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At max capacity

Supply chain and logistics executives used to joke that no one knew or understood what their jobs were — that is, until the COVID-19 pandemic upended how goods were transported to warehouses and ultimately to customers.

“Until you start to look behind the scenes, you don’t know how all of this gets to your door until you can’t get it,” says Rick Holden, vice president of business development and a corporate officer for Riverside Logistics, a Richmond-based third-party logistics and supply chain management company.

The pandemic “turned the supply chain completely on its ear” for a solid 18 months, with days of shipment backlogs and other disruptions in getting goods to customers turning to weeks and weeks turning into months, adds James Durfee, vice president of business transformation at Riverside Logistics. It was then that consumers and businesses alike had to come to terms with the new normal — that there would be significant delays and disruptions in receiving shipments at ports, finding transportation for goods, and keeping warehousing and logistics workers employed.

“As a logistics provider, we saw that our customers suddenly became much more amenable to service disruption because it became the norm, rather than the exception,” Durfee adds.

As the pandemic went on, businesses started over-ordering and overstocking goods at warehouses, which caused inventory levels to skyrocket.

“Companies weren’t really built — supply chains weren’t really built — to handle something of the magnitude of the COVID pandemic where things were shut down for huge amounts of time,” says Doug Thomas, a professor and supply chain expert with the University of Virginia’s Darden School of Business.

Across the country, inventory levels are extremely high. In the Richmond market alone, warehouse inventory levels jumped from a traditional pre-pandemic 40% to a staggering 90% by 2022. And in Hampton Roads, the warehouse vacancy rate — the amount of available storage space — is below 1%, says Trevor Dunlap, president of Chesapeake-based transportation and logistics companies Givens Transportation Solutions and Givens Inc.

Plus, the goods being stored in warehouses today are those that were in much higher demand during the pandemic that companies “mis-purchased” when people were primarily staying at home — items such as sweatpants and home goods that made people feel more comfortable in their surroundings, Holden explains. Now, amid an uncertain economy and as many companies are returning workers to offices in hybrid work models, the demand for those items is dropping.

The shift in demand “created a huge glut of inventory that we’re still working through,” he says. “Until you create more space in warehousing, you have to do something with that stuff before you can bring more [goods] in behind it.”

The logistics, warehousing, and shipping industries are now forced to regroup following this massive surge in traffic they saw during the pandemic.

“There are still pockets of stockouts and excess inventory in various industries,” says Barbara Hoopes, a professor and supply chain expert with Virginia Tech. “The shipping and logistics industries will continue to provide customers with services [like] expedited shipping and inventory controls to help stabilize these situations.”

Hampton Roads warehouses like this one operated by Chesapeake-based Givens Inc. are filled with surplus inventory that stacked up after demand for consumer goods cooled. Photo by Matthew R.O. Brown
Hampton Roads warehouses like this one operated by Chesapeake-based Givens Inc. are filled with surplus inventory that stacked up after demand for consumer goods cooled. Photo by Matthew R.O. Brown

Supply imbalance, freight volumes

While much of the supply chain backlog has worked itself out, there are still challenges facing the industry, explains Mike Coleman, president and CEO of Norfolk-based logistics and shipping firms CV International Inc. and Capes Shipping Agencies. Exceedingly high inventory levels have made it increasingly difficult for companies to locate warehouses with space to store their goods.

“Everything worked its way out of the backlog in the supply chain — for the most part. There are still challenges,” Coleman says. “There’s still a lot of difficulty finding warehouse availability. Many are full with excess inventory.”

This excess inventory is what Durfee refers to as the “wrong” inventory because there is a glut of items remaining in warehouses that were popular during the pandemic, but no longer have the same amount of demand. This has resulted in Riverside Logistics having to turn down some customers or reduce the amount of space available to clients.

“We’re much more selective on who we take. We’ve actually had to ask some clients to leave our space,” Durfee says. “The nature of the beast was that we were kidding each other that we’d be a good fit long term. It took us a while to internalize that across our management team because we had never done that before.”

However, the situation is seen as largely temporary within the industry, with much of the excess inventory being sold on the discount market to move it out more quickly. In the meantime, instead of adding warehouse space, companies are turning “to leased resources [like] contracted or public warehouses for shorter-term, flexible capacity,” Hoopes says.

As warehouses reach max capacity, some logistics and warehousing companies — such as Givens — are placing a greater emphasis on hiring and retaining talent. Warehousing, distribution and logistics services continue to be in high demand as inventory levels remain high, also driving a need for industry labor, Hoopes explains.

“We definitely continue to focus on how we can be more efficient with labor,” Givens says. “On the warehousing side, we’re figuring out how we can become most efficient because that’s where our most dramatic cost increases have been over the last two years, just in wages and benefits.”

Hoopes warns, though, that increased hiring in warehousing and logistics could lead to layoffs as “needs ebb and flow.” While industry demand for labor is high at the moment, she adds, “it’s hard to say if it will last very long in the face of prolonged uncertainty.”

Thomas, of U.Va., has a more pessimistic view of how companies will handle supply chain operations moving forward.

“Mostly what I see is companies not doing too much to reshape their supply chains. I think it’s going to be forced in a few specific industries, largely due to either pressures from consumers or actions from [government] policymakers,” he says. The Biden administration has issued a couple of executive orders that have addressed reviewing supply chain capabilities and resilience across four industries deemed critical to national security and stability: food, pharmaceuticals, electronics and energy.

Changes in consumer demand

Since the surge in imports from other countries during the pandemic placed a huge strain on the logistics system, and as a result, supply chain companies are being forced to examine their future business plans. Prioritizing longer-term partnerships and retaining talent will become increasingly important in the warehousing industry as purchasing patterns stabilize so that these companies can focus on cooling consumer demand. Changes in imports from other countries have also impacted supply chain operations in the U.S.

“Spending patterns have gone back to the pre-pandemic routine. When the pandemic happened, you had people at home buying, buying, buying, and that fueled a huge spike in imports out of China and in the Far East to the United States,” Coleman says. “Now that spending patterns are going back to pre-pandemic normals, we’re seeing a major drop in container freight volumes coming to the United States from Asia.”

The Port of Virginia, which processed record container volumes in 2022, was able to avoid shipping traffic snarls that plagued West Coast ports during the pandemic. Photo courtesy Port of Virginia
The Port of Virginia, which processed record container volumes in 2022, was able to avoid shipping traffic snarls that plagued West Coast ports during the pandemic. Photo courtesy Port of Virginia

Ocean freight costs have come down significantly, particularly in Asia-to-U.S. trade, Coleman says, adding that in some cases rates are 75% of what they were in May 2022. For that reason, reducing freight spending is going to be the name of the game for every shipper going into the next year, he adds. During the height of the pandemic, it cost between $20,000 and $25,000 to ship a container from Asia to the East Coast, with shipping contract rates between $8,000 and $10,000 as a minimum quantity commitment, Coleman says. Now, shipping rates are below $2,000 per container, he adds.

“Shippers are anxious to recover the exorbitant rates they were paying during the pandemic, and carriers are fighting for every container,” Coleman says. “It is a buyers’ market, and carriers seem more than willing to undercut one another to the point where they are losing money. Ultimately, this is not good for shippers or the shipping industry. There needs to be stability.”

Future focused

Although the extent of the COVID-19 pandemic couldn’t have been anticipated, the Port of Virginia has actually been several steps ahead in preparing for significant changes in the shipping and logistics industries. The Port of Virginia saw record container volumes in 2022, highlighting the advantage it has in owning and operating all its terminals. Other large ports — including those in Los Angeles and New York — have multiple, competing terminal owners and operators, which means that the ports have less control over rearranging deliveries and distribution. When vessels began to back up on the West Coast during the pandemic, it was more difficult to redirect cargo, but the Port of Virginia had more flexibility.

“We can make all of the decisions necessary to accommodate these surges without any disruptions in efficiency or any disruptions to our customers and cargo owners,” says Joe Harris, spokesman for the Virginia Port Authority and the Port of Virginia. The pandemic was “a really long-term test for us, and we passed it with flying colors.”

In spring 2022, the Port of Virginia formalized a $1.4 billion capital investment project that includes expanding rail capacity, widening and deepening the channels to at least 55 feet deep and improving and modernizing equipment at the North Berth at Norfolk International Terminals. Some of the work had been announced before the pandemic, but the investment is helping the Port of Virginia build its reputation as an East Coast alternative to West Coast ports that faced massive congestion and shipping traffic jams in 2021 and 2022.

The Port of Virginia’s extensive upgrades are intended “to get ready for the next surge of cargo — whenever it may come,” Harris says. “In the port business, you must be continually investing and reinvesting in your facilities, your operating systems, your equipment. You have to look at the entire picture, and you have to have a strategy for what’s next.” Work on the projects will be complete by 2027, Harris adds.

The improvements also can be an opportunity for businesses to choose the Port of Virginia over other ports.

“There is, I think, every reason to believe that companies may start looking to source products from different places and flow them into the U.S. market through different ports,” Thomas says. “I think investment in technology, investment in the operations of the ports, is going to be important. I think that’s an opportunity for Virginia to have significant growth in the Port of Virginia.”

Tech improvements

Just as the pandemic illuminated technological inefficiencies in most industries, it also demonstrated that supply chain industries are in need of technological advancement. This is in part due to the complexity of the industry, but also labor shortages that are driving an increasing need for automation.

For example, CV International is focused on improving logistics technology because, as a freight forwarder, the company acts as a control tower for freight movement and as an aggregator for tracking data and key performance indicators related to supply chains, Coleman explains. CV International has worked to upgrade its reporting and tracking technology that can be customized for its clients to view via dashboards.

