Category Archives: Economic development

Passing Class No Guarantee of Certificate In New State Workforce Program

Average earnings three years before and one after completing the VCCS FastForward workforce certificate program. Source: SCHEV. Click for larger view.

Virginia’s FastForward workforce credential program now in its third year is showing good success in getting students through training, but a high number of people in some programs do not earn the matching certificate.  Those who achieve both usually show the highest wage growth.

For those who went into the program earning under $20,000 a year, the subsequent increase in earnings is dramatic, almost 140 percent year over year.  “We are serving a very high need population, even compared to the traditional community college population,” said Lori Dwyer, assistant vice chancellor for programs for the Virginia Community College System.   Continue reading

Amazon in Northern Virginia: 5 Positives

The road to the Silicon Swamp is paved with gold.

1-The Future. In 2011 Marc Andreessen, founder of Netscape, wrote an essay for the Wall Street Journal titled, “Why Software is Eating the World.” The eight years since Andreessen’s essay was published have served to vindicate, validate and verify the accuracy of his thesis. Yet while software eats the world, it doesn’t necessarily dine in the same old restaurants.  Car making used to be centered in Detroit. Now Silicon Valley is the new Detroit. Not only are upstarts like Tesla centered in The Valley but traditional car manufacturers are heading west too. As Andreessen noted, traditional non-technology companies all need to become software companies in order to survive. Metropolitan areas with strong software skills will attract not only technology companies but non-technology companies as well. Embrace software or be eaten by it. The future belongs to those who code.

2-Ecosystem. Silicon Valley isn’t Bentonville, Arkansas. No one company dominates Silicon valley and therein lies its enduring strength. The Valley is an economic growth machine fueled by start-ups, spin-outs, mergers, acquisitions, bankruptcies and oceans of venture capital. The idea that NoVa’s benefits from the Amazon deal start and stop with Amazon is myopic. Talented employees will come to National Landing, work for Amazon, and then leave to start new ventures. The 25,000 Amazon jobs should be seen as a starting point rather than a final outcome. In fact, startups founded by Amazon veterans like Fugue are already operating in the area. Continue reading

Amazon Local Incentives Not Worth A Revolution

Artist rendering of possible Crystal City to Reagan National Airport pedestrian bridge. Source: Crystal City Business Improvement District.  Click for larger view.

One of the self-styled revolutionaries seeking to prevent Amazon from planting its second headquarters in Arlington County complains the local incentive package offered is $23 million.  A research fellow at the Mercatus Center at George Mason University puts the total at $51 million.  The actual monetary value is elusive and still to be determined.

Both critics appear in a story from the politically-charged “news” outlet The Blaze, showing Amazon’s local incentives are national news.  So far, the much-larger state package, now approved by the 2019 General Assembly, has been the focus.  That was before a band of New Yorkers spit out their piece of Amazon Pie, inspiring Northern Virginians of similar ideological bent to step up a local battle.

UPDATE (2 p.m.):  The Arlington Board of Supervisors is set to vote on its agreement with Amazon on March 16, and here is the draft of the contract, just posted.  Continue reading

Killjoys versus GilJoy: Grievance Versus Opportunity

Gilbert Bland, CEO of the GilJoy Group and the Urban League of Hampton Roads, sees opportunities everywhere.

Northern Virginia progressives opposed to subsidies for Amazon are grievance-mongering nihilists who have nothing to offer but spittle and bile. Far from helping the people they purport to speak for, if they were successful in scuttling the Amazon deal — the Arlington County Board still must vote on county subsidies — they would cause only harm.

Instead of trying to kill the deal, progressive whiners and complainers could be working to capture a share of the  influx of public and private monies for the benefit of Arlington’s poor. An example they could emulate, but never will, is Gilbert T. Bland, chairman of the GilJoy Group and CEO of the Urban League of Hampton Roads, who, according to Virginia Business magazine, is leading initiatives to improve housing, education, health and workforce development for the region’s African-Americans.

But working within the establishment is not how progressives roll. Listen to Roshan Abraham with Our Revolution Arlington, as quoted by NBC News: Continue reading

Amazon as Un-Apple

Apple headquarters in Cupertino, California.

When Apple decided to build a new corporate headquarters, it designed a massive structure that resembled a flying saucer. The facility was an architectural marvel but it was entirely self contained, permitting no interaction with the surrounding community. It was impossible for employees to walk to work from home, and the campus was located far from public transit. For all practical purposes, the only commuting options were riding in cars, vans, and corporate buses.

