Virginia is now looking for the payoff of two high-dollar state economic development initiatives that reached major milestones last week.
The GROW Capital Jobs Council adopted a “growth and diversification plan” on Friday morning to nurture projects aimed at creating high-wage private-sector jobs in a region that encompasses the Richmond metropolitan and Tri-Cities areas and extends through Southside to the North Carolina border.
It is one of nine regions created by GO Virginia, a business-led initiative financed in part by $28 million in state taxpayer dollars in this biennium under legislation the General Assembly adopted and Gov. Terry McAuliffe signed last year. Once the state GO Virginia board acts on the regional plans on Sept. 12, the next challenge will be to produce collaborative projects that stimulate regional economies and create high-wage jobs.
“My worry is time,” said Virginia Commonwealth University President Michael Rao, a member of the 25-person regional council, in a meeting at Williams Mullen law firm in downtown Richmond. “There is no question what our state wants to see is results out of this.”
A day earlier, the Virginia Research Investment Committee launched an intensive nine-month study of research assets and opportunities at public colleges and universities that the state can turn into commercial technologies that drive business investment and high-wage jobs.
The research initiative, financed with $12 million in state tax money for operations and $29 million in bond proceeds for capital investments, also has begun to evaluate the first 10 proposals for collaboration among higher education research institutions and technology-driven industries.
“It’s a very well-conceived effort in a very tight time frame,” said Mitch Horowitz, principal and managing director of TEConomy Partners, a Maryland-based technology consultant that expects to deliver the bulk of its analysis and recommendations for research opportunities by early January, before the General Assembly convenes.
The two initiatives are likely to overlap in some of their goals, such as putting more emphasis on commercialization of applied research at higher education institutions such as VCU and Virginia State University.
VCU is considered crucial to the industry cluster identified by the regional plan as the “highest potential for growth” — health, life sciences and bioscience. VSU features a program for advanced manufacturing engineering in a region that already has major assets in the Commonwealth Center for Advanced Manufacturing next to Rolls-Royce Crosspointe’s aircraft engine factory in Prince George County.
Also common to both initiatives is the development of a talent pipeline to produce the workforce with the skills to fill high-wage jobs in potentially lucrative new industries.
“The talent and skills of the workforce will be an essential key to the creation of higher paying jobs in the emerging economy,” states the growth and diversification plan produced by DecideSmart and Chmura Economics & Analytics for the regional council.
The plan, presented by DecideSmart principal Robert D. Holsworth, a former VCU dean and current member of its board of visitors, cautions, “Significant cultural and institutional changes are necessary for the region to become a leader in developing the workforce of the future.”
Those changes require a different focus on education, especially at Virginia’s community colleges, to prepare students for jobs that require more than a high school education but less than a four-year bachelor’s degree.
“Our stakeholders believe that a long-term de-emphasis on skilled trades, a pervasive misunderstanding of the contemporary opportunities and working conditions in industries such as manufacturing, and a stigma that is often attached to not pursuing a college or university education have contributed to the workforce gaps that are evident today,” the report states.
The plan gives mixed marks to the economic status of the broader Capital region.
“Population has been growing more rapidly in the region, overall labor force participation is high, and employment growth is supported by a diverse mix of industries,” it states. “However, the region has a larger share of the population with only a high school degree, and high rates of poverty in both urban and rural areas.”
For example, five rural localities in the region — Emporia and the counties of Charles City, Sussex, Surry and Greensville — have declining populations. Labor force participation is below the regional average in the Crater district. And five localities had poverty rates above 20 percent in 2015, led by Petersburg at 28.4 percent, Greensville at 27.9 percent and Richmond at 24.4 percent.
The region’s assets include a large military presence at Fort Lee, where the U.S. Army provides “high-level logistics and security training” that could bolster the region’s economic opportunities in the logistics of moving goods and services, said Dennis K. Morris, executive director of the Crater Planning District Commission.
Logistics was one of the industry sectors touted in a report Holsworth produced for Richmond’s Future, a five-year policy effort led by former VCU President Eugene P. Trani. VCU also is among five higher education institutions that participate in the Commonwealth Center for Advanced Logistics Systems in Prince George.
But jobs in traditional logistics operations, such as warehouse and distribution centers, tend to carry lower wages than GO Virginia’s statutory mission requires it to produce. But Morris said logisticians — who coordinate complex supply chains for organizations — are paid an average of more than $86,000 a year. And Greater Richmond Chamber President Kim Scheeler cautioned the council not to forget the importance of warehouse and distribution jobs in logistics networks, such as the Port of Richmond.
The Richmond Marine Terminal, now operated under long-term lease by the Port of Virginia, is generally considered an important asset to the region, for logistical distribution chains and potential advanced manufacturing operations.
B. David Peck, former owner of Peck Iron & Metal and now principal of a commercial real estate business, contends that the marine terminal’s value is more the property itself than the port operation, primarily barges between Richmond and Hampton Roads.
“It’s got terrific potential, but it’s not going to be a port,” Peck told the regional council.
Scheeler said the port might not have been viable in its “old mode,” under city operation, but the “alliance with the Virginia Port Authority changed that.”
He also suggested that the port provides an opportunity for collaboration between the GROW Capital Jobs Council and its GO Virginia counterpart in Hampton Roads.
“The logistics piece is a natural for us to have that conversation with them,” Scheeler said.
John O. “Dubby” Wynne, chairman of the Virginia Growth and Opportunity Board, said in a statement: “We are pleased that the GO Virginia Regional Councils have submitted their Economic Growth and Diversification Plans which lay out each region’s unique economic challenges and areas of opportunity. These plans are an essential predicate to understanding each region’s unique economic challenges and areas of opportunity.
“This is another significant step forward as regions join together to create more higher-paying jobs throughout Virginia.”