“For us, for our company, technology is huge right now — giving actionable visibility to our clients, exceptions management, cost management and an overall better managed supply chain,” he adds.

In fact, data-based decision making in supply chain industries will become “mandatory” for customers, Hoopes says. This will include technology that helps to optimize routing and scheduling as well as analytics tools to track shipments’ locations along the supply chain — particularly “shipments that are not meeting set milestones [and] that require direct attention or some extra action by our
team,” Coleman adds.

The use of artificial intelligence in the shipping and logistics industry is also beginning to be discussed, particularly in relation to the trucking industry. To combat an ongoing shortage of truck drivers, some shipping companies have been testing autonomous trucks. But Durfee and Holden point out the law still requires that a live driver be present in the autonomous vehicle, defeating the idea of the vehicles reducing labor costs.

“It’s going to take some time before we land with this,” Durfee says. 

Magical moments

2023 BEST PLACES TO WORK — LARGE EMPLOYERS WINNER

The pandemic put a damper on workplace culture, which was particularly difficult for service-oriented organizations like Vaco, a Tennessee-based national staffing and consulting firm with an office in Richmond.

Recruiters and salespeople are typically more social and outgoing, so adjusting to a remote — and now hybrid — working environment has been a challenge for the firm.

“Trust was put back into the employees’ hands,” says Amy Miller, a managing partner with Vaco Richmond. “We’ve had to get creative with our culture because of people working in that remote or hybrid environment, not traveling as much, and not getting that face time with leadership and other teams.”

What hasn’t changed in the 17 years that Miller has been with the company, though, is Vaco’s willingness to invest in its employees. Today, this includes a focus on wellness, fitness, community service and even special vacation time.

“We’ve always invested in the whole person — professionally, personally and mentally,” Miller says. “Our commitment is to continuously develop, including our communication, our collaboration, as well as encouraging our team to create their own ‘magical moments’ for themselves, for their direct teams, for their clients, for their candidates.”

On the fitness and wellness front, Vaco Richmond sponsors outings such as hot yoga classes, walking challenges and plant workshops. Plus, the company’s office space includes a massage chair for employees. While Vaco operates on a hybrid work schedule, the company remains flexible on working hours and days employees are expected to be in the office. Most employees work remotely but have the option to come into the office.

Nationwide, Vaco also offers employee memberships to Calm, an app that includes guided meditations. “It’s a focus nationwide to avoid burnout and to make sure that we’re all understanding of each other’s mental space,” Miller says.

Community and philanthropic service are also core to Vaco’s workplace culture. The company operates its own employee-funded 501(c)(3) organization, Vaco Cares, which was “born from the overwhelming desire to help someone in their darkest moment,” Miller says. Vaco Cares provides funding to support colleagues, their immediate families, candidates, consultants and clients in times of need such as natural disasters, fires, deaths, unforeseen illnesses, or debilitating accidents.

Vaco also hosts volunteer days with Richmond organizations such as RVATECH, Junior Achievement of Central Virginia Inc., We Heart Harlie & Friends Foundation, and the Cystic Fibrosis Foundation.

A lot of companies tout a “work hard, play hard” mentality, but Vaco takes this a step further by offering multiple trip opportunities. Each year, Vaco offers three trips: Engage the Region, Engage the World, and Vatopia. These trips give employees the chance to meet up with other offices in the region, to meet nationally in Las Vegas with more than 800 other Vaco employees, or for top performers to enjoy a luxury vacation incentive, respectively.

“It’s a service company, so we’re all fairly outgoing and social and enjoy being at networking events,” Miller says. “It’s nice to be able to work from home, but it’s also nice to get back in [person] together.”

While the Engage the Region and Engage the World trips are more like work conferences, Vatopia is a true vacation. Employees set goals with leadership, and if they meet them, they are rewarded with the Vatopia trip and can even bring a plus-one. The company also extends its flexibility to goal setting; if an employee has a major life event such as new parenthood, then their work goals are adjusted accordingly, Miller says. This year, qualifying employees will travel to the Bahamas.

“Employees are the foundation of the success of the company,” Miller says. “Leadership at all levels is really committed to nurturing an environment that invests in our employees.”

The 13th annual Best Places to Work list

Health first

2023 BEST PLACES TO WORK — SMALL EMPLOYERS WINNER

SmartEdge IT LLC, a Herndon-based business software development company, places a high premium on employee health and well-being.

SmartEdge pays 100% of the premium for its health care package and provides $50,000 life insurance policies for all full-time employees, benefits that start on the day a person is hired.

“Health insurance is very expensive these days, but we provide them with free health care,” says Raja Kilaru, president of SmartEdge, which made the Inc. 5000 list of the nation’s fastest-growing companies in 2020 and 2022.

SmartEdge’s clients include financial services firms, health care companies and even retailers such as Walmart. The software developer’s services range from business intelligence, data warehousing and application development to quality assurance. SmartEdge employs 30 people in Virginia.

SmartEdge employees initially receive two weeks of paid time off, as well as 15 company holidays and unlimited sick time. After one year of employment, workers can receive an unlimited number of paid days off. Plus, if overnight travel for work is required, the company provides monetary incentives or extra paid time off to compensate employees for their time.

When the company switched to remote work amid the pandemic, SmartEdge sent employees ergonomic chairs to make telecommuting more comfortable. As of December 2022, SmartEdge workers were still telecommuting, but Kilaru planned to move to a flexible, hybrid model in January. “They can log in at any time — they just need to accomplish the task,” Kilaru says. “We’re not going to micromanage.”

SmartEdge also places an emphasis on wellness. Each year, the company hosts a fitness challenge, encouraging workers to participate in physical fitness as well as meditation and yoga. SmartEdge IT also provides an annual meditation and yoga class for its employees.

“All of our employees are very happy,” Kilaru says. “We treat all of the employees like a family.”

Employees also have the opportunity to take paid time off to volunteer with local organizations, such as Loudoun Hunger Relief. The company also fundraises for
St. Jude Children’s Research Hospital.

Additionally, SmartEdge strongly encourages mentorship within the organization and empowers employees to continue their education. Each year, employees have access to up to $5,000 to pursue an educational program of their choosing. It’s often used by workers to earn an MBA or technology certifications. The company also hosts a variety of workshops dedicated to productivity, time management, diversity and financial education.

“We have a lot of long-term employees,” Kilaru says. “We’re training them and we’re retaining them.”

Holding onto employees isn’t a problem at SmartEdge, which has a 95% employee retention rate and salaries ranging from $110,000 to $150,000.

Overall, SmartEdge continues to be a place where employees want to work because they’re viewed as assets to the company, Kilaru says.

“It’s about teamwork,” he adds. “We help each other.”  

The 13th annual Best Places to Work list

A balancing act

While there was no way to predict that a global pandemic would disrupt office life as we knew it, one Virginia-based company already had a grip on one trend impacting working professionals. During the COVID-19 pandemic, one in five U.S. households adopted a cat or dog, accounting for about 23 million households, according to a survey by the American Society for the Prevention of Cruelty to Animals (ASPCA).

Charlottesville-based electronics retailer Crutchfield Corp. was already ahead of what’s been called the “puppy boom” of the COVID pandemic. About five years before the onset of COVID, Crutchfield implemented its “pawlicy” allowing dogs onsite at most of its facilities.

For employees headed back to the office who are worried about leaving their new Fido at home, that barrier was already removed. Surrounding its headquarters, Crutchfield has about two miles of woodland trails, which were repaved during the pandemic. But the shining star for employee pet owners is “Woofer Park” dog park, a pun on the name of a part of the car and home audio speakers that Crutchfield specializes in selling. Woofer Park, along with other outdoor spaces, was also freshened up during COVID-19 while employees were working remotely.

“We do seem to have a lot more dogs in the building now than we did,” says Chris Lilley, Crutchfield’s chief human resource officer. “People spend a lot of time on their breaks outside with their dogs, so the dog park’s been really popular.”

Similar to the way many other companies are operating post-pandemic, Crutchfield has employees working hybrid and remote schedules. Crutchfield is taking a more “gentle easing” approach toward reintroducing employees to the office, Lilley says, allowing workers to choose when or whether to come into the office and not forcing workers to do anything they’re not comfortable doing.

No company is truly immune to the new “hybrid workplace conundrum,” as Lilley puts it. Even companies recognized among Virginia’s Best Places to Work have been grappling with how to cultivate and maintain their corporate cultures in a remote or hybrid work environment.

“The workforce has changed over the past two to three years. The expectation now is that work is remote or virtual, so when you tell someone that they have to work onsite, they’re not interested,” says Jason Fair, CEO of Richmond-based Genesis Consulting Partners LLC. “That creates a recruiting challenge in finding the right talent to deliver the high-quality services that we deliver.”

McLean-based federal contractor Harmonia holds a variety of remote events to build rapport with new hires working from distant states, says Katryn Stewart, vice president of human resources and administration. Photo by Don Petersen

‘Stressbusters’

While a cliché, many best places to work compare their workforce to a family. And similar to the ways that families struggled to stay connected during COVID-19, these organizations also had a tough time maintaining the cultures they’d built up over the years.

While “culture” is an overused word in the corporate world, it’s really about maintaining the personality and character of the company, no matter the work environment, says Tom Tingle, president of Williamsburg-based architecture firm GuernseyTingle. “If you can’t maintain the culture, then it’s just a place to work,” he says. The culture of the 39-year-old firm has developed over time, but it’s a reflection of the people who work there. During the past three years, GuernseyTingle has redefined its work-from-home policy several times, morphing from a 100% remote environment during the height of COVID-19 to a hybrid policy. Today, employees work in the office Monday through Thursday, and have the option to work remotely on Fridays.

