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A tale of two economies

On a September trolley tour of Danville’s revitalizing downtown, the city’s economic development director, Telly Tucker, recounted to me a memory of his first day on the job, back in 2014. Stopping into a local bakery to grab a cup of coffee and a pastry, he introduced himself to the young lady behind the counter, prompting her to respond, “Why’d you move to Danville?”

Tucker, needless to say, was taken aback.

“With all of the assets I see and our potential for future growth, if we as residents and stakeholders don’t speak well of ourselves, how can we expect others to?” Tucker asks. “We all know we have challenges, but overwhelmingly, the good outweighs the bad, and the good doesn’t get enough attention.”

This anecdote came to mind a week later when I was in Harrisonburg covering the Federal Reserve Bank of Richmond’s inaugural Investing in Rural America conference, held Oct. 2 at the Hotel Madison & Shenandoah Convention Center.

Speaking on the importance of rural communities and small towns changing their narratives, Richmond Fed President Thomas Barkin said that’s necessary not only to promote themselves to outsiders, but to retain the people who already live there.

“Changing the prospects of a town, it seems to me, starts with aligning the mindsets of the people in that town,” Barkin said. “And a great metric is whether the kids who grow up and go to school there choose to come back.”

In this month’s cover story, we’re examining how the American workforce is about to undergo a seismic shift in the next decade, as millennials and Generation Z become the dominant working population. Attracting and retaining these younger workers is top of mind in economic development circles, but nowhere are they more desperately needed than in small town America.

Rural population growth has been stagnant or shrinking for decades while urban growth has been skyrocketing. However, rural people account for about 60 million people in the United States, or one in five Americans, a not-at-all insignificant percentage.

And rural workforces are dwindling and aging, as localities grapple with how to grow — and harvest — a crop of young workers with 21st-century skill sets.

In his first 18 months as Richmond Fed president, Barkin has learned that there are two economies in the Fed’s Fifth District, which includes Virginia, West Virginia, Maryland and the Carolinas — “one in bigger cities and one in smaller towns.”

While larger metro regions are thriving in Virginia’s Golden Crescent, which stretches from Northern Virginia through Richmond to Hampton Roads, the commonwealth’s rural areas are struggling — with everything from graduation rates to access to medical care and broadband.

In some areas of Southside and Southwest Virginia and the Shenandoah Valley, as many as 60% of households have no internet subscription. But increasing its usage and availability is critically important: “Like rural electrification 80 years ago,” Barkin said, “the benefits — in terms of opportunity identification, skill-building, telemedicine and the like — are too big to pass up.”

Also contributing to the rural economic gap and social isolation are the closures of local banks, hospitals and colleges, Barkin said, not to mention the ravaging impact on small-town workforces of opioid addiction.
Faced with all that, “I’ve encountered arguments that the challenges of distressed rural communities are too difficult to solve,” Barkin said. “They’re not.”

Fixing these challenges, he said, will require focus, persistence, regional cooperation and a concerted effort from residents and local leaders to improve educational offerings and seek out and take advantage of funding opportunities.

I saw those traits in abundance among the four dozen or so community and business leaders who participated in Virginia Business’  Sept. 24 Meet the Editors luncheon at Danville’s high-tech Institute for Advanced Learning and Research, where they’re focused on solutions such as innovative workforce development programs that begin as early as middle school.

Millennials can find a lot to like in Danville, with its attractive turn-of-the-century buildings, affordable cost of living, breweries, Minor League Baseball team, high-speed internet, stunning riverfront YMCA and        11.5-mile Riverwalk Trail — not to mention outdoor activities like kayaking, paddleboarding and ziplines.

But for Danville — and other small towns like it — a major challenge of the next decade will be convincing these in-demand young adults that they have a future there.

For Tucker, that effort started with the cashier at the bakery. Now, whenever he sees her, it’s a running joke for him to ask her to say three things she likes about Danville.

She always comes up with answers.

Altria brings IQOS heated tobacco product to U.S.

In the wake of their aborted reunion, Henrico County-based Altria Group Inc. embarked on a new venture with spinoff company Philip Morris International Inc. to introduce its IQOS heated tobacco products for sale in the U.S. market.

“After much deliberation, the companies have agreed to focus on launching IQOS in the United States as part of their mutual interest to achieve a smoke-free future,” Philip Morris International CEO André Calantzopoulos said in a late September announcement acknowledging that merger talks had ended between the two companies.

