The US state of Virginia has a long history of working with foreign companies. Karen Thuermer on how the south eastern state’s governor is attracting FDI from across the globe.

Mark R. Warner, governor of the Commonwealth of Virginia, is frequently referred to as the state’s chief economic development officer. It is a title this young and vibrant state leader cherishes, along with the state’s economic development motto that his administration coined: “One Virginia, One Future.”

To unify efforts to promote economic development in his administration, Mr Warner established Executive Order 34 to form the Economic Development Strategic Planning Council. FDI fits keenly into that plan given the amount of interest and investment overseas companies have in Virginia.

In 2001, for example, 53 foreign affiliated announcements were made in the state, thereby creating 3386 jobs and $363m in investments. Leading the way in announcements that year were firms from France, Switzerland, Canada, Germany and Israel.

Although he has yet to go overseas to promote FDI, Mr Warner’s plans call for a trip to Europe early this year. “The commonwealth needs to focus on economic development now more than ever to combat the recent recession,” he says, emphasising his commitment.

He abated plans to lead a trade mission to China and Japan last year due to state budget shortfalls of a whopping $5bn and the uncertain direction of the economy. “I did not think travelling abroad at that time would look good to my constituents,” he says.

Instead, he concentrated on streamlining government and introducing stronger spending controls. Yet he was insistent not to cut any incentive programmes that encourage firms to locate in Virginia or marketing efforts that promote economic development.

Aggressive promotion

“Marketing is key to any sales effort,” he says. “How else are we to recover from periods of economic downturn? I believe the fact we acted so aggressively in making the budget cuts places us in a better position for recovery,” he says.

He may be correct. Thanks to the state’s aggressive effort, Virginia maintains its AAA bond rating.

Since taking office one year ago, he has announced more than 22,000 new jobs amounting to more than $2.32bn in private investments.

In addition to incentive programmes, such as the Governor’s Opportunity Fund, and training dollars from Workforce Service (plans that are equally available to foreign and domestic companies), Virginia is well represented overseas. The Virginia Economic Development Partnership maintains trade offices in Frankfurt, Germany; Săo Paulo, Brazil; Hong Kong; Seoul, Korea; Mexico City; and Tokyo. Japan is Virginia’s number two trading partner after Canada.

“Virginia was the first US state to open a trade office in Europe,” the governor emphasises. “We have a long history of working with European firms.”

Now, despite a possible war with Iraq and some European opposition to a war, Mr Warner is anxious to promote his state overseas. He understands wholeheartedly the importance of networking, marketing, and building relationships.

“I may be new to politics but I have been in business for 20 years,” he says. “I have travelled extensively in business but not yet as governor. I have companies in Ireland and the UK that sell worldwide, so I know the challenges of doing business in another culture. I am very familiar with what businesses need and want.”

During his career in business, Mr Warner founded a technology venture capital fund, started a healthcare foundation for more than 400,000 underserved Virginians, formed a website where pensioners could find answers to medical questions, implemented a programme that teaches basic computer skills, and created four regional investment funds to attract business.

In his efforts, Mr Warner plans to target three industry groups that already have a strong presence in Virginia: pharmaceuticals, automotive, and information technology/telecommunications. His goal is to build on strengths that the state already has.

Germany’s Boehringer Ingelheim, one of the world’s largest private pharmaceutical companies, offers a particularly good example of a European firm that recently located to Virginia based on what the state has to offer. It committed $2.5m to set up a research centre in Richmond’s Virginia Bio-Technology Research Park. Indicating a commitment to biotech, this year the state will host BIO International.

Infrastructure pluses

Another plus for larger international firms is Dulles International Airport in Northern Virginia, 45 minutes from the heart of Washington DC.

“Dulles has more international seats than any other airport on the US east coast [after New York’s JFK International],” he points out.

The state is also a good location for the burgeoning automotive industry. During the past decade the US south east has blossomed with plants from European auto manufacturers. “Virginia is a good location to serve core automotive manufacturers in Michigan and the south east,” Mr Warner says.

Volvo trucks are manufactured in the south west corner of the state and Ford assembles pick-up trucks, vans and cars in Norfolk.

IT and telecommunications are well planted in the state. Mr Warner points to BAE Systems from the UK, which recently opened its North American headquarters in northern Virginia.

“Companies in this industry desire to locate in northern Virginia because of the number of IT and telecom firms already located there. Plus they are close to the regulators in Washington DC,” he says.

Mr Warner sees businesses in the UK, the Benelux countries and Germany as top contenders for Virginia because these countries are solid in the pharmaceutical, automotive and IT/communications industries. He is quick to add that manufacturers from other countries, such as Italy and Spain, are also taking a bigger stake in the state.

“It helps that Europeans are already familiar with Virginia, whereas they might not be with other states,” Mr Warner says. “They know something about our history and historic leaders George Washington and Thomas Jefferson. They have heard of Charlottesville and Williamsburg. Virginia is also a state with much culture, top educational institutions, and an outward point of view.”

Mr Warner desires to expand beyond promoting the state to traditional trading partners such as those in Europe, Canada and Japan, however.

“I want to build stronger ties with countries like India,” he says. “We already have a vibrant Indian community in northern Virginia, especially in the internet, IT and communications industries. I believe we can attract more software, back-office and services industries by building synergies between Virginia and India-based firms,” he says.

“Such firms could come to Virginia’s rural areas much as the automotive industry did 15 years ago when it began locating in the US south east.”

Uncertain times

Mr Warner is well aware that companies today may be more reluctant to relocate and expand, given the uncertain economic and political climate. “A war with Iraq is a cloud that hangs over us all,” he says. “It freezes investment decisions and adds to these economically uncertain times.”

But he is optimistic that if an overseas firm decides on the US, Virginia can present a strong case for consideration. He is committed to helping companies to locate in Virginia. “We offer attractive incentives and will do whatever it takes to close the deal,” he says.