Mike Petters
Corporate Vice President and President,
Northrop Grumman Newport News
On Friday, July 13, 2007, Mike Petters, Corporate Vice President and President of Northrop Grumman Newport News, appeared on CNBC's "Power Lunch." Below is a transcript of the interview.
Sue Herera, anchor: It's finally here. All this week, CNBC has been counting down America's top five states for business in our exclusive rankings of all 50 states. Senior correspondent Scott Cohn has been traveling through all five finalists to unveil the winners for us, and today, Scott is in the number one state for business, so here are some hints abut this state before we go to Scott.
This was one surprised me. It's the Internet capital of the world. It also is home to the world's largest office building and it is home to the world's largest shipyard.
So, Scott, the suspense is killing me. Where are you?
Scott Cohn reporting: Sue, you said it's finally here. That's kind of what I thought of when we landed here about 1:00 this morning. We have been through about 6,000 miles, five states, looking at the states that put it all together for business, and this state really did. Our top state among America's top states for business is Virginia.
We are at the Northrop Grumman Newport News shipyard where they are working on the refueling/complex overhaul of the USS Carl Vinson, a Nimitz-class carrier. This is about a three-year project to completely overhaul this nuclear-powered aircraft carrier. Thousands of people working on this project alone in a shipyard that employs some 20,000 people.
We'll talk a little bit more about that in a moment, but, first, here is why Virginia is America's top state for business.
(Videotape segment:) Slow and steady wins the race for the Old Dominion state. Virginia didn't just stand out in one or two areas; it was solid across the board. At 1,327 out of 2,021 points, no other state came close. Virginia won its best ranking in the economy category, where it came in at number three overall. Economic growth here is running around five-and-a-half percent, by no means the fastest in the country, but solid. This state boasts an educated workforce, one of the best regulatory climates for business around, and with the high-tech industries in Northern Virginia, a healthy flow of venture capital. Unemployment here is just 2.9 percent. The corporate tax rate in Virginia is a flat 6 percent. The top individual income tax rate is five-and-three-quarters percent.
Virginia's largest private employer is Northrop Grumman with its giant Newport News shipbuilding operation and an IT organization based in Herndon. But Virginia is also still rural. Agriculture is still the state's largest industry.
Cohn (live): Now, we scored 10 different categories in our study of America's top states for business, and Virginia was in the top 15 in all but two of those categories, so it really was a strong showing overall. We want to talk a little bit about this place we're at, the world's largest shipyard. Mike Petters is the president of Northrop Grumman Newport News, and he is with us in what really is a pretty amazing place. Give me a sense of all the moving parts here that you've got to keep track of every day.
Mike Petters: Well, we have about 20,000 people that come through our gate every single day and their job is to build cities that go to sea, with their own airports, if you will, and build submarines for the Navy. We basically do anything you can imagine from engineering to design to manufacturing to production, and then we follow the ships when they go to sea. We follow them all around the world and track them and help make them safe.
Cohn: And Virginia and Newport News, Northrop Grumman, go way back, obviously. There's a geographic reason why you're here, but you also really do have to interact a lot with this state that, according to our study, did so well.
Petters: Right. Northrop Grumman has four of its eight business units headquartered here in Virginia, and all eight of our business units do business in this state. And so a business climate that is conducive to good operations is very important to us. We look at things like how good is the education system, how good is the transportation system going to be, what kind of power system and power environment are you going to have, because everything we do requires a lot of power. This place in particular requires a lot of power.
And those are the kinds of things that are infrastructures for business systems that they need to be successful in that environment. And the commonwealth is very amenable to working with businesses on those issues.
Cohn: Really quickly, there weren't many weak areas for Virginia, but the two areas that were weak in our study – relatively – were transportation and the cost of living. Is that something that you notice, and what needs to be done about that?
Petters: Well, certainly, transportation has been a front-and-center discussion with the state for a decade. And in the past legislative session, they actually came forward with a compromise to move ahead and start moving out on some more transportation initiatives. I think that's a great step forward. The governor and the leadership in the General Assembly had to be willing to compromise, and they were, and I think we've made a big step forward.
As far as the cost of living goes, I guess my view of that is some of that's related to the kind of business you're doing. And to the extent that we can get the infrastructure issues solved, we can address the cost of living issues.
Cohn: All right, Mike Petters, thank you very much, the head of the Newport News shipyard, as the whistle goes off here.