Amazon might compete with Apple for the title of world’s most valuable company, but Amazon has a very different philosophy regarding real estate and facilities. Think of Amazon’s East Coast headquarters in Arlington and Alexandria as the un-Apple. Amazon does not regard itself as a company apart. To the contrary, the company wants to embed itself into the urban fabric. Here’s how the Washington Business Journal described Amazon’s thinking:

Amazon.com Inc.’s second home in the D.C. region will be a neighborhood — not a campus — of largely locally hired employees who eat at local restaurants and maybe bring their dogs to work, according to Holly Sullivan, who was among the leaders of the e-commerce giant’s HQ2 search.

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Progressives Perpetuating Poverty

Danny Cendejas, an organizer with La ColectiVa, addresses concerns about HQ2. Photo credit: Washington Business Journal

Amazon’s decision to scrap a $2.5 billion investment in New York City has emboldened far-left progressives in Northern Virginia to oppose the e-commerce giant’s plans for plans to build an East Coast headquarters in Arlington. Critics of HQ2 are targeting $23 million that Arlington County will contribute to the pot of incentives, reports the Washington Business Journal.

“The county should vote down the deal,” said Roshan Abraham, an organizer with Our Revolution Arlington in an anti-Amazon meeting Monday. One of the richest companies in the world does not need the county’s money, he said. “If Amazon chooses not to come to Arlington over $23 million, good riddance.”

A primary concern among leftist activists is rising rent. As 25,000 highly paid Amazon employees start working in Arlington, they will bid up housing prices. About 3,000 apartment units in Alexandria and Arlington between South Glebe and West Glebe roads could become unaffordable for the largely Latino community living there once Amazon moves in, say Amazon foes.

I sympathize to some degree with those who resent the incentives, including some $500 million in workforce grants from the state. Amazon is the world’s most valuable company, CEO Jeff Bezos is the world’s wealthiest man (at least until his divorce is settled), and the showering of massive tax breaks on Amazon is manifestly unfair. But the world is unfair, and the rational response is not to chase Amazon out of town but to craft a deal that is tax-flow positive for state and local government, and work to ameliorate negative impacts on housing and transportation. To do otherwise is to limit opportunity and perpetuate poverty. Continue reading

Data Centers Spur Electricity Demand in Virginia, Says Greenpeace

Continued expansion of data centers in Virginia is driving demand for electricity, which gives Dominion Energy the justification for expanding its gas-fired generating fleet and building the Atlantic Coast Pipeline, according to a new report by Greenpeace, “Clicking Clean Virginia: The Dirty Energy Powering Data Center Alley.”

While several major providers of cloud services — Amazon, Facebook, and Microsoft most prominently — have committed to deriving their electricity from renewable energy sources, the boom in data centers has outpaced the ability of the data center industry, Amazon in particular, to line up renewable energy contracts.

“While electricity demand for utilities is flat or declining, electricity demand from data centers in Virginia has grown sharply, between 9 and 11 percent year year, offsetting declines elsewhere, with data center demand regularly touted by Dominion to its investors as a sign of continued growth,” states Greenpeace.

Ironically, although the Greenpeace opposes the Atlantic Coast Pipeline, information in the report undercuts an argument the environmental group’s Virginia allies use against the Atlantic Coast Pipeline: that Dominion forecasts have consistently overstated future electric load. While electricity load has plateaued or even declined in many states, demand from data centers continues to push demand incrementally higher in Virginia. Continue reading

Virginia’s If-You-Don’t-Build-It-They-Won’t-Come Economic Development Strategy

Kevin Costner bet the farm in “Field of Dreams.” But “build it and they will come” is not a sound economic development strategy.

The City of Emporia, one of Virginia’s poorest cities, has poured $25 million into the 1,600-acre Mid-Atlantic Advanced Manufacturing Center. To date the industrial park has yet to attract a tenant. Over the past decade, Virginians have sunk more than $100 million into land acquisition and development for industrial “megasites” in the hope of luring major manufacturing investment, reports the Associated Press. So far, the Old Dominion has little to show for it. Continue reading

The Exact Moment Virginia Changed Forever

For veteran observers of the Virginia General Assembly, a brief oral exchange between an Amazon executive and the chairman of the Senate Finance Committee on Wednesday was a bright flash of insight into Virginia’s new political landscape.

You do not see people, especially not people seeking a major expenditure of state funds, get that cavalier with the chair in that committee.  The nervous laughter from the audience that followed, and then lingered for a few seconds, was exactly that:  Laughter from nervous people.

