Category Archives: Business and Economy

Help Wanted

Photo Credit: Daily Press

by Dick Hall-Sizemore

I had heard about the problem with restaurant staffing, but had not experienced it. During the pandemic, my wife and I have relied on two local Italian restaurants for both takeout and eating out. Both restaurants reopened as soon as they could, and both retained the same staff they have had for several years.

While running errands today, I decided to get some lunch at a restaurant that I had gone to in past years, but not recently. It is a small, locally-owned Mexican restaurant that was open in Northside when we moved here over thirty years ago. It was closed. A sign on the door said that it would be closed “today” because of staff shortages. The sign looked as if it had been in place for some time.

Next was a somewhat trendy barbecue place (it advertises that it was named 4th Best Barbecue restaurant in the nation). A man at the front entrance informed me that only take-out or pickup was available. The dining room was closed due to staff shortages.

Going down the street a bit, I came upon a locally-owned, long-established Greek-Italian place whose gyro I really like. Place dark; door locked; no sign on the door.

I finally found some lunch at a Mexican restaurant that is a franchise. I like its chile verde, but I decided to try something different.  Its burrito was mediocre, at best. Continue reading

Old Guys Rule

“If you don’t respect your elders, then I’ll just have to teach you to respect your betters.” — John Wayne

by James A. Bacon

Rather than compile a list of young business executives on the move, Virginia Business magazine earlier this year profiled “Eight Over 80” — old guys still active in business or in the community.

The list, which the magazine is highlighting in its end-of-year recap of top stories, included such successful entrepreneurs as 80-year-old Jim McGlothlin, CEO of the United Co., in Bristol; 84-year-old Dan Clemente, CEO of Clemente Development Co. Inc., in Vienna; 80-year-old Heywood Fralin, chairman of Medical Facilities of America, in Roanoke; and 83-year-old Jim Ukrop, co-founder of New Richmond Ventures LLC in Richmond, among others. In a class by himself, is 92-year-old Harvey L. Lindsay Jr., of Harvey Lindsay Commercial Real Estate in Norfolk.

Jim Ukrop dishes out the best quote: “I don’t hunt, I don’t fish, I don’t go to Florida, and I threw my golf clubs in the ocean, so I have to do something.”

I had the good fortune to work for a man who had them all beat: E. Morgan Massey. Early this year, at the age of 94, he was still coming into the office every day and working on deals as I was finishing up the history of the Massey family. He didn’t have the same energy level as when he was a whipper-snapper of 75 or 80, but he managed to stay on top of things. Continue reading

Bacon Bits: Hampton Roads Edition

Wind power to the rescue? Hampton Roads, Virginia’s second-largest population center, is the anchor dragging down Virginia’s economic growth. Could that be about to change? The region has pinned its economic-development hopes upon leveraging Dominion Energy’s $9.8 billion offshore wind farm to become a manufacturing and supply- chain center for the burgeoning East Coast wind industry. Earlier this year, Dominion announced that it would invest $500 million to build a wind-turbine installation ship, but would build it in Texas — a seeming disappointment for Hampton Roads. However, the energy company announced yesterday that it had ordered 176 wind turbines from Siemens Gamesa Renewable Energy. The turbine blades will be manufactured in a Portsmouth facility the Spanish company announced in October that it planned to open, investing $200 million and creating 310 jobs. So, there is hope after all that Virginia will capture some economic benefit from the super-expensive wind farm.

Hampton Roads hotels on the upswing. The hospitality industry was crushed by the COVID epidemic as Americans cut back on travel. But hotels in Hampton Roads have outperformed the industry compared to Richmond, Northern Virginia, the state as a whole, and even the U.S. After suffering a 9% contraction — much milder than elsewhere — the industry has rebounded smartly, according to data published in the “2021 State of the Commonwealth Report” published by Old Dominion University. Continue reading

Not a Lost Decade, Perhaps, But a Lagging Decade

GDP growth by Virginia metro area. Source: “2021 State of the Commonwealth Report”

Old Dominion University’s “2021 State of the Commonwealth Report” provides an unwelcome, but necessary, reminder that Virginia’s economy has been  lagging since 2010. While the U.S. gross domestic product grew at a compounded annual growth rate of 1.6% between 2010 and 2020 (hardly a robust performance), Virginia’s economy grew at a mere 0.7% rate.

