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The $100 million Rolls-Royce jet engine facility in Prince George County Virginia was awarded the 2008 Economic Development Deal of the Year Award by Business Facilities magazine.

From Business Facilities:
“Our judging panel was particularly impressed with the creativity displayed by Virginia in crafting an incentive package for Rolls-Royce. Included in the package are $35 million in performance grants; $56.8 million in cash payments that are partly dependent on employment and investment targets over the next 16 years; $6 million from the Governor’s Opportunity Fund to meet future infrastructure needs; a $5 million grant for the development of spin-off companies; a five-year tax break on machinery taxes, tool taxes, and the company’s business license; a 50% discount for connecting utilities; and the waiving of rezoning costs also are part of the deal.”

Once again, Virginia proves that it is the #1 State to do Business.  Rolls-Royce considered over 30 international locations for this project and Virginia won with the best combination of incentives, labor force, and access to higher education.  Over the next 10 years, the project will contribute almost $2 billion to the state economy and create 3,000 jobs.  The Rolls-Royce facility not only substantiates Virginia as a global high end manufacturing location, but also validates the Greater Richmond Area as the hub of Virginia.

Last week, Maersk shipping lines announced that they will be leaving the Port of Charleston by the end of 2010.  It’s not that Maersk didn’t want to be in Charleston.  On the contrary, they worked to find solutions where they could stay.  However, in the end, it was a matter of operating costs.  Maersk, operating its own dedicated terminal, must use union labor.  The company has asked for permission to relocate its operations to the common yard.  Unfortunately, the ILA did not provide the necessary consent.  Maybe they thought Maersk was bluffing.  Maybe they just didn’t think it through.  However, now Maersk is leaving and come 2010, those ILA jobs will be lost.

On the plus side, Maersk will relocate the services that previously called upon Charleston.  It’s a good bet that a fair amount of that traffic will go to Virginia, where Maersk recently built a $500 million automated terminal.

A recent Shpping Digest article outlined some of the difficulties Charleston is having designing in a rail yard to their new North Charleston Terminal.  The issue revolves around the need to realign an access road on the terminal to allow electric lift equipment to shuttle containers to a new private intermodal yard.  By redesigning the road, they reopen the permitting and planning process.  The potential for delays could be very costly to the state.  In addition, CSX is a partner in the venture that would be building the intermodal yard and would be the only operator using it – no Norfolk Southern.  Any move to go above and beyond to accommodate the new rail yard would be frowned upon by NS and could be politically costly.

However, Charleston needs to address their rail issues.  Norfolk has on dock rail and is expanding the number of tracks available.  Savannah has near dock rail and is also expanding to accommodate both CSX and NS.  Charleston could be putting itself at a significant competitive disadvantage if it doesn’t figure this out quickly.  Shippers are making decisions today that will effect where they will locate in 2013 when the North Charleston terminal is completed.

GlobeSt.Com today had an interested article on China’s role in the demand for industrial space in the US.  The gist of the article is that China’s economy and production is slowing to the point where it might have an effect on the US industrial market.  The author points out that many of the industrial REITs have made big bets in port markets and those bets may not do as well as previously expected.  One of the important things to note is that we are talking about a shift from 35% growth to 23% growth.  By any measure, that is still tremendous growth and a trend worth paying attention to.

However, the growth is projected to slow and the author is correct that this slow down may have an effect on demand.  However, it just goes to further emphasize the importance of picking the right locations.  When the demand does decrease, it will certainly not decrease proportionally across all port markets.  Some will be much harder hit than others.  As an example, just look at Maersk’s recent decision to leave Charleston in 2010.  Bad news for Charleston, but great news for other markets which will benefit from Maersk redirecting that traffic.  Norfolk and Savannah should both profit from the decision.

Again, making wise investment decisions is the key here.  Any box in any port industrial market won’t get the job done anymore.