Sometimes, thinking inside the box is what’s best for business.
A recent report by the West Virginia University Bureau of Business and Economic Research suggests that capitalizing on the existing strengths of regional industries can spur development and attract business more effectively than seeking out new sources.
Eric Bowen, research assistant professor at the Chambers College of Business and Economics, led the study “Identifying Industrial Clusters for Targeted Economic Development in West Virginia.”
In the report, Bowen and BBER Director John Deskins identified the state’s top impact clusters – or areas of top-performing industrial activity - and offered recommendations on how to develop strategies to promote further economic growth.
“Building on a region’s comparative advantages is typically a more effective economic development strategy compared with a strategy that ignores a region’s existing industrial structure and pursues a more generic approach,” Bowen said.
The report identified industrial clusters in all six of the state’s metropolitan regions, including:
• Advantage Valley Region (Cabell, Kanawha and Putnam counties): oil and gas production, upstream chemical products, automotive.
• Beckley Metropolitan Area (Fayette and Raleigh counties): food processing and manufacturing, health services, business services, hospitality and tourism.
• Eastern Panhandle Region (Berkeley and Jefferson counties): information technology, downstream chemical products, education and knowledge creation, food processing and manufacturing.
• North Central Region (Harrison, Marion, Monongalia and Preston counties): aerospace vehicles and defense, oil and gas production, electric power generation, education and knowledge creation, information technology, biopharmaceuticals.
• Parkersburg Metropolitan Area (Wirt and Wood counties): oil and gas production, automotive, food processing and manufacturing, water transportation.
• Wheeling Metropolitan Area (Marshall and Ohio counties): oil and gas production; marketing, design and publishing; health services.
An industrial cluster analysis examines the supplier relationships of companies in a geographic region to identify gaps and opportunities related to its industrial structure that could attract new businesses, the report states.
Bowen said cluster analysis has become an increasingly important way for regions to understand their local economic structure.
“The unifying theme of this report is that each metro area, in itself, is different,” he said. “Each region has its own strengths that it can build on to bring in new companies to the region.
“The most impactful clusters are going to be those that have high wages and are growing nationally, which makes it easier to bring new locations in the state.”
Though the report relies on data from 2017, Bowen believes it can still guide public officials and business leaders through the economic wreckage of the COVID-19 pandemic.
“We’re well aware that the economic recession brought on by the COVID pandemic has had very detrimental effects across the state,” he said. “We hope this report can help local areas with their recovery.”
The study was done in collaboration with the West Virginia Development Office.
“This serves as another tool for the Development Office in their efforts to more precisely target the businesses and industries that best fit into West Virginia’s industrial landscape and are therefore most likely to expand into our state,” Deskins said.
Here are additional notes and findings, broken down by region:
Advantage Valley: While employment in health services is the largest at 32,451, the concentration of coal mining jobs is more than 24 times the national average.
Another notable industry is petrochemicals, of which $1 billion in products is imported into the region. “These imports are of a different kind of chemical than is produced in the region, but it may be possible for exporters to retool or enhance their outputs to meet local demand.”
Beckley: The fastest growing cluster is in food processing and manufacturing, which experienced 450 percent growth. The report notes Coca-Cola Bottling Co. in Beckley and United Dairy in Beaver as primary drivers.
Eastern Panhandle: This region’s largest emerging cluster, in terms of employment, is in the performing arts field. “The Eastern Panhandle has a thriving arts scene with big draws to the region, particularly the Contemporary American Theater Festival at Shepherd University.”
North Central: Five impact clusters here have average wages well above the national average. Aerospace vehicles and defense jobs lead the list at more than $131,000 per worker.
Parkersburg: Oil and gas production remains a standout with its high wages compared to the national average. Business services experienced growth of 13 percent between 2007 and 2017.
Wheeling: Researchers acknowledged the volatile economy in this region over the past decade but reported that oil and gas jobs have grown rapidly in recent years. Health services remain the largest cluster for employment at nearly 11,000.
To read the full report, go to https://researchrepository.wvu.edu/bureau_be/324
CONTACT: Jake Stump
WVU Research Communications
Assistant Dean of Communications, Engagement & Impact
John Chambers College of Business and Economics
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