REPORT FROM VIRGINIA BEACH, VA ScottHall
BusinessDevelopmentCoordinator
VirginiaBeachEconomicDevelopment
(757)385‐6498
schall@vbgov.com
TABLE OF CONTENTS Contents
Introduction ______________________________________________________________________________________________1
Cost&WorkforceComparison__________________________________________________________________________2
Workforce Demographics:_________________________________________________________________________________________2
Federal Income Tax Rates: _________________________________________________________________________________________3
Cost Comparison:___________________________________________________________________________________________________3
ManufacturingStrengths ________________________________________________________________________________5
MajorVirginiaBeachManufacturers__________________________________________________________________________5
TaxAdvantages___________________________________________________________________________________________________6
LogisticalAdvantages____________________________________________________________________________________7
ThePortofVirginia______________________________________________________________________________________________7
ForeignTradeZone_____________________________________________________________________________________________7
PortIncentives__________________________________________________________________________________________________8
DrayageCosts___________________________________________________________________________________________________9
DistributionCompanies________________________________________________________________________________________9
RailAccess________________________________________________________________________________________________________12
InterstateHighwayAccess_____________________________________________________________________________________13
ContactInformation____________________________________________________________________________________ 14
INTRODUCTION Introduction
Virginia Beach, Virginia is globally recognized as one of the best places to do business in the United States. The Commonwealth (State) of Virginia is also extremely “business friendly,” as state laws are written to favor business. This report is designed to provide an in‐depth look at the Virginia Beach business environment. Key takeaways include: Low Tax Rates: •
In Virginia, businesses have a very streamlined and efficient tax system; at the local (City) level, businesses and residents have only one local taxing authority – there are no special school district taxes, utility district taxes, or transportation district taxes •
Virginia Beach has eliminated taxes on machinery and tool equipment used in manufacturing processes Business Cost Advantages: •
Manufacturers pay no business inventory tax or license fee (gross receipts tax). If a business is engaged in wholesale trade, its business license fee based on the amount of gross sales receipts the business generates, but that fee would not exceed $50 per year for each of the first 2 years of operation •
Virginia Beach is located within 15 minutes of the Port of Virginia, the 3rd largest container port on the US East Coast and is strategically positioned along major interstate and rail lines, providing you easy access to most major American markets. International Community: •
Nearly 200 companies from at least 27 different countries operate businesses in the Virginia Beach area; this means you have access to a large number of peers from around the world who have experience establishing a US facility from abroad •
Because of the large volume of global trade that takes place in the Virginia Beach area, businesses have access to some of the best international business law and immigration attorneys in the United States; most banks in the area are also experienced in conducting international financial transactions Page1
COST & WORKFORCE COMPARISON Cost&WorkforceComparison