“It’s allowed us to get back to having more collaboration and, frankly, more creativity,” Tingle says. “You have more organic discussions around the office over projects and it’s difficult to have that happen [remotely].”

One thing that didn’t stop during COVID-19 was GuernseyTingle’s “stressbusters,” employee get-togethers to blow off steam for a couple of hours.

“When COVID hit and we weren’t able to do that, we really struggled with connecting with folks,” says Kristin Baum, the company’s vice president of human resources. “In the virtual world, it’s just not the same when you’re not seeing everybody every day.”

Stressbusters have included going out for dinner or happy hours and playing games such as pool, darts or simulated golf. But when workers couldn’t get together in person, employees and their families visited an outdoor “drive-through” station at the office to pick up food, hopped on a video call to eat dinner together, played Mad Libs and met each other’s pets from the comfort of their own respective homes.

‘Trial and error’

McLean-based federal IT contracting firm Harmonia Holdings Group LLC wasn’t as worried about maintaining corporate culture as it was concerned with recruiting and acclimating new employees during the pandemic, says Katryn Stewart, Harmonia’s vice president of human resources and administration.

With an array of new hires from as far away as Washington state, Maine and Texas, Harmonia remains primarily remote, so it’s been focused on creating connections with people who can’t physically meet in person.

“I’ll be honest, some of it has been trial and error,” Stewart says. “We’ve always been a very tight-knit organization. When we moved to a remote organization during COVID, we already had a very strong foundation of connection and collaboration, so we really just wanted to keep that going.”

To acquaint employees with the company’s personality, Harmonia has tried out different remote events such as virtual dance competitions. It also implemented monthly all-staff video coffee chats.

But what’s been most successful so far in helping employees feel connected was Harmonia’s “Bring Yourself to Work Day,” which the company first hosted in mid-2022. All employees who were within driving distance of the office were invited to spend a workday at Harmonia’s McLean headquarters.

“This doesn’t sound that exciting up front,” Stewart says, “but keep in mind these are employees who have worked remotely for the last 2 1/2 years.”

Harmonia leadership decked out the office with decorations and massage tables. Employees snacked on rolled ice cream, boba tea and other treats. They also had dibs on any company swag they wanted, including T-shirts, desk lights, pens, notepads and backpacks. More than 150 of the 230 employees living in the area showed up for Harmonia’s first “bring yourself to work” day event, and the company has more of the events planned for 2023.

“Yeah, they were expected to work — it wasn’t a party,” Stewart says. “But it was an opportunity to see each other, to connect, to talk and see how fun it was to be a part of a team face-to-face.”

Flexibility and understanding

Felix

The bottom line for workplace success now is flexibility, say representatives from Virginia’s Best Places to Work. While it may have been sparked by the pandemic, it has shifted to become a necessity.

McLean-based financial advisory firm Cassaday & Co. Inc. has long prided itself on being a family-friendly company, and that continues to be a top priority in the post-pandemic era.

At the wealth management firm, work times can be dependent upon stock market hours, but there are also roles that can be done outside of traditional 9-5 work hours, says Allison Felix, Cassaday’s managing partner and chief operating officer.

Much of the company shifted to telework and hybrid schedules amid the pandemic and that hasn’t changed much; employees can telecommute up to three days a week.

“We have a lot of people who like coming in [to the office] more than that, but for those who still desire that level of flexibility, that still exists today,” Felix says.

Cassaday lets employees take out interest-free loans to purchase tech hardware and also lets workers roll over their paid days off, which largely weren’t used as much during the pandemic when people took fewer vacations. Those benefits are particularly attractive for the firm’s younger, single hires, Felix says.

Like Harmonia, Cassaday has held some in-office events to build camaraderie. During the FIFA World Cup in December 2022, Cassaday employees watched World Cup games at the office and chowed down on red-white-and-blue-themed foods.

“It was a great opportunity to return to something that felt like pre-COVID normal and still … ensuring that our staff understand that we’re still looking at them as the whole person,” she says.

No matter the path a company chose to take during the pandemic, there’s no doubt that the nature of work is in flux and will continue to change.

“When we’re seeing folks forcing folks back into offices and onsite full time or part time,” Lilley says, “it seems to be a hammer approach to a problem that requires much more delicate tools.”  

The 13th annual Best Places to Work list

A challenging year

2023 BEST PLACES TO WORK — MIDSIZE EMPLOYERS WINNER

The last couple years have been a trying time for many businesses, but probably not for the same reasons as Patriot Group International Inc.

When the U.S. Armed Forces withdrew the last troops from Afghanistan in August 2021, ending a 20-year war, the Warrenton-based federal contractor lost nearly 20% of its revenue and had to let go more than 75 employees practically overnight, says Greg Craddock, CEO of Patriot Group, which provides mission support security and risk management services to federal intelligence and defense clients as well as private sector clients. This often includes high-risk work overseas.

The pullout from the war happened quickly, resulting in more than 100,000 people leaving the country in just a few days. Even President Joe Biden called the withdrawal “messy.”

“Unfortunately, with the way things transpired, we lost a lot of valued team members just simply because the work disappeared,” Craddock says. “That’s something that we obviously don’t like doing — making those phone calls and letting people know that they have to look for another way to support their family.”

While suddenly losing a significant revenue stream forced Patriot Group to examine how to streamline its business and remain competitive, that was secondary to taking care of personnel, Craddock says. This meant that company leadership needed to be clear and direct in its communication with workers.

“Within our industry, one of the keys to success or failure is good or bad communication,” he adds. “There’s some uncomfortable conversations that went down but being forthright and honest and upfront with the personnel was just the key to success.”

As a result of the 2021 Afghanistan pullout and the subsequent hit to Patriot Group’s business, 2022 was a challenging year for the company. A key part of showing commitment to its employees was maintaining or even improving upon worker benefits and opportunities, Craddock says.

This includes allowing new hires to immediately enroll in the company’s health care plan and start contributing to their retirement plans. Patriot Group provides matching 401(k) accounts, matching 100% of the first 3% of an employee’s contribution, and 50% on the next 2%. Flexible work hours can also be used to accommodate family events. Personnel can also get tuition reimbursement for advanced or postgraduate degrees as well as certifications and business education workshops.

Patriot Group also fosters a culture of mentorship and support. The company prioritizes promoting current employees to higher-ranking positions.

“Our primary goal is to promote within when opportunities present themselves,” Craddock says. “One of the key components to that is making sure that our junior employees get the opportunity to not only perform without someone looking over their shoulder and develop their own leadership style, but also we’re there to help them learn more about effective leadership traits and best practices.”

The resilience Patriot Group has shown following an unexpected business challenge looks like it’s going to pay off. Today, the company employs 228 people in the U.S., about 70 of whom are in Virginia. Since 2020, its U.S. workforce has grown by about 80 people, including 30 in Virginia. PGI also participates in the state’s Virginia Values Veterans (V3) program, through which companies commit to hiring military veterans.

“2022 … [was] a challenge in terms of our overall business success, but we … [saw] real positive growth indicators for the back half of the year,” Craddock says, “and we think 2023 could be potentially one of our best ever.”

The 13th annual Best Places to Work list

‘Inferiority complex’ no more

As recently as 30 years ago, few people would have imagined that Fairfax County would grow to contain one of the most robust technology ecosystems in the nation, with thousands of tech-fueled firms, fed with workers trained by some of the state’s top universities.

Bruce Caswell, president and CEO of McLean-based federal tech contractor Maximus Inc., has been in Fairfax County for the past three decades. But he recalls a time when Fairfax — now home to 8,700 technology firms — didn’t compare to other tech epicenters in the U.S.

“There was a period where we had a bit of an inferiority complex because we would look at other regions like Silicon Valley or even the Route 128 corridor in Massachusetts and be envious of the way that they were building their technology ecosystems,” he says. “But I think we’re well past that at this point. If anything, we’re poised to become, if not the leading, already one of the very leading technology ecosystems in the country.”

How did Fairfax get there? Jennifer Taylor, president and CEO of the Northern Virginia Technology Council, says there’s been three major waves of tech innovation in the region since the 1990s: the emergence of the internet, the late 1990s dot-com bubble and the explosive regional growth of government contracting during the 2000s.

“Because Virginia is very business-friendly and because the federal government is the largest purchaser of tech products and services, it’s attracting the key pieces of the tech ecosystem,” she says. “Over 30 years, the area has just really flourished. All you have to do is take a look at the skyline and our infrastructure to see the growth.”

While government contracting has been a boon for the region, Fairfax County has also grown to attract commercial technology companies, Taylor adds. In the county alone, there are 44,000 open jobs, about 30% of which are in the tech industry, according to the Fairfax County Economic Development Authority (FCEDA).

Northern Virginia’s business-friendly atmosphere and federal contracting ecosystem attract tech companies, says Northern Virginia Technology Council President and CEO Jennifer Taylor. Photo by Will Schermerhorn
Northern Virginia’s business-friendly atmosphere and federal contracting ecosystem attract tech companies, says Northern Virginia Technology Council President and CEO Jennifer Taylor. Photo by Will Schermerhorn

Competing with other tech hubs

Silicon Valley has long been synonymous with tech startups. Currently, there are about 8,000 startup tech firms in the San Francisco Bay Area, employing about 225,000 people. Other tech hubs have popped up in Boston, Texas and North Carolina. However, Fairfax County has established itself as a tech government-contracting epicenter.

