West Virginia Breaks Out of Economic Typecast

Most of us are proud to be able to do something well. Becoming known for a specific talent is an accomplishment. But actors, companies and even states can become typecast into one limiting role.

West Virginia earned its reputation as an energy producer. Two-thirds of the electricity West Virginia generates is exported to the rest of the country. We rank fourth in the country in net interstate sales of electricity and remain a leader in low-cost electricity. Our economy has long been tied to the energy markets, rising when energy markets rose and falling when conditions were less than favorable.

Years ago, the state’s governmental, industrial and educational leaders realized that our fields of industry had to expand for the state to reach its potential. We had to cultivate new strengths, while continuing our commitment to our traditional industries.

Today West Virginia’s development strategies focus on emerging sectors such as aerospace, automotive, biometrics, biotechnology innovations, high technology data, higher-end data centers and business service centers.

Many companies recognize West Virginia’s fundamental attractions such as strategic location -” within overnight delivery distance of half of the U.S. population-” and quality workforce. West Virginia workers have earned a reputation for low turnover and high productivity. For example, Toyota Motor Manufacturing, West Virginia, Inc. (TMMWV) has received the prestigious Harbour Award for seven consecutive years. The award recognizes the productivity of powertrain plants in North America.

Gov. Earl Ray Tomblin joins workers for lunch at the Toyota Motor Manufacturing West Virginia plant in Buffalo.

Battelle Institute conducted research on how the state could develop an innovative economy. The analysis identified the state’s competitive advantages, including the presence of a large number of nonprofit and federal research institutions; a growing academic research base; an increasing technology sector; and a highly productive workforce.

The report outlined strategies that included:

  • Build a culture that supports innovation, entrepreneurship and the growth of technology-based companies

  • Increase the state’s R&D capabilities and commercialization infrastructure needed to bring the technology to the marketplace

  • Ensure access to capital at all stages, from concept to prototype to growing company

  • Promote a pro-active business climate with incentives to attract, grow and retain technology-based companies.

West Virginia has made great strides in putting these strategies into action.

Investing in Innovation
In 2008, the state created the West Virginia Research Trust Initiative, popularly known as “Bucks for Brains,” investing $50 million in excess revenue to stimulate research at Marshall University and West Virginia University. The Bucks for Brains dollars match the funds the universities receive from private and corporate contributors, doubling the value of qualified donations. The universities’ research is expected to create new patent and high-technology jobs.

West Virginia recently expanded its technology infrastructure as well. In December 2010, the state acquired the former Union Carbide Technology Center in South Charleston. Renamed the West Virginia Regional Technology Park, the 258-acre campus contains offices, large laboratory space and four pilot plants. Pilot plants allow medium-scale production, a vital step in testing the viability of a new process before a company invests in a full-scale plant.

Capital Ideas
Small firms made up 96.2 percent of West Virginia’s employers. An investment in our creditworthy small businesses is an investment in the economic vitality of our communities and our state.

In January 2012, the state launched the West Virginia Capital Access Program (WVCAP). The state-run WVCAP uses federal dollars from the State Small Business Credit Initiative to give small businesses access to new loan funds they can use to invest, expand and create jobs.

In 2012, the nonprofit West Virginia Coalition for Technology-Based Economic Development (TechConnectWV) and Robert C. Byrd Institute (RCBI) for Advanced Flexible Manufacturing introduced StartUp West Virginia -“ Manufacturing. The program awards grants that enable small manufacturers and entrepreneurs to use RCBI’s advanced manufacturing technology center, expertise and equipment to develop their ideas into prototypes. The goal is to turn those ideas into commercial products -” and new high-tech manufacturing jobs.

Pro-growth Taxes
While other states are raising taxes, West Virginia is reducing them.

The business franchise tax is being phased down and will be eliminated altogether in 2015.

The High-Tech Manufacturing Credit assists qualified businesses that manufacture certain computers and peripheral equipment, electronic components or semi-conductors.

The High-Technology Business Property Valuation Act reduces the property tax valuation for equipment and tangible personal property to 5 percent of the original costs and eliminates sales tax for qualified property purchases.

In 2012, West Virginia reduced its Corporate Net Income Tax rate from 8.5 percent to 7.75 percent, saving West Virginia businesses $15 million. Plans call for the rate to drop to 6.5 percent in 2014.

West Virginia efforts to diversify are showing results.

Since 2005, West Virginia has seen $18.3 billion in new business investments.

In 2011, West Virginia led the nation in export growth. Our rate of 39.5 percent outpaced the United States’ export growth rate of 15.8 percent. While coal led the list of top exports, the other categories reflect the state’s variety of products: plastics, machinery, optical/medical products, organic chemicals, aerospace components, automotive components, organic cleaning preparations and aluminum.

Protea Biosciences was launched in West Virginia in 2001. In 2012, the international life sciences journal The Scientist announced its selection of Protea to receive its Top 10 Innovative Technologies award for 2011. Protea earned the award for its Laser Ablation Electrospray Ionization (LAESI) technology, described as the world’s first technology that allows real-time molecular imaging.

Both Macy’s and Amazon.com chose West Virginia for their fulfillment operations. Macy’s is nearing the completion of its $150 million fulfillment center in Berkeley County. In 2011, Amazon expanded its footprint in the state with a new 70,000-square-foot customer service center in Huntington.

The state’s automotive community has grown dramatically since Toyota’s plant opened its doors in Putnam County in 1996. In March 2012, Toyota announced it would invest $45 million to boost production and create 80 new jobs at the West Virginia facility. The expansion, expected to be completed by July 2013, will increase employment at the West Virginia plant to 1,200 and Toyota’s total investment to $1.3 billion.

Today, West Virginia’s automotive industry includes Hino Motors Manufacturing U.S.A, Diamond Electric, Nippon Thermostat of America, NGK Spark Plugs, Allevard Sogefi U.S.A., KS of West Virginia and STaSIS Engineering.

West Virginia has made dramatic progress over the years. Our current accomplishments give cause to celebrate, but not to rest. West Virginia’s leaders in business, government and education will continue to work in partnership to develop our state’s diverse talents and expand the roles we play on the world’s economic stage.

West Virginia Gov. Earl Ray Tomblin can be reached via www.wv.gov/ or at www.governor.wv.gov/Pages/default.aspx.

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Richard Blanchard
Rick is the Managing Editor of Corp! magazine. He has worked in reporting and editing roles at the Port Huron Times Herald, Lansing State Journal and The Detroit News, where he was most recently assistant business editor. A native of Michigan, Richard also worked in Washington state as a reporter, photographer and editor at the Anacortes American. He received a bachelor of arts from the University of Michigan and a master’s in accountancy from the University of Phoenix.