The following report compares the Virginia Beach Metropolitan Statistical Area (MSA), also known as “Hampton Roads,” to the Philadelphia, PA MSA and the Charleston, SC MSA. WORKFORCE DEMOGRAPHICS: Virginia Beach, VA MSA vs. Philadelphia, PA MSA and Charleston, SC MSA. Below is a comparison of workforce demographics, including unionization rates, and the cost of living in Virginia Beach, VA, Philadelphia, PA, and Charleston, SC. Labor Force Virginia Beach, VA Philadelphia, PA Charleston, SC MSA MSA MSA 829,500
3,017,300 332,500
45,000
233,000 19,900
5.4%
7.7% 6.0%
Civilian Labor Force Unemployed Unemployment Rate Source: Bureau of Labor Statistics, April 2013 Social Characteristics Total Population Total Households Median Age School Enrollment (Preschool – Ph.D. Level) Percent High School Graduate or Higher Percent Bachelor’s Degree or Higher Military Veterans Virginia Beach, VA Philadelphia, PA Charleston, SC MSA MSA MSA 1,677,984
5,992,414 682,121
612,156
2,220,655 258,454
35.4
38.1 35.5
471,075
1,611,549 177,611
89.8%
28.7%
217,171
88.7% 32.9% 373,654 87.4%
29.8%
68,561
Source: US Census Bureau American Community Survey (Reflects 2011 Survey Data). Approximately 15,000 members of the military are available to enter the local workforce each year, along with more than 16,000 graduating college students and 58,000 graduating high school students. Page2
COST & WORKFORCE COMPARISON FEDERAL INCOME TAX RATES: The United States federal corporate income tax rates are set based upon a variety of factors, and range between 15% and 40%. Corporations may deduct local and state income tax expenses when computing federal tax income, generally resulting in a net effective rate of approximately 35 percent. COST COMPARISON: Virginia Beach, VA vs. Philadelphia, PA and Charleston, SC BUSINESS TAXES Virginia Corporate Income Tax Sales and Use Tax Unemployment Insurance (per employee) Workers Compensation (Employer insurance costs per $100 of payroll) Pennsylvania 6.00%
6.00%
$177
9.99% 8.00% $536 $1.47 $0.72
South Carolina 5.00%
8.50%
$359
$1.77
Sources: Virginia Economic Development Partnership, City of Virginia Beach, City of Philadelphia, SCTax.org
AVERAGE UTILITY RATES (Estimates) Electricity (Cents per kWh) Natural Gas (Dollars per 1000 cubic feet) Virginia Pennsylvania 5.40
$5.46
7.02 $8.55 South Carolina 5.47
$5.50
Sources: Dominion Virginia Power, Electricity & Natural Gas: US Department of Energy, April 2013 Industrial Rates Cost of Living Index Composite Index Grocery Housing Utilities Transportation Healthcare Miscellaneous Goods and Services Virginia Beach, VA MSA 99.2
93.7
96.2
112.3
96.2
98.5
101.2
Philadelphia, Charleston, PA MSA SC MSA 121.9 99.5
122.2 107.4
140.5 84.6
126.5 114.1
106.5 99.0
98.1 105.2
114.0 103.5
National Average=100
Source: ACCRA Cost of Living Index, 2013 Q1 Data Page3
COST & WORKFORCE COMPARISON Average Annual Wage Data by Occupation Occupation (SOC Code) All Occupations General and Operations Managers (11‐
1021) Industrial Production Managers (11‐
3051) Production Occupations (51‐0000) First‐Line Supervisors of Production and Operating Workers (51‐1011) Computer‐Controlled Machine Tool Operators, Metal and Plastic (51‐4011) Cutting, Punching, and Press Machine Setters, Operators, and Tenders, Metal and Plastic (51‐4031) Team Assemblers (51‐2092) Helpers – Production Workers (51‐9198) Transportation and Material Moving Occupations (53‐0000) First‐Line Supervisors of Helpers, Laborers, and Material Movers (53‐1021) Laborers and Freight, Stock, and Material Movers (53‐7062) Bookkeeping, Accounting, and Auditing Clerks (43‐3031) Secretaries and Administrative Assistants (43‐6014) Virginia Beach, VA MSA $42,280
$113,720
$102,340
$36,550
$63,310
$41,710
$28,990
$29,380
$24,020
$33,930
$49,670
$25,820
$34,870
$32,610
Philadelphia, Charleston, PA MSA SC MSA $50,310 $41,180
$139,980 $98,970
$109,010 $97,630
$38,690 $40,600
$65,950 $65,380
$42,240 $36,190
$33,890 $51,010
$31,100 $37,960
$25,390 $31,270
$34,280 $32,520
$53,150 $51,980
$28,960 $25,670
$40,040 $34,940
$36,120 $31,310
Source: U.S. Bureau of Labor Statistics, May 2012 Occupational Employment Information
Due to the thousands of exiting military personnel and large shipbuilders in the area, a skilled and disciplined labor force is readily available for your company in Virginia Beach. Additional salary information or estimates are available upon request. Page4
