McDermott International Inc. has announced plans to spin off its Babcock & Wilcox subsidiary, which designs and builds nuclear reactors for power plants and the U.S. Navy, and move the corporate headquarters from Lynchburg to Charlotte, N.C.

The relocation will involve fewer than a dozen employees, leaving some 2,400 employees in the Lynchburg area unaffected. But the loss could prove to be more than symbolic. The employees making the move presumably will be highly compensated senior executives. They will require high-end office space, they will support their new community philanthropically and, one can only assume, they will hire the support staff required to run a publicly traded company. That office space, that philanthropic support and those jobs will go to Charlotte, not to Virginia.

It is understandable that a publicly traded company, as the new J. Ray McDermott International S.A., will be, would want to locate a headquarters facility in a city providing easy access to legal, financial, accounting and other talent. But that talent is readily available in nearby Richmond or Northern Virginia, both the home to numerous corporations the size of McDermott. Were either of those two locations considered? Was anyone in the state economic development community aware of the decision? Did Virginia communities ever have a chance to pitch McDermott? Is there anyone to hold accountable for this lost opportunity?

I have posted in the past on Virginia’s opportunity to grow a powerful nuclear-power industry cluster around the presence of B&W and Areva in Lynchburg, the Northrup Grumman shipyard in Newport News, Dominion in Richmond, North America’s largest uranium deposits in Pittsylvania County, and access to nuclear regulatory authorities in the Washington, D.C., area. In that regard, Virginia has far more to offer than North Carolina. A year or two ago, Sen. Ken Cuccinelli, since elected Attorney General, showed a strong interest in the idea of leveraging Virginia’s nuclear expertise into more economic development — he and I chatted briefly and exchanged some email correspondence on the subject. But I never sense a glimmer of interest from anyone else. And that, sadly, includes the Kaine administration.

Claiming the corporate headquarters of a publicly traded company whose main business is nuclear power would have highlighted Virginia’s role as a leader in the nuclear industry — all the more because of B&W’s leadership in that industry. In June the company announced the development of a small nuclear reactor, which could make it possible to bring nuclear power online in smaller, less expensive increments. The company described it as a “potential game changer for the global nuclear market.”

The loss of the headquarters won’t change where the design work takes place, which, I presume, is Lynchburg. But the announcements, the glory and much of the deal-making will come out of North Carolina. Consider the McDermott-H.Q. episode as a lost opportunity. Also count it as one more defeat in the long-running competition between the Tarheels and the Cavaliers. Our record doesn’t look much better in economic development that it does in basketball.

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11 responses to “Who Lost B&W?”

  1. Gooze Views Avatar
    Gooze Views

    I am not sure that spinning off B&W is that big a deal. For years, McDermott, the owner, had been in New Orleans. Right? If so, what's the difference with Charlotte? Secondly, one of the primary reasons why Lynchburg was selected was that during the Cold War was that it was fairly close to DC and the Pentagon but was in a secluded area beyond the 40 kilometer range that diplomats, many undercover spies, were restricted from going beyond (starting at their Washington embassies.) So East Bloc intelligence officers found it hard to get to Lynchburg.
    Actually, Virginia has come up in the nuclear world with Areva's continued presence in Lynchburg and the new shop in Newport News.
    As for mining uranium, I was recently told by Dominion officials that there's no real need at the moment for new uranium supplies, which casts doubts on the SOuthside mining idea. What's more, about half of all fissionable material used in U.S.reactors comes from recycled Soviet-era nuclerar weapons. Isn't it better to use nuclear material this way that risk pollutiing regional watersheds with an unneeded mine?

    Peter galuszka

  2. James A. Bacon Avatar
    James A. Bacon

    That's interesting about the uranium supplies. Sure, I totally agree, better to use old Soviet nukes than dig new stuff out of the ground. Any idea how long those nukes will last? 10 years? 20? At some point, we'll have to start mining uranium again.

  3. Anonymous Avatar

    How much mining will we have to do in order to build several hundred thousand wind generators?