“People are realizing that Silicon Valley is not the only place that tech talent resides, and it’s not the only place where tech companies thrive,” says FCEDA President and CEO Victor Hoskins. Several Fairfax County startups have grown into successful unicorn tech companies with valuations of more than $1 billion, including Somatus Inc., Electrify America, ID.me Inc., IronNet Inc. and Expel Inc.

Fairfax County and the surrounding Washington, D.C., region also have a lower cost of living when compared with other tech hubs and major metropolitan areas, according to the FCEDA. San Francisco outpaces Northern Virginia in terms of tech compensation — but not by much. Tech workers in Northern Virginia make 97% of their counterparts’ salaries in New York, San Francisco, Seattle and San Jose, California, according to data from Carta, a San Francisco-based software firm specializing in tech industry equity management.

Entry-level tech workers in Fairfax County can expect starting salaries ranging from $80,000 to $150,000, Hoskins says, with compensation skyrocketing from there. Tech workers who have a few years of experience and a master’s degree can earn between $200,000 and $350,000 per year in the county. A typical household (with two adults and two children) would need a salary of about $117,000 per year to live comfortably in Fairfax County, according to data from the Economic Policy Institute. The average cost for a two-bedroom apartment in Fairfax County is $1,909 per month, EPI data shows. And while the median home sale price for November 2022 was $630,000, there are also affordable housing options in Fairfax County, where the government has a goal to add 10,000 more units by 2034.

While that cost of living may seem manageable on paper, Northern Virginia is notorious for being the most expensive region in the state. To continue to attract tech talent to the region, the region needs to become more affordable, Taylor says. “Can they afford to live here? Are the wages competitive?” Taylor questions. “If we can crack that nut, it’ll help us compete against areas like San Francisco.”

Remote work is one option for making living in the region more affordable since employees can find cheaper housing options outside the D.C. real estate bubble. With the option of remote work, professionals can also land jobs based in higher paying cities — like New York City or San Francisco — but still work from home. About 70% of the employees at Herndon-based cybersecurity company Expel work from home at least part of the time. “Having the availability of working remote — even if it’s only a few days a week — really gives you that option to choose where to reside without the need to be as close to the headquarters as possible,” says Jeff Kaiser, Expel’s principal program manager for compensation analytics. Expel, which was established in 2016, employs nearly 1,000 people and had a $1.5 billion valuation as of September 2022.

“We do also find folks who are well-established in their careers,” adds Yanek Korff, Expel’s co-founder and chief of staff. “Our more experienced folks tend not to have a problem with the pricing in this area. They’ve already found their homes, they have real estate, they’re building families here.”

The variety of tech jobs available in Fairfax County is vast. Some of the most in-demand tech positions in the county include cloud engineers, cybersecurity specialists, full-stack engineers, .net developers, business analysts and enterprise architects, Caswell says.

“This area provides almost inexhaustible talent for tech businesses, whether it’s security or just tech in general,” Korff says. It also has “a diverse talent [pool], which I really like,” he adds. “The D.C. area is a bit of a melting pot, as it’s often a transitory area for people.”

During the next five years, the Northern Virginia region will need to add more than 130,000 tech jobs to keep up with demand, according to data from the FCEDA in collaboration with the Northern Virginia Economic Development Alliance (NOVA EDA). In Fairfax County alone, there are currently more than 13,000 tech jobs left unfilled, county data shows.

Virginia ranks third in the nation for concentration of tech workers, making up 8.7% of the commonwealth’s workforce, according to the Computing Technology Industry Association (CompTIA). The state also ranks No. 5 in net tech employment at more than 350,000 workers, and fourth highest for new tech job postings in 2021, at more than 48,000 postings, according to CompTIA. By comparison, nationally, employment in computer and information technology jobs is projected to grow 15% during the next 10 years, which is much faster than the average for all occupations, according to the U.S. Bureau of Labor Statistics. Plus, the Virginia Employment Commission projects a nearly 17% increase in computer and IT jobs during the next decade.

The Fairfax County area is “one of the very leading technology ecosystems in the country,” says Bruce Caswell, president and CEO of McLean-based Maximus. Photo by Will Schermerhorn
The Fairfax County area is “one of the very leading technology ecosystems in the country,” says Bruce Caswell, president and CEO of McLean-based Maximus. Photo by Will Schermerhorn

Tech talent demand

While there will be plenty of employment opportunities for tech workers during the next decade, Fairfax County isn’t immune to the massive tech talent gap. In the cybersecurity industry alone, the nation is short 700,000 workers, according to a report by market research company Lightcast.

Part of the reason that many of these tech jobs are left unfilled is a skills gap. The region, however, is working on closing the fissure between the skills tech companies are seeking in workers and what top universities in the region are teaching students. This “employer-signaling” system, as established by the Greater Washington Partnership, listens to tech companies to learn the type of skills needed and communicates that need to top universities in the region, like George Mason University and Virginia Tech’s developing Innovation Campus, Caswell explains.

“We’re listening to industry and government and really proactively asking them and rejiggering electives and programs to meet those needs,” says Liza Wilson Durant, George Mason’s associate provost for strategic initiatives and community engagement and professor and associate dean in the College of Engineering and Computing. “That makes Virginia a very interesting place for industry to locate because they’re hopefully going to find the talent that they need to meet those demands.”

For example, in 2015, George Mason launched the nation’s first cybersecurity engineering bachelor’s degree largely in cooperation with industry partners, including Northrop Grumman Corp., the Falls Church-based Fortune 500 defense contractor. While most cybersecurity programs across the U.S. are focused on IT security, George Mason’s program focuses on Internet of Things (IoT) devices, smart buildings and autonomous vehicles. GMU similarly consulted Reston-based Fortune 500 contractor Science Applications International Corp. (SAIC) to launch its master’s in data analytics engineering degree in 2013.

“We’ve been very focused on the supply of diverse tech talent for Virginia and the region,” she adds. “We are very interested in understanding what the skills, knowledge and abilities of industry and government are so that we can make sure that we’re producing graduates with the skills that industry and government need.”

While Virginia Tech’s Innovation Campus is in Alexandria, it too acts as a feeder for tech companies in the region. The school, which opened in 2020, currently hosts about 250 graduate students. By its 2024 full buildout, Academic Building One will be able to accommodate about 750 graduate students and 200 doctoral students. Ultimately, it is hoped they will fill computer science and computer engineering jobs across the Northern Virginia region, including at Amazon.com Inc.’s HQ2 East Coast headquarters in Arlington.

“We’re not scaled to be a boutique; we’re scaled to really deliver at a high end in terms of the number of students that will be graduating each year that will go into this workforce,” says Lance Collins, vice president and executive director of Virginia Tech’s Innovation Campus. “There’s a lot of companies, and I think that it’s becoming an attraction to be in this region because of the investments that Virginia has made into its higher ed to address that gap.”

At this point, though, there’s still more jobs out there than there are people to fill them, Collins adds. “We really want there to be an equilibrium because that means companies can grow at the pace that their intrinsic capability and market share,” he says.

Fairfax County still has a growing population, Taylor points out, but universities and companies will need to pay closer attention to retention efforts as other tech hubs also continue to grow. A lot of this will come down to company culture and work flexibility, Expel leaders say. And that goes beyond amenities like free snacks or foosball in the breakroom.

“A lot of companies talk a pretty good game from a cultural perspective, but when it comes down to the decisions and the behavior, though, there’s some variance,” Korff says. “That can make it very difficult to keep people in seats because that disconnect between what people expect and what they find can wear on you over time.” 


Steven F. Udvar-Hazy CenterPhoto courtesy Virginia Tourism Corp.
Steven F. Udvar-Hazy Center
Photo courtesy Virginia Tourism Corp.

Fairfax County at a glance

Located about 20 miles south and west of Washington, D.C., Fairfax County was established in 1742; the city of Fairfax, the county seat, was incorporated in 1805. Fairfax County is an epicenter for many of the state’s technology companies and is also home to George Washington’s Mount Vernon estate. Nine Fortune 500 companies are based in Fairfax County, including defense contractors General Dynamics Corp. and Northrop Grumman Corp. George Mason University, one of the most diverse colleges in the country, is also in the county.

Population

1.14 million

Top employers

  • Inova Health System
  • Amazon.com Inc.
  • Booz Allen Hamilton Holding Corp.
  • Capital One Financial Corp.
  • Freddie Mac
  • General Dynamics Corp.
  • Science Applications
    International Corp. (SAIC)

Major attractions

Tysons Corner Center, a massive mall with hundreds of stores and restaurants, is a premier regional shopping destination. The county is also home to the Smithsonian Air and Space Museum’s Steven F. Udvar-Hazy Center and the Wolf Trap National Park for the Performing Arts, as well as Great Falls Park and Mount Vernon. Notable areas to visit in Fairfax include Reston, Vienna, Tysons/McLean and Herndon. Reston Town Center is another popular shopping and dining destination.

Top convention hotels

Westfields Marriott
Washington Dulles

336 rooms, 59,538 square feet
of event space

Hyatt Regency Reston
518 rooms, 32,000 square feet
of event space

The Ritz-Carlton Tysons Corner
398 rooms, 30,000 square feet
of event space

Boutique/luxury hotels

Archer Hotels

The Watermark Hotel

Stafford Hotel

Notable restaurants

2941 Restaurant
French-meets-American, 2941.com

Amoo’s
Persian, amoosrestaurant.com

Clarity
Modern American, clarityvienna.com

Wren Tysons
Japanese, wrentysons.com

Fortune 500 companies

  • Freddie Mac
  • General Dynamics Corp.
  • Northrop Grumman Corp.
  • Capital One Financial Corp.
  • Leidos Holdings Inc.
  • NVR Inc.
  • Booz Allen Hamilton Holding Corp.
  • Science Applications
    International Corp. (SAIC)
  • Beacon Roofing Supply

Exceeding expectations

In the greater Richmond region, local economic development authorities have been hard at work landing new business and securing expansions, and this year those efforts bore fruit, they say.

