Bacon's Rebellion

New Director Speaks

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by

James A. Bacon
in

Jeffrey Anderson, the new executive director of the Virginia Economic Development Partnership (VEDP), spoke in Charlottesville yesterday and Bob Gibson filed a report for the Daily Progress.

Those expecting that an economic development “outsider” would offer a new approach or fresh thinking would be disappointed. Anderson brought up the old saw about Virginia not always being competitive with other states in offering incentives, citing the Dell computer plant that went to North Carolina. From Gibson’s article, it’s difficult to determine whether Anderson thought that was a good thing or a bad thing.

Anderson also called for better cooperation among regions. I wish I had a dollar for every time I’ve heard that prescription over the last nine years.

Why Anderson vaulted to the top of applicants for the VEDP job might be explained by this anecdote:

[He] cited his experience as executive vice president for BearingPoint, a Tysons Corner-based consulting firm in the global financial services business.

In Fairfax County, the firm tried to bring in more entry-level employees and found they lost too much time in commuting to and from work in an area where $50,000 salaries did not allow them to live close enough to their workplace.

The firm searched five states, including Virginia, for places to land 500 jobs and chose instead to locate them in Hattiesburg, Miss. His former employer also found it had to move jobs to India and China, he said.

Better to choose someone with a background in not choosing Virginia than someone with a background in marketing Virginia, apparently. If Anderson can convince companies like BearingPoint to put jobs in Southside and Southwest instead of Mississippi, he’ll be a winner.

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10 responses to “New Director Speaks”

  1. Steve Haner Avatar
    Steve Haner

    An excellent column with some real insights. Ditto on the question of political will — big things happen at the state level only when a governor takes the lead. Baliles did it on transporation, Allen on parole and educational accountability, et. al., The one year term doesn’t hamstring them completely — in some ways it does free them to take some risk. And it is still good to be the governor (better to be the king, as Mel Brooks noted, but good to be the governor.)

  2. CG2 Avatar
    CG2

    The most disturbing aspect of the new director’s commentary is the apparent continued focus on big business moves as the principle focus of an effective economic development strategy. This despite the fact that small businesses (under 250 employees) create 75% of new jobs and are the real engine in sustainable economic growth (not to mention community development, see, e.g., findings of rural policy group).

    In the last four years, Virginia has seen money for small business development centers cut entirely from the state budget and the budget of the Department of Business Assistance cut by more than a third. Put that together with consolidation of state business into larger and larger contracts for which Virginia small businesses cannot compete, and one must wonder what the long term effect of these strategies might be on Virginia’s economy, our tax revenues and our communities.

    The new Governor is required by law to develop and implement a comprehensive written economic development policy for the Commonwealth in his first year in office. You can find the law on line at § 2.2-205. Economic development policy for the Commonwealth

    The law gives the Secretary of Commerce and Trade the job of developing the policy with the help of a cabinet level commmittee. The Secretary and the committee are required to review the economic development policy in effect at the commencement of the Governor’s term of office and to make such revisions to the existing policy as the Secretary deems “necessary to ensure that it is appropriate for the Commonwealth.” The General Assembly gets to consider the policy once approved by the Governor.

    To get the process going, the new Governor is required to issue an executive order creating a cabinet-level committee to assist the Secretary in the development of the comprehensive economic development policy for the Commonwealth. The committee is required to include other members of the Governor’s cabinet and the Governor is allowed to appoint “members of regional and local economic development groups and members of the business community to serve on the committee.”

    The Warner committee was broad-based and inclusive but discussion of the economic development policy pretty much started and ended with the review of the Gilmore administration policy. Members of the committee were told that no changes in the overall policy were indicated and their time was spent primarily on implementation issues.

    Let’s hope that members appointed to the cabinet committee by Governor-elect Kaine will include strong advocates for small business who will help ensure that our comprehensive economic development policy is equally or more focused on small business health and growth as it is on incentives for out of state companies.

  3. Will Vehrs Avatar
    Will Vehrs

    Claire, I appreciate your commentary and knowledge of “inside” economic development issues.

    Allow me to add my perspective to a few points you made.

    Regarding cuts in the Department of Business Assistance budget: a lot of those cuts were Workforce Services money that usually go to large corporations as training reimbursement for new job creation. Another area cut was money for the Virginia Small Business Financing Authority–most of their loan programs go to the high end of the small business community.

    The Department of Business Assistance actually is doing more now for small businesses, especially start-ups, than they ever did before the budget cuts, and they are doing it for virtually no added incremental costs. The Virginia Business Information Center actually answers the phone calls and emails of entrepreneurs and gives them straight talk and solid advice, not a glossy brochure. Trust me, that is a real need that is finally being fulfilled.

    Cutting state funding to small business development centers probably has not had much of a negative effect. State funding largely went to a bureaucratic layer, not programs that actually helped real businesses. Directed appropriations for proven programs to interested centers might be a good idea if one is going to spend state money on small businesses, but it shouldn’t go to bureaucrats for writing and enforcing Memorandums of Agreement.

    As for your mention of state procurement opportunities for small business, that is an area where spending has exploded to little apparent effect. There is almost more staff and funds dedicated to signing small businesses up for the state procurement system and SWAM certification than there is for supporting all other small business support initiatives.

    I would love for the required creation of a comprehensive economic development plan become an opportunity for Virginia to at least discuss alternative visions and real initiatives, not vague vows for more regional cooperation, more branding, more incentives, etc., etc.

