Richmond-Petersburg wins big in tech hub competition, New River and Danville confirmed as advanced manufacturing centers

This is the old “good news, bad news” routine.

The good news is that the New River Valley and Danville are in line for federal money to develop a strategy to grow the region’s advanced manufacturing and materials industries.

The bad news is that neither that nor a proposal by Lynchburg and Southwest Virginia to be designated a full-fledged regional technology hub made the cut.

On the other hand, that New River/Danville grant could someday grow into a tech hub, so that’s not a bad consolation prize at all.

I’ve been writing about the push for the federal government to accelerate the growth of technology centers beyond the usual high-tech hotspots for years now, so let’s take a look at Monday’s climactic announcement by the Economic Development Administration, which designated 31 technology hubs and then gave out 29 additional “strategy grants” (such as the one for New River/Danville) for runners-up.

(For our news story on the tech hubs, see Matt Busse’s report on what the strategy grant means for New River/Danville.)

1. The EDA designated more winners than it had to.

The legislation creating tech hubs — the CHIPS and Science Act that passed last summer — called for “at least 20.” The EDA added 11 more than it was required to name. I suppose that makes losing out even worse, but it does underscore the Biden administration’s enthusiasm for this project. In fact, President Joe Biden himself made the formal announcement.

2. The Northeast was the big winner.

The legislation required at least three hubs in each of the EDA’s six zones, so that’s 18 right there. I figured with 20 hubs, two zones would get a fourth. Instead the EDA zone from Virginia to Maine won nine tech hubs. That EDA zone also inexplicably includes Puerto Rico, so technically the whole zone was awarded 10 hub hubs. By contrast, the one that covers most of the South got only the required three. The nine awards from Virginia to Maine went to Richmond, Baltimore, Philadelphia, upstate New York (two different awards), Vermont, New Hampshire, Maine and Rhode Island. 

3. Politics does not seem to have been a big factor in the designations.

I always figured there’d be some. For instance, Senate Majority Leader Chuck Schumer, D-New York, had pushed hard for Buffalo and got one in Buffalo. However, many tech hubs went to states that will never help Democrats politically. For instance, two of those Southern ones went to South Carolina and Mississippi, two states that are off-limits for Democrats (the third Southern one went to Miami — Florida is probably out of Democrats’ reach, too, but they may think otherwise). Meanwhile, North Carolina, a state Democrats have targeted after former President Barack Obama carried it in 2008, won no tech hubs (but did pick up two strategy designations on a par with New River/Danville). If politics were the main consideration, North Carolina would have won something and South Carolina and Mississippi wouldn’t have.

4. The Lynchburg-Southwest bid may never have had a chance.

It was based on nuclear energy: Lynchburg has a core of nuclear businesses, Gov. Glenn Youngkin wants a small modular nuclear reactor in Southwest Virginia and the InvestSWVA group in Southwest Virginia is eager to position that region as a center for energy research of all types. That seemed to me to be a bid that might stand out for being unique. The EDA did award a tech hub for one proposal related to small nuclear reactors, but that was to the Idaho Advanced Energy Consortium. Idaho does have the advantage of being home to the Idaho National Laboratory, where a lot of the nation’s nuclear research takes place. A former lab director once bragged: “The history of nuclear energy for peaceful application has principally been written in Idaho.” Tennessee also had a nuclear-related bid based in Oak Ridge and didn’t win anything, either, so the Lynchburg-Southwest Virginia proposal may never have had a chance. Virginia’s nuclear-related bid was also split into two, with one group leading the tech hub proposal, another the strategy grant proposal. That may not have been the best look, either, but the reality is if the EDA was only going to give out one nuclear hub, Idaho was the logical choice. 

One political observation: The fact that the Biden administration awarded a nuclear-related tech hub underscores how politically complicated nuclear energy is. While some on the left have reflexively opposed it as dirty and dangerous, others have embraced it, however reluctantly, as key to going carbon-free.

5. The Richmond-Petersburg area won a tech hub for advanced pharmaceutical manufacturing. 

Richmond-Petersburg is a double winner of Bidenomics. Last year it was awarded $52.9 million as part of the Build Back Better Challenge for advanced pharmaceutical manufacturing. It’s now eligible for tens of millions more. A story last year in the Richmond Times-Dispatch traced the origin of the Richmond-Petersburg pharmaceutical hub to 2017 when Dr. Frank Gupton, chair of pharmaceutical engineering at Virginia Commonwealth University, used a $25 million grant from the Bill and Melinda Gates Foundation to found the Medicines for All Institute. The goal then, the Times-Dispatch reported, “was to make cheaper medicines for HIV, malaria, tuberculosis and other diseases around the world.” As the paper tells the story: “In 2020, Gupton and entrepreneur Eric Edwards launched Phlow, which aspired to fix America’s drug-shortage program. That year, it won a $354 million federal contract to build up the country’s national reserve of medicines and to make ingredients used to treat COVID-19. Medicines for All then pivoted to COVID and found a way to rebuild Merck’s COVID-19 therapy and reduce the price from $2,000 a kilogram to $200.” Something important seems to be happening in the Richmond-Petersburg area. 