MANUFACTURING STRENGTHS ManufacturingStrengths
"Our Virginia Beach workforce has proven its ability to meet the demands of our customers, both here and overseas. Because of the manufacturing‐friendly environment in Virginia Beach, we are able to compete domestically and globally, ultimately allowing us to continue to expand our operations here.“ ‐ Peter Mueller, STIHL, Inc. Virginia Beach is a manufacturing hub, strengthened by a strategic location on the East Coast that provides companies with access to two thirds of the U.S. population and manufacturing market within a two‐day driving distance. According to Chmura Economics & Analytics, approximately 63,000 people work in the manufacturing industry in the Virginia Beach MSA. This existing labor pool, along with individuals trained in local colleges and exiting military personnel, provide manufacturers with a large pool of skilled employees from which to draw when opening a new plant in the area. MAJOR VIRGINIA BEACH MANUFACTURERS Company # Employees Product / Service Description 2,067 Chain saws & outdoor power equipment 350 Cable assemblies/wiring harness sets Controls Corporation of America (CONCOA) 250 Industrial pressure valves & regulators; welding Architectural Graphics Incorporated (AGi) 340 Hospital, airport & mall sign systems Aetna Insulated Wire Co. 230 Nonferrous wire & fabricated wire products; cables Hermes Abrasives, Ltd.* 195 Industrial coated & bonded abrasives products
STIHL Inc.* M & G Electronics Corporation Page5
MANUFACTURING STRENGTHS IMS: Gear* 155 Automotive Seat Parts Labels Unlimited, Inc. 115 Pressure sensitive labels & tags Acoustical Sheetmetal Inc. (ASI) 105 Sound/weather resistant attenuated enclosures NGK‐Locke Polymer Insulators, Inc.* 100 Polymer & porcelain electrical insulators *International Company TAX ADVANTAGES Manufacturers in Virginia Beach enjoy low, stable tax rates. Tax advantages include the following: •
Single Factor Apportionment Effective 2015 •
Corporate Income Tax Liability depends on location of sales and company’s tax strategy •
No Inventory Tax for Manufacturers •
No Tax on Business Equipment for Manufacturers •
No Tax on Machinery & Tools Equipment •
6% State Sales Tax (No Sales Tax on Industrial Materials) •
Flat $50 business license fee for first 2 years of operations in the City of Virginia Beach (manufacturers are exempt) •
Only ONE local taxing authority Page6
LOGISTICAL ADVANTAGES LogisticalAdvantages
THE PORT OF VIRGINIA The Port of Virginia is built around the world’s largest natural deep‐water harbor and currently stands as the third largest container port on the East Coast. Home to the largest and fastest container cranes in the world, the Port can accommodate the world’s largest ships and is home to APM Terminals, America’s first privately developed container terminal and one of the most technologically advanced port facilities in the Western Hemisphere. The Port also offers: •
50‐foot deep channel •
World’s largest and most modern cranes •
48 steamship lines sail to 380 ports in 115 countries •
4 modern marine terminals support containers, break bulk and Roll On/Roll Off cargo •
Lowest pilferage rates on the East Coast Information on all trade lanes traveled via the Port of Virginia is available upon request. Foreign Trade Zone The Virginia Port Authority holds the Grant of Authority for Foreign‐Trade Zone (FTZ) #20. A Foreign‐Trade Zone is a secure area under supervision of U.S. Customs and Border Protection (CBP) that are considered outside the customs territory of the United States for the purposes of duty payment. The entire Virginia Beach MSA is now considered to have FTZ designation. Activation for specific properties takes approximately 30 days. Page7
LOGISTICAL ADVANTAGES Benefits for users include: 
Duty Deferral: Users can avoid paying duties on imported merchandise until the goods are removed from the FTZ and enter in the U.S. commerce. Duty on machinery is deferred until it is put into production. 
Inverted Tariffs/Duty Reduction: FTZ users can pay lower duty rates on goods produced in the zone when the finished product has a lower duty rate than the imported components. 
