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Economic Development in Virginia’s Coalfields Region Is a ‘Little Like Fishing’

Sykes Enterprises, Inc., a company that provides businesses with outsourcing support, has a facility in a technology park in Wise County, Virginia.

Sykes Enterprises, Inc., a company that provides businesses with outsourcing support, has a facility in a technology park in Wise County, Virginia. Bill Lucia / Route Fifty

 

Connecting state and local government leaders

“The economic situation didn’t happen overnight and it’s not going to be cured overnight,” according to Carl Snodgrass, an economic development official in Wise County.

WISE, Va. — Carl Snodgrass takes a long view when it comes to economic development here in the coalfields region of southwest Virginia.

“It’s a little like fishing,” Snodgrass said. “It takes time, the results are unpredictable and it doesn't help any to get impatient.”

Snodgrass, 80, is executive director of the Wise County Industrial Development Authority and has been working on economic development issues in the area for about 25 years.

Carl Snodgrass, executive director of the Wise County Industrial Development Authority, stands in front of the Inn at Wise, in Wise, Virginia. (Photo by Bill Lucia / Route Fifty)

Over the course of several hours speaking to Route Fifty on an afternoon in late March, Snodgrass offered his perspective on the persistent effort and incremental progress that have been involved in attempts to boost the economy here as the coal sector has eroded.

Snodgrass did not delve into national politics. But he discussed his work at a time when President Trump has promised to spur job growth in America, particularly in places that have experienced industrial declines—which have in some cases persisted for decades.

Trump has also proposed cuts to federal programs small and rural communities like Wise County have tapped for assistance. The Appalachian Regional Commission and a U.S. Department of Agriculture water and wastewater loan and grant program are two examples.

'Take Advantage of What Assets You Have'

The city of Wise serves as the county seat for Wise County, which has about 39,000 residents and is situated roughly 280 miles west of Richmond on Virginia’s border with Kentucky.

Coal mining was a longtime engine for the local economy here.

A U.S. Energy Information Administration report from last year showed 16 coal mines remained in the county during 2015. The comparable report for 2001 showed 65. And local mining jobs had withered to around 560 in 2015, down from around 2,200 in 2001, according to U.S. Bureau of Labor Statistics figures.


This chart shows the total number of employees in Wise County, and the number in the mining sector, excluding oil and gas-related jobs. (Source: U.S. Bureau of Labor Statistics, Chart: Bill Lucia, Route Fifty)

The county’s non-seasonally-adjusted unemployment rate in February was 7.7 percent, higher than the 4.9 percent national rate at that time, but down from a 11.4 percent peak in 2013.

"The economic situation didn’t happen overnight and it’s not going to be cured overnight," Snodgrass said.

He said coal had a heyday in Wise County in the early to mid-1970s. “Everybody in the business did really well.”

There’s always a hope the industry will rebound, he said. But with global market forces and competition from natural gas that is far from guaranteed—in spite of the Trump administration’s moves to roll back regulations on coal mining and power plants.

While the next economic chapter for Wise County is unclear, there have been some notable developments in recent months and years.

Businesses involved in the aerial drone sector have demonstrated an interest in Wise County as a place where they can test and work with their aircraft. And a local community college has developed a curriculum to train workers for jobs that arise in this field.

A faded bumper sticker on a pickup truck in Wise County, Virginia reads: “Ban Mining Let the Bastards Freeze in the Dark” (Photo by Bill Lucia / Route Fifty)

The county has also attracted a $65 million data center project designed to meet stringent federal security guidelines to the Lonesome Pine Regional Business and Technology Park. Operated by a company called DP Facilities, Inc., the plan is for the facility, known as Mineral Gap, to serve government agencies and commercial clients.

Laying the groundwork to get the data center to locate in Wise County took about seven years and involved upgrades to electricity and broadband infrastructure, which were covered with private dollars.

The industrial development authority provided free land for the facility.

As Snodgrass notes, the county is outside the “blast zone” that would be affected in a catastrophic attack on the nation’s capital—a potential selling point for firms that specialize in protecting critical information.

“You take advantage of what assets you have,” Snodgrass said.

Wise County bills itself as “The Safest Place on Earth.”

'Kind of Like Taking Baby Steps'

Data centers, which house computer equipment, tend to not employ many people. Mineral Gap is expected to hire for about 40 new positions over the next three years.

But the new facility in Wise County has given a boost to the local tax base, Snodgrass said. As did a power plant near the town of St. Paul that burns coal and up to 20 percent biomass for fuel. The plant came online in 2012 despite opposition from environmental groups.

The Virginia City Hybrid Energy Center near St. Paul, Virginia burns coal and up to 20 percent biomass. (Photo by Bill Lucia / Route Fifty)

The roughly 425-acre technology park where the new data center will be located is owned by the industrial development authority—part of the $43.9 million in total assets the agency had in June 2016, according to an audit report. Much of that amount consists of buildings and land.

