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
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WEST VIRGINIA EXECUTIVE