Company invests $21.2 million to expand facility in Strasburg, expects 300 employees
What does it take to run a paper products company? And why would one invest and decide to grow in Virginia?
INVEST recently sat down with Philip Rundle, CEO of paper towel and tissue products producer Mercury Paper Inc. In April, the company announced that it would invest $21.2 million to expand its two-year-old facility in Strasburg, located in the Shenandoah Valley just a few miles from the Virginia Inland Port. The firm’s Chinese parent company, Sinar Mas Group, is one of the world’s leading pulp and paper companies. In Virginia, Mercury creates paper brands and sells its products to retail outlets, hotels and restaurants across the country.
Rundle, from South Africa, talks with INVEST about why Mercury chose Virginia, his company’s commitment to the environment, and relives his childhood in South Africa.
You wanted this facility to be in North America. Of all the places you could’ve gone, why choose Virginia?
Virginia wanted our business more than any state we went to. They were more pro-business than anybody we had worked with and were more entrepreneurial in the way they looked at bringing in business to the state. And they want to create jobs for people in Virginia. We probably worked with four or five states, and when we review the entire process, it’s obvious that Virginia absolutely walked away with our project in every aspect.
How important were incentives in your decision?
The incentives they’ve given us have been part of our choice to locate here, absolutely. But you have to look beyond incentives. For example, I can pick up the phone any time of the day and call VEDP officials, and they’ll pick up the phone and talk to me. I have them all on my cell phone.
- In terms of your distribution network, what makes your Virginia location more strategic than if it were in another part of the East Coast?
Seventy percent of the U.S. population is located east of the Rockies, and much of it is on the East Coast. In our business, we must be located in the center of the population density to be successful. Our location is within major truck and railroad networks, providing us with strategic distribution coverage within a 500-mile radius to major cities in the Northeast and Midwest, both of which are key markets for us. Virginia provides Mercury Paper with the infrastructure we need to achieve distribution excellence on the East Coast.
Plus, you’re 12 miles from the Virginia Inland Port.
Yes. Once our raw materials land in Norfolk, it gets put onto the rail system and goes to the Virginia Inland Port. That helps keep containers and trucks off the road. It takes two days between arriving in Norfolk and getting to our facility, and we don’t notice it at all. For distribution out into the rest of the country, we are situated perfectly in Northern Virginia, with access to the Virginia Inland Port, highways, and Dulles Airport.
How is the labor force in Virginia?
We were able to pick up experienced people that we might not have picked up if the economy wasn’t where it was today. I hate to put that out there, but it’s a matter of fact. We have found an exceptionally hard-working and talented labor force. People get up in the morning and want to come to work. And the people here are exceptionally loyal; they have wonderful family values and they want to build careers. Some of them have worked at companies up here for 15 or 20 years.
You grew up in a South African mining community. What was that like?
I told my parents at a very young age that I didn’t want to live there or work as a miner. I was forever looking for opportunities as a young boy … selling tires and glass bottles to make money so that I could have better toys. The schools in the area provided a feeder system for the mines. I eventually convinced my parents that I needed an academic education versus a technical one, and I enrolled into a private boarding school.
What do you think of CNBC’s latest ranking of the best states for business? Virginia was No. 2.
Well, I think CNBC got it wrong. It should be No. 1.
Jim Cheng practiced business in Virginia for more than 20 years before Governor McDonnell appointed him Secretary of Commerce and Trade in January 2010.
In 1994, he founded CHM, an information technology company, which he grew from a staff of five to 550 at the time he sold it in 2005. He has been actively involved in mentoring small businesses and angel investment and served as president of Totus Lighting Solutions, a startup efficient-energy firm.
Cheng serves as a Trustee of the Darden School Foundation at the University of Virginia and a member of the Old Dominion University Education Foundation Board.
- You have been a successful business owner and investor for many years. Why the shift into public service?
I owe so much to this country and the state of Virginia. This is a great opportunity to give back to the community and to do something that I know how to do – help develop business in Virginia.
- What are your goals?
We want to leave the state better than we found it. One way we can do that is to get the word out to international companies and help bring them – and jobs – to Virginia. If international companies are evaluating the U.S. for in a plant or factory, we want them to choose Virginia.
- What are you doing to attract more international businesses to Virginia?
We are not competing just with our neighboring states, we’re competing with the world. And that is the big challenge for VEDP (Virginia Economic Development Partnership) and the Governor’s administration.
VEDP has produced great results from its marketing efforts in Europe and Japan, but had to cut back due to budget cuts. Now that the General Assembly has passed a budget that includes funding for more international marketing, we plan to build on that success.
That is important because we are learning that many international companies don’t know about the great business climate and workforce we have in Virginia.
We’ll be traveling internationally with the Governor and working hand-in-hand with our consultants overseas to give them an extra level of support. We also plan to open a couple of trade offices in Asia and expand our presence in Europe. We are very excited about this and have already made great strides in establishing contacts in anticipation of this.
- How does this international focus help to increase jobs in Virginia?
It is all tied in together. We recognize investment potential from some of the fastest growing international countries. In fact, 49 percent of investment from new-to-Virginia projects worked by the VEDP over the past six years came from international companies.
We have to go to Asia, Europe and elsewhere in the U.S. to help get businesses to move here or build new factories here, and thus bring jobs.
- How did you build your team for international marketing?
Well, VEDP already has a great staff.
We hired staff in the Secretariat’s office with experience in dealing with international companies. We have a former federal employee who has a lot of experience with the State Department and speaks Chinese.
We also have someone who is very familiar with the Korean market. He’ll be working with all of the Asian countries. He’ll also be empowering our citizens from ethnic communities here to help us recruit more companies from overseas.
- What else does the state need to do to help ensure more jobs in Virginia?
We have to do the leg work to make sure that our workforce is ready for the jobs when they come.
In a global economy, the only way to a secure future is training.
We have a lot of agencies and a lot of regulations. So, we also have goals for many of our agencies to reduce regulation. We want to make sure we keep out of the way of businesses – that is very important.
We also have to work with our Department of Housing and Community Development to make sure we are doing the right things for our rural communities, like building infrastructure.
- What are you doing in rural communities?
Our Deputy Secretary for Rural Economic Development, Mary Rae Carter, is from and works in rural Virginia. We will be traveling all over the state to understand the concerns of rural Virginians so we can address issues to help them grow businesses.
- Virginia is often recognized as a great place to do business. What makes it so attractive?
As I get to visit more and more parts of the state, I get to see all of our amazing resources.
For example, we have great transportation resources like the deep water port of Hampton Roads.
In Virginia, we’re very entrepreneurial. We’re a very low tax state. We’re a right-to-work state. We have a great education system and great universities.
All of these things added together, plus our proximity to the U.S. capital, as well as funding, research and talent, make Virginia very attractive to companies.
- What has the new administration done so far for Virginia’s businesses?
Our lawmakers just increased the Governor’s Opportunity Fund, which provides funds to the Governor to help secure a business or expansion project. That signals that we are really ready to attract businesses here.
The Governor also restored several tax exemptions that primarily affect manufacturers. This shows that we are very interested in bringing more manufactures to the state. This also shows that we listen to concerns from businesses.
We also passed legislation that creates a tax credit for green jobs.
- Recent economic conditions have been very challenging. What gives you hope for the future?
International companies are looking for low asset prices, skilled workers and a good business environment, and we provide that in Virginia. That is partly why we’re seeing so many international companies come here.
We have a lot of creative people thinking creative thoughts and that is going to go a long way in getting jobs here, as long as we get the word out about doing business in Virginia.