Press Room

FOR IMMEDIATE RELEASE

Alan Fogg, FCEDA, afogg@fceda.org, 703-790-0600 (o)
or 571-213-5065 (m)

Presentation by FCEDA Chairman Steven Davis to the Fairfax County Board of Supervisors

March 21, 2005

Good morning, members of the board. I am Steven Davis, chairman of the Fairfax County Economic Development Authority Commission and assistant controller at Exxon Mobil Corporation. Thank you for the opportunity to talk about the activities of the Economic Development Authority in 2004. I also will offer some insight on where we see the local economy heading in the future.

Before proceeding, I would like to recognize my fellow commissioners of the Economic Development Authority: Michael Horwatt, Ron Johnson, Mike Lewis, Ann Rodriguez, Sudhakar Shenoy and Will Soza.

Fairfax County continues to lead the nation in economic growth. The county added 25,000 jobs to its economic base in 2004, a growth rate of 4.4 percent compared to the national growth rate of 1.2 percent. Many other areas of the country have started to create jobs again, but none approach our growth rate. Competitive markets such as Boston and Los Angeles added jobs at a rate below the national average, and Silicon Valley continues to suffer job losses.

During one week in November, five companies with a major presence in Fairfax County – Booz Allen Hamilton, CGI-AMS, PricewaterhouseCoopers, SAIC and SRA International – announced their intention to create almost 10,000 jobs in Fairfax County over the next several years. A sixth company, the world’s largest helicopter manufacturer, AgustaWestland, announced the same week it would relocate its North American headquarters to Fairfax County.

Gov. Warner called it the best week for economic development in the history of the Commonwealth. I daresay no other locality in the nation had a better week in the last several years. Clearly Fairfax County continues to be the economic engine for the Commonwealth and the Washington region.

The Fairfax County EDA last year worked with 144 companies that said they will add more than 11,000 jobs to the economy during the next 12 months. These companies also leased more than 2 million square feet of office space, which helped to lower our office space vacancy rate closer to the level that will induce developers to build more space and increase the commercial tax base.

Another way we are stimulating the commercial office market is with the Fairfax County BioAccelerator in Springfield. Last year the BioAccelerator graduated two companies. Now it is home to biotechnology companies from Germany and the U.K., and we are working with them so they can follow the same path into office space.

As important as the number of jobs and amount of office space is the type of jobs. Many of the jobs being created in Fairfax County are in high-end professional services, which generally are the high-paying, technology-oriented jobs that every jurisdiction would love to attract.

One thing that sets Fairfax County apart from almost every other jurisdiction – and benefits it greatly – is its international business community, and the FCEDA in 2004 increased its efforts to market the county to foreign-owned companies. Last summer the FCEDA hired marketing representatives in Bangalore and Tel Aviv to build awareness of the county among companies in those locations interested in expanding into the U.S. market. In a couple of weeks a marketing representative will come on board in Seoul, South Korea, to promote Fairfax County there.

Having permanent in-country representation is a cost-efficient way to build momentum in important foreign markets that we couldn’t achieve through periodic contact.

These efforts are bearing fruit. Almost 300 companies from other countries have established operations in Fairfax County, up from 223 just three years ago.

Fairfax County now is home to six Fortune 500 companies, 12 of the 500 largest Hispanic-owned companies in the U.S., seven of the 100 largest African American-owned companies, and five of the 100 largest Asian-owned businesses.

Why is all this happening? Federal contracting is a huge draw for companies right now and many businesses want to be close to Washington to take advantage of those opportunities. They could locate anywhere in the D.C. area, though, so why are they coming to Fairfax County? We think it is because of the balance of business attributes, our quality of life -- and of course because of the Economic Development Authority’s aggressive and consistent outreach to businesses worldwide.

Let me quote Arthur Yang, president of ISTN, a nanotechnology company that graduated last year from the Fairfax County BioAccelerator in Springfield: “Although we outgrew our space at the BioAccelerator, we wanted to stay in Fairfax County because of the advantages of the location here and the support we have gotten from the Fairfax County EDA.”

On the business side, executives want to be close to Washington Dulles International Airport, and they like the fair tax structure, the wealth of opportunities to be close to their markets, the support for businesses that this county and state have offered for decades, and a well-trained and highly educated work force. On the quality of life side, I believe companies and employees value the top-ranked public school system, other high-quality county services, the extensive park system, the low crime rate, the wide array of housing options and our cultural diversity.

What does 2005 look like? The EDA will strive to keep Fairfax County one of the national leaders in job growth. At year’s end, the office vacancy rate was 11.6 percent, which was down from 15.6 percent at the end of 2003. However, we have 102 million square feet of office space, which means we have almost 12 million square feet of space that is empty. The vacancy rate will have to get in the 5 percent range to induce the development community to build more office space that will increase the commercial tax base and reduce the burden on homeowners to pay for the county services that residents demand.

I was pleased to see in the County Executive’s budget message that the average assessment of commercial property rose 12 percent, the highest in many years. However, residential assessments jumped an average of 23 percent this year, so the commercial percentage of the tax base continues to fall. Meanwhile, the number of residents still is projected to increase by more than 10,000 a year for the next 20 years, meaning higher demands for county services. Clearly again we need to increase the private sector’s share of the burden of public service costs.

In 2005 the FCEDA will continue to identify and support the building blocks that are necessary to maintain a strong and diversified economic base. Those building blocks include our traditional strengths in information technology companies and professional services firms, but they also reflect a growing diversity in foreign-owned firms, bioscience and biomedical companies, and woman- and minority-owned businesses.

The FCEDA also is examining what it does to help companies stay and grow in Fairfax County.

This is especially important because we are a national leader in job creation. We have become a target for economic development organizations from other places are advertising here and coming here to talk with our companies and get them to take their high-paying jobs elsewhere. The FCEDA is redoubling its efforts to show how the kinds of business opportunities and long-term investment in our quality of life are far more important than short-term incentives.

Our retention efforts include visiting more Fairfax County companies to see what their concerns are, and an aggressive advertising and public relations program that builds awareness of the business opportunities and quality of life available in Fairfax County. They include talking with the financial community, especially the more than 30 venture capital firms and organizations located here, to help companies find the sources of capital they need to grow. Venture capital investments in Fairfax County companies in 2004 amounted to two-thirds of the dollars invested in Virginia companies.

Retention efforts also include the Emerging Business Forum, which we created in 2001 to stimulate the growth of minority- and woman-owned companies. This year the FCEDA is holding Emerging Business Forum sessions with business groups that represent our strong minority communities. On March 10 we co-hosted a program with the Virginia Hispanic Chamber of Commerce, and on April 1 we will co-host a session with the group formerly called the Indian High-Tech CEO Council. We are making Fairfax County known as THE place for minority- and woman-owned companies to grow and succeed.

By the way, partnerships with the private sector are not restricted to the Emerging Business Forum. In this fiscal year, the FCEDA has obtained more than $200,000 in non-county contributions for specific events and programs.

The FCEDA Commission is conducting an off-site visioning session next week to reassess our mission and strategic directions. The FCEDA is working hard to carry out the business development mission that this board has supported for almost three decades. We have worked to transform Fairfax County into one of the most prestigious business locations in the world, but we are not resting on past achievements. The competition to attract and retain good companies, good workers and high-paying jobs for this generation and the next is much too fierce to let our guard down.

FCEDA President Jerry Gordon is with me this morning and we would be happy to answer any questions you have. I also hope you will look through the FCEDA’s 2004 annual report, which the County Executive’s staff has distributed to you this morning. Thank you.

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