A very big player has arrived on the scene in Virginia.  Everybody else just moved back one or more steps in the pecking order.  Live with it.

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Bristol’s Newest Savior: a Proposed Casino and Resort

Jim McGlothlin (right) talks about his proposed casino project. Photo credit: Bristol Herald Courier

The City of Bristol, having mortgaged its future with a failed mall development project, is betting on another big-ticket project: a proposed $150 million casino with accompanying hotels, conference center, retail, and restaurants built at the failed mall location. The backers assert that the Bristol Resort and Casino would create an estimated 2,000 jobs initially, growing to 5,000 eventually, and paying an average salary of $46,000. The project would generate $30 million annual tax revenue for the hard-pressed locality.

All the backers need is for the General Assembly to rescind its ban on casino gambling in Virginia.

Normally, I would be highly skeptical of a project like this. When developers spin a fantasy vision of jobs and tax revenues, there’s always a hook — all they need is a little support from government. Loans, subsidies, loan guarantees, whatever. But in this case, the Bristol casino backers are funding the project themselves. Continue reading

Virginia Back to No. 1, or Close to It

Image source: Business Facilities

Virginia’s economic growth rate may have lagged the national average last year (See Don Rippert’s post on the subject), but outside perceptions of Virginia have changed for the better. Virginia ranked 4th in Forbes magazine’s 2018 Best States for Business ranking and 4th in CNBC’s Best States for Business ranking. Most recently, on the strength of winning half of Amazon’s HQ2 project, the most highly touted economic development project in recent history, Business Facilities magazine anointed Virginia as 2018’s “state of the year.Continue reading

Who’s Got Broadband and Who Doesn’t?

Percentage of households with broadband by locality. Source: Virginia Public Access Project based on the 2013-2017 American Community Survey.

This map, published today by the Virginia Public Access Project, shows clearly the metropolitan/rural divide in access to broadband Internet access. Some rural areas obviously enjoy better broadband service than others. Look at the cluster of counties to the south and west of the Washington metropolitan area. Look at the cities and counties running down the I-81 corridor from Winchester to Blacksburg. Many are low-density localities, but somehow they have higher broadband penetration. Continue reading

More People Still Moving Out of Virginia than Moving In

Virginia is still leaking population through out-migration, according to the most recent United Van Lines national movers study, which tracks customers’ state-to-state migration patterns in 2018. The gap between those moving into the state and moving out was small — 48.4% inbound compared to 51.6% outbound, but it continues a discouraging trend of the past several years and seemingly cements the robust in-migration of previous decades.

Dig into the numbers, however, and there were some consolations.

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Virginia Should Take Regional Approach to Building Offshore Wind Supply Chain

Where the action is in East Coast offshore wind. Source: BVG Associates. (Click for more legible image.)

To build an offshore wind supply chain with thousands of construction, manufacturing and maintenance jobs, Virginia should collaborate with Maryland, North Carolina, and South Carolina, concludes a report issued last week by BVG Associates for the state’s Department of Mines, Minerals and Energy.

Offshore wind development is advancing rapidly in the Northeastern states, and if Virginia wants to maximize the benefits of the emerging offshore wind industry, it needs to move quickly. “Virginia has great potential and many unique advantages to attract this investment, but it must act now if it is to be a leader in OSW,” states the study, The Virginia Advantage: The Roadmap for the Offshore Wind Supply Chain in Virginia. Continue reading

The Cloud Services Boom

Source: National Bureau of Economic Research

If it seems like the cloud-services industry is the hottest economic sector in Virginia — outside the new Amazon East Coast half headquarters — that’s probably because cloud services is one of the hottest economic sectors in the United States. This chart published by the National Bureau of Economic Research shows how cloud services expenditures have boomed in recent years.

The Washington region was the only metropolitan area in Virginia with the attributes that could compete for Amazon’s HQ2, but other parts of the commonwealth can vie for data centers, as Henrico County has shown with Facebook and Mecklenburg County with Microsoft. Unlike Amazon’s HQ2 facility in Arlington/Alexandria, which envisions hiring 25,000 workers over the next decade or two, data centers require only a few dozen employees, so they can locate in labor markets as small as rural Mecklenburg County.

As long as Virginia has abundant fiber-optic trunk line capacity with connections around the world, like the new trans-Atlantic cables to Virginia Beach, and as long as the state can provide abundant, competitively priced green energy, the sky’s the limit for more cloud-services investment.