Of all Virginia’s metro areas, the only one that came close to matching the national growth rate was Richmond, which grew at a 1.5% rate. Virginia’s traditional growth engine, Northern Virginia, grew at a mere 1.0% rate, Winchester by 1.2%, Charlottesville by 1.0%, and Blacksburg-Christiansburg by 0.8%. The economies of Hampton Roads, Roanoke, Kingsport-Bristol, Lynchburg, Harrisonburg, and Staunton all shrank over the decade. Continue reading

Virginia Migration Trends

Net Domestic and International Migration, Virginia, 2010-2020. Source: “2021 State of the Commonwealth Report”

by James A. Bacon

Over the decade between 2010 and 2020, Virginia lost more than 80,000 inhabitants through domestic out-migration (a figure that captures the number of people moving across state lines within the United States). But it more than offset that loss through an international in-migration of roughly 300,000, according to data published in the “2021 State of the Commonwealth Report” by the Dragas Center for Economic Analysis and Policy at Old Dominion University.

When broken down by metropolitan area, it turns out that the net domestic out-migration was concentrated in the Northern Virginia and Hampton Roads metropolitan statistical areas. The Northern Virginia component of the Washington MSA lost a net of 157,000 domestic residents, while Hampton Roads bled 61,000. All of the state’s smaller metros, led by Richmond with 41,000, gained inhabitants through domestic in-migration. Continue reading

Now California Will Control Virginia’s Auto Sales

A BMW model qualified as zero emissions by the California Air Resources Board. You see more and the subsidies California provides buyers here.

By Steve Haner

First published this morning by the Thomas Jefferson Institute for Public Policy.

Virginia’s automotive sales market is now officially controlled in Sacramento, with the likelihood that no new internal combustion engines can be sold in the Commonwealth after 2035.

The Virginia Air Pollution Control Board, acting not with discretion but on orders from the General Assembly, voted on December 2 to adopt Advanced Clean Cars Program regulations that delegate ultimate control to the California Air Resources Board. Virginia will simply follow Sacramento’s lead in dictating that an ever-increasing percentage of new car sales be certified as low emission or zero emission by the CARB.

Legally it would be similar to Virginia being forced to comply with federal regulations, except these rules will come from and be amended by California and its governor, regulators and legislature. Who in Virginia gets to vote for them? No one.

Legislation in 2021 directed the Air Pollution Control Board to adopt these rules with no deference to the regulatory processes. If you missed the usual public notices or hotly-contested public hearings, it may be because they didn’t happen. Media coverage has also been sparse.  Continue reading

Inflation Disruption Watch: Property Tax Assessments

Houses in the Hopyard Farm subdivision in King George County, where home values have risen. Photo credit: The Free Lance-Star

by James A. Bacon

Inflation may be a national, even global, phenomenon, but many of its ramifications play out locally. When housing prices rise, so do real estate tax assessments and tax burdens. Inflation creates tensions in the labor market as workers demand pay raises to offset lost purchasing power. Higher wages push employees into higher tax brackets. The term “the misery index” — calculated by adding the unemployment rate and the inflation rate — could well make a comeback. Economic productivity suffers and, if we follow the path of the 1970s, stagflation could well ensue.

Here at Bacon’s Rebellion we will begin sharing data points on the local impact of inflation, starting with two stories: one from King George County and one from the City of Richmond.

In King George County, 77-year-old Carl Crump is retired and living on a fixed income. With the price of gas, groceries and other basics trending higher, Crump was none too happy to receive a real-estate assessment that would push his tax bill $800 higher, reports Fredericksburg’s The Free Lance-Star. Continue reading

Workplace Heat Rule Given Cold Shoulder

by Steve Haner

First published this morning by Thomas Jefferson Institute for Public Policy. 

Virginia’s Safety and Health Codes Board on Friday voted down a proposed workplace heat protection standard, strongly opposed by the state’s business community but ardently sought by organized labor and farmworker advocates.

The Department of Labor and Industry (DOLI) was seeking to push the proposed rules out for a final round of public comments. Abiding by the standard schedule for regulatory adoption would have meant final approval rested with incoming Governor-elect Glenn Youngkin. Perhaps the December 3 vote was an early sign that attitudes toward the regulatory state are expected to change.

As is always the case with these proposals, a massive amount of staff work had been put into preparing the draft standard, including several industry and labor stakeholder groups meeting throughout 2021. According to public comments made before Friday’s vote, those stakeholder groups had divided along similar lines.