The companies launched IQOS for U.S. sale in early October out of a mall storefront in Atlanta, where they are test-marketing the device. IQOS, which heats tobacco into an aerosol, produces “fewer or lower levels of some toxins than combustible cigarettes,” according to the Food and Drug Administration, which approved it for sale in the United States in April.

Popular in Russia and Japan, IQOS was introduced by Philip Morris International in 2014. Available in 48 overseas markets, it has about 8 million users.

IQOS’ introduction into the U.S. comes amid uproar over an epidemic of teen use of vaping products that has largely been blamed on San Francisco-based Juul Labs Inc., a company in which Altria holds a 35% stake. In September, Juul Labs CEO Kevin Burns stepped down and was replaced by K.C. Crosthwaite, Altria Group’s former chief growth officer.

There has also been a wave of mysterious lung ailments partly linked to vaping THC via bootleg devices that by mid-October had resulted in 33 deaths in 24 states (including Virginia) and nearly 1,500 illnesses nationwide, with many occurring among teens and young adults.

In a statement, Philip Morris International noted that global data, based on four years of international sales, demonstrates that IQOS is “not significantly appealing to youth or to nonsmokers.” Unlike Juul’s marketing practices, Altria says it has no plans to sell IQOS online or advertise it via social media influencers. Also, it’s only available in tobacco flavor and two menthol flavors.

A longtime Fortune 500 company listed among the S&P 500, Altria is the parent company of Richmond-based tobacco products manufacturer Philip Morris USA, best known for its Marlboro cigarettes brand.

Altria spun off Philip Morris International in 2008. Based in New York, it is also a Fortune 500 company and manufactures Marlboro cigarettes and other tobacco products and brands for sale in more than 180 nations outside the United States.

General Dynamics lands $325M U.S. emergency telecomm contract

A division of Falls Church-based defense contractor General Dynamics will provide priority telecommunications services to the U.S. Department of Homeland Security under a contract worth up to $325 million with federal Cybersecurity and Infrastructure Agency's (CISA) Emergency Communications Division (ECD).

CISA, which falls under the purview of Homeland Security, was created in November 2018 as a standalone federal agency to reduce and eliminate threats to the nation's critical physical and cyber infrastructure assets.

General Dynamics Information Technology (GDIT) will provide services allowing Homeland Security to provide priority voice, data, video and information services in order to maintain continuity of government operations during natural emergencies, acts of terrorism and war.

GDIT has provided support to the federal government's priority telecommunications services program for the last 25 years, providing critical services so that hundreds of thousands of registered users, including the White House, are able to communicate during times when communications systems are congested by increased traffic or physical damage. The new contract will allow GDIT to continue its support work for the program, including integrating 5G cellular network technology.

International tourism to Virginia hits new record

Virginia's international tourism visitation surpassed 1.1 million in 2018, with more than $2 billion in economic impact, Gov. Ralph Northam announced Wednesday.

“Virginia’s doors are open, and we are welcoming record numbers of visitors from around the world,” Northam said in a statement in Wednesday. “International visitors play an important role in building and maintaining our strong economy by shopping at our local businesses, dining at our restaurants and taking in our world-class attractions. It is these diverse tourism assets that make Virginia a premier destination for global travelers and drive economic prosperity and job creation throughout our commonwealth.”

The state has seen a 22% increase in international tourism since 2009, and the number of visitors from overseas increased by 5% from 2017 to 2018.

Nearly half of Virginia's international tourists hail from Canada, 29% from Europe and 17% from the Asia-Pacific region. 

“Love is at the heart of every vacation. That’s one reason our brand resonates so well — even across continents,” said Rita McClenny, President and CEO of Virginia Tourism Corp. “Whether our beaches, mountains, music, wine, craft beer or oysters, there’s something for everyone to love in a Virginia vacation.”

Virginia is celebrating the 50th anniversary of its “Virginia is for Lovers” campaign.

 

Mexican packaging company building $65.3M plant in Chesterfield

Mexican packaging solutions company Cartograf will invest $65.3 million to build its first U.S. folding and micro-corrugated package printing facility in Chesterfield County's Meadowville Technology Park, according to an announcement Wednesday from Virginia Gov. Ralph Northam. The manufacturing plant will create 63 jobs.

