before the sale.

DCA Partners bought the property from Daleville College Partners for approximately $2.07 million.

Clay Taylor with Cushman & Wakefield | Thalhimer’s Markets Group represented DCA Partners in the purchase.