"The big challenge facing Virginia in many of its communities is the labor supply," says Dennis Donovan, senior managing director with the Wadley-Donovan Group, a site consulting firm based in Morristown, N.J. "It's the same as it is around the country, but it's the big challenge in Virginia."

Donovan says that the state's quality of life plays a key role in it being able to attract top talent, "but you don't really relocate hourly people," he continues. "There is a real shortage of hourly workers and technicians in Virginia as there is in a lot of states. There's a number of things that must be done, but I know Virginia is making every effort to develop an effective work-force development program."

The most recent move was Gov. Jim Gilmore's naming Secretary of Trade and Commerce Barry E. DuVal as a key player in the Work-force Development Council. The group's goal is to develop programs and bring together resources from a variety of state programs. "And the very significant resources that we're putting into education are focused on and directed toward helping prepare the people receiving the training and education for the jobs of today and of the future," says Mark Kilduff, executive director with the Virginia Economic Development Partnership. "We're also trying to have in place programs that help in retraining workers."

Despite the fact that labor is growing increasingly difficult to find in Virginia, businesses continue to flock there. So what else does it have to offer?

"It has a very good economic development department that works well with a public-private partnership," Donovan explains. "They do a great job of providing services. And in high technology, the key is that it already has a base in that arena; there's already a critical mass there. It also has a very favorable image for quality of life, which enhances a company's ability to attract talent nationally. And it's very good at permitting."

On the downside for business, however, Virginia has not been known to hand out many large incentive packages. The state, however, is making some efforts to change that. This year, the General Assembly modified the Virginia Investment Partnership Act to include non-manufacturers that invest $100 million in the state and create 1,000 jobs. "This is a recognition of the changes that are taking place in our economy, of the importance of the information technology, Internet and other high-tech sectors that are found in Virginia," Kilduff says.

In another nod to the high-tech companies, legislation was passed this year allowing localities to separately classify the personal property of Internet-related companies and Internet service providers.