Virginia competed with North Carolina and Georgia to land the project, which will serve industrial customers in the northeastern U.S. and Canada. The Virginia Economic Development Partnership (VEDP) worked with Chesterfield County, the Port of Virginia and the Greater Richmond Partnership to secure the factory. Northam approved a $750,000 grant from the Commonwealth's Opportunity Fund to assist Chesterfield with the project. Cartograf is also eligible to receive benefits from the Port of Virginia's Economic and Infrastructure Development Zone Grant Program. VEDP will provide the company with employee training funding and services through its Virginia Jobs Investment Program. Charlotte, North Carolina-based commercial real estate firm The Keith Company assisted Cartograf.

“Securing Cartograf’s first operation in the United States is a significant win for Virginia and is a strong testament to the outstanding global connectivity that we offer manufacturers of all sizes,” Northam said in a statement. “By locating in the greater Richmond region, Cartograf will have access to major markets and the Port of Virginia, which will support the company’s continued growth for years to come. We thank the company for choosing to locate in Chesterfield County, and we are honored to welcome Cartograf to our commonwealth.”

Based in Mexico City and founded in 1986, Cartograf provides packaging solutions to international customers in more than 40 industrial sectors, including food and beverage and personal hygiene. 

“For the past 30 years, Cartograf has partnered with worldwide brands across a diverse group of industries and our products are part of people’s everyday lives through a large array of packaging solutions,” said Cartograf's president, Juan Jose Páramo Riestra. “Cartograf’s main facilities are located in Aguascalientes, Mexico, and as a result of constant organic growth and a substantial market share increase, the company is proud to announce its first overseas expansion, consisting of a new manufacturing facility located in the Meadowville Technology Park in Chesterfield, Virginia. This would not have been possible without the cooperation and support from Chesterfield County, the Commonwealth of Virginia and The Keith Corporation. Cartograf looks forward to this new venture and contributing to the growth of the surrounding community.”

Survey finds 1,250+ IT/software jobs coming to Roanoke/New River Valley

More than 1,250 IT and software-related jobs are being created over the next 18 months in the Roanoke/New River Valley region, according to the results of a newly released survey of 315 area employers conducted by the nonprofit Valleys Innovation Council. 

The jobs are being created by more than 40 employers with workforces ranging from very small businesses to the region's largest employers.

“We must be proactive in our outreach to show people living outside our region that there is an excellent depth of IT and software development professional opportunities in our region, which offers unparalleled beauty, affordability and cultural amenities. VIC will now turn its attention to working with stakeholders on devising strategies to identify and attract the needed talent,” Greg Feldmann, interim executive director and CEO of the Valleys Innovation Council, said in a statement released Tuesday.

Council co-chiair Doug Juanarena, said,“We wanted hard numbers to better understand the near-term outlook in this sector, so that we can work with regional employers, support organizations, and communities to devise strategies to help develop and recruit this talent. … We’ve been hearing for some time now that regional employers have a growing, unmet need for IT and software talent. For example, the Advance Auto headquarters move to Raleigh, N.C. for better access to talent should serve as a wakeup call for the region on this issue. Almost no business today can grow and scale without IT and software development talent.”

Designed by Valleys Innovation Council with input from regional employers, the survey was distributed by the council and other groups, including Onward NRV, the Roanoke-Blacksburg Technology Council, Roanoke Regional Partnership and the Virginia Tech Corporate Research Center.

The council plans to release a full report on the survey data by the end of the year.

 

Former Gov. McAuliffe Joins Hunton Andrews Kurth

Former Virginia Gov. Terry McAuliffe has joined Hunton Andrews Kurth LLP, Virginia's second-largest law firm, as the global strategy advisor for the Centre for Information Policy Leadership (CIPL), the firm's Washington, D.C.-based global privacy and cybersecurity think tank. 

“Gov. McAuliffe brings a depth of understanding of global business, the challenges and opportunities facing it and emerging issues related to cybersecurity and privacy matters that is hard to match,” Wally Martinez, managing partner of Hunton Andrews Kurth, said in a statement released Tuesday. “His business acumen, coupled with his public service experience, will be very valuable for Hunton, the Centre for Information Policy Leadership and our clients.”

McAuliffe, who served as Virginia's governor from 2014 to 2018, will provide strategic counsel with a focus on cybersecurity and privacy issues and will aid in developing policy initiatives aimed at helping companies address and mitigate data security and privacy risks. He will also support the development of privacy principles that will facilitate the secure global exchange of digital information.