In fact, 2022 has outpaced the past two decades, declares Jennifer Wakefield, the Greater Richmond Partnership’s  president and CEO, as the region landed two “megaprojects” — The Lego Group’s $1 billion toy factory in Chesterfield County (See related November 2022 cover story) and CoStar Group Inc.’s $460 million expansion in Richmond — as well as other major deals.

Representing the city of Richmond and the counties of Henrico, Hanover and Chesterfield, GRP was instrumental in bringing in 13 projects in the past fiscal year that are expected to produce nearly 5,000 jobs, totaling $1.62 billion in capital investment and 4.45 million square feet of development.

Lego’s announcement in June that it will build a $1 billion plant in Chesterfield County’s Meadowville Technology Park, creating more than 1,760 jobs over the next decade, is the Richmond region’s marquee deal this year, although CoStar’s expansion is making a big impact in the city. In May, the real estate data company purchased the former SunTrust building south of the James River for $20 million, and on the other side of the river, adjacent to its current footprint, will be a $460 million campus expected to employ 2,000 people.

“It doesn’t look like there’s an end in sight, which is good,” says Wakefield, who joined GRP in 2017 and was promoted to CEO in February 2021. “It has been absolutely insane lately.”

The Richmond region continues to be a popular destination for the manufacturing and distribution sectors, as well as tech and pharmaceutical businesses. Much of that is due to its location near major highways, airports, railways and the Port of Virginia’s terminals in Richmond and Hampton Roads, Wakefield says.

“I think that we have all the right mix of ingredients for companies who are interested in being in what I like to call a Goldilocks location,” she says. “We’re not too big. We’re not too small. We’re just right.”

Henrico County

If you’ve ever dunked an Oreo in milk, chances are it came from the Mondelez bakery in eastern Henrico. Chicago-based Mondelez International Inc., a $26 billion-plus food and confectionary company, owns all Nabisco products.

The Mondelez bakery in Henrico has been around for about 50 years, and in late 2021, the company announced a $102.5 million expansion, expected to create 80 jobs. The expansion also includes new manufacturing equipment, which has the power to produce 10,000 Oreos per minute, says Anthony Romanello, executive director of the Henrico County Economic Development Authority.

Coca-Cola also announced it would spend $23 million on upgrades and expansions to its Henrico plant, which includes new bottling technology. Bottles about the size of a test tube will be shipped to the Henrico facility, and a blow-mold machine expands the plastic to a larger 20 oz. size. This means that 60 to 70 fewer trucks are coming to the Coke plant per week because they can carry more of the consolidated bottles. This investment saves the company on transportation costs and reduces truck traffic on county roads, explains Romanello.

Because of Henrico’s long history in food distribution, he adds, “In the eastern part of the county, we’ve got substantial infrastructure that they need for the investments and a really good road network, so they can get the product out quickly.”

Henrico also landed a $144 million investment from QTS, a data center company that set up a network access point for three subsea telecommunications cables from Virginia Beach, which connect to data networks in Europe, South America and the United States. QTS announced in July it would expand its White Oak Technology Park data center by 1.5 million square feet, near Meta Platforms Inc.’s 970,000-square-foot data center.

On the western side of Henrico County, pharmaceutical giant Thermo Fisher Scientific Inc. announced in March a
$97 million investment to build two bioanalytical labs in the former Toys “R” Us location near Regency Square, as well as a third lab in downtown Richmond near VCU Medical Center. The company is targeting Virginia college-educated scientists to fill about 400 jobs in the county.

Another high-profile project, GreenCity, is coming to the former Best Products Co. campus, just off interstates 64 and 95.

Groundbreaking on the $2.3 billion mixed-use development — which will include a sustainably built and operated 17,000-seat arena expected to open by 2025 — is set to take place in early 2023. The 204-acre property will also include residential, retail, office and hotel space, with full completion by 2034.

This project is in step with Henrico’s master plan, which focuses on redevelopment on the west side of the county and new buildings on the east, Romanello says.

“We’re seeing more residential [space]. We’re seeing buildings being upgraded,” he says. “You’re going to see further densities there that we haven’t had before.”

Chesterfield County

This year has been very busy for Meadowville Technology Park in eastern Chesterfield.

In September, Plenty Unlimited Co. announced its plans to build the nation’s largest indoor vertical farming facility at the tech park, a $300 million investment expected to produce 300 jobs in the next six years. The first building, expected to be complete in late 2023, will feature 30-foot towers to grow Driscoll’s strawberries at scale, a major change for the agribusiness, which has typically sourced fruit from traditional farms in California and Mexico.

The goal is to grow strawberries in Virginia and be able to ship them to an estimated 100 million customers in the mid-Atlantic and Northeast within hours.

“[Plenty] had some pretty specific needs around power,” says Matt McLaren, senior project manager with Chesterfield Economic Development. “Meadowville Technology Park has a great relationship and infrastructure with Dominion, and we’re able to plan for the future with power needs.”

One of Petersburg’s major pharmaceutical players, nonprofit drugmaker Civica Rx, also is setting up shop at the tech park, investing $27.8 million on a 55,000-square-foot lab to support its North American headquarters being built in Petersburg and expected to open in 2024.

Of course, the arrival of Danish toymaker Lego, which plans to start hiring workers late this year or in early 2023 for its moulding, processing and packing plant on 340 acres at Meadowville, is the biggest development for the region.

“The Lego project initially was driven here because of our location, because they can get to a lot of customers,” Wakefield says. “One of the biggest things that we bill is that you can get to half of the U.S. customers within a day’s drive.”

While economic development projects usually take years to come to fruition, there will already be a groundbreaking on the 1.7 million-square-foot facility later this year at the technology park. Lego said in its announcement in June it will begin operations in a temporary building in early 2024, and the permanent plant will start production in the second half of 2025.

“This is a legacy company that continues to innovate. We’re excited to partner them with our workforce,” McLaren says. “We share a lot of their values. It just felt like a perfect fit.”

Richmond

In October 2021, the city of Richmond announced the marketing of the Diamond baseball stadium property as an area for redevelopment. Now, plans for the rebranded Diamond District are steaming ahead with City Council approval.

The center of the $2.44 billion multiuse development will be a new baseball stadium for the Richmond Flying Squirrels AA team — a necessity under new Minor League Baseball regulations to keep baseball in Richmond — and accompanying residential, office, retail and hotel space, as well as walkable green space.

One of the aims of the project is to connect the new neighborhood to Richmond’s popular Scott’s Addition community, just across the high-traffic Arthur Ashe Jr. Boulevard.

In September, a 10-person city panel chose a development group for the project that includes Richmond-based Thalhimer Realty Partners, Washington, D.C.-based Republic Properties Corp., Chicago-based Loop Capital Holdings LLC and San Diego venue developer JMI Sports. The joint venture’s proposal beat out 14 other applicants.

Unlike earlier big proposals (including the unsuccessful Navy Hill plan), the Diamond District follows the Richmond 300 masterplan, and the stadium will be funded with Community Development Authority (CDA) bond financing. Tax revenue from the 67-acre property, as well as leasing fees from the Squirrels and Virginia Commonwealth University athletics, will pay off the bonds.

“I also cannot stress enough the importance of land-use planning that has paved the way for large-scale redevelopment projects in the city,” says Leonard Sledge, the city’s economic development director and a member of the panel. Phase one will include the baseball park, which is expected to open for the 2025 MiLB season.

Downtown, CoStar has started work on its $460 million campus, which will include a 26-story, 1 million-square-foot building, the tallest among Richmond’s skyline. The former SunTrust bank office across the James River will be home for about 400 more employees. Essentially, Richmond will serve as a second headquarters for the Washington, D.C.-based company, which currently has about 1,200 employees in Virginia’s capital.

Richmond’s next large-scale economic development focus will be centered around the Greater Richmond Convention Center, Sledge says, part of a new “innovation district” that would add office and lab space for the growing biotech sector and more residential and park land.

“Richmond continues to be a great place for people and companies — large and small,” Sledge says. “More importantly, the economic development work of the city continues to emphasize the importance of equitable economic growth.”

Hanover County

Perhaps the unofficial nickname for the town of Ashland — “The Center of the Universe” — is starting to also apply to Hanover County.

Hanover has seen more commercial development in the past five years than in the previous 15, says E. Linwood Thomas IV,
director of Hanover County Economic Development. In 2022, the county announced more than $240 million in new projects.

“The overall consensus is that Hanover has been consistently strong,” Thomas says. “We’ve been punching above our weight class for the last five years.”

Nonetheless, the county has lured Performance Food Group, a Goochland-based Fortune 500 company that plans to build an $80 million sales and distribution facility in Ashland, producing an expected 125 jobs.

Pennsylvania-based Lutron Electronics Co. Inc., which produces residential and commercial lighting products, also plans to build in Ashland, investing $28.3 million in a manufacturing plant that is set to employ 200. The governor’s office announced that deal in September. Also, pharmaceutical giant Walgreens announced in February that it will build a $34.2 million automated packaging and distribution facility in eastern Hanover, creating 249 jobs. Meanwhile, the Wegmans $175 million, 1.7 million-square-foot distribution center is under construction.