The briefing document for Friday’s meeting exceeds 350 pages, with the actual proposed standard covering pages 177 to 199. The first round of public comments is also reproduced in the document or can be found here. The early, written comments were heavily favorable to the rules, but the oral testimony Friday was dominated by opponents. Continue reading

Welcome to Loudoun – Just Avoid Route 7

by James C. Sherlock

Saw this headline in the Washington Business Journal.

“Toll Brothers pushes big residential plans in Ashburn — and a tribute to enslaved people who once lived there.”

Behind the headline: This is to be a development of 1,300 residences in a project named Mercer Crossing.

Since it is being built by Toll Brothers, we’ll assume they will be pricey.

Their Lenah Mill project in Aldie has homes for sale from “$1,323,895″ and from “$1,499,950,” depending upon how much space one needs and how close one wishes to live to one’s neighbor.

Six other Toll Brothers developments in Loudoun are nearing sold-out status. Continue reading

A Curious Coincidence Regarding Those Price-Gouging Actions

A BP station. Photo credit: Wikipedia

by James A. Bacon

Earlier this week, Virginia Attorney General Mark Herring announced a successful enforcement action against a gas station under the state’s price-gouging statute. Richmond-based 7HC Inc., doing business as 7 Heaven BP in eastern Henrico County, will be required to refund $2,858 to 152 customers for jacking up the price per gallon during the Colonial Pipeline shutdown in May. The firm also will be dunned $2,000 in attorneys fees.

That represents the third enforcement action against a Virginia enterprise under the Virginia Consumer Protection Act in connection with the Colonial Pipeline gas shortages. The other two were against Tahir and Sons LLC in Springfield, and RIR Mart Exxon near the Richmond International Raceway in Henrico County.

Oddly enough, the three firms all have something in common. See if you can figure out the common denominator from the names of the owners.

  • 7HC — Eltam Salem
  • Tahir and Sons LLC — Tahir Mahmoud
  • RIR Mart Exxon (Saly Inc.) — Balwinder Singh

Continue reading

Masters of Hype and Puffery

Former President Clinton at the GreenTech “pilot plant” in July 2012.

This is the fifth in a series of articles about Terry McAuliffe and GreenTech.

by James A. Bacon and Carol J. Bova

On July 6, 2012, GreenTech Automotive launched the rollout of the “all-American” MyCar electric vehicle at a ceremony attended by former President Bill Clinton, the governor of Mississippi, the assistant secretary of Homeland Security and, as described by local media, “an overflow crowd.”

It was a festive occasion. Clinton lauded company chairman Terry McAuliffe and former Mississippi Governor Haley Barbour, a Republican, who was also in attendance, for overcoming their political rivalries and delivering a tremendous manufacturing project for the state of Mississippi. 

McAuliffe, too, was upbeat. “For too long, America has been inventing products here and sending the production jobs overseas,” he said. “But … we’re proud to bring manufacturing jobs back and prove that the U.S. is still the world leader in technological innovation and manufacturing.”

The day before, McAuliffe had told the New York Times that he thought the company could produce 10,000 cars in 2013. He quoted an $18,000 price tag for a top-of-the-line MyCar, with less capable versions selling for less, implying potential revenues in the realm of $150 million. During the ceremony itself, he announced big news: Domino’s Pizza Inc. would exclusively use the MyCar to deliver pizzas in 10,000 locations across the U.S.

Photographers snapped pictures of a grinning Clinton toodling around the cement floor of the pilot plant in a MyCar decked out with the Domino’s Pizza logo. Other photographs showed GreenTech employees industriously working on an assembly line of MyCars. Continue reading

Shearing the Sheep

This is the fourth in a series of posts about Terry McAuliffe and GreenTech Automotive.

by James A. Bacon and Carol J. Bova

The Chinese citizens who lost $500,000 each from investing in GreenTech Automotive were not happy with their setback. While they had ponied up their money as part of a scheme to get a U.S. visa under the EB-5 program, many thought they would get their money back. When they didn’t, they felt cheated. Twenty-seven of them banded together and filed suit against Xiaolin “Charles” Wang, Anthony Rodham and Terry McAuliffe, the principals of GreenTech and its allied fund-raising arm Gulf Coast Management.