The former Virginia governor made cybersecurity a top priority during his tenure as chairman of the National Governors Association, and he was awarded the 2017 Technology Champion award from the National Association of State Chief Information Officers. Following his gubernatorial term, McAuliffe has served as a distinguished visiting professor at George Mason University's Schar School of Policy and Government, and he's been a frequent commentator on CNN. He's also released two books: “Beyond Charlottesville: Taking a Stand Against White Nationalism” and the political memoir “What A Party!”

“I am honored to be working with Hunton and CIPL on data protection and cybersecurity issues,” said McAuliffe. “Cyber risks are some of the most serious threats to our nation’s security. By 2020, 200 billion networked devices are expected to be connected across the globe. Domestic and foreign actors target sensitive information and systems that, if compromised, could have significant economic and political consequences for all Americans.”

Established by Hunton in 2001, the Centre for Information Policy Leadership works with industry leaders, regulatory authorities and policy makers to develop global solutions and best practices for privacy and data usage. In addition to its Washington, D.C., headquarters, it has offices in Brussels and London.

Colliers International promotes two Norfolk execs

Colliers International announced Tuesday that it has promoted two executives in its Norfolk office.

Mac Weaver has been promoted to vice president. A University of Virginia graduate who joined the brokerage team in 2014, Weaver has participated in more than 250 transactions totaling over $200 million, representing clients including defense contractors, REITs and national corporations.

Tyler Brooks, who has been promoted to assistant vice president, has represented Colliers in more than 100 lease transactions, with a total value of more than $40 million. Properties represented by Brooks have included The Railyard at Lambert's Point and Lynnhaven North.

Bon Secours names Faraaz Yousuf Richmond market president

Bon Secours has named Faraaz Yousuf its Richmond market president, starting Dec. 1.

Yousuf joined Bon Secours Mercy Health in July as chief strategy officer of the health system's Atlantic Group, responsible for strategic planning efforts across five states, including Virginia and Florida. In his new position, Yousuf will oversee Richmond market operations, which includes St. Mary's Hospital, St. Francis Medical Center, Richmond Community Hospital and Memorial Regional Medical Center, as well as Rappahannock General in Kilmarnock. He succeeds Toni R. Ardabell, who stepped down in July after three years as president of Bon Secours Richmond Health System to return to Inova Health System, where she is now associate chief, clinical enterprise.

“Faraaz is an integrative and dynamic leader with strong interpersonal skills that will drive business and community outcomes while ensuring the patient is at the center of every decision,” Brian White, Bon Secours Mercy Health Atlantic Group president, said in a statement released Tuesday. “He has the benefit of building upon a firm foundation of excellence in Richmond and the market’s strong commitment to the health and well-being of our patients and the Richmond community.”

“I am honored to join the Richmond team and work with our physicians, community partners and associates to serve the distinct needs of our patients across Richmond,” said Yousuf. “I see this new role as an opportunity to make a significant impact on the communities we serve.”

A Virginia Commonwealth University alumnus who holds a master's degree in healthcare administration, Yousuf previously served as president and senior vice president of Maryland-based LifeBridge Health, a $1.8 billion health system. He also formerly worked as chief operating officer for Sutter Health and Hospital Corporation of America.

The Richmond-based Bon Secours is part of Maryland-based Bon Secours Mercy Health System. One of the top 20 health systems in the United States, Bon Secours Mercy Health was formed in 2018 following the merger of Bon Secours Health System and Cincinnati-based Mercy Health.

Hampton Roads homes under contracts up 30%

The number of Hampton Roads homes placed under sales contract In September rose 30.14% from the same period last year, according to Real Estate Information Network Inc. (REIN), the regional Multiple Listing Service. Regional closings were also up, rising 13.07% from September 2018.

The median sales price also rose in September, up to $249,000 — a 6.34% increase over the same period in 2018. And the number of distressed home sales (foreclosures and short sales) were at the lowest level since July 2008, accounting for 4.27% of all residential settled sales.

“Major factors affecting our regional marketplace and increased sales this month include lower interest rates and the outstanding opportunities for employment due to our strong military presence, shipbuilding and technology growth,” said Barry Nachman, a regional broker and member of REIN’s Board of Directors. “This leads to a positive environment where members of our communities feel confident in moving forward in their decision to purchase a home.”

Overall residential homes listed for sale dropped by 13.46% year-over-year in September, marking the 50th consecutive month of active-listing declines.