In an otherwise decent year, Richmond’s business world has experienced rough waters.
Flashy up-and-comer Health Diagnostic Laboratory flamed out magnificently. MeadWestvaco, a solid performer recruited to the area a decade ago with much fanfare, is being bought by an out-of-state concern.
Lumber Liquidators based in Toano got nailed in a “60 Minutes” segment for buying dangerous flooring material from China, which was followed by a federal investigation. The company lost its chief executive and is struggling to recover.
And Dominion Resources, the state’s biggest political donor, confronts a massive shift in the energy markets and the push for renewables. It also confronts widespread, grass-roots opposition to its plans for a new natural gas pipeline and possibly building a new nuclear unit at North Anna.
Despite the turmoil, there seems to be evidence that Richmond’s sluggish atmosphere of domination by gray-suited men finally may be changing. Shared-economy darlings Uber and Airbnb are gaining strength while startups are winning beachheads in transitional neighborhoods such as Manchester and Scott’s Addition.
“I think that Richmond is finally coming together with startups — it’s at a tipping point,” U.S. Sen. Mark Warner says. He’s been focusing on ways to help millennials who work several jobs without the benefit of traditional safety nets.
Otherwise, Richmond has been enjoying a steady economic ride since March 2010, when the unemployment rate hit 8.2 percent, according to the Bureau of Labor Statistics. In June 2015, that figure was 5.2 percent, a tad lower than the national average but a little higher than the state’s level at 4.9 percent.
Employment in the area’s health services, state government and information technology sectors appears steady. And Richmond seems to have sidestepped the kinds of sequestration hits in federal spending, especially in defense, that have struck Northern Virginia and Hampton Roads. The Army base near Petersburg, Fort Lee, is facing fewer cuts than anticipated.
Recent newcomers, including Amazon, which operates fulfillment facilities in eastern Chesterfield and in Dinwiddie counties, are humming along.
More are on the way. Shandong-Tranlin, a Chinese paper-maker, is proceeding with a plan for a $2 billion mill in eastern Chesterfield that will employ 2,000. The project, one of the largest ever by a Chinese company in the United States, is said to be more environmentally friendly because it will use leftover farm waste, not trees, to make paper. Nor will it use bleach, so the James River should be less polluted.
Traditional manufacturing perks along, albeit slowly, according to the June 3 edition of the Beige Book, issued by the Richmond Federal Reserve Bank.
Construction pushes ahead at Stone Brewing, a San Diego craft beer maker, which is building a $74 million brewery and restaurant near Rocketts Landing that will employ nearly 300. Miffed that Stone got big support from the state and city, homegrown Hardywood Park Craft Brewery announced plans to build a brewery in Goochland County while keeping its original location in Scott’s Addition.
Real estate is seeing its biggest pickup since crashing in 2008. “The market has been real good in 2015 and the momentum is continuing into the summer,” says Laura Lafayette, chief executive of the Richmond Association of Realtors. “It is far outpacing 2014.”
But the biggest business story of the last year has been a crushing one.
Health Diagnostic Laboratory, which supplies blood testing equipment and services, had been on a roll since its founding in 2008. In short order, it had amassed more than 800 workers and a new $100 million headquarters and lab center in the Virginia Biotechnology Research Park downtown. The city’s business elite lionized co-founder Tonya Mallory, a Power List regular who spread the firm’s wealth through local charities and at sports programs run by Virginia Commonwealth University where Mallory once was a student.
It all came tumbling down in September when The Wall Street Journal, as part of a Pulitzer-Prize-winning series on Medicare fraud, reported that HDL had been paying about $17 to doctors each time they selected its blood testing services. Within days, Mallory was out as chief executive. Further investigations revealed that Mallory had set up a system to pay off doctors with executives from an Alabama marketing company that she previously worked with. Joe McConnell, another HDL co-founder, replaced her, but the damage was done.
Earlier this year, HDL agreed to a $47 million civil penalty with the U.S. Department of Justice and five years of supervision. Civil lawsuits alleging fraud mounted. By June, HDL was in bankruptcy court and has put itself up for sale. Scores of employees have been laid off and the HDL logo on the scoreboard at the VCU basketball court was removed. The next shoe to drop is if there are criminal indictments.
1. Thomas F. Farrell
Chairman, President and Chief Executive
Farrell is guiding Dominion through a lot of turmoil these days as it faces vigorous grass-roots protests against a $5 billion natural gas pipeline and upheaval in energy markets, with natural gas pushing forward and climate change being addressed. He’s fought against the green movement with advertising campaigns casting Dominion positively and has tapped legislators for relief from state regulators. He’s a sought-after local resource for civic help, too. Recently he stepped in with requested last-minute support to prepare for the UCI Road World Championships.