Part of Hanover’s success in securing new economic development opportunities has been its engagement with the Virginia Business Ready Sites Program, which helps localities get land shovel-ready for businesses to move in quickly.

“They start to build the shell, and the next thing you know, you’ve got these big corporations who see the Richmond region and Hanover County as a strategic location on the Eastern Seaboard,” Thomas says. “We do a lot of this work up front, so we don’t have to compete as hard on the back end.”

Currently, Hanover County has 5.4 million square feet of new commercially zoned space, either approved or being developed. The county’s vacancy rates in the industrial market are less than 1.6%.

Most of this space is being leased before completion because of the county’s “strategic location and low cost to do business,” Thomas adds. “Hanover is just really starting to see the fruits of those labors in this past year because of all the new development taking place.” 


Black History Museum and Cultural Center of Virginia Photo courtesy Richmond Region Tourism
Black History Museum and Cultural Center of Virginia Photo courtesy Richmond Region Tourism

Richmond at a glance

Founded in 1737 by Col. William Byrd II, Richmond is known as the River City for its location on the James River. The state’s capital, Richmond is home to the Virginia General Assembly and much of state government, and the metro region is headquarters for eight Fortune 500 companies. The region also is home to the University of Richmond, Virginia Commonwealth University, Virginia State University and Virginia Union University.

Population

226,604 (city); 1.3 million (metro region)

Top employers

VCU Health System/VCU: 21,332 employees

Capital One Financial Corp.: 13,000

HCA Virginia Health System: 11,000

Bon Secours Richmond: 8,416

Dominion Energy Inc.: 5,433

Major attractions

Richmond is home to historical and cultural attractions such as the Poe Museum, American Civil War Museum, the Virginia Museum of Fine Arts, the Virginia Museum of History & Culture and the Black History Museum and Cultural Center of Virginia. Visitors can also enjoy time outside at Maymont park or the Kings Dominion amusement park about 20 miles north of the city. Carytown, the Fan District and Scott’s Addition offer many options for shopping, dining and entertainment.

Top convention hotels

Richmond Marriott
413 rooms, 26,760 square feet
of event space

DoubleTree by Hilton Hotel
Richmond – Midlothian
237 rooms, 26,039 square feet
of event space

The Jefferson
181 rooms, 26,000 square feet
of event space

Hilton Richmond Short Pump
Hotel and Spa
254 rooms, 21,937 square feet
of event space

Notable restaurants

Lemaire — New American, lemairerestaurant.com

Longoven — New American, longovenrva.com

L’Opossum — Modern French, lopossum.com

Shagbark — New American/Southern, shagbarkrva.com

Stella’s — Greek, stellasrichmond.com

Fortune 500 companies

Performance Food Group Co.

Altria Group Inc.

CarMax

Dominion Energy Inc.

Markel Corp.

Owens & Minor Inc.

Genworth Financial

Arko Corp.

Keeping watch

The question of the quarter: Are we entering a recession? One key indicator of a future recession can be inflation, which hit a 40-year high this year.

Between June 2021 and June 2022, the consumer price index increased by 9.1%, according to the U.S. Bureau of Labor Statistics. One of the first tangible signs for many consumers were gas prices at the pump, which exceeded $5 a gallon earlier this year, although prices dipped to a statewide average of $3.45 per gallon in Virginia by mid-September.

The Federal Reserve Bank has also taken actions to cool inflation this year, enacting two 0.75-point interest rate hikes in a row, after two years of 0% interest rates during the pandemic.

The Fed did this to break the “grip of inflation,” as Atlantic Union Bank CEO John Asbury puts it, designed to create “demand destruction” for products with soaring prices.

In late September (after this issue went to press), the Fed’s voting body was set to meet, with some traders predicting that it could raise interest rates again by as much as a percentage point.

Although the word “recession” strikes fear in the hearts of Americans who suffered losses during the 2008 Great Recession, the technical definition is two consecutive quarters of decline in GDP, which occurred during the start of the COVID-19 pandemic, as well as other periods throughout the past 25 years.

In a Henrico County town hall meeting in June, Richmond Fed President and CEO Tom Barkin said, “Historically, eight of the last 11 Fed tightening cycles have been followed by some sort of a recession.” He predicted that supply chain and labor shortage issues would subside in coming months. “That means inflation should come down over time,” Barkin said, “but it will take time.”

Nonetheless, Virginia businesses and bankers are keeping a watchful eye on their budgets as they plan for the end of the year and 2023.

“We’re in a little bit of new-ground territory,” says Brian Schools, president and CEO of Chartway Federal Credit Union, noting the combination of inflation and labor shortages in today’s market. “But I will tell you the loan volume has been really good of recent.”

This counteracts worries that rising interest rates would cause a slowdown in loans, both on the consumer and commercial side. What bankers have seen so far in the marketplace is bucking that logic.

“It’s an intuitively natural assumption that as interest rates rise, loan demand will go down,” says Virginia Bankers Association President and CEO Bruce Whitehurst. However, he notes, “loan demand is pretty good on the commercial side. Everyone’s looking for the potential of a slowdown but [we’re] really not seeing it at the moment.”

Thomas Ransom, Truist’s Virginia regional president, says his commercial and mid-market customers are “generally positive” about the economic outlook but still watchful. Photo by Shandell Taylor

Strong commercial demand

Coming out of COVID, banks expected business would be a little soft, says Cecilia Hodges, M&T Bank’s regional president for Greater Washington and Virginia. But her bank has seen just the opposite.

“We’re having a really strong year in all areas of our business right now,” she says. “Demand for commercial loans is very strong. Business banking activity has been very strong.”

In fact, one trend that has emerged in commercial loans has been that more businesses are borrowing now to expand their inventories because they believe prices may continue to rise with inflation — or they’re trying to avoid even higher interest rates in the months to come. More companies are also “doubling down” by making capital investments, considering acquisitions and growing their businesses, Hodges adds.

Truist’s commercial and middle-market clients remain “generally positive” about current economic conditions, says Thomas Ransom, the bank’s Virginia regional president, but there are also growing concerns about labor shortages and margin pressure amid rising interest rates and higher input costs.

“Given all of this, we remain generally positive about our prospects for continued loan growth,” Ransom says. “At the same time, we acknowledge that there’s increased uncertainty associated with the softening economic environment, which may cause loan growth to soften, but currently we’re continuing to help our clients understand the marketplace and their options.”

In the University of Michigan’s U.S. consumer sentiment survey for August, 55.1% of people polled felt positively about the economy, marking a three-month high after June’s low of 50%, and consumers predicted prices to increase at an annual rate of 3% over the next five to 10 years.

Asked whether now is the right time for businesses to take out loans, Hodges says it depends on how a particular company is faring in the current economic environment. Some businesses thrived during the pandemic, adopting new technologies and figuring out ways to increase productivity and demands for their products and services. Other businesses, though, have felt more pressure to increase wages and pricing, she says.

“For some of those companies, it’s been a struggle for them, and it’s been hard for them to spend money and make investments,” Hodges says.

Ransom says Truist has seen its corporate finance and mergers and acquisitions (M&A) business pick up this year.

“We are actively having conversations with our clients to understand how inflation and rising rates impact their businesses so that we can work with them on ways to strengthen their companies’ positioning for any down cycle,” he says.

Atlantic Union has also seen some commercial clients rely more on cash reserves when investing in new inventory.

“We’re starting to see some borrowers use more cash instead [of taking out loans],” says David Ring, an executive vice president and commercial banking group executive with Atlantic Union Bank. “For equipment purchases in particular, [clients are] starting to use cash rather than financing or even vendor financing because it’s a more productive use of their cash.”

On the consumer side

When looking at consumer loan demands, two areas have become sticky for low- to middle-income consumers in particular: mortgages and car loans. The two-point increase in interest rates since the start of the year has caused a slowdown in home sales and mortgage applications, says Ryan Price, chief economist with Virginia Realtors.

In June, home sales dropped by nearly 19% statewide compared with June 2021, Virginia Realtors reported, affecting the whole state, with the largest declines in the Shenandoah Valley, the Northern Neck, the Eastern Shore and suburban Richmond and Northern Virginia.

Higher interest rates are “complicating a lot of potential buyers’ — and even sellers’ — budgets,” Price says. “It’s adding a lot of cost to the mortgages, and it’s also reducing their purchasing power.”

Credit unions in particular may start to feel the effects of a decline in home loan applications. Mortgage lending typically accounts for about 50% of all credit union loans, including first mortgages, refinances and home equity lines, says JT Blau, chief advocacy officer of the Virginia Credit Union League, which represents 108 member-owned credit unions.

“We’re hearing from a lot of our credit unions that originations or new mortgage loans have reduced fairly quickly,” he says. “This is due to the rise in interest rates and home prices. It’s making that monthly payment harder and harder to obtain for people.”

Steven Yeakel, president and CEO of the Virginia Association of Community Banks, says bankers are still watching how interest rate hikes could affect consumer loan demands for the rest of 2022 and 2023.

“Certainly, what’s going on now does not compare to the concerns over the economy in 2019 and 2020 or the concerns in banking-customer relationships and the challenges hitting consumers primarily,” he says. “[Community banks are] just very carefully examining the data that’s there and staying in close touch with borrowers and ready to make the adjustments as they present themselves.”

Hodges notes that M&T’s homebuilding clients have also reported fewer people visiting model homes or looking to purchase. Plus, the construction of new homes is slowing down because of affordability issues, mostly around mortgage rates, Asbury adds.

