VIRGINIA’S ECONOMIC DEVELOPMENT LANDSCAPE

HAMPTON ROADS ASSOCIATION OF FINANCIAL PROFESSIONALS

ROBERT W. MCCLINTOCK RESEARCH DIRECTOR

FEBRUARY 14, 2012

VIRGINIA UNEMPLOYMENT

2

6.2

4.6

7.0

6.4

6.8

6.5

7.2

5.6

8.9

5.0

6.3

6.1

0 2 4 6 8 10Percent (%)

Winchester

Northern Virginia

Hampton Roads

Roanoke

Richmond

Lynchburg

Bristol

Harrisonburg

Danville

Charlottesville

Blacksburg

Virginia

Source: U.S. Bureau of Labor Statistics, LAUS, Dec 2011 (not seasonally adjusted)

By MSAUnemployment Rate

VIRGINIA UNEMPLOYMENT

3

VIRGINIA UNEMPLOYMENT

4

2.0

4.0

6.0

8.0

10.

0P

erc

ent (

%)

Jan 2000Jan 2001

Jan 2002Jan 2003

Jan 2004Jan 2005

Jan 2006Jan 2007

Jan 2008Jan 2009

Jan 2010Jan 2011

United States Virginia

Hampton Roads MSA

Source: U.S. Bureau of Labor Statistics (Not Seasonally Adjusted)

United States, Virginia, and Hampton Roads MSAUnemployment Rate

5

20%

Blacksburg CharlottesvilleDanville Hampton RoadsHarrisonburg LynchburgNorthern Virginia Other localitiesRichmond RoanokeWinchester, VA-WV

Source: Bureau of Labor Statistics, CES (Dec 2011, preliminary)

By MSAVirginia Employment

VIRGINIA EMPLOYMENT GROWTH

6

Recession Recession

-6.0

-4.0

-2.0

0.0

2.0

4.0

Pe

rcen

t (%

)

Jan 2000Jan 2001

Jan 2002Jan 2003

Jan 2004Jan 2005

Jan 2006Jan 2007

Jan 2008Jan 2009

Jan 2010Jan 2011

United States Virginia

Hampton Roads MSA

Source: U.S. Bureau of Labor Statistics, CESMeasured in percent change in S.A. nonfarm payrolls year-over-year; Virginia and Hampton Roads data not seasonally adjusted.

United States, Virginia, and Hampton Roads MSAEmployment Growth

VIRGINIA EMPLOYMENT GROWTH

7

2.9

1.3

-0.2

-0.6

0.4

1.1

1.5

1.6

1.0

3.0

5.2

1.0

1.3

-2 0 2 4 6Percent (%)

Winchester

Northern Virginia

Hampton Roads

Roanoke

Richmond

Lynchburg

Bristol

Harrisonburg

Danville

Charlottesville

Blacksburg

Virginia

United States

Percentage Change from Previous Year

Source: U.S. Bureau of Labor Statistics, CES

December 2011Employment Growth

VIRGINIA EMPLOYMENT GROWTH

8

1.01.3

-5.2-1.3

-1.40.8

-0.51.9

0.71.6

1.0-1.3

1.42.2

1.50.1

2.02.0

2.22.7

-6 -4 -2 0 2 4Percent (%)

Total Nonagriculture

Information

Construction

Manufacturing

Trade, Trans. & Util.

Government

Educ. & Health Services

Financial Activities

Leisure & Hospitality

Prof. & Bus. Services

Percentage Change from Previous Year

Source: Bureau of Labor Statistics, CES, December 2011

December 2011Employment Growth By Major Sector

United States Virginia

HAMPTON ROADS EMPLOYMENT GROWTH

9

-0.21.0

-1.4

-6.5-5.2

-1.70.7

-1.71.5

-0.42.0

0.6-0.5

0.91.0

1.42.2

1.71.4

-6 -4 -2 0 2 4Percent (%)

Total Nonagriculture

Construction

Information

Trade, Trans. & Util.

Financial Activities

Leisure & Hospitality

Manufacturing

Government

Prof. & Bus. Services

Educ. & Health Services

Percentage Change from Previous Year

Source: Bureau of Labor Statistics, CES, Monthly Data (December 2011), Not seasonally adjusted

December 2011Employment Growth By Major Sector

Virginia Hampton Roads

VIRGINIA EMPLOYMENT FORECAST

10

-0.4

-1.0

0.6

-0.3

0.9

-0.0

1.7

1.1

-2-1

01

23

Pe

rcen

t (%

)

2010 2011(p) 2012F 2013F

Percentage Change from Previous Year

Source: Bureau of Labor Statistics, BEA, Moody's Analytics

Virginia and Hampton Roads MSAEmployment Growth Forecast

Virginia Hampton Roads MSA

ANNOUNCED INVESTMENT AND EMPLOYMENT

2009 2010 2011

Investment $2.79 $2.60 $3.39Jobs 17,061 18,372 28,407Announcements 310 303 420

11

All announcements are subject to revision

CALENDAR YEAR 2011 HIGHLIGHTS

• Encouraging announcements results and trends compared with 2010– Jobs: +52% (28,407)– Capital Investment: +30% ($3.39 Billion)– Projects: +34% (420)

• Strongest job totals in 8 years, since 2003 • Geographic parity in job growth; each of the 6 Regions exceeded 2010 job totals;

and Diversified Sector Growth statewide• Existing business expansions remain fundamentally important to economic

performance: 71% of jobs, 72% of capital investment• Manufacturing represents 22% of job totals, 38% of total capital investment• Data centers (14 projects) dominant sector for investment; ($960M), and almost

half of all non-manufacturing investment• Professional, Scientific, and Technical Services dominant sector for job growth

