West Virginia Executive Spring/Summer 2020 | Page 30

[ economy ] Prosperity in the ERIC BOWEN, PH.D. KIM RUDDLE Potomac Highlands In 2015, Pendleton County, WV, and the broader Potomac Highlands region— including Hardy, Hampshire, Grant, Mineral and Pendleton counties—experienced a significant economic loss when the Sugar Grove Naval Station shut down its operations. As a result of the closure, the Pendleton County Commission, in coordination with the Region 8 Planning and Development Council, engaged researchers from the John Chambers College of Business and Economics and the Regional Research Institute at West Virginia University (WVU) to develop an action plan for economic prosperity in the Potomac Highlands region. The development of the plan, which was completed in January 2020, was conducted through a four-pronged approach, including an economic impact analysis of the Sugar Grove closure, a cluster analysis and workforce analysis of the Potomac Highlands region and extensive interviews with local stakeholders. The final result was the creation of six recommendations for future action in the Potomac Highlands region that would make it more competitive and thus more prosperous. Total Economic Impact of the Sugar Grove Naval Base Closure Type of Impact Direct Indirect and Induced Total Output (in millions)* $15.8 $6.5 $22.3 Number of Jobs 158 58 216 Employee Compensation (in millions) $15.8 $1.6 $17.4 Tax Revenue (in thousands)** $381 $180 $561 * Output is equal to employee compensation because other operational expenditures are spent outside the region. ** Tax revenue includes sales, personal income, corporate net income and property taxes. Economic Impact Analysis of the Station Closure The closure of Sugar Grove Naval Station eliminated 158 jobs in the region, with an additional 58 jobs lost in secondary industries such as restaurants, grocery stores and retail stores as a result of the lost income from the naval station workers. Total economic losses in the region were approximately $22 million, with about $16 million coming from income losses at Sugar Grove. While these impacts were certainly significant, particularly for smaller businesses in Pendleton County that relied on business from workers at the base, the study found that they represent a relatively small proportion of the total employment in the region. Cluster and Workforce Analyses In developing the action plan, identifying industry clusters in the Potomac Highlands region helped pinpoint target industries for economic development. The analysis identified two primary clusters for potential growth in the region over the next five years: advanced materials and forest and wood products. The cluster analysis also identified four additional sectors that can be seen as emerging opportunities in the region: business and financial services, information technology and telecommunications, machinery manufacturing and transportation equipment manufacturing. While these industries are not currently highly clustered in the region, they are growing 28 WEST VIRGINIA EXECUTIVE