On the commercial real estate side, Atlantic Union is seeing large real estate sales starting to slow down, but that can work out well for banks, Ring says. “That stuff is staying on our books longer, which is really good for us and seeing our balances be more stable.”

Similarly, refinancing has slowed down since interest rates rose above zero, VBA’s Whitehurst says. In August, the national Mortgage Bankers Association reported that mortgage applications and refinancing fell to their lowest levels in 22 years.

“If someone is interested in refinancing their home, they might be now at a rate that is higher than what they currently have, and that can make that not a good option for people,” Blau notes.

The mortgage slump has not carried over to auto loans, though, at least in the state’s credit unions. As of the first half of 2022, auto loan balances grew 12%, Blau says, and if the pace continues, it would be the biggest year for auto loan growth since 1994. In Virginia, according to a Federal Reserve report released in August, the average auto debt per capita was $5,210.

However, Blau notes, there’s still plenty of uncertainty in the vehicle market, from microchip disruptions to fluctuating gas prices.

“Inflation plays a huge part in the household budget,” he says. “Our members are weighing gas, car payments, all these factors, along with all the other elements of a budget. Finding a car payment that works can be difficult.”

Credit card crunch

Although some consumers may be wary about taking out loans, they’re increasingly leaning on credit. In the second quarter of the year, credit card balances jumped by 13%, the biggest year-over-year spike in 20 years, the Federal Reserve Bank of New York reported.

“People are tapping into credit to cover for some of those inflationary pressures,” Schools says. M&T is also starting to see balances creeping up on consumer credit cards, Hodges says.

“We’re seeing a little bit of the more moderate-income individuals and families are getting stretched thin due to inflation, and they’re starting to rely on credit for their needs,” she says. “The higher-income individuals and families are still sitting on a fairly nice cash cushion, and they really haven’t been impacted.”

What will be important to watch is credit scores, Blau says, because those heavily impact consumers’ ability to get loans with desirable interest rates. Asbury says, though, that Atlantic Union has seen an absence of credit defaults or other payment problems.

“As a bank, one of the things that is the best indicator of health is what are loan losses and credit defaults doing?” he says. “And the answer is they’re not doing anything.”

Another benchmark that banks will need to keep an eye on as interest rates continue to rise is deposit levels. In September, the Federal Deposit Insurance Corp. (FDIC) reported that deposits fell 1.9% to $19.6 trillion in the second quarter of the year, the first time that deposits have declined since 2018, although the report notes that stimulus money during the pandemic prompted “unprecedented growth” in deposits.

In late 2020 and 2021, “we all lived in an excess deposit world, perhaps from stimulus money,” Schools says. “Well, that has all subsided and now it’s about [banks] marketing for deposits.”

Hodges notes that competition for deposits was “pretty fierce” when interest rates were at zero, and now is even more so.

“In this rising rate environment, [deposits are] extremely valuable to banks, and it’s also opened up an opportunity for businesses to actually shop for rates,” she says. “All banks are hungry for deposits right now.” 

‘The Wild West’

From an outsider’s perspective, it may appear as if technology is improving and changing almost daily — especially sparked by pandemic-driven remote work. But according to a 2021 study by the Massachusetts Institute of Technology, more than 80% of technologies improve in performance at a rate of less than 25% per year.

Virginia Tech, however, is focusing on the future of technology: quantum research, engineering and computing.

Not only is the Blacksburg-based school investing resources in a field that’s burgeoning in importance, but it’s also serving as a force for thought leadership in this space. Between the Virginia Tech Center for Quantum Information Science and Engineering and a $12.5 million gift from Fortune 500 federal contractor Northrop Grumman Corp. to fund quantum technology research and education, the university is moving into the research and development of quantum technology.  It’s believed that quantum research will lead to the development of exponentially faster and smaller computers and processors, as well as groundbreaking methods for making data more secure.

Quantum technology “would allow us to solve computational problems that we couldn’t solve in our lifetime,” says Luke Lester, head of Virginia Tech’s Bradley Department of Electrical and Computer Engineering (ECE).

The science of quantum physics and mechanics involves the study of the physical properties and interactions of matter at the scale of atomic and subatomic particles, explains Wayne A. Scales, Virginia Tech’s J. Byron Maupin Professor of Engineering. This could involve studying how atoms interact with electromagnetic fields as well as the formation of molecules, adds Sophia Economou, a Virginia Tech physics professor and director of the Blacksburg-based Virginia Tech Center for Quantum Information Science and Engineering.

Applications for quantum computing range from simulating chemical reactions in pharmaceuticals development to solving logistics problems, says Sophia Economou (center), director of the Virginia Tech Center for Quantum Information Science and Engineering. Photo courtesy Virginia Tech

Quantum physics is very different from the classical physics discovered by Isaac Newton more than three centuries ago. Quantum physics’ counterintuitive features — such as the ability of matter to exist in multiple states at one time — can be used to implement new kinds of technology.

Quantum computing adds to the ability to manipulate the very smallest pieces of matter and technology — but packs a bigger punch than classical computers.

Quantum computers can solve problems that traditional computers — even supercomputers — can’t handle, according to IBM, a pioneer in the development of quantum computers. In January 2019, International Business Machines Corp. unveiled the first integrated quantum computer, IBM Q System One, designed for scientific and commercial use. Applications for this quantum computer include new methods for modeling financial data and designing optimal paths across global systems for more efficient logistics practices or optimizing fleet operations, according to IBM.

While we’re still probably at least a decade away from seeing quantum technology in practical corporate use, IBM has continued to develop quantum computers, which are generally much better at finding patterns in data and can create more advanced algorithms. One real-world application of IBM’s quantum computing efforts so far is taking place via a partnership with Mercedes-Benz, which is using the technology to research and develop more efficient lithium-ion batteries for electric vehicles. Using quantum computing, researchers can model molecular interactions occurring inside of batteries in hopes of developing longer-lasting batteries with greater charging capacities and speeds.

In short, quantum technology is expected to impact virtually every branch of engineering in the future, Scales says. So, Virginia Tech researchers, students and professors are studying and developing ways to implement quantum theory in a variety of applications, such as cryptography and cybersecurity.

“To be really simple, it is the future,” says Peter Kent, a graduate research assistant at the Hume Center for National Security and Technology and National Security Institute at Virginia Tech.

Multidisciplinary research

Quantum science research requires expertise and input from a variety of disciplines, including computer science, engineering, chemistry, physics and mathematics. Interdisciplinary research in quantum computing started organically at Virginia Tech, Economou says. Much of the effort started with Economou’s own research, along with that of chemistry, physics and math faculty members.

“The disciplinary collaboration takes patience in the beginning because you need to establish a common language — sometimes the same things with different names,” she says. “Sometimes you don’t know the same things and that’s good.”

But to streamline collaboration, Virginia Tech is forming two centers for quantum research: The Center of Quantum Architecture and Software Development and the Virginia Tech Center for Quantum Information Science and Engineering.

The former, which is based at the Virginia Tech Innovation Campus in Alexandria, is funded by the Northrop Grumman gift and will be focused on coding and software for quantum computing.

In November 2021, Northrop Grumman announced the quantum-focused gift, which will fund endowed faculty, fellowships, programming connecting the corporation to the campus, pathway programs for K-12 students and support for master’s degree students in computer science and computer engineering experiential learning programs. So far, the Northrop Grumman funding has gone toward searching for another professor and researcher and helping connect company experts with Virginia Tech quantum science and engineering faculty to develop quantum computers and technology.

“Additionally, the company’s funding is also supporting the development of a diverse pipeline of talent to increase the opportunities for students who want to study quantum,” says a Northrop Grumman spokesperson. “We’re in the early planning stages of standing up experiential learning opportunities between students and industry partners in the application of this critical area of research, science and engineering.”

Quantum technology “would allow us
to solve computational problems that we couldn’t solve in our lifetime,” says Luke Lester, head of Virginia Tech’s Bradley Department of Electrical and Computer Engineering. Photo courtesy Virginia Tech

Economou’s Center for Quantum Information Science and Engineering focuses on researching quantum computing and communications. Her group, which includes students, researchers and faculty from disciplines such as computer science, physics, chemistry, and engineering, performs theoretical research in quantum information, technologies, networking and cryptography.

“The line between ‘researching’ and ‘developing’ quantum technology is somewhat blurry,” Economou explains. “I would say we are on the more fundamental side, but our work is important for the development of quantum technology. There exist multiple companies, including many startups, that are on the more applied side. To really create and scale up a technology, industry is needed anyway.”

As Virginia Tech’s two quantum technology research centers continue to grow, professors and students are expanding their quantum science research into new applications of quantum computing and technology.

At the university’s electrical and computer engineering department, Lester and another professor, Mantu Hudait, are researching quantum dot technology, which transports electrons to emit various colors of light to be used in applications such as lasers, LED lights and medical imaging devices. Other quantum research being done at Virginia Tech’s ECE focuses on information processing, cybersecurity, and radio frequency modalities.

Virginia Tech is also part of the Quantum Economic Development Consortium (QED-C), a national initiative focused on growing the U.S. quantum tech industry. The QED-C was established through the National Quantum Initiative Act passed by Congress in 2018 to accelerate quantum research.

Real-world risks, rewards

The pandemic revealed the fragility of many aspects of life — including the difficulty of protecting sensitive information. Between 2020 and 2021, the average number of cyberattacks per company rose by 31%, according to Accenture’s State of Cybersecurity Resilience 2021 report. But quantum applications have the potential to achieve new levels of cybersecurity, Lester says.

“What do consumers of engineering and technology ultimately care about? They care about speed, and they care about security, passwords and stealth,” he adds.

