Volume 13, Number 3 – October 2016

Notes from Coal Country: Now for Some Good News

As readers of this e-newsletter or the EntreWorks Blog know, we’ve been spending a lot time working on engagements in America’s coal-dependent regions in Appalachia, the Mountain West and elsewhere.   We took a closer look at economic transitions in coal country in our last e-newsletter.  This was a somewhat depressing read, as many coal-dependent communities face serious troubles.   But, it’s not all bad news.   While transition to new economic drivers is proving challenging, coal-dependent communities are making important progress and pioneering new and innovative approaches to community development.   This issue of EntreWorks Insights highlights some of these inspirations and innovations.  In this election season, we all need some good news!

As we noted in our last e-newsletter, the coal industry transition is brutal.   Many coal-dependent communities have relied on coal as an economic driver for more than a century.  In many regions, coal is the primary provider of good high-paying jobs.  The average coal miner can make as much as $75,000-$85,000 per year—nearly three times the average income.   The loss of these livelihoods has serious economic, social, and cultural consequences.

New paths to prosperity are being plowed, but the process takes time.   As they develop new strategies, coal-dependent regions must address three sets of issues at one time:  1) Helping coal miners and other workers retrain and find new careers, 2) Identifying and capturing new business and economic growth opportunities, and 3) Addressing larger structural challenges facing their communities.   This is a tough juggling act, but, as we’ll see below, some good news is emerging.

Retraining and Reskilling   

When mines and other facilities close, Job One is to help miners and displaced workers retrain and find new gainful employment.    In many ways, miners face retraining challenges similar to long-tenured manufacturing workers.  They have extensive and specialized technical skills, but they may lack needed credentials or may have trouble transferring those skills to new industries.

Fortunately, miners have many skills that are in high demand if appropriate transition services are in place.  A recent Virginia Tech study assessed relevant workforce skills in Southwest Virginia.  This analysis found that many coal industry occupations, such as roof bolters and machine operators, require STEM-related skills and competencies that directly translate to high level production positions in growing manufacturing sectors. 

Many successful programs help miners transfer these STEM skills to new sectors.  Efforts to help miners move from “coal to code” have received loads of media attention, including a recent shout-out from President Obama.   Pikeville, KY’s Bit Source, a web development firm, has been the subject of more than a dozen national and global news stories.   The success of these IT efforts is a reminder that, even though located in rural areas, many coal-impacted communities do have excellent broadband infrastructure in place.

In Southwest Virginia, regional leaders are hoping to position the area as a center for unmanned aerial vehicle (UAV) testing and research.  In 2015, Wise, VA was the site of the first ever remote drone delivery of pharmaceuticals and medical supplies.    More recently, regional leaders have created the Fly Wisely Accelerator Corporation to serve as a regional advocate for UAV development.   Finally, Mountain Empire Community College, based in Abingdon, VA, has become the state’s first provider of credit-based courses on UAV technologies.

Coal workers are also well-situated to obtain new employment in the growing solar industry.    A recent study found that the solar industry could conceivably absorb nearly all of the workers projected to lose jobs in the coal sector.  More importantly, the researchers found that technical workers could actually earn more in the solar sector.  (In contrast, managerial level workers would earn less.)

Identifying New Economic Engines

When it comes to community economic adjustment, it’s always better to “hit for singles, not home runs.”  It is near impossible to find a single replacement for the jobs and revenue provided by the coal industry.   And, it’s probably not a good idea anyway as dependence on any one single industry is a risky proposition.   A more promising approach involves a mix of strategies that nurture and support a diverse set of new economic drivers. 

A number of communities are responding to the coal transition challenge by building up their own internal capacities.  Many regions had made little or no historical investments in economic development because they had always been able to rely on revenue and jobs from coal.   With the loss of these resources, they’re now developing new visions for their economic futures.  Moffat County in Northwest Colorado is a good example.   This small community has a large share of its employment and tax base tied to a local mine and power plant—more than 500 workers in a community of only 9,000 people.  The region is now embarking on its first effort to craft a countywide economic diversification strategy.   

Each community and region will likely embrace a different mix of economic targets but some promising ideas are already sprouting up.  New approaches to tourism are especially promising, and some interesting models are emerging.  Southwest Virginia’s Crooked Road trail—following key locations tied to the birth of country music—is gaining lots of attention.  Other strategies also seek to link multiple destinations and activities—all as part of an approach to encourage longer visits and create more local business opportunities.   Examples include the Trail Towns program (linking Pennsylvania and Maryland towns along the Great Allegheny Passage) and the regional Bon Appetit Appalachia website promoting culinary tourism.

