McDermott International Inc. has announced plans to spin off its Babcock & Wilcox subsidiary, which designs and builds nuclear reactors for power plants and the U.S. Navy, and move the corporate headquarters from Lynchburg to Charlotte, N.C.
The relocation will involve fewer than a dozen employees, leaving some 2,400 employees in the Lynchburg area unaffected. But the loss could prove to be more than symbolic. The employees making the move presumably will be highly compensated senior executives. They will require high-end office space, they will support their new community philanthropically and, one can only assume, they will hire the support staff required to run a publicly traded company. That office space, that philanthropic support and those jobs will go to Charlotte, not to Virginia.
It is understandable that a publicly traded company, as the new J. Ray McDermott International S.A., will be, would want to locate a headquarters facility in a city providing easy access to legal, financial, accounting and other talent. But that talent is readily available in nearby Richmond or Northern Virginia, both the home to numerous corporations the size of McDermott. Were either of those two locations considered? Was anyone in the state economic development community aware of the decision? Did Virginia communities ever have a chance to pitch McDermott? Is there anyone to hold accountable for this lost opportunity?
I have posted in the past on Virginia’s opportunity to grow a powerful nuclear-power industry cluster around the presence of B&W and Areva in Lynchburg, the Northrup Grumman shipyard in Newport News, Dominion in Richmond, North America’s largest uranium deposits in Pittsylvania County, and access to nuclear regulatory authorities in the Washington, D.C., area. In that regard, Virginia has far more to offer than North Carolina. A year or two ago, Sen. Ken Cuccinelli, since elected Attorney General, showed a strong interest in the idea of leveraging Virginia’s nuclear expertise into more economic development — he and I chatted briefly and exchanged some email correspondence on the subject. But I never sense a glimmer of interest from anyone else. And that, sadly, includes the Kaine administration.
Claiming the corporate headquarters of a publicly traded company whose main business is nuclear power would have highlighted Virginia’s role as a leader in the nuclear industry — all the more because of B&W’s leadership in that industry. In June the company announced the development of a small nuclear reactor, which could make it possible to bring nuclear power online in smaller, less expensive increments. The company described it as a “potential game changer for the global nuclear market.”
The loss of the headquarters won’t change where the design work takes place, which, I presume, is Lynchburg. But the announcements, the glory and much of the deal-making will come out of North Carolina. Consider the McDermott-H.Q. episode as a lost opportunity. Also count it as one more defeat in the long-running competition between the Tarheels and the Cavaliers. Our record doesn’t look much better in economic development that it does in basketball.