But beware: In the wrong hands, a quantum computer also is efficient and fast enough to break the most secure current encryption codes, Scales says. A foreign adversary or bad actor with a quantum computer could easily hack into systems and steal data, he adds. That’s one of the reasons governments all over the world are investing in quantum research, Economou says. It’s hoped that quantum cryptography research would help prevent future quantum computing attacks.

Other applications of quantum computing include simulating chemical reactions to design drugs or developing solutions to complicated logistics problems, Economou says. Quantum computing will also be important for technology optimization purposes like finding optimal data patterns. This could lead to finding better logistical patterns and increasing energy efficiency, providing solutions that could save corporations money.

“That’s the direction that industry and business are interested in because, of course, optimization has a big impact across many different applications,” Economou adds. “Right now, with quantum computers, we’re at the stage where people are still developing the basic hardware, the building blocks, and we don’t even know yet what kind of technology we’ll end up using in a real quantum computer.”

Communication networks like 5G could be improved by quantum technology, making data more secure. 5G communication could be encrypted by quantum key distribution — a method of making data more secure via quantum mechanics. Verizon started trials using quantum keys to protect its 5G network in 2020. One of  the most powerful things about quantum-powered cybersecurity is its increased ability to detect intrusions, Scales says.

“Encryption keys are continuously generated and are immune to attacks because any disruption to the channel breaks the quantum state of photons, signaling eavesdroppers are present,” states a 2020 report on Verizon’s quantum key trial.

Teaching the future

Quantum research leaders at Virginia Tech agree that this type of emerging technology requires collaboration from several STEM-related disciplines. That’s why Scales is so focused on creating a quantum science curriculum and other learning opportunities for students from many educational backgrounds.

“It’s the Wild West almost,” says Sefunmi “Shef” Ashiru, a rising senior at Virginia Tech studying computer science and quantum science. “There’s a lot of opportunity to just try things.” Ashiru is also a backend software engineering intern with IBM.

Scales is primarily focused on experiential learning for quantum science, especially more laboratory experience for students.

“A lot of companies really think that this is critical,” he says.

To that end, Scales created a quantum research lab space for both undergraduate and graduate students to learn about quantum information science. Students start out by learning the basic concepts of quantum science, and then moving on into more advanced curricula, including quantum cybersecurity, quantum cryptography and quantum techniques for various types of advanced sensors.

“It’s really beneficial because it really forces the students who ideally would be multidisciplinary to learn teamwork to work through the problem,” Kent says. He also focuses on quantum research with Scales.

Scales is also working to develop sophomore-level courses in quantum science to get students interested in the topic as early as possible and to enter the talent pipeline. Outside of Virginia Tech, Scales also is working to replicate quantum research labs at historically Black colleges and universities (HBCUs), including Virginia State University and Texas’ Prairie View A&M University. One goal is also to get students interested in quantum science even sooner — like in K-12 schools.

“We’re at a point now where we can understand the extraordinary potential of the field, but we have to continue to work hard to get capable young people interested and then come up with a strategy for educating them in the field,” Scales says. “That’s a great challenge.”

‘An exciting time’

As more applications for these new quantum technologies are realized, companies also are establishing their own quantum programs, Economou says. Amazon.com Inc., Google LLC, Microsoft Corp. and IBM all have quantum research and development programs. Quantum-related jobs range from software engineering to more research-focused positions, like in academia.

“There’s a lot of positions open at this point in major companies and startups,” Economou says. “So, it’s an exciting time to get into the field.”

Starting out in quantum research doesn’t require waiting until college or a career. In 2021, in collaboration with the U.S. Department of Energy’s Co-design Center for Quantum Advantage (C2QA), Virginia Tech launched an annual summer school program for high schoolers interested in learning about quantum science. The four-day event is free, and students can learn quantum concepts and use quantum simulators and processors provided by IBM. This year, about 150 students participated in the program, which was held in early August.

While getting students interested in quantum science at an earlier age is helpful, another strategy for developing a talent pipeline will include reskilling or upskilling current tech workers. Tech companies will need to stay up to date with the latest advances in quantum science and computing or risk falling behind.

“These are hard problems. This is not trivial,” Lester says. “We’re probably going to retrain an awful lot of engineers, reeducate [them] to learn quantum as well. It’s a big task also to educate people because it’s going to be a big shift.”

The most optimistic estimates say we’re five years away from seeing quantum technology becoming practical enough for corporate or workplace settings, Economou explains, but it could be more like 10 to 20 years until that happens. Quantum research will take time — as did other technological revolutions.

“Quantum computing will be very different. At this point we do not envision a ‘personal quantum computer’ to replace a laptop,” Economou says. “Quantum computers would be more specialized machines used by the government or industry. Presumably, initially there would be a small number of such machines to which customers can connect to solve specialized problems.”

Quantum communication networks could potentially be established relatively quickly compared with other quantum technologies, she says, but even that will still take several years. Keeping the momentum of quantum research and development going, she says, will require time and plenty of resources.

“You … need significant investment, which is actually happening right now in the U.S. and worldwide,” Economou says. “This has been recognized as an area of national security and economic development.”

On the road again

Major road projects are happening across the state, but the undeniable headliner is the largest infrastructure project in state history, the $3.8 billion Hampton Roads Bridge-Tunnel expansion.

In October 2020, crews broke ground on the HRBT expansion, which will increase tunnel and interstate capacity along 9.9 miles of Interstate 64 between Hampton and Norfolk to reduce congestion and improve access to the Port of Virginia. The expansion will also enhance road safety, creating more emergency evacuation routes.

A massive underwater tunnel-boring machine will lay the path for twin two-lane tunnels (approximately 50 feet deeper than the current tunnels), which will be constructed west of the existing eastbound tunnel. More than two dozen marine bridges also will be replaced. The four-lane sections of the I-64 corridor between Settlers Landing Road in Hampton and the Phoebus shoreline — as well as the four-lane section of I-64 in Norfolk between the Willoughby Spit shoreline and the Interstate 564 interchange — will be widened to include an express lane and a shoulder that can be used as a drivable lane as needed.

Crews currently are building the launch pit for the tunnel-boring machine, which will bore the twin tunnels under the waterway between the bridge-tunnel’s existing manmade islands. This year, in preparation for bridge construction, crews are erecting temporary trestles where traffic will be redirected from existing trestles. 

Construction on the I-64 widening from Settlers Landing Road and the Phoebus shoreline was scheduled to start in April and be completed by October 2024. The entire HRBT project is expected to be finished in late 2025 and will include a total of eight lanes across the water. 

HRBT is only the fourth roadway project in the nation to use the tunnel-boring equipment. Virginia Beach middle schoolers named the machine Mary in honor of Mary Winston Jackson, a NASA scientist depicted in the 2016 film “Hidden Figures.” Once assembled, the titanic machine (which will be delivered in pieces to the U.S. in late summer or early fall) will be 46 feet in diameter, 350 feet long, weigh 4,700 tons and operate at 12,000 horsepower, says Louis Brais, a tunnel engineer with Hampton Roads Connector Partners (HRCP), the design-build team for the project. Land and tunnel work will happen simultaneously, with land work beginning this year and tunneling beginning in 2022. Two years into the project, underwater drilling will be happening 24 hours per day.

HRCP is a joint venture led by New York-based Dragados USA Inc. and including Vinci Construction, Flatiron Construction Corp. and Vinci subsidiary Dodin Campenon Bernard. Fairfax County-based engineering consulting firm Dewberry will provide quality assurance services for the project, working with the Virginia Department of Transportation and HRCP to ensure that materials meet project specifications. The Hampton Roads Transportation Accountability Commission is the primary funding agent for the project, using local revenue from sales and gasoline taxes in the Hampton Roads Transportation Fund.

Other major transportation projects underway include:

NORTHERN VIRGINIA

Fred Ex, Transform 66 projects

With an eye toward reducing traffic congestion and improving connectivity on Interstates 495 and 95 for Northern Virginia commuters, the state government entered into a $1 billion public-private partnership with Transurban, an Australian toll-road operations company with its U.S. headquarters in Alexandria. Transurban, which announced plans in December to sell half of its toll roads, is funding the construction of the $565 million Fredericksburg Extension (Fred Ex), which will offer 66% more capacity on I-95 during peak periods via a 10-mile extension of the freeway’s express lanes south to Exit 133. Transurban will operate and maintain the express lanes expected to open in 2022 and charge variable toll rates for using the lanes in a contract that extends until 2087.

VDOT, the state Department of Rail and Public Transportation (DRPT) and I-66 Express Mobility Partners are also working on the $3.7 billion Transform 66 Outside the Beltway project. Improvements include 22.5 miles of new express lanes, which are expected to open along Interstates 66 and 495 in December 2022. The partnership also includes projects that will improve bus service and transit routes, add park and ride lots, improve interchanges and add
11 miles of bike and pedestrian trails.

SHENANDOAH/ SOUTHWEST VIRGINIA

Interstate 81 improvements

One of Virginia’s chief trucking corridors, Interstate 81 is slated for $2.2 billion in improvements this decade, with a 2031 completion date. Regional fuels taxes, statewide road and diesel taxes and truck registration fees are going toward improvements recommended for I-81 by the Commonwealth Transportation Board. In July 2019, localities along the interstate saw a 2.1% regional fuels tax bump, which will fund projects such as widening the highway, making curb improvements and adding auxiliary lanes. With a focus on safety and reliability concerns, bridge replacements, ramp extensions, highway widening, curb improvements and added auxiliary lanes are all part of the plan. The project focuses on the 325-mile stretch between Virginia’s borders with Tennessee and West Virginia.