A study commissioned by the Virginia Coalfield Economic Development Authority confirmed it is on the right track when it comes to the targets of its job growth and investment efforts.
The study, conducted by the Virginia Tech Center for Economic and Community Engagement, recommends that VCEDA continue to focus on the advanced manufacturing, electronic information technology, energy-related enterprises and creative tourism industries.
Jonathan Belcher, VCEDA’s executive director and general counsel, called the results of the study “reassuring.”
“Overall, the targets made sense to us. It was well researched and validated what we’re focusing on. It helps us better understand that the targets valued have not changed,” he said.
Four target industries
These are the four target industries identified in the Tech study:
Advanced manufacturing — machinery manufacturing, fabricated metal manufacturing, wood product and furniture-related manufacturing and electrical equipment manufacturing
Electronic information technology — software development, telecommunications and data, and IT support services
Energy-related enterprises — renewable energy and manufacturing and battery storage and manufacturing
Creative tourism — including artisan restaurants and traded sector pursuits, food-based agriculture and research and outdoor recreation
The results of the study were presented in September to the VCEDA board. The authority was created in 1988 by the General Assembly to diversify the region’s economy and create jobs. It covers the counties of Buchanan, Dickenson, Lee, Russell, Scott, Tazewell, Wise and the city of Norton.
The study cost about $25,000, according to Belcher. The last such study was done in 2014 by a North Carolina consulting firm and the results were similar, he said.
Scott Tate, associate director of the Virginia Tech Center for Economic and Community Engagement, worked on the report along with two colleagues. It was conducted between February and August, he said.
The center has done a number of the studies for counties and regional economic development organizations, he said.
“It makes sense every few years to reassess the economic context and look at trends and opportunities to see how best to align a region’s efforts at economic development, including attracting prospects,” Tate said.
After the four targets were identified, the report pinpointed several sub-sectors of interest and included justifications for zeroing in on those target firms, challenges that must be overcome and opportunities for each sector.
Results
One of the most positive takeaways from the analysis was that the region is outperforming national averages in key sector areas, Belcher said.
That was the case in advanced manufacturing, particularly machinery manufacturing, fabricated metal products and electrical equipment, which all grew more than the national average over the last five years, according to the report.
In 2021, there were 26 businesses involved in machinery manufacturing in the VCEDA region that accounted for nearly 800 jobs, according to the report.
That number is “126% greater than the national average for employment. From 2017-2021, the VCEDA region experienced a 23% increase in jobs in this sector compared to a 3% national decrease and a 0% change in Virginia,” the report states.
The report cited three companies in the area that are involved in machinery manufacturing, Tadano Mantis Corp. in Richlands, which makes telescopic boom crawler cranes; Komatsu, which has locations in Abingdon, Duffield and Norton and manufactures construction, mining, forestry and industrial equipment; and Simmons Equipment Co. in Tazewell, which makes mining equipment.
Challenges
Belcher said the challenge that stood out most to him was the lack of enough available land in the region and too few sites for some categories of industries.
The report states that the region has a number of sites, but “product quality varies, and larger shovel-ready sites are a challenge. The region’s largest ready-to-go site is under 100 acres, smaller than desired by larger manufacturing prospects. Specifically looking at Southwest, currently, only five sites over 100 acres were identified for investment by Virginia Build Ready Sites program.”
According to the report, many sites and buildings aren’t “ideal fits” for typical industries due to topography, workforce and proximity to infrastructure such as interstates, airports and the Port of Virginia.
“These challenges, particularly topography, mean that sites will often cost more to develop in Southwest Virginia than in other parts of the state and may take longer to realize project wins,” it states.
A number of manufacturing and supply chain projects are lost due to the lack of well-prepared sites or available buildings. Plus, some sites are in “distressed communities” with higher-than-average unemployment or poverty rates, which make it tough to attract businesses, according to the findings.
There are also challenges with employees, the study found. Some employers say they have difficulty filling open jobs because a high number lack the skills required and many fail to pass a drug test or criminal records check.
Opportunities
Opportunities identified for the region include its low cost of living and low labor and energy costs, which are highly competitive in Virginia and the nation, the report states.
Another strength is the region’s higher education institutions, which have partnerships with manufacturers in job training, research and development.
An example cited in the report was a partnership developed by Mountain Empire Community College, Southwest Virginia Community College, Virginia Highlands Community College, and Wytheville Community College to expand the training and development to prepare workers to enter the supply chain manufacturing for the offshore wind energy field.
One service that was mentioned as both a positive and a negative in the study was broadband access. Broadband is now available in many areas in the VCEDA region. The study points out that in 2021, the region received more than $45 million in broadband grants to install more connections.
However, another section of the report notes that while broadband access has improved, “there are still areas lacking infrastructure, making it difficult for small business owners, remote workers, and others to have that last mile broadband access. Survey results show that the majority of the Pound River region in Dickenson County is devoid of anything that could be considered a reliable internet connection.”
Conclusions
Tate said two things stood out to him in the study’s findings. The first was that an identified target sector was energy-related enterprises and the sub-sector of renewable energy and battery storage and manufacturing. In 2021, the VCEDA region had nearly 1,400 jobs in these industries and the workers had average earnings of more than $75,000, he said.
The other was that creative tourism was identified as a sector of importance. VCEDA has been providing seed funding to help businesses start and grow in this sector, Tate said.
Over the last five years, 43 small businesses related to accommodation and food services received VCEDA seed capital funding, which created at least 131 full-time jobs and 239 part-time jobs. Seed capital funding was granted to 49 small businesses in the region related to arts, entertainment, recreation and retail trade, creating at least 99 full-time jobs and 115 part-time jobs, he said.
Belcher said he was also struck by the recommendation of creative tourism, which he said is fairly new as an industry target and is tourism plus added value.
To help the region grow, the analysis made the following recommendations:
– Improve the number and quality of “shovel ready” sites
– Collaborate with regional educational institutions to align programs with industry needs
– Create a foundation for cooperative partnership initiatives and alliances in the region
– Market universal broadband coverage coming to residents and businesses
– Offer entrepreneurial services and resources to assist companies in the early stages.