(12,363 jobs); high wage sector• International job growth up 66% (2,162 jobs), 8% of all projects; still down about

2/3 from 2008 recent peak of almost 7,000 jobs

RECENT MAJOR ANNOUNCEMENTS

13

SELECTED STATEWIDE PROJECTS - 2011

Company Name Location Business Jobs Investment (millions)

Amazon.com Chesterfield & Dinwiddie Cos. Fulfillment centers 1,060 $85.0

Green Mountain Coffee Roasters Isle of Wight Co. Coffee roasting, grinding, flavoring, packaging 800 $180.0Defense Health Headquarters Fairfax Co. Defense Department’s Medical Command HQ 533 $225.0 International Paper Isle of Wight Co. Fluff pulp mill 213 $80.0ICF International Henry Co. Operations center, business process mgmt. 539 $15.0Bechtel Corporation Fairfax Co. Global Operations HQ; engineering 625 $18.0Backcountry.com Montgomery Co. Online retailer of outdoor gear 216 $25.5MeadWestvaco Corp. Covington Bleached paperboard 0 $285.0

Rubbermaid Commercial Products Winchester/Frederick Co. Commercial plastic products 71 $67.25

Albany Industries Galax Upholstered furniture 335 $2.5K-VA-T Food Stores Washington Co. Corporate HQ; Distribution of food products 25 $20.4Microsoft Corp. Mecklenburg Co. Data center 10 $150.0Cadence Staunton Micro-scale precision-cutting tools 65 $15.9CFA Institute Charlottesville Global association of investment professionals 45 $24.5

All announcements are subject to revision 14

SELECTED HAMPTON ROADS PROJECTS - 2011

Company Name Location Business Jobs Investment (millions)

Green Mountain Coffee Roasters Isle of Wight Co. Coffee roasting, grinding, flavoring, packaging 800 $180.0

Enviva LP Southampton Co. Manufactures wood pellets 64 $75.0

International Paper Isle of Wight Co. Fluff pulp mill 213 $80.0

Katoen Natie Norfolk Warehousing and distribution 225 $12.0

GEICO Corporation Virginia Beach Call center; insurance policies 285 $1.0

IMS:GEAR Virginia, Inc. Virginia Beach Metal and plastic gear assemblies 80 $35.5

Ace Hardware Corp. Suffolk East Coast re-distribution center; hardware 75 $14.0

TRG Customer Solutions Hampton Inbound and outbound communications 120 $3.0

Kruger, Inc. Portsmouth Warehouse, pulp and paper import/export 0 $25.0

Enviva LP Chesapeake Storage/distribution of wood biomass products 24 $11.7

All announcements are subject to revision

15

ANNOUNCED INVESTMENT AND EMPLOYMENT

Region New Jobs Investment (millions) Announcements

Central Virginia 4,134 $517.64 70

Hampton Roads 3,202 $567.81 52

Northern Virginia 14,422 $1,220.73 184

Southern Virginia 2,669 $424.50 39

Southern Virginia 2,029 $149.62 31

Valley Region 1,951 $508.16 44

Grand Total 28,407 $3,388.46 420

Regional Totals – Calendar Year 2011

16

All announcements are subject to revision

RECENT VEDP HIGHLIGHTS

• International Presence Expanded– India: 2 firms engaged in August 2011– United Kingdom: Engaged HMC Global in March 2011– China: Representative in Shanghai in May 2011

• Governor’s Mission to Israel & India – November 2011– Over 60 prospect meetings and events

• Digital Media Campaigns – Over 30 million targeted impressions– Wall Street Journal, Bloomberg Business Week, Forbes– Area Development

• Export Program (VALET ) expanded– Serving existing VA businesses to increase international sales

17

RECENT VEDP HIGHLIGHTS

• Project pipeline improving(+ 40%)• International projects (18% of pipeline)• Broad-based sector activity

– Advanced manufacturing– IT/ Data centers “hot”– Corporate HQ’s; operations centers– Slight uptick in distribution activity, but still below pre-recession norms

• Sector Marketing Campaigns – launched in key regions – Federal (MD/DC)– IT (Northern CAL)– Food Processing (Chicago)– Aerospace (TBD)– Life Sciences (TBD)

18

VIRGINIA’S MESSAGE

19

KEY DEVELOPMENTS AT THE PORT OF VIRGINIA

Trends

• Port volume expected to grow 4% to 5% in 2012

• Volume was up 1.2% in 2011

Port Tax Credits

• Port Volume Increase Tax Credit ($50 per TEU)

• Barge & Rail Usage Tax Credit ($25 per TEU)

• International Trade Facility Tax Credit ($3,000 per new FT employee or 2% of qualifying investment)

20Source: Virginia Business; Port of Virginia

LEGISLATIVE AGENDA - 2012

• Life Sciences Strategy• Tax Credit Enhancements

– Major Business Facility Job Tax Credit– Small Business Investor Tax Credits

• Funding to Promote Advanced Manufacturing– Mega project site development– Workforce readiness

• Non-credit instruction at community colleges• Wallops Island launch site improvements• International & domestic marketing funds• Agricultural & Forestry Initiative Development Fund

21

PROMINENT ACCOLADES

• Virginia named “Top State for Business” by CNBC

• Ranked “No. 1 Pro-Business State” by Pollina Corporate Real Estate, Inc. in 2011

• Ranked number one for “Economic Growth Potential” in Business Facilities magazine

• Virginia Beach named the “Best-Run City in America” by 24/7 Wall St., a financial news website. Chesapeake was ranked sixth.

22

THE ECONOMY IS IMPROVING (?)

23