  4. Steve Haner Avatar
    Steve Haner

    Sorry, Will, my comment above actually applied to the Post post, on the transportation column. Oh, well. Somedays it is a wonder that I can turn on this stupid black box at all.

    Anderson also addressed the Virginia Chamber’s forum on Tuesday, with a fairly technical presentation on “price points” and workforce needs, etc. I heard him address small business, but admittedly I didn’t take notes. It is all well and good to take care of small “bidness” but a whole lot of “small bidness” growth is related to those larger mega firms and the move to cut costs. They won’t be looking for a Virginia CPA, recruiter or a local caterer if they aren’t…here. It is not A or B.

  5. Jim Bacon Avatar
    Jim Bacon

    Anderson’s remarks were most disturbing. I thought that Virginia had settled the “incentives” debate back during the Allen administration. Virginia’s policy has been, and rightly so, that we offer minimal financial incentives, and when we do offer them, we tie them to achievement of performance-based metrics like investment and job creation.

    I don’t fault Anderson for not becoming an advocate of small business. That’s not his job. (It’s the Governor’s job, and the Secretary of Commerce and Trade’s job.) The head of the Virginia Economic Development Partnership by definition is in charge of marketing the state and recruiting outside business.

    What I do fault him is for focusing on incentives as a substitute for the real drivers of corporate investment such as the quality of the workforce, industry clusers and supply-chain linkages. Virginia can compete with anyone in its areas of natural strength. But there’s no sense in spending hundreds of millions of dollars, as North Carolina did to attract Dell, to make it worthwhile for businesses to locate here instead of where they would have gone without the incentives.

  6. Terry M. Avatar
    Terry M.

    A related aside on the small business end. Goal 7 of the higher education restructuring act requires:

    Actively contribute to efforts to stimulate the economic development of the Commonwealth and the area in which the institution is located, and for those institutions subject to a management agreement, in areas that lag the Commonwealth in terms of income, employment, and other factors;

    I suspect much of this is going to take place in supporting the small business arena and technology transfer. The two performance measures for goal 7 adopted by SCHEV are:

    7A. Institution develops a mutually agreed upon number of plans to help address local and/or regional economic development needs. These plans will consist of specific partners, activities, fiscal support, and desired outcomes. The institution will identify these plans for SCHEV in the first year of their use for this measure.

    7B. In succeeding years, institution will receive positive feedback on an annual standardized survey developed by SCHEV, in consultation with the institution, of local and regional leaders, and the economic development partners identified in its plans, regarding the success of its local and regional economic development plans.

    A number of the institutions already have small business development centers…I think we can expect to those increase and receive improved institutional support and attention.

  7. James Atticus Bowden Avatar
    James Atticus Bowden

    When it comes to big business incentives, check out what USED to be the Gateway facility in Hampton (opened with great fanfare by Gov Allen) and the former big telemarketing centers in Newport News/Hampton. CG2 is right to emphasize small businesses.

    Rolling back the half cent sales tax helps small businesses. I showed the math in my op ed for the Sake of a Pizza on the Rebellion. If families with incomes of 40k and higher have $10-20 less to spend, they can increase their debt or they cut back on the spending. The impact means jobs. Rule of thumb: $150m = 5000 jobs. Most small business and most minimum wage.

    Isn’t BearingPoint the reflagged name for accounting firm that was cooking the books? Like Airtrans is the old Valujet?

    Finally, I just don’t buy that a firm ‘had’ to ship jobs to India or China. It’s the Populist in me that keeps me close to some Dems – in recognizing the problem, not in finding the solution – that doesn’t buy it. Capitalism is all about choices, free will and creating opportunities.

  8. Peterbilt Avatar
    Peterbilt

    And please don’t forget the big deal that Governor Gilmore made about the Volvo Truck Plant in Pulaski! Well its gone Pfffffgt….. in employment.

  9. subpatre Avatar
    subpatre

    Jeff Anderson as a Virginia economic development leader? The cynic in me is reborn.

    Gov. Warner pulled off some fast ones on the Commonwealth. Presenting himself as a pro-hunting sportman, even asking for the NRA’s endorsement, he gathered a sizable rural vote. Once in office, his appointments gutted the Division of Game and Inland Fisheries. Now Warner’s traipsing around emphasizing his midwestern or New England roots, depending on what caucus he’s selling himself to.

    Governor-elect Kaine appears to be following his mentor’s example, appointing Anderson to the VEDP. Anderson’s the head of finance and administration for Bearingpoint, a ‘management consulting’ firm, who took the position when the company’s books were found to be off by $92 million and the former CFO retired.

    Bearingpoint’s one of the major recipients of ‘no-bid’ contracts in Afghanistan and Iraq, yet has a dependably dismal performance. It’s problems resulted in no reported financials for 2004 or the first three quarters of 2005, and no indication when those filings will be made.

    The firm’s accounting problems may not be Anderson’s doing; but Kaine’s appointed –as a leader for Virginia’s economic development– a financial executive from a firm that’s in accounting trouble, isn’t capable of routine disclosure reporting, isn’t investing in Virginia, isn’t creating Virginia jobs, and isn’t even maintaining its value.

    That Jeff Anderson thinks retirement communities are great “economic development” makes people wonder what planet he’s from…. and what more surprises Governor Kaine has in store for us. Heaven help us all.

  10. Will Vehrs Avatar
    Will Vehrs

    Sub, the Director of the VEDP is not appointed by the Governor. He or she is chosen by an semi-independent board appointed by the Governor. The board, of course, probably hires some high-priced firm to conduct the “search” and identify the candidates. I don’t think that takes away from the major points of your comment.

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