When Picking a State, Who Should Focus on Southern Virginia #18

When Picking a State, Who Should Focus on Southern Virginia with Joe Anwyl #18

In another recent podcast we talked about why businesses expand to the United States. But it’s a huge country with 50 states and they’re all different – not just geographically, but in terms of laws, culture and doing business generally. So where do you go?

Well, that depends on why you’re setting up in the States, what sort of business you’re in and what markets you’re trying to reach. Recently I met up with Joe Anwyl to talk about one state in which he specialises, Southern Virginia.

Joe’s professional background is in engineering project delivery, team management, and business development, and he has first-hand experience of trading in USA, UK, Europe, Middle East, South America, India, China, and Malaysia.

In our conversation, Joe’s talking about the advantages of Southern Virginia and the businesses it should appeal to. However, whatever your business, and even if that state is not the right destination for you, I think you’ll find Joe’s commentary really interesting and helpful.

Since 2013, Joe has been working to support UK and EU firms expanding to Virginia. He’s worked closely with Rolls-Royce North America and has helped a dozen firms establish companies in the US. Most recently Joe has been helping international companies make the engineering and tech-centric location of Southern Virginia their operational base in the USA.

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Web Sites and Links

Contact details: [email protected]

Web Site: www.investsouthernvirginia.com

LinkedIn profile: https://www.linkedin.com/in/joe-anwyl-1a425a10/

Transcript

OLIVER: I’m with Joe Anwyl, who’s the FDI consultant with Invest Southern Virginia. Tell us why businesses should be so interested in Southern Virginia, Joe?

JOE: Well thanks Oliver. Virginia is an interesting place, because it’s in the United States, which is the most sophisticated large country on earth.

OLIVER: Can you give us a quick geographic pinpoint because many listeners might not know where Virginia is?

JOE: So, half way, we call it mid-Atlantic. That’s not for an English ear, halfway across the Atlantic, but it is indeed half way between New York City and Jacksonville in the very north part of Florida. Another geographic check is Washington D.C., the capital of the United States, which is right next to the northern corner of Virginia.

OLIVER: OK, right.

JOE: Virginia is a very sophisticated state. It sits at the heart of US governance, where the White House is. It sits at the heart of the US defence sector, the Pentagon being in Northern Virginia. Other defence installations like NASA, Langley and Norfolk Naval Base, the largest naval base on the East Coast, sit within our State. So, there is no greater concentration of defence contracting and defence manufacturing anywhere in the world than Northern Virginia. The Pentagon spends $517 billion a year on defence, so you know it’s a good place to be.

OLIVER: It’s a huge amount

JOE: If you’re interested in defence spending it’s a good place to be.

OLIVER: So are they mostly defence companies that are attracted there?

JOE: My role is to help UK and EU companies open manufacturing facilities in the southern part of Virginia. The companies that we most successfully help are aerospace related, defence related, advanced manufacturing related. So, aerospace, defence, oil and gas, automotive and the metals and materials sector.

OLIVER: Ok and I guess there’s a reasonably sophisticated and well-trained workforce for that?

JOE: There are various things that lead companies to locate in Virginia. The single most important is – this will be a big claim and I can back it up – it is the world’s greatest advanced manufacturing workforce. So, part of that comes from training. The investment that a relatively wealthy state has made in training its young people is phenomenal. I go to, I’ve been lucky enough to go to high schools to see 14-year-old kids learning to operate four and five axis machines. I’ve been fortunate enough to go to community colleges which are a bit like our old polytechnics. They provide facilities and training that outclass a number of our universities, and there are a number of super high-quality advanced training institutes for graduate level people that produce some of the finest engineering technicians on earth.

OLIVER: That’s really impressive but doesn’t that make it a very expensive place to do business?

JOE: It’s interesting. The northern part of Virginia is as expensive as anywhere in the US. In the southern part of Virginia, which I represent and help, the technology and the training and the quality of people remains, but the price is reduced because there’s a lot of space. Take land for example, for the right manufacturing company, we’ll give them free land, to come and establish.

OLIVER: Oh really?

JOE: Just compare that, the second-best place on earth to manufacture is Northern England. That is, in the metals industry.

OLIVER: Right

JOE: So if you compare contrast Northern England to Virginia, you can pay between a quarter of a million and a million pounds per acre for industrial real estate in the U.K. In Virginia we’ll give it to you, we have no shortage of that. So all of these cost reductions lead to costs that we offer to incoming companies being about 18 percent below the US national average of doing business. So to compare and contrast that to other places that have previously had manufacturing, Florida would not be a bad place to put a manufacturing company but it’s 20 percent above the national average cost of doing business there. California which has traditionally been an advanced manufacturing and aerospace location for businesses, is 40 percent above the national average. It would take a very brave business leader to choose that 60 percent delta.

OLIVER: Absolutely.

JOE: That is the fundamental reason why the southeastern United States is becoming the hub for advanced manufacturing. So, I represent Virginia, which of course, I will tell you is the best State.

OLIVER: You would say that wouldn’t you, as they say!

JOE: But there is no bad decision to be made in the south-eastern United States. Florida, a little bit more expensive, but yes high technology, a good State to be in. North and South Carolina, excellent locations for potential manufacturing businesses, and Virginia. That is that is seen by migration of manufacturing in the U.S. and from the rest the world in foreign direct investment into southern United States. We’ve seen Rolls-Royce site its largest non-UK new build in Virginia. Boeing have closed factories in California and moved them to South Carolina. Boeing were a hair’s breadth away from closing all their machine shops in Seattle because of cost and over unionization. It literally went down to a single vote with the union, so a hair’s breadth, and possibly most telling, Aviation Week moved its annual conference from Seattle to Charlotte, North Carolina. So, the Southeast United States has become unquestionably the location of choice for advanced manufacturing companies.

OLIVER: You mentioned Rolls-Royce which is of course a huge company, is it, are there attractions for smaller companies as well?

JOE: Very much so. That’s a really interesting question. In terms of the macro outlook we are currently at a very interesting historical crossroads in advanced manufacturing. Since the crash of 2008 there has been historic under-investment by OEMs like Rolls-Royce and Boeing. At the same time there’s been a historic increase in demand for their products. As an example, you mentioned Rolls-Royce. In the next 10 years, Rolls-Royce have to build more jet engines than they have collectively flying today.

OLIVER: So is that really true?

JOE: Its really true, so on top of, so there is a tsunami of demand for aviation products because of a lack of investment and because of the aging out of the workforce. In manufacturing in the US, it depends how you include manufacturing, but generally in our industry, for metals and materials based manufacturing, the average age of a shop floor worker is 52. What that means is that in the next 10 years you’re going to lose almost half of your workforce. How are you going to replace it? It takes me back to your question, Oliver, about training. Most of the training centres I’ve been to all over the world and I’ve been lucky enough to do this job in the Far East, Middle East, Europe, UK and all over the US. Most training centers I go in are filled with machines that have been donated by generous businesses that they no longer need. So, you have a training center that has machines that are worn out, that looks something like a cat threw up. You’re expecting young people to go into these facilities, and for them and for their parents to be inspired about a career in manufacturing. So globally there’s been a huge dearth of entry into manufacturing. So, what we offer is that cost 18 percent below the national average. A world class workforce which I’ve talked about, and to answer your question in a very long way, a demand that cannot be filled by the OEMs. So they are going to be forced to put work towards their supply chain. So now is the time for global advanced manufacturing companies to take advantage of this historic demand in manufacturing.

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