Back In Top 5, The Challenge Is To Stay There

Corks are popping all over Richmond as the business network CNBC announced this morning that Virginia is back in the top five of its annual survey of best states for business, ranking number 4.  It is the only state in the top five east of the Mississippi. The full Virginia report is here.

The photo on the CNBC page shows a Huntington Ingalls-built warship, but one of the amphibious ships built in Pascagoula, Mississippi.  Perhaps the web designers remember that the first time Virginia topped this list as number one the announcement was made from pier 3 at Newport News Shipbuilding with the future U.S.S. George Bush in the background as Governor Robert McDonnell took the bow.

Governor Ralph Northam will get to enjoy the spotlight this time, and should, but the credit needs to be spread widely. The person doing handsprings should be Stephen Moret, president of the Virginia Economic Development Partnership, who has been focused on improving these rankings since coming to Virginia to fix a broken agency its reputation.

Speaker Bill Howell and the others who joined with McDonnell in pushing forward the transportation tax package years ago deserve a nod, as those projects are starting to come on line. Virginia’s rank for infrastructure improved from number 25 in 2017 to number 20 for 2018, and may continue to rise now.

Also improved over last year was the ranking for education. Despite growing costs Virginia’s higher education system, public and private, remains the envy of many other states, but the focus now extends beyond degrees to work-related certifications.

This ranking is a marketing coup with no immediate value to the average Virginian. Staying in the top five over time will have value, however, as more business location or investment decisions start with Virginia on the short list.

Looking at the details there are only a handful of individual categories where the state ranked extremely well (workforce, education, business friendliness) and only two where Virginia was below the median – the related categories of cost of living and cost of doing business.  First or second quintile scores in several categories resulted in the good overall score.

Those outliers deserve some attention. A huge component of the cost of living and cost of doing business is the cost of electricity and other forms of energy, and the trend lines there are bad despite the energetic public relations efforts of a certain large utility. Another huge component of both is state and local taxes, which are under growing pressure to rise and where Virginia has a chance to be creative thanks to federal tax reform.

Not a time for any resting on any laurels. But some martinis at lunch are indicated.

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11 responses to “Back In Top 5, The Challenge Is To Stay There”

  1. vaconsumeradvocate Avatar

    Another cost of doing business in Virginia is the horrible climate Virginia has for consumers. Our pro-business stance, which folks tend to interpret as necessarily being opposed to anything consumers request, means that in too many ways businesses in Virginia take advantage of consumers. When consumers are taken advantage of, businesses’ employees and their families don’t get good value for their dollars, which makes them seek more income and benefits, which adds to the cost to business. It also means some businesses take advantage of other businesses. Basically, the perspective is that anything business wants to offer should be allowed even when it hurts people and the bigger the business the fewer limitations should be imposed. We tend to ignore the societal costs of these consumer losses, assigning them all to the stupid consumer who doesn’t do what’s in his/her best interest. Nothing could be farther from the truth but it is hard to quantify the small losses of each consumer in each transaction or the costs of helping an individual consumer get back on their feet after it all adds up to personal financial damage/failure.

    What should occur is seeking win/win for businesses and consumers but unfortunately, that is not how things happen in Virginia. Every time I see someone touting this business ranking I’m further discouraged about the situation consumers face so that it is possible to tout the ranking.

  2. Steve Haner Avatar
    Steve Haner

    I disagree with your basic premise that “business friendliness” is necessarily equivalent to “consumer hostility”. My friend, with all due respect, advocacy on behalf of consumers in the corridors of power in Richmond is somewhere between weak and invisible and no one involved seems interested in change. I agree there is a vacuum. Step one might be to get the state’s own operation out from under the elected Attorney General, but good luck with that. But if nobody is aggressively or effectively speaking on behalf of average consumers, that point of view will be lost.

  3. Peter Galuszka Avatar
    Peter Galuszka

    I’m not a big fan of the state ratings of big business magazines, having worked for a few.
    I remember freelancing for a Fortune product on the best places to start a small business. Their data base listed Lake Monticello near Charlottesville and an apparently forlorn strip mall in South Florida.
    I don’t see the difference between such ratings and U.S. News & World Reports much criticized college ratings. Wallet Pop comes out with what seems like several ratings each day. Should we take this stuff seriously?

    1. Steve Haner Avatar
      Steve Haner

      Politics is not the only sphere where perception is reality. 🙂

    2. Reed Fawell 3rd Avatar
      Reed Fawell 3rd

      I totally agree with Peter on these state ratings by business magazines, or other outsiders, no matter who they are.

      I also agree with Steve about perception becoming reality, with a key supplement and caveat. These false reports of greatness over time can also create an altogether different and very unfortunate reality.

      Thus, Hilary’s Campaign, a sure winner in its own mind and in the media’s mine, was rendered lazy, stupid, and unimaginative by arrogance and thus blindsided by Trump.

      Thus, too the French military was considered to be the strongest and smartest military by far in Europe by everyone during the 1930s, only to collapse within days in 1940 under German onslaught. The French didn’t have a chance, given their overconfidence that they could win WW1 all over again.

      Hence these cooked up bogus reports of excellence over time do far more harm than good. A word to the wise – all winners are paranoid. All loser are not. The US needs to relearn that ancient lesson.

  4. Steve Haner Avatar
    Steve Haner

    I clearly said no resting on laurels! And indeed years ago Virginia did take its own pro-business greatness as an article of faith. Getting knocked off the pinnacle was a good thing.

    1. Reed Fawell 3rd Avatar
      Reed Fawell 3rd

      Yes, indeed you did, Steve, and I should have noted that.

      Plus I suspect that I am not Moret’s favorite fellow about now, but he seems a very able and imaginative fellow himself, and such folks typically assemble very competent, practical, and results oriented staffs, so there is likely some reality here under that report now. But Virginia needs to find a way to better spread its wealth around the state. I was struck by a recent comment here by someone as the North Carolina’s success in this regard. Surely, there is no reason Virginia can’t do the same. It has done so in the past at places that now can reinvent themselves if better resource allocations are made.

  5. LarrytheG Avatar

    geeze… NoVa and Hampton are virtual US Govt agencies… I guess all those contracting businesses LIKE Virginia, eh? I’m agree with Peter… and do have hopes that Moret will steer Virginia to the private sector for “business”.

  6. Steve Haner Avatar
    Steve Haner

    A cynic might note that this positive ranking, like the aforementioned higher ed rankings, can be aggressively cited by the business community as an argument against various popular proposals: taxes, regulations, pro-union legislation, a downgrade in Virginia’s debt rankings. Gee, we can’t do that! It might hurt our ranking! It is a strong shield for the status quo, like the AAA bond rating. But as the former chief lobbyist for the Chamber I could never say that….

  7. Obviously former Gov McAuliffe worked tirelessly to promote Va. for business. We should give credit where due. But the reason McAuliffe had to work so tirelessly is the No. 5 ranking is somehow missing the reality.

  8. djrippert Avatar

    I suspect many of these rankings are reverse engineered. That doesn’t make them wrong it just makes their explanation of why somewhat suspect.

    Here’s my take for the improvement …

    1. Obama gone
    2. Trump big on defense, homeland security, etc
    3. Virginia does better until the next Obama comes along

    The survey purveyors can’t just say that but I suspect that “business climate” in Virginia ebbs and flows with federal spending.

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