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From Site Selection magazine, November 2015

A One Track Mind

Governor Terry McAuliffe is determined to be ‘Job Creator in Chief’ for the Commonwealth.

Overlooking Blue Ridge Parkway
Photo by Sarah Hauser, Virginia Tourism Corporation


Site Selection: Last year you said you wanted to “crush the other 49 states in job creation.” How’s that going?

Gov. McAuliffe: I try to do it every day. Today I announced my 470th project since I’ve been governor. Some of those are expanding companies that are already here. We have done a tremendous number of economic development projects — almost $7.8 billion, which is almost double any governor of Virginia in capital investment. When I came into office about 18 months ago, I inherited a $2.4-billion deficit. Last month I announced the largest surplus in Virginia history. We’ve had tremendous change in our economy, including very low unemployment, the lowest in the southeast — 4.5 percent — the lowest since September 2008.

The challenge I have to be careful about when I talk about building that New Virginia Economy is that we are vulnerable. We’re the number one recipient of Department of Defense dollars of all 50 states. We have the largest naval base in the world, 19 military installations, Quantico, the CIA and the Pentagon. So any inaction and foolishness by Congress — not being able to get a debt ceiling done, not being able to get a budget done, not being able to deal with the Highway Trust Fund — has a big impact.

We have to diversify, we have to bring in new business. But as I say, 4.5 percent is great for us, and our average weekly wage for private employees was up 7.6 percent from a year ago.

SS: How personally involved do you get in recruiting foreign direct investment deals to Virginia?

Gov. McAuliffe: I travel constantly. Last year we went to China twice, Korea, Japan and a bunch of European countries. I am very active in recruitment of business but I leave it to my Secretary of Commerce and Virginia Economic Development Partnership (VEDP) to get into the nuts and bolts of it. What I do is open doors and try to close deals. I want us to chase every deal on the globe, but that doesn’t mean we want every deal. You just don’t know unless you’re there, at the table. Some deals just don’t make sense. If it makes sense, then we’re like a dog to a bone.

We won the largest deal done by a Chinese company in America ever, last year. [The Shadong Tranlin Paper Co. project, an investment of $2 billion, creating 2,000 jobs.] But we don’t just spend our time going after new business. We have a lot of business here and we want to help them grow. I spend a lot of time on the phone for CEOs to open markets for existing businesses in Virginia. I think there are 800 or so international companies doing business in the Commonwealth right now.

SS: Last year you introduced the “New Virginia Economy Workforce Initiative.” Among the goals were 50,000 citizens trained in the STEM-H fields by 2017; 10,000 businesses taking the “Patriot Pledge,” promising to recruit and hire more veterans; creating greater alignment between education policy and workforce development; and increasing support for startups/entrepreneurs. Where are you in the process of meeting these four goals in particular?

Gov. McAuliffe: We are way ahead. Let’s just take the Patriot Pledge. Veterans are very important to the Commonwealth. I said I wanted 10,000 jobs created under my term. They just went over 11,000 jobs — 900 days early. Last week I upped it to 20,000 veterans hired before I leave office. We have, per capita, more veterans than any other state. We have more female veterans and more veterans under the age of 25 than any other state. We transition between 10,000 and 15,000 service members from active-duty status to veteran status each year. We want those vets to stay here. We’ve reworked our entire credentialing process. Let’s give veterans credit for the military service they have. I want veterans to know that when you come here, and stay here, we’ve got a job for you.

Governor McAuliffe, Volvo Project
Gov. Terry McAuliffe at the groundbreaking of Volvo’s new $38-million customer experience center in Dublin, Va.
Photo by Michaele White, Governor’s Office

We’re on track to get our 50,000 STEM-H credentials in the next three years. But what I’m trying to put in place is that we have 500,000 by 2030. The secret sauce in business creation is that you have to have a workforce for the companies you’re recruiting. Before they invest millions of dollars they want to know whether they’ll have a worker for five to 20 years. That’s the key.

I’m trying to restructure our education system. Kids getting out of school with a lot of debt and no job does not do me any good as the governor of Virginia. Get them out and move them right into that workforce with a skill set. That’s why I really want those college presidents out of their offices into their communities finding out what the needs of the communities are, and changing courses if they have to.