Weekly Entries: Zone users can submit paperwork only once a week at a rate no higher than $45. 
No Time Constraints: Merchandise may remain in the zone indefinitely whether or not it is subject to duty. 
Customs Compliance: Customs & border protection requirements and federal criminal sanctions are deterrents against theft. Cargo that is imported into FTZs have fewer incidents of loss and may result in lower insurance costs. Additional information is available upon request. Source:PortofVirginia.com
Port Incen ves The Virginia Port Authority offer tax incentives for businesses that import or export through the Port of Virginia. Incentives include: 
Port Volume Increase Tax Credit ‐ Tax credit for taxpayers engaged in the manufacturing of goods or the distribution of manufactured goods that use public or private port facilities located in Virginia and increase cargo volume through the facility by 5% in a single calendar year over their base year cargo volume. Credit is $50 per TEU in excess of the base cargo. 
Barge and Rail Usage Tax Credit – Tax credit for usage of barge or rail to move cargo rather than by truck or other motor vehicle on Virginia’s highways. Credit is $25 per TEU in excess of number of containers shipped by barge or rail during the preceding year. 
International Trade Facility Tax Credit – Tax credit for either creating new jobs or capital investment in an international trade facility as a result of moving 10% more cargo Page8
LOGISTICAL ADVANTAGES through a Virginia Port Authority‐operated cargo facility than in the preceding tax‐able year. Credit is $3,500 per qualified full‐time employee that results from increased qualified trade activities or an amount equal to 2% of qualified capital investment expenses made by the taxpayer to facilitate increased qualified trade costs. Drayage Costs According to the Virginia Port Authority, the average cost of drayage from the Port of Virginia in the Virginia Beach MSA is between $210‐$250 + FSC. Fuel surcharges are based on weekly South Atlantic averages released by the Department of Energy. Distribu on Companies The Virginia Beach MSA is also home to major distribution centers for prominent retailers and shippers. A list of distribution companies with a presence in the region can be found in the table below. Company Name AAFES Dan Daniel Distribution Center # Employees 1,000 ACE Hardware Import Re‐Distribution Center 75 American Condenser and Coil 20 Associated Distributors LLC 170 Atlantic Dominion Distributors 504 AudioVox 175 AVID Medical, Inc. 355 BNYK Logistics (Americas), Inc. 200 C. Lloyd Johnson Company, Inc. 280 California Cartage Company, Inc. (Cal Cartage) 218 Page9
Sector Supplier for Army/Air Force Exchanges Hardware products & supplies Automotive condensers & DX coils Wines, beers, distilled spirits, bar supplies Tobacco products & confections Electronic automotive accessories Disposable surgical supplies/procedure trays Distribution & logistics support services Food & wholesale goods for military stores 3PL & distribution services for Target import LOGISTICAL ADVANTAGES Casey's Seafood, Inc. Central Coca‐Cola Bottling Company, Inc. Chesbay Distributing Company, Inc. 100 150 195 Communications Test Design, Inc. (CTDI) 50 Contemporary Cybernetics Group, Inc. 110 Cost Plus World Market Distribution Center 100 D.D. Jones Transfer & Warehouse Co., Inc. Dollar Tree Stores, Inc. Eurpac Warehouse Sales, Inc. 160 660 300 Ferguson Enterprises, Inc. Frito‐Lay, Inc. 800 100 Givens, Inc. (Givens Trucking, Givens Logistics) 450 Grand Furniture Discount Stores, Inc. Hoffman Beverage Company, Inc. 100 135 Kempsville Building Materials, Inc. 175 M. Price Distributing Company Maersk Distribution Services / HUDD Logistics Massimo Zanetti Beverage USA 100 627 160 Navy Exchange Services Command (NES) Noland Company (WinWholesale) Northrop Grumman Newport News 175 224 200 PAPCO Oil Company, Inc. QVC Chesapeake, Inc. QVC Suffolk, Inc. (Fulfillment Center) SAFCO Products, Inc. Page10