In addition to its work supporting UAVs, Southwest Virginia is also touting its potential as a center for information technology firms and data centers.  The region has good broadband infrastructure, ample water, and a secure safe location.   It is also home to the University of Virginia at Wise which operates Virginia’s only undergraduate software engineering program.    The university has also recently inked a partnership with the Mach 37 Cyber Accelerator program to create closer linkages to the technology community in Northern Virginia.

Addressing Long-Term Challenges
It’s tough to retrain workers and identify new economic engines to replace lost coal jobs.   But, that’s not the only challenge facing coal dependent regions.  Typically, they also face a nasty mix of more long-term structural challenges as well.  At the top of the list is the need to develop a skilled and ready workforce.   This effort has at least two components—addressing the health of current residents and increasing their skill base.

Many coal-dependent communities are in the midst of a health crisis.   The opioid epidemic is centered in Appalachia, and more general health challenges of high obesity and diabetes rates and limited access to basic health services, also abound.  You can see some of the latest data at the Appalachian Community Data Portal. There are lots of excellent local experiments underway, including a major effort by the Appalachian Funders Network to engage foundations to supporting a culture of health in the region.  Another cool event occurred earlier this month in Somerset KY.  The Health Hack-a-Thon engaged hundreds of local residents, along with experts from MIT and other researchers, to brainstorm and develop action plans to address the region’s drug epidemic and the challenges related to obesity and diabetes.

Workforce development is a core part of economic diversification efforts across America’s coal-dependent regions.  In nearly all cases, these efforts include investments to help coal miners and related workers find new jobs and careers.  But, they can and should include a more long-term perspective that seeks to create better career option for all local residents.   Many of these efforts are being funded via the Obama Administration’s Partnerships for Opportunity and Workforce and Economic Revitalization initiative.   Most of these POWER projects are just getting underway, but it is likely that a similar effort would also be continued if Hillary Clinton becomes President.  Donald Trump’s energy plan does not include community programs of this type.

New workforce development investments will help, but coal regions, like much of rural America, may need to think even bigger and consider what they can do to encourage more in-migration.    These regions have faced decades of population loss, and a return to prosperity likely requires a reversal of this pattern.  Attracting new residents can bring new talent, new skills, new perspectives, and economic growth.   For example, recent research shows that immigration is a key factor in determining whether a rural region’s economy grew over the past decade.  (Note:  You can find lots of excellent ideas on this topic in a recent report from Welcoming America.)

For this reason, coal-dependent communities should consider combining their ongoing diversification strategies with programs that encourage new residents.  The actual policy mix will differ by community but nothing should be off the table.  This could include encouraging local settlement of new immigrants, retiree attraction strategies, provision of subsidized housing (for artists or others), and the provision of free or subsidized land.    These efforts to support “brain gain” have received lot of attention in the Great Plains and the Midwest.  They deserve similar attention in coal country.

As we noted in the last edition of this e-newsletter, the coal transition challenge is “not as bad it looks.”   Coal communities face a tough transition, but as this edition of EntreWorks Insights hopefully shows, there’s great cause for hope and optimism.   A series of interesting and inspiring experiments are now underway, and their potential for building stronger communities is enormous.

What’s New at EntreWorks Consulting?

The summer has been busy as we finished up several projects in Pennsylvania, including work in Monroe and Somerset Counties.  In addition, we are kicking off a major research project (on behalf of the Appalachian Regional Commission) assessing the development of entrepreneurial ecosystems in Appalachia and some new work for the Kansas City-based PIPELINE entrepreneurial fellowship program.   Finally, we are continuing a long-running project supporting the Office of Economic Adjustment’s Defense Industry Adjustment program.

We also have numerous upcoming speaking engagements.  In the next month, Erik Pages will be presenting at the annual meetings of the Pennsylvania Economic Developers Association and the Northeast Regional Employment and Training Association.  In addition, he will be the keynote speaker at the Roanoke-Blacksburg Technology Council’s Fall Gala.  Hope to see you on the road.

We also continue to provide more regular news and updates at the EntreWorks blog at http://entreworks.net/blog.   Recent posts have discussed new big data resources, the evolution of the gig economy, and we’ve also offered some comparisons of the Clinton and Trump platforms on key economic issues.  You can also access blog updates at our Facebook and LinkedIn pages and on Google Plus.