SS: Do you get any pushback from folks asking, ‘What about a liberal arts education?’

Gov. McAuliffe: Nobody pushes back on me, they may think it privately. Look, I love a liberal arts education, too — I was a pre-law major — but I know the metrics and data on job creation. We need technology workers. We know that if we’re going to bring these businesses in, we’re going to need tens of thousands of tech workers. We can talk about the liberal arts and that’s terrific, but I ran for governor to be a job creator. I can create jobs if I’ve got a workforce. The only way to get a workforce is teaching those STEM-H courses early. I want every kid in Virginia schools coming into kindergarten to get a coloring book that says STEM-H on the front. You cannot start this early enough.

SS: What is the administration doing — specifically — to create a climate/culture where entrepreneurs can take their idea or product to the marketplace?

Gov. McAuliffe: We already have the kernels of an entrepreneurial hub in northern Virginia with our data centers and tech, and the things we’re trying to do with the MACH 37 cybersecurity accelerator that we’ve got in northern Virginia to create an entrepreneurial ecosystem. Our tax code has incentives; for example, if you come to Virginia in the tech space and you want to invest here we give you long-term capital gains exemptions. A lot of companies, like bioscience, want to be close to the federal government — we’re 12 miles from the National Institutes of Health (NIH). Cyber is generated out of the DoD, the Pentagon. We have the military piece, which is a great turbo charger.

SS: What is your administration doing to respond to the needs of industry with regard to workforce and talent development, particularly in the advanced manufacturing/skilled labor jobs? Are there specific initiatives/proposals being implemented both by government and education, starting at K-12?

Gov. McAuliffe: Every governor is dealing with the issue of the skills gap. This year will be my first two-year budget. I’ve told everybody my whole emphasis is investing in K-12. Because of the Great Recession, government shutdowns and sequestration, our K-12 positions have taken a hit. We’ve lost about 5,000 positions since 2008. Just filling up the gap is not the answer. Strategic innovative investments are what is needed. I’m also a huge advocate of pre-K. My emphasis will be on workforce development beginning in K-12. I’m going to put money, serious resources, into the development of our K-12 to better align with industry and end the skills gap in Virginia.

SS: Dominion’s Atlantic Coast Pipeline (ACP) was a major announcement last year. You were very supportive of the project when it was announced, calling it a “game-changer” with respect to job creation and the potential for lower energy costs for citizens and companies in Virginia. However, it is not without controversy from many quarters, especially citizen groups and environmentalists who are concerned not just with the destruction of some of Virginia’s pristine forests, but with erosion and water contamination issues. I read comments from you from earlier this year saying that you wanted the pipeline to move forward in a way that is environmentally friendly. Where does this project stand now, and have your views shifted at all?

Gov. McAuliffe: A couple things. I’m the guy who brought the Climate Commission back to Virginia. They weren’t allowed to meet for four years. The environmental community was very happy with that. I reached out to the federal government so we don’t have fracking in the George Washington National Forest. I have been very, very pro-environment, pro-renewable energy, trying to do different things because I believe climate change is real and I believe man contributes to it. I say this because for four years before me it was not allowed to be said. But you go with me to Hampton Roads when it’s rained all day and you’ll see a lot of roads shut down. So I get it.

I’ve said to Dominion and everybody, when we do this, we need to do it in a way that protects the environment, clearly protects our heritage sites and doing the best we can with local landowners so it is not so disruptive. The recent poll I saw showed that 76 percent of Virginians support the pipeline. Not everybody is going to be happy, but we have done our best, stressing that we will protect our environment and heritage sites.

“We have the lowest unemployment in the entire Southeast, 4.5 percent, the lowest we’ve had since September 2008.”

