Whenever the Botetourt County supervisors meet, demonstrators gather outside the county offices to protest the Google data center that will soon start construction in the county’s business park.
Depending on the time of day, those anti-data center demonstrators pass by workers going to or from another business in the Greenfield Center complex. Those are the workers for Munters, a company that makes climate control systems — and whose exponential job growth in Botetourt has been fueled by the same data center industry that their neighbors are protesting.
That juxtaposition frames some of the complexities surrounding not only the Google debate in Botetourt, but also the larger data center debate across Virginia, and an even more far-reaching debate about the role of the artificial intelligence systems that many data centers power.
Data centers certainly come with well-known drawbacks: They are thirsty for energy and water.
On the other hand, they generate tax revenue and jobs, which is why some rural localities are eager for them.
One rap against data centers is that they don’t create many jobs, which is sometimes true, and sometimes not, depending on the type of data center in question. In Botetourt, Google is committed to create at least 150 jobs; the proposed Stack development in Pittsylvania County calls for at least 2,500 jobs.
That’s not what we’ll talk about today, though. Instead, what we’ll look at is what those jobs at Munters represent, which usually doesn’t get much attention — part of the supply chain for data centers.
In a recent interview with Cardinal News, Gov. Abigail Spanberger referenced her interest in growing that supply chain. Her comments came in the context of the dispute over the state’s tax incentives for data centers — incentives that Senate Finance Chair Louise Lucas, D-Portsmouth, wants to end eight years early and which Spanberger believes should stay in place until their scheduled expiration in 2035 on the grounds that the state has already made commitments that shouldn’t be broken.
Spanberger said the issue is bigger than just these giant warehouses full of computer servers.
“It is not just data centers,” she said. “It is advanced manufacturing. I have met with some companies that want to come to Virginia” to be part of the supply chain. “They are looking to invest in Virginia and create manufacturing jobs in Virginia.” The implication: Those economic opportunities might be at risk if Virginia ends its tax abatement early.
That raises the question of just how big is that supply chain now? How many jobs are we talking about? And how does Virginia rank?
Those have proven to be difficult questions to answer, primarily because the companies that constitute the data center supply chain often are making components for other industries as well. For instance, Munters — the Botetourt plant referenced earlier — is a Swedish company that was founded in 1955, long before data centers existed. The firm started off making refrigeration systems and dehumidifiers; supplying data centers is simply an expansion of its market, although in Virginia, an important one. Munters employed 200 people when it moved from Buena Vista to Botetourt County in 2022 and is now close to 670, county officials say — with the demand for climate systems for data centers driving that growth.
That’s a very clear case. Others are less so. There are lots of figures on the number of people working in data centers, but quantifying the number employed in the supply chain that leads up to them is much more difficult.
I turned to Jason El Koubi, president of the Virginia Economic Development Partnership, the state’s economic development agency. “Our knowledge of the broader data center supply chain in Virginia is limited and likely understated,” he said by text message. “Many companies which support the data center industry provide contracting, construction, or manufacturing services to other industries and do not explicitly indicate data centers as primary customers even if that is the case.”
Despite that limitation, he said, “we can identify more than 100 companies whose business is overtly focused on serving the industry, but that’s almost certainly an undercount since many manufacturers, contractors, and infrastructure providers also serve other markets. The 100+ figure is really just the tip of the iceberg.”
What we can say with more certainty is that there is a lot of money being poured into data centers and related infrastructure, which means there is a lot of money going into manufacturing the components of those facilities. The consulting firm McKinsey & Co. issued a report last year that said “by 2030, data centers are projected to require $6.7 trillion worldwide to keep pace with the demand for compute power.”
We also know that relatively little of that infrastructure is currently built in Virginia, which means if you’re, say, the governor, you can see lots of room for growth.
Broadly speaking, the main components of a data center are the information technology (computer servers, for instance), the power infrastructure, the cooling systems and the physical aspects of the building (surveillance, fire suppression). A 2024 study by the General Assembly’s investigative arm, the Joint Legislative Audit and Review Commission, said that 68% of the data center investment went into information technology and little of that was spent in Virginia “because there are no major computer server manufacturers in Virginia.” However, that report also said: “Some other equipment used in data centers is sourced in Virginia. For example, Virginia has suppliers of electrical and cooling equipment, raised-access floors and hot/cold aisle containment systems, and fiber infrastructure. These suppliers have recently located or expanded operations in Virginia because of the state’s large data center market.”
JLARC didn’t attempt to estimate a job count, though.
El Koubi says more than 80% of the known supply chain jobs are in Northern Virginia, about 10% in the Richmond area, the rest scattered across the state. That distribution, though, is starting to change.
Virginia has seen a surge of power-related manufacturing jobs and those are going to rural areas. Roanoke-based Virginia Transformer Corp. bills itself as the largest U.S.-based manufacturers of electrical power transformers in North America; it also recently acquired a 17-acre parcel in Botetourt County’s Eastpark Commerce Center for an apparent expansion (the company hasn’t talked about the acquisition). Hitachi Energy currently employs 670 people in Halifax County and earlier this year announced an expansion that would add 825 more jobs; the company says this will make South Boston the biggest manufacturing site for large power transformers in the country.
It’s hard to say how many of these jobs are related to data centers, but clearly many are. A news release from Hitachi last year, which announced a $1 billion investment in U.S. manufacturing, specifically tied its expansion to AI-driven data centers, with the South Boston plant part of that.
In late May, Spanberger announced that the North Carolina-based engineering company Jabil is opening an operation in Prince George County — 352 jobs to “produce critical power distribution systems and solutions for Siemens, a worldwide leader in industrial manufacturing and engineering.” What wasn’t said: Both Jabil and Siemens are involved with data centers. A spokesperson for Jabil confirms that the Prince George facility will be producing “critical applications including data centers.”
Some of you may have already connected some of these dots: While we have come to associate data centers with Northern Virginia (although they’re not spreading outwards), much of the manufacturing for the supply chain is turning up in rural Virginia — places like Botetourt County, Halifax County, Prince George County. This complicates the politics on data centers, because it means that communities that may not have any data centers (although Botetourt soon will) now have a financial stake, jobs-wise, in the data center industry.
Virginia lost jobs last year and is forecast by the Weldon Cooper Center for Public Service at the University of Virginia to lose jobs this year, as well. If you’re the governor of Virginia and want to turn those numbers around, you’d naturally look to see what the growth sectors are — and which of those fit best with Virginia. Given that, it’s only natural that Spanberger would see the data center supply chain as one that could help Virginia’s jobs situation — and be concerned that if legislators end the tax incentive early, that not only slows data center development (which many would be happy with), it would also slow down the manufacturing jobs behind data centers.
This is where seemingly simple political positions have complex implications on the ground — some of this job growth in rural areas is tied to data centers. Lucas has set a “listening tour” on data centers, but she doesn’t have appearances in, say, Halifax County, where she might hear something very different about data centers from Hitachi workers than she will in Virginia Beach and Richmond.
There are also some fascinating class implications as well. Beth Macy, the Democratic candidate for the 6th Congressional District, wants a moratorium on data center development and “guardrails” on artificial intelligence, citing studies on how AI could eliminate a lot of white-collar jobs. On the other hand, data centers devoted to AI are creating a lot of blue-collar jobs for those who make power-related equipment. That leaves me curious: What do the anti-Google protesters in Botetourt have to say to their neighbors who work at Munters and who owe their livelihood to data centers?
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