Wise County is situated among steep mountains and hillsides. The relatively flat ground where the technology park is located sits atop a former mining site.

Near the data center are two customer service centers—similar to call centers. One is for Frontier Secure, a subsidiary of the telecommunications company Frontier Communications Corp. The other is for Sykes Enterprises, Inc., a company that provides businesses with outsourcing support.

Sykes has been there about 16 years and during that time has had an average of around 400 employees, according to Snodgrass. Frontier, he said, has close to 300 workers currently and is supposed to ramp up hiring until they hit about 480, over the course of about three years.

The building at the technology park that Frontier now occupies was empty for about 14 years before the company moved in during 2016. “Nice to see all those vehicles in the parking lot,” Snodgrass said, referring to the cars parked in front of the building as he drove past.

The Frontier Secure service center at the Lonesome Pine Regional Business and Technology Park park near Wise, Virginia. (Photo by Bill Lucia / Route Fifty)

Jobs with Frontier Secure in Wise County pay on average about $35,000 per year with benefits, according to Snodgrass. A local news report from WCYB-TV last year said entry level pay was about $12 per hour. According to the U.S. Bureau of Labor Statistics, average annual coal mining pay in 2014 in Wise County was reported as $66,266.

Finding new jobs that pay on par with what miners could earn, Snodgrass said, is a tall order.

“There’s no way that I can envision that we can replace jobs that pay that kind of money in this current economy,” he said, describing the newer jobs as “kind of like taking baby steps.”

The Frontier Secure project received access to a variety of state incentives.

For example, the Virginia Coalfield Economic Development Authority approved a $5.6 million loan to the Wise County Industrial Development Authority to help cover building improvements. The coalfield economic development authority receives a portion of revenues from state taxes levied on the extraction of coal.

And the Virginia Tobacco Region Revitalization Commission approved $2 million in grant funds to pay for computer equipment, which is now being leased back to Frontier Secure.

Asked about the potential criticism of using government money to help support the project, Snodgrass replied: “We couldn’t have done it without the help.” He added that he believed the increase in the local tax base and employment gains were enough to justify the costs.

'Disappointments Are Far Greater Than the Rewards'

About three miles away from the technology park is the University of Virginia’s College at Wise. The four-year liberal arts college with about 2,000 students touts that it offers the only undergraduate software engineering program in the state.

Last year, the Appalachian Regional Commission, a federal agency that works on economic development in parts of 13 states, awarded roughly $1.4 million for a cybersecurity education initiative that involves the University of Virginia’s College at Wise and two other area colleges.

The Appalachian Regional Commission also awarded a $2.2 million federal grant last year to help expand the aerial drone course curriculum at Mountain Empire Community College, located in Big Stone Gap, another town in Wise County.

Trump in his budget proposal last month called for eliminating the ARC.

In downtown Wise, on East Main Street, across from the county courthouse, is a hotel called The Inn at Wise. The building features colonial revival style architecture and is about a century old. Pillars and a second-floor balcony frame the front entrance.

Buildings on East Main Street in downtown Wise, Virginia (Photo by Bill Lucia / Route Fifty)

Snodgrass worked there part-time when he was in high school, taking care of bellboy and front desk duties. In the early days of his professional career, he took a job at a bank across the street. His father was a coal miner, but did not pressure him to go into the industry.

The hotel had been shuttered for about 20 years and “the pigeons had kind of taken over,” according to Snodgrass.

“It was a dilapidated building right in the heart of Wise,” he said. The industrial development authority spent around $13 million to acquire, renovate and, in 2014, reopen the hotel. The total amount spent on the project exceeded early cost estimates by several million dollars.

Snodgrass acknowledged that visitors have not flocked to the hotel, but said “it’s regaining a reputation.”

Looking ahead, he said expanding agriculture in the region could be a possibility.

Historically, fruits such as apples were grown here. Orchards were cleared to make way for mines. Some of the soil left behind on former mine lands is unsuitable for growing crops. But vines for wine-making grapes have shown promise in certain areas.

Snodgrass expects that the county will attract more data centers in the coming years, and that the upgraded utility and broadband connections could help with this. He also sees manufacturing opportunities tied to aerial drones and points out that some former mining industry workers have completed retraining programs for professions like air-conditioning system repair.

A key goal for the industrial development authority, he said, is diversification.

How far ventures like data centers and farming might go toward establishing a new foundation for the local economy remains to be seen. In his line of work, Snodgrass said typically “the disappointments are far greater than the rewards, but you have to persevere.”

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Bill Lucia is a Senior Reporter with Government Executive’s Route Fifty and is based in Washington, D.C.

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