100 1,275 1,200 20 warehouse Fresh or frozen fish/seafood Soft drink products Beer & ale products Cable equipment for Cox Communications Computer & office equipment General & specialty merchandise Distribution & logistics support services Retail goods Military products Plumbing, heating & piping products Salty snacks Distribution & logistics support services Furniture, floor coverings & appliances Beer & ale products Building materials & supplies InBev/Anheuser‐Busch beverage products Logistics & distribution Ground roasted coffee Supplier for Navy/marine Exchanges Plumbing fixtures/supplies Logistics & distribution Petroleum & petroleum products Product distribution center Product distribution center Product distribution center LOGISTICAL ADVANTAGES Supreme Foods, Inc. SYSCO Food Services of Hampton Roads Target Corporation (Import Warehouse) 130 400 300 Tri‐Cities Beverage Corporation 160 United Parcel Service 500 United Parcel Service 220 Valeo Hampton Wal‐Mart Import Distribution Center 165 600 Wanchese Fish Company / Suffolk Cold Storage 150 Williamsburg Foods, Inc. 100 Source: Hampton Roads Economic Development Alliance Page11
Food products Food services Retail products Alcoholic beverages; beer & ale Parcel shipping / tracking / delivery Parcel shipping / tracking / delivery Transmission housing & clutches Retail products Fresh or frozen fish/seafood Wholesale farm products & raw materials LOGISTICAL ADVANTAGES RAIL ACCESS In addition to easy Port access, the Virginia Beach/Hampton Roads area is the headquarters of the Norfolk Southern Corporation and serviced by both Norfolk Southern and CSX Railways. Norfolk Southern’s “Heartland Corridor” allows double‐stacked containers to move quickly from the Port of Virginia to Chicago, and points further westward. Cleveland
Chicago
Harrisburg
Columbus
1,031Miles
1031
Milesto
to
Chicago
1,264Miles
1264
Milesto
to
Chicago
Prichard
Roanoke
28 Tunnels Require
Modifications to
Provide 20’-3”
Clearance
The Port
of Virginia
Heartland Corridor
CSX also has major rail yards, transflo terminal service bulk transfer terminals, and intermodal terminals in the Virginia Beach area that also provide access to Chicago and other markets. Page12
LOGISTICAL ADVANTAGES INTERSTATE HIGHWAY ACCESS Two‐thirds of the U.S. population and manufacturing base are within 1,200 km of Virginia Beach. The region is intersected by several interstate highway systems, making the region a hub for distribution and truck transportation services. The region is served by the following: Served by Interstate Highway 64, the major East/West interstate connecting the East Coast to the Mississippi River Corridor •
•
1 hour from Interstate Highways 85 & 95, major North/South interstate highway corridors serving the East Coast •
3 hours from Interstate Highway 81, another major North/South interstate highway corridor Driving Distance to Major U.S. Cities City Distance Miles KM Washington, DC 203 327 Philadelphia, PA 344 New York, NY City Miles KM Dallas, TX 1,376 2,214 554 Detroit, MI 732 1,178 400 644 Chicago, IL 890 1,432 Atlanta, GA 585 941 Miami, FL 953 1,534 Boston, MA 642 1,033 Houston, TX 1,382 2,224 Page13
Distance CONTACT INFORMATION ContactInformation
For additional information about doing business in the United States and Virginia Beach, please contact the Virginia Beach Department of Economic Development. Warren Harris, Director / wharris@vbgov.com Scott Hall, Business Development Coordinator / schall@vbgov.com Michelle Chapleau, Business Development Manager (Manufacturing) / mchaplea@vbgov.com Top Mid‐Sized City in the U.S.: fDi Magazine ranked Virginia Beach as the best mid‐sized City in the United States in its 2013 “American Cities of the Future” ranking. The City’s infrastructure and economic potential were also ranked in the top 10 for mid‐sized Cities in the Western Hemisphere. Page14