  4. not your father's economic developer Avatar
    not your father’s economic developer

    How about we hold accountable the folks who decided not to build a joint airport between Lynchburg and Roanoke in the 70's? Corporate HQ's are wherever the CEO sleeps at night. I'm with Gooze on this one. Not a big deal.

  5. I hope there is not another shoe getting ready to drop.

    Moving your corporate headquarters and not the operations is not exactly comforting.

  6. Anonymous Avatar

    We should abolish the corporate income tax here in VA. Besides being a major attraction to companies to stay and relocate it actually increases treasury revenues within a relatively short period of time. It's worked in every place it has been tried and increased employment. According to the US Congressional budget office 70% of the cost of this tax comes from labor and 30% comes from the shareholder. It's a proven job killer. At less than 5% of the states "revenues" its just not worth it.

  7. here's an interesting perspective:

    " What Makes Cities Great"

  8. Anonymous Avatar

    Energy Consumption per Real Dollar of GDP has dcreased from 20,000 BTU's in 1950 to around 8.5 Thousand BTU's per Dollar of GDP in 2008.

    America uses a lot of energy but we are among the most efficient nations in converting it to GDP.

    You have to wonder how much more we can cut before we reach a point of diminishing returns: Clearly it can't go to zero, and th esame goes for the use of other resources as well.

    As George will Points out:

    "Barack Obama, understanding the histrionics required in climate-change debates, promises that U.S. emissions in 2050 will be 83 percent below 2005 levels. If so, 2050 emissions will equal those in 1910, when there were 92 million Americans. But there will be 420 million Americans in 2050, so Obama's promise means that per capita emissions then will be about what they were in 1875. That. Will. Not. Happen."

    Clearly, if you premise a city on one resource and that resource runs out, something is going to have to give. That's been the case from wildcat mining camps to aircraft manufacturing on Long Island. Currently there is consideration of removing residents from the city of La Paz due to lack of water.

    Sooner or later you need some kind of resources to support jobs.


  9. Groveton Avatar

    At the risk of being very redundant:

    1. The only candidate for governor who had even a whisper of an understanding of how to attract private employers to Virginia was Terry McAulliffe. Bob McDonnell would be very well advised to ask Terry to help him bring jobs to Virginia. Terry might not do it (out of some sense of loyalty to the Democratic Party) but McDonnell should ask. McDonnell ought to offer $1/year. This isn't about compensation.

    2. Airports are a big deal to big companies. More and more companies are giving up their fleets of private jets. It doesn't look economical or ecological to maintain a private air force. I understand that there are arguments in favor of private corporate jets but the trend is down. Therefore, companies have to get their executives and customers into and out of wherever they operate. That means an airport with direct flights to major cities. I am willing to bet that was part of the decision with regard to Charlotte vs. Lynchburg.

    3. Mining uranium is a hideous business. It may be quite profitable. The companies engaged in the business might be great corporate citizens. But the process is very challenged ecologically speaking. I'd suggest that anybody in Virginia who thinks uranium mining is a good idea look at places where uranium is actually mined today. I guess you need to mine uranium to have nuclear power. I realize that (on a macro basis) nuke is better for the environment. However, on a micro basis, it's a very tough business.

  10. America's best high schools – 2010

    List contains public and private schools. Only two from Virginia. Both are public high schools in Farifax County – Thomas Jefferson and Langley. Thomas Jefferson is a magnet school for science and technology. Langley is a regula old Fairfax County public high school. It is rated the 47th best high school in America.

    Congratulations to the teachers and administration of Langley High School for their astonishing rating.

    Perhaps some of the teachers from Langley should be paid bonuses and sent to other school districts in Virginia.

    Does Lynchburg have a magnet school for scince and technology?

  11. Anonymous Avatar

    As others have mentioned, I think this move is almost certainly related to airline service. Virginia should've been able to keep the HQ because Dulles offers more flights, especially international, than Charlotte and probably office space just as cheap with the current downturn. You have to wonder if Virginia officials had a chance to make a case to B&W.

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