I also know that we need infrastructure to get the cheap gas to Virginia. None of this gas will be exported. Not an ounce will be exported. I can use as much as I want in the Commonwealth of Virginia and then it goes down to North Carolina. It’s like a superhighway. I can take a spur off it wherever I want. If I want to build a manufacturing center or a whole new enterprise zone, I can get gas to these areas where I can build manufacturing plants and I can beat China. This pipeline will revolutionize re-shoring manufacturing back to America, and if we can do this, I want those jobs in Virginia. There are parts of Virginia where they’ve lost textile, tobacco, furniture and coal jobs. This has gone on for the last 100 years. I can only compete with Asia with cheap energy, and this pipeline gives us that.

I’m standing on the side of job creation while protecting the environment. If we have all this natural gas coming out of the Marcellus Shale and we can’t use it because we don’t have the infrastructure, we are leaving jobs on the table and I’m ceding those jobs to my neighboring states. I’m not willing to do that, and I won’t do that.

SS: How has the business community responded to your challenges to them – to hire more veterans, to expand and invest?

Gov. McAuliffe: They’ve been 100 percent supporters. The Chamber of Commerce has been supportive and they have their own plan, Blueprint Virginia, which is very similar to the initiatives I have proposed. I asked for a lot of funds in the last budget to allow me to continue to move forward with economic development and the General Assembly put those funds in. There’s no question that the metrics speak for themselves.

I inherited a mess, a huge budget deficit, a very slow economy due to the government shutdown and sequestration. There was $9.8 billion lost from 2011 to 2013. The effect of that on your growth rate is tremendous and it takes five to six years to run through your system. All these billions I’ve talked about, that $7.8 billion, the next governor will get the primary advantage of that. Let’s take the big Chinese deal, $2 billion — we don’t even have the permits done for that yet, let alone construction or operation. The decisions we make today are really going to be beneficial to Virginians five to 10 years from today.

SS: How aggressive is Virginia right now in its attempt to land the new FBI headquarters?

Gov. McAuliffe: We are aggressive in going after the FBI headquarters. I believe a majority of FBI agents and personnel live in the Commonwealth of Virginia. We are blessed that we have the lowest tax rate of any of our neighboring jurisdictions. Everyone in the region is looking at the project; it’s obviously between us, DC and Maryland. What I’m hearing from the GSA [General Services Administration] is that it will be a year until they get to the point where a decision will be made.

SS: When you talk to companies, whether US or foreign, what are they saying about Virginia? What are the pluses and minuses and how are you either leveraging them or addressing the concerns?

Gov. McAuliffe: They talk to us about workforce. The things we’ve already discussed. They know we have a good business climate, great connectivity. We have the deepest port on the east coast, the only port that can handle the post-Panamax ships that will come around. We have cheap energy, we’re building a new pipeline called the Atlantic Coast Pipeline that will provide us with some of the cheapest energy costs in America. That’s going to create a renaissance in manufacturing.

Also, when I travel, when I go to a lot of places overseas, they haven’t heard much about Virginia. Here’s a funny story that happened when I was in China, Japan and Korea. I asked if they’d ever been to Virginia and I kept hearing “No, no, no.” No one had ever been to Virginia. I asked, “Where have you been?” They’d say, “I’ve been to Washington, DC,” and I’d say, “Really? Where did you land?” They’d tell me they landed at Dulles Airport. I said, “Dulles Airport is 26 miles inside of Virginia, so you have been to Virginia.”

Flying home I thought, I bet there’s no sign at Dulles. When I landed we drove out to the Dulles access road. There was a sign that read ‘Welcome to Washington Metropolitan Region.’ I went crazy. We drove to Reagan-National. There was no sign at all there. I called up my Secretary of Transportation, Aubrey Layne, and said, “You have 60 days to get the biggest signs you have ever seen that say ‘Welcome to Virginia, Virginia is for Lovers’ and if you can’t do that, I’ll get a stepladder and do it myself.” Now, every airport in Virginia has these signs. If you land at Dulles there’s a sign. Every entry point into the Commonwealth has a sign. A lot of this is marketing, but you ask me the biggest challenge, for some countries, is they haven’t heard of us. Once we get in and make the pitch, we’re very successful.

Editor’s note: Since this interview was conducted, the total capital investment and total projects shared by Governor McAuliffe have gone up – 80 more projects have closed amounting to an additional $1 billion in capital investment.

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