2019 Region 3 Growth & Diversification Plan Update

This report is an update to the original Growth and Diversification Plan (Growth Plan) adopted by Region 3 in August 2017. The 2019 update follows the Growth and Diversification Plan 2019 Amendment Guidelines to comply with the Growth and Opportunity Act of 2016, which requires regional plans to be updated at least every two years.

Under the guidance of the Region 3 Growth & Diversification Plan Committee, the updated plan seeks to build on learned experience from implementation of the 2017 Growth Plan, with an emphasis on understanding the context in which GO Virginia is carried out in Region 3. The result is a framework that establishes strategies that are easily understood and can be measured.

What We Accomplished:

The learned experience of the last two years includes the project investments that are discussed in more detail in the Investment Strategy section of this Report:

  • 3 projects totaling nearly $6 million in approved GO Virginia funding
  • Leveraging over $7 million in non-state, private and philanthropic funding.
  • These investments will result in:
    • 1) a new innovation hub in the southern tier of the region that introduces and trains entrepreneurs, small businesses, existing manufacturers, and individuals on new technology platforms that increase productivity and lead to high-paying jobs; and
    • 2) a robust pipeline of talent that is certified and ready to be employed in occupations in the region’s target sectors. The estimated return on investment over 5 years for the GO-TEC project that will be the Region 3 platform for developing the talent, is projected to exceed a 1.4:1 ratio, producing over $9 million in new state revenue.

In addition, the regional council generated cross-region communication that has resulted in scale-ups of businesses, as well as sharing of best practices. To do this, the regional council personally engaged over 250 local and regional stakeholders through a variety of methods. It sponsored 4 all-hands meetings, held 4 webinars and dozens of stakeholder conference calls, and created 7 working advisory committees. The council launched a website and social media presence, produced a library of videos and photographs, gave multiple presentations to civic organizations, hosted a number of state agency partners at its council meetings, and conducted two deep dive analyses in the areas of high value wood products and of apprenticeship and work-based learning. It also began to connect its innovation resources and assets more formally.

What We Learned:

What was learned from all these successful launch steps is that Region 3’s assets and people are truly stewards and leaders that form a solid basis for continuing to build a strong regional economy. The challenge, as with any large organization, is sustainability to ensure full engagement and continuing focus on the priority goals.

What has also been learned during the course of developing this update relates to the context in which any Regional economy and organization operates, and the impact of that context to the success (or barrier) to any regional strategies. As highlighted in the section entitled “Alignment with State and Private Initiatives” there are no less than a dozen ongoing evaluations, initiatives, and strategies being led by partners outside of Region 3. The majority of these efforts will likely have some impact to Region 3. As a result, the council should reassess this 2019 update when these external evaluations are finalized and determine how the reports, findings and recommendations impact Region 3.

Where We’ll Go:

The Growth and Opportunity Act of 2016 requires regional plans to be updated at least every two years. Based on an empirical analysis produced by Mangum Economics and with the substantial input from a variety of informed stakeholders with expertise and knowledge about the economy in Region 3, the forward looking strategy recommendations are intended to provide guidance to the Region 3 Council on how to most impactfully use its limited resources and its substantial intellectual leadership, as it continues to build on its successes from 2017 and yet, adapt to changing market conditions that affect rural America. Forward-looking strategic recommendations include economic and operational actions.

Fundamentally, both the data and the stakeholders told us that:

  • The Region 3 economy overall is stable. Perhaps attributable to stronger national economic conditions, there were some concerns raised about national policies related to trade. No major shifts in the economy in the last two years were noted; to some this is evidence of stability; to others it is a red flag for concern that the region is not keeping pace with its counterparts in rural America. Furthermore, the numerous unique physical assets that are currently underleveraged could, if fully developed, be regionally impactful job centers that stimulate the economy powerfully to complement ongoing incremental job creation. These assets included the facilities like the Foreign Affairs Security Training Center in Blackstone, Microsoft’s data center in Mecklenburg County, the Virginia International Raceway in Halifax County, the Olde Dominion Agricultural Complex in Pittsylvania County, the vacant hospital facilities in South Boston and in Patrick County, the former DuPont Complex in Henry County, St. Paul’s College in Brunswick County, and others.
  • Talent supply, development and recruitment remains a priority. As evidenced in the Mangum Economic report, shortages in middle-skilled talent remain challenging for employers. Soft skills were cited by stakeholder as another weakness. GO-TEC is not yet a recognized brand – stakeholders generally indicated some awareness of it – but its outcomes have not yet begun to be felt in the Region and its brand has not yet become recognized by stakeholders. These impacts are expected over the next 2-5 years.
  • Lack of broadband remains a barrier to business formation, expansion and attraction and to talent development and recruitment in the region. From entrepreneurs to small businesses to major manufacturers to health care to education, the lack of ubiquitous coverage at acceptable speeds and costs is a barrier to the economy’s ability to fully grow.
  • Publicly controlled and prepared industrial real estate is acceptable, even competitive, for a region of this size. However, the impact of sub-region variations of this prepared real estate product is evidenced through the numbers and quality of business development prospects being referred to the region as well as visiting the region. Additionally, there is a no formal assessment about the quantity and quality of prepared inventory for small-to-medium businesses and entrepreneurs that could support the creation of higher-paying tech jobs and the redevelopment of vacant buildings in the smaller towns of the region.
  • Opportunity exists in the entrepreneurial space (see the TEConomy report), but, without a cohesive strategy and the promotion of support resources, this space’s success is limited to defined geographic pockets. TEConomy’s data indicates that there is a strong concentration of start-up activity in the agriculture, natural resource, manufacturing, and health care sectors in Region 3. Particularly notable among the young professional stakeholders is the willingness to launch businesses, coupled with frustration about lack of support systems and in some cases, policy barriers to business formation.
  • Data supports that the original strategic sectors defined in the 2017 Growth & Diversification Plan remain appropriate. Despite the GO Virginia State Board determination that the health care field is not a traded sector and therefore not appropriate for GO Virginia funding, there is good data and strong stakeholder support in Region 3 to maintain the health care sector as important to the regional economy, particularly related to the use of technology in this field. There is also interest in focusing on the opportunities for value-added production opportunities for natural resource products including wood products and hemp. Input also indicated a desire to think toward the future for business sectors that may align, but not yet be fully researched to validate regional capacity for growth, such as unmanned systems. The 2019 plan update incorporates these sectors.

There are 29 strategies and measures identified in the Investment Priorities and Areas of Critical Needs, categorized in each section of this report. A summary of all strategies and measures can be found in the appendix entitled Summary Recommendations. Successfully investing in projects that align with these strategies will, over time, lead to the ultimate goal of higher job creation through business formation, scale-up, and attraction.

Region 3 is a large geographic area with limited communication channels flowing east to west or west to east. In 2017, stakeholders told us that they did not know what was going on in other parts of the region. In 2019, stakeholders told us that they were beginning to learn what was happening in other parts of the region and they wanted to know more.

The strategies will continue to foster communication, cooperation, and collaboration among all areas of the region. The council has made great strides over the first 2-3 years, and the real impact lies ahead as workforce pipelines are filled and as the entrepreneurship center comes online. The Region 3 Council is eager and prepared to move forward.

Read more about the Region 3 Growth and Diversification Plan here.