New commerce secretary eyes incentives, small business as keys to Virginia’s economic success

Incentives, small business key to Va.’s success

RICHMOND, Va. — When Performance Food Group opted to build an operations center in South Carolina rather than its home state of Virginia, then-chairman Bob Sledd said the decision killed him.

Better incentives, work force training and other services wooed the food distribution company to take the planned facility and jobs to South Carolina because it offered things Virginia “just wasn’t able to touch,” Sledd said.

“I hated for our guys to make that decision, but how I can argue with them?,” Virginia’s newly appointed secretary of commerce and trade said in a recent interview with The Associated Press.

“Those are the things I don’t want to see happen. I want to see those jobs stay here.”

When Sledd, 57, takes office on Jan. 16, he will oversee commerce in a state experiencing an unemployment rate hovering around 6.5 percent, well below the U.S. average of 9.5 percent. Yet some areas of Virginia, mostly in the Southwest, face unemployment levels nearing 20 percent.

“We’re struggling a bit like every other state. There are a lot of rural areas in Virginia that are really hurting,” said Sledd, a former chief executive of Performance Food Group, a food distribution company with revenues totaling more than $9 billion. He is currently a managing partner of Pinnacle Ventures LLC, a venture capital firm, and serves as a director for three public companies.

While Virginia’s location, work environment and tax laws make it very business-friendly, Sledd said more must be done to bring jobs to the state. Sledd, not being fully indoctrinated into the new post, said he is unable to provide specifics, but believes some legislative tweaking may be needed.

The challenge, he said, is putting more money into economic development and helping small businesses succeed.

Sledd said the Governor’s Opportunity Fund, which supports industrial development projects that create new jobs and investment in Virginia, is “woefully underfunded” compared to states that also are competing for business.

The fund, created in 1992, has averaged about $8.5 million for each of the last five years. Incoming Republican Gov. Bob McDonnell vowed during his campaign to double that.

But Sledd said localities looking to attract new businesses to their communities can’t expect the state to shoulder the full burden of that task by tapping into state funding and resources.

“The reality is, it starts with them,” he said. “They’ve got to help themselves out, but the state also needs to put more arrows in their quiver and enable them to be successful and support their efforts.”

Sledd said he also believes in working with community groups in order to help localities prosper, but recognizes the limited nature of resources available for both economic development and social programs.

“I have a lot of passion about helping people, but it all starts with jobs,” Sledd said. “I don’t want to see those areas suffer from cuts in funding, but the reality is if we don’t create jobs, there’s going to be a greater need for that. So what comes first?”

Over the last few years, economic conditions have forced cuts at companies worldwide. Notably in Virginia, electronics retailer Circuit City went out of business and International Paper announced plans to shut the plant in Franklin, laying off 1,100 workers.

Sledd said there’s a fine balance between making cuts and making a buck, but acknowledged, “profit is not a dirty word.”

“It’s kind of a little bit of a Catch-22 for businesses. They need to cut so they don’t go out of business,” he said. “Good business sense is that you might have to cut a little bit, but you don’t cut the heart out of your business.”