2. William H. Goodwin Jr.
Retired Chairman and President
The area’s most influential individual businessman has taken lumps, with Virginia Commonwealth University Medical Center and Bon Secours Richmond Health System backing out of a plan for an independent, stand-alone, regional children’s hospital. Goodwin is marshaling a comeback for his legacy project and has strong support among PACKids, a group of local pediatricians favoring the hospital. He remains highly active in other civic activities, such as serving as the rector of the University of Virginia.
3. Martin J. Barrington
Chairman and Chief Executive
Altria Group (Philip Morris USA)
Richmond-made Marlboro remains the nation’s best-selling cigarette brand and Altria is a major local employer. Yet Barrington must maneuver the steady decline of tobacco use and the rise of electronic cigarettes that until now Philip Morris USA has avoided. His company still offers top pay and perks and is a huge contributor to local arts projects such as the Altria Theater and the Richmond Folk Festival.
4. Michael Rao
Virginia Commonwealth University
Rao has hunkered down as leader of the area’s largest educational institution. The university continues to expand its two campuses and grow its academic reputation. Rao made waves when he made a key decision to drop an idea for VCU to back an independent children’s hospital. He’s also increased faculty salaries by 2 percent and tuition and other student fees by about 3 percent. Yet Rao, who has taken criticism for his management style and losing star basketball coach Shaka Smart, is regarded as more of a caretaker than innovator.
5. Matt Williams and Joe Alexander
Chief Executive and Chief Creative Officers
The Martin Agency
The locally bred advertising company represents such marquee-name clients as Geico and Stolichnaya vodka and is celebrating its 50th anniversary. A change at the top has come with Matt Williams taking over as chief executive from John Adams, the longtime chairman who leaves this year. Joe Alexander has taken over the key chief creative officer from Mike Hughes, who died in 2013. Although now owned by Interpublic Group, the agency has 423 of its 512 employees in Richmond and is an engine of the local advertising and creative industry. Ad Age ranked it as No. 23 out of the top 25 advertising companies in the United States by revenue.
6. The Markel Family and Alan L. Kirshner
Specialty insurer and financial company Markel continues to bring in whopper stock prices. Two years ago, it traded in the high $500 per share level. At the end of August it was in the $800s. Through its offices on four continents, Markel provides insurance for clients involved in complicated and difficult situations. It also continues its philanthropy, such as large donations to build and create an endowment for the Institute for Contemporary Art at VCU.
7. Jim Ukrop
Investor and Businessman
Former Head of Ukrop’s Super Markets and First Market Bank
Banking on his family’s brand and business savvy, Ukrop continues to put his energies into venture capital firms. His New Richmond Ventures has funneled money to Evatran (see next) and nine other startups. His backing of a plan for a baseball stadium in Shockoe Bottom didn’t help the project take off, however. The former head of the once best-known grocery stores in the area worries that Richmond is being oversaturated with food stores and that service might suffer.
8. Rebecca Hough
Co-Founder and Chief Executive
Hough, at 29, is sparking up wireless systems to recharge electric cars. The company she founded with her father in 2009, with Jim Ukrop’s help, has become an icon for the successful Richmond startup. The company makes Plugless Power charging devices for the Nissan Leaf, the Chevrolet Volt and the Cadillac ELR and has picked up a $1.6 million deal in China. Hough says that next year, Evatran will supply equipment for Tesla and BMW. In Richmond’s traditional male and gray-suited business world, Hough is certain to stand out.
9. Richard Cullen
When former Gov. Robert F. McDonnell learned that he might be the target of a corruption probe, guess who was the first person he speed-dialed? Cullen, too close personally to defend the governor, quickly recommended several powerhouse law firms, not that McGuireWoods isn’t. The law behemoth recently moved in to its new 18-story Gateway Plaza headquarters building on Cary Street between Eighth and Ninth streets downtown. It’s so influential that The Washington Post has described it as Richmond’s “shadow government.” Cullen himself helped represent Texas Congressman Tom DeLay, whose conviction for money laundering was later overturned. No luck yet for McDonnell, whose various appeals for corruption convictions last year have gotten nowhere.
10. Richard Fairbank
Chairman, Chief Executive and President
Capital One Financial Co.
Although headquartered in McLean, CapOne is the area’s largest private employer. It had 11,491 local workers in January. As always, that number rises and falls regularly, as does the size of contract employees, mostly information-technology workers, based at the credit card company’s sprawling West Creek campus. It announced another series of layoffs in July, closing call centers in Oregon and South Dakota while picking up General Electric Capital’s health services business for $7 billion.
Editors Note: This version corrects the year of Mike Hughes' death to 2013.