Two years ago, Jared Chalk was pitching a London company on why it should do business in Hampton Roads.
Chalk, then six months into his job as the Hampton Roads Alliance’s chief business development officer, was competing to woo the British exporter at the same time as several other large metro areas.
He highlighted that two-thirds of the U.S’s population was within a day’s drive of Hampton Roads, the region had a growing number of startup businesses and a growing seaport.
“At that point, the guy from Atlanta stands up and just punches me right in the face, essentially, talking about the Atlanta airport and access to the world. The guy from Austin's like, ‘I appreciate the startups, we had 20,000 startups.’ The guy from New Jersey talks about the port and the growth of their port.”
While Hampton Roads could promise all those things to the company, it couldn’t do any one of them better than the other metro areas.
Chalk left that meeting knowing the region needed a new story to tell.
As global tensions rise and the country tries to get a better handle on its supply chains post-pandemic, Hampton Roads’ top economic development officials say the region is uniquely positioned to take advantage.
But that will mean pursuing growth in the defense industry — a major philosophical shift for a region that’s spent nearly a decade trying to separate its fortunes from the federal budget.
“In some ways, you had to go through all the brain damage of the first 20 years of the 21st century to be in a position to take advantage of the opportunities coming our way,” said Doug Smith, who heads the Hampton Roads Alliance.
In the post-pandemic economy, efforts are under way to bring key manufacturing and development back to America after decades of off-shoring and military spending is rising amid global wars and growing tensions.
The Alliance is looking at how it can set up the region’s defense industry so contractors can produce dual-use technologies – products needed by their traditional Department of Defense clients that could also be used in the private sector.
Developers of drones and autonomous systems are one example. Another Smith is excited about is nuclear energy.
“That industry almost disappeared in the ’70s, (but) we were continuing to put two nuclear reactors on every aircraft carrier (and) one on every submarine,” Smith said.
He said the region’s uniquely qualified workforce dovetails with expanding interest in nuclear power as technology dramatically increases the nation’s power consumption.
“There's a real opportunity for us in an industry that, I believe, is going to explode as the demand for energy is going to double in Virginia over the next 15 years.”
Balance between "successful" and "vulnerable"
Today, about 4 of every 10 dollars of economic activity in the region is tied to the Department of Defense. But for years, the hope was to reduce the region’s reliance on defense spending.
In 2013, federal budget cuts known as sequestration slashed tens of billions from the defense budget and shook the core of the region’s economy.
Local and state leaders at the time said it was imperative to shift Hampton Roads’ economy away from defense. Among them was Smith, then the head of consulting firm Kaufman and Canoles.
“We were probably right. I think it was a fair position to take at that point,” Smith said.
The ensuing effort to diversify, which included everything from luring big tech companies to attempts to build an arena, failed to produce major results.
“We didn’t have a regional strategy at that point. I think you had individual localities trying to move the needle on their situations,” Smith said.
Officials tried to chase what seemed to be working elsewhere, but even smaller swings didn’t pan out. A commerce park built by Virginia Beach to draw new bioscience startups into the area, for example, failed to attract new businesses. Plans for expansions to the park were scrapped and the space was recently taken over by LifeNet, a Virginia Beach-based company that handles organ donations.
Now, the Alliance thinks doubling down on defense will draw in the new businesses and high-paying jobs it failed to capture when it attempted to shift away from the same industry.
“I think the transition that’s occurring right now is we’re recognizing we’re a maritime-industrial-defense economy in a way nobody else is,” Smith said.
By leaning into Hampton Roads’ position as a defense hub - not just a national one, but a global one - the region has unique opportunities.
Smith said the key is finding the right balance to “make us successful, but not make us vulnerable.”