6. This selection process is a useful reality check for where we stand economically.

At the beginning of the process, Commerce Secretary Gina Raimondo said that the purpose of designating tech hubs would be “to take your region from being a player to being a global leader.” It’s easy, then, to see how Richmond was a natural choice for a tech hub — it’s got an impressive base to build on. Likewise, if you’re only picking one tech hub related to nuclear energy, the state with the Idaho National Lab has a clear advantage over communities that don’t have a similar facility. One person I talked to about the tech hubs called the Lynchburg/Southwest Virginia loss “a gut punch” and I have no doubt it is. Still, it’s a reminder of where we stand — and where we don’t. If we want more, we have to do more on our own.

7. The strategy grant for New River and Danville confirms how important advanced manufacturing is for those communities. 

While it’s natural to focus on what we didn’t win, what we did win is kind of a big deal. While the core of this proposal came from the New River Valley, let’s not overlook the Danville component. In 2000, Danville was a city that had hit bottom with the collapse of the textile industries. It has steadily reinvented itself as an advanced manufacturing city. Sharing in this award is official recognition of Danville’s new standing in the world. It also underscores the New River Valley’s rising status as a technology center, which ultimately can be traced back to the presence of Virginia Tech. (The Brookings Institute reported last year that New River has one of the fastest-growing tech sectors in the country). Only 29 communities in the country got these strategy grants, and the New River/Danville bid came from one of the smallest. Some went to much bigger places — Charlotte (optics and metrology), Phoenix (medical device manufacturing), San Antonio (cybersecurity and secure manufacturing processes) — while others went to statewide projects. West Virginia won two, one for “digital identity” projects and another for “advanced energy and materials manufacturing.” The only distinct community that’s smaller than New River/Danville that won a strategy award was Rapid City, South Dakota, for research into “autonomous mining and underground decarbonization.”

8. We won’t know for at least a decade whether this initiative works.

Economies, much like Rome, aren’t built overnight. We know the problem this program is trying to solve: The wealth being created in the technology sector is unequally shared, geographically speaking. It’s concentrated in places such as Silicon Valley and Boston’s Route 128 while other parts of the country have been hollowed out economically. I’ve pointed out before how the fundamentals of our economy have changed. In the industrial age, if Detroit prospered from making and selling cars, then so did steel factories in Gary, Indiana, and coal mines in Appalachia. Now those regional connections have been severed. Silicon Valley isn’t buying algorithms assembled in Martinsville. It can do well economically even if heartland communities aren’t. This tech hubs program is intended to “spread the digital wealth.” It will take years, though, to figure out how many of these communities have made the economic level to the next level. That means several things. Among them:

9. Biden won’t benefit from this politically.

Biden has tried to take the phrase “Bidenomics,” apparently originated by The Financial Times and the Wall Street Journal as a disparaging reference to his economic program, and turn it into a compliment. “Bidenomics — you don’t have to leave home to find a good job,” he said Monday at the tech hubs announcements. Many of Biden’s economic programs have been designed to rebuild the economy in heartland communities — the tech hubs program is the sexiest, but there are lots of others. The so-called Inflation Reduction Act created tax break zones for locating renewable energy companies in “energy communities” that have seen coal, oil and gas go away; due to a quirk in the law, some of those zones have wound up in parts of Virginia we don’t usually associate with energy (such as the part of Pittsylvania County where the Southern Virginia Mega Site is). The Recompete program will direct economic development funds to some of the most economically distressed parts of the country. These may actually be quite important initiatives to rebuild the economy in some communities, but any successes will play out over such a long time that they won’t help Biden in 2024. If they work, though, they might come to be recognized years from now as an important part of his legacy — just as hindsight now teaches us that one of former President Dwight Eisenhower’s greatest accomplishments was the interstate highway system, although that wasn’t apparent when he left office.

10. Ultimately, bipartisan support will be necessary to keep the tech hubs program going.

The essence of the tech hubs program is to increase federal spending on research and development. “As a country, we used to invest 2% of our gross domestic product in research and development,” Biden said. “Now it’s 0.7%. How can you lead the world when you no longer lead in research and development?” The CHIPS and Science Act sets aside up to $75 million for each of these tech hubs but what Biden is really talking about is a sustained increase in federal R&D spending. That’s something that requires a long-term consensus in a country where party control of Congress flips back and forth. It’s often said that the CHIPS and Science Act passed on a bipartisan basis and that’s true, but not completely true. It passed the Senate 64-33 with significant Republican support — but most Republicans still voted against it. The measure passed the House on almost a party-line vote. What would some future Republican Congress, or some future Republican administration, think of this program? It’s notable who signed the endorsement for the New River-Danville proposal. Both of Virginia’s two senators did — Democrats Tim Kaine and Mark Warner. So did two Republican House members — Morgan Griffith of Salem and Rob Wittman of Westmoreland County. Why Wittman? He serves on the Armed Services Committee and there are some possible defense applications to this work. However, Rep. Bob Good, R-Campbell County, who represents Danville, didn’t sign the endorsement, even though Danville stands to be a beneficiary of this award.

I suppose I could add one more question, one that can be posed to both Monday’s winners and losers and those in-between: So, now what?