The outcome of the case, Xia Bi vs. McAuliffe, hinged on matters of law. Boasting, exaggeration and hype regarding future events, referred to as “puffery,” which the defendants indisputably engaged in, do not constitute fraud. Although some of the Chinese plaintiffs’ allegations did describe misstatements of fact, said federal appeals court judge J. Harvie Wilkinson III in a 2009 ruling, they failed to show that they had based their investment decisions upon those misstatements. Accordingly, he upheld a lower court order to dismiss the case.

Nevertheless, Xia Bi vs. McAuliffe provides insight into how the GreenTech fund-raising operation worked. It is abundantly clear why the Chinese investors felt cheated, even if they could not win their case in court. As Wilkinson wrote, “There are no laurels in this case, no accolades to be bestowed.” Continue reading

Dreams from the Opium Den

This is the third article in a series about Terry McAuliffe and GreenTech.

by James A. Bacon and Carol J. Bova

When partners Xiaolin “Charlie” Wang, Anthony Rodham, and Terry McAuliffe banded together in 2009 to finance and build an electric vehicle enterprise known as GreenTech Automotive, they thought big. Very big. In a 2009 offering memorandum pitched to Chinese investors, they stated they aimed to grow their flimsily financed start-up into an automotive behemoth eventually capable of generating up to $33 billion in revenue.

“If full production of one million vehicles is realized,” elaborated the document, GreenTech’s manufacturing facility in Tunica County, Miss., would be “one of the largest automobile manufacturing plants in the world.”

In retrospect — after GreenTech went bankrupt having produced only a handful of cars, burned through more than $140 million, and left barely $6 million behind for investors and creditors in the bankruptcy settlement — such aspirations seem wildly disconnected from reality. Whether McAuliffe and his partners believed such targets were remotely realistic is a question only they can answer.

Looking at GreenTech from the outside, some described the business as a scheme to snooker millions of dollars from naive Chinese investors. A more charitable explanation is that the GreenTech partners genuinely believed their own hype, hoping they could bootstrap one fund-raising effort into enough progress in building the enterprise that they could make it to the next fund-raising round with a better story, raise some more money, make more progress, and hook the next round of investors. In other words, in such a view, their business plan was fake until you make it.

Whatever the thought process, it was an abject failure. Chinese investors lost almost everything, they felt cheated, and the three principals opened themselves to accusations of fraud. Continue reading

Brace Yourselves for Inflationary Impact

This chart, courtesy of John Butcher, shows how the Consumer Price Index has broken out from the annual 1% to 3% increase range of the previous decade. While inflation is a national story, it has public policy implications for Virginia, especially now that public employee unions can engage in collective bargaining. Federal Reserve Bank officials hope the inflationary surge will subside. But once inflationary expectations get embedded in the economy — most visibly through the mechanism of multi-year union contracts — they can be stubbornly persistent. You can’t blame workers for wanting their pay to keep pace with inflation. But someone will draw the short stick, and that’s likely to be taxpayers. — JAB

A Handshake Deal Gone Bad

This is the second in a series of articles about Terry McAuliffe and Greentech.

by James A. Bacon and Carol J. Bova

Fourteen  years ago, Benjamin Yeung was a Chinese entrepreneur whose companies manufactured and sold minibuses, passenger cars and business vehicles in China. In 2007 he launched a venture with the idea of building small hybrid cars in the United States. What made the plan unusual was the source of financing: Chinese investors willing to invest $500,000 in the U.S. in order to get a green card under a new U.S. initiative, the EB-5 Investor Pilot Program.

Although he needed an interpreter, Yeung was comfortable doing business in the United States. His wife, Rhea, was an American citizen, and he owned a residence in California. According to the account he gave in a court affidavit, he set up a holding company, Hybrid Kinetic Automotive Holdings, Inc. (HK Holdings), and an operating subsidiary, Hybrid Kinetic Automotive Corporation (HKAC).

Yeung said he made wife Rhea the sole shareholder of HK Automotive Holdings. But to run the venture in its start-up phase, he brought on a young Chinese man living in Northern Virginia, Xia0lin “Charlie” Wang. Wang was highly credentialed. He had earned an undergraduate law degree from Xiangtan University, an M.A. degree in development studies from Ohio University, and a degree in international law from Duke University. On his resume, he listed experience as a capital markets partner in the Washington, D.C., office of a prominent New York law firm. Continue reading