#1WEST VIRGINIA FORWARD West Virginia Forward: Summary of Findings September 27, 2017#2We are focused on understanding West Virginia's strengths and opportunities and identifying initiatives that will provide the collaboration to achieve both short- and long-term success in revitalizing the economy, creating jobs and priming the state for success in our changing economic and technological landscape.#3ECONOMIC SECTORS & ECONOMIC ENABLERS WV economic development Diversify economic sectors Maintain current industries Differentiate in growing sectors where WV has a presence Capture new sectors that have high growth prospects / Aerospace MRO Auto parts manufacturing / Metals manufacturing / Carbon fiber reinforced plastics / Fine chemicals / Higher-end tourism / Cyber security and cloud services / Fulfillment distribution / Building products Keep an eye on potential opportunities / Life sciences / Vehicle assembly plants Business climate / Ease of doing business / Cost of doing business / Regulatory environment Improve performance on economic enablers Innovation and business development Infrastructure Human capital / Quality of life Attract businesses Support small-businesses / Foster development of new businesses / Transportation / Broadband / Sites / Talent pool Workforce participation / Talent attraction / Utilities to infrastructure / Population health#4West Virginia's Value Propositions WV OH PA MD VA KY Employee turnover 8.8% 9.3% 9.5% 9.5% 10.8% 9.9% Home ownership 74.2% 66.4% 67.7% 65.6% 66.4% 69.6% Earnings per hour $21 $23 $24 $27 $26 $21 Cost of living (% of national average) 95.7% 93% 102.8% 125% 100.2% 95.7% Cost of doing business (% of national average) 93% 97% 101% 105% 101% 94% Business tax climate 18 45 24 42 33 34#5Economic Enablers: Summary of Findings Outperform peers On par with peers Underperform peers Enablers: Dimensions: Diagnostic: Cost of Doing Business / Top 15 states for cost of doing business, but energy costs are rising Business Climate Innovation and Business Development Regulatory Environment Quality of Life Starting new businesses Growing Existing Businesses Attracting Businesses Transport Infrastructure IT / 18th on State Business Tax Climate Index, ahead of peers / Has taken measures to improve legal climate / Ranks last in quality of life / Business exits higher than startups, ranking #49 on business birth rate and #47 on patent creation / Fewer small business innovation research awards ($20 per $1M of GDP), lesser seed/angel funding / Limited discretionary funds available to close deals / #43 on bridge quality, and #37 on road quality / Bottom ten on access to broadband, with internet backbone missing WV entirely / Opportunity to certify more sites for business attraction Potential opportunity to consider: / Rebrand WV's strengths in business climate / Establish action plan to combat rising utility costs / Ease administration of TPP / Convene innovation actors in the State and increase support to growing startups / Enhance small business support resources / Change mix of incentive types / Expand development office investment attraction capabilities / Create financing mechanisms to fund capital projects / Launch site certification program / Expand broadband coverage Human Capital Sites Foster Talent Pipeline Improve Health and Skills of Workforce Attract Talend from outside WV / Fewer STEM and college grads than all peers (14% and 20% respectively) / Net population loss of ~5K/year / Declining labor force participation (ranks worse in women and disabled people participation vs. peers) / Create concerted statewide human capital effort / Expand STEM talent pool / Encourage returning/relocating to West Virginia / Combat the opioid crisis / Train workforce in jobs that are high in demand#6Economic Sectors: Implementation: Action items can be broken down into six initiatives Business attraction Human capital strategy Local business support Innovation leadership Sector diversification Carbon fiber reinforced plastics (CFRP) Commercialize infrastructure IP Become a CFRP recycling hub Fine chemicals Attract producers directly downstream of existing production Invest in upstream and downstream connections Higher-end tourism Cybersecurity Attract higher spend adventurers Expand second homes market in the eastern part of the state Attract higher income retirees Economic Enablers: Infrastructure investment Rebrand WV's business climate Establish action plan to combat rising utility costs Business climate Ease administration of TPP Innovation business development Set up an innovation council Launch enhanced small business support program Change mix of incentive types Expand role of development office Infrastructure Create a financing mechanism/s for capital projects Launch site certification and outreach program Build middle mile network Attract anchor companies and progressively expand to other segments Invest in cybersecurity talent Create enabling innovation environment Human capital Integrate existing human capital efforts across state Expand STEM talent pool Increase workforce participation Encourage returning/relocating to West Virginia Combat the opioid crisis Train workforce in jobs that are high in demand#7Topography Limits Availability of Large Sites Subtypes: Industrial: Business Park Industrial: Business Park, Vacant Land Industrial: Business Park Industrial: Business Park, Industrial: Manufacturing Industrial: Business Park, Vacant Land Vacant Land Max Size ○ <25 ○ 25-50 8 О 50-100 100-200 >200#8WV DOES NOT CERTIFY SITES AND COULD LEARN FROM PEER STATES What is a certified site? / A certified site is a development-ready industrial site that has completed a rigorous review process by the State and an independent, third-party engineering firm / Specific site details, such as zoning restrictions, title work, environmental studies, soil analysis and surveys, are assessed for compliance and authenticity BUILD-READY JobsOhio APPROVED MCCALLUM CERTIFIED SITE Best practice example - OH / WV's peers (OH, KY, etc.) have certified sites available to speed up development / OH launched SiteOhio to help companies find the best location in OH / SiteOhio puts properties through comprehensive review and analysis / OH shows a site is ready for immediate development with all utilities, adequate capacities, and all due diligence studies / OH also ensures the site is free of incompatible uses, with no limitations or insurance liability based on surrounding property#9WV has a strong value proposition to offer to IT services operations Key WV Assets: Value Proposition: Labor force Affordability / Low turnover rate (8.8% vs. 10.3% average) / High rate of home ownership / Significant cost advantages over most of the US / Dedicated, skilled and low-cost workforce; right to work state / Near major IT hubs and the federal government in COOP compliant geography / Ease and low cost of doing business / Low cost of living (14% below average) / Low cost of doing business (7th best in US) / Low operating costs Location & transportation / Easy access from D.C. and Pittsburgh / Safe distance from key federal sites Favorable policies / Ranked higher than any neighboring state (21st) on State Business Tax Climate Index / Has decreased business tax burden by more than $660 million in the last eight years / Provides IT specific incentives eliminating sales tax and reducing property tax#10WV's tourist population is under-indexed on upper & middle class tourists & older tourists There is an opportunity for West Virginia to capture higher-income tourists¹ West Virginia can also slightly increase visits from older tourists 52 40 32 38 WV US Average 16 22 Low-income Middle-income High-income 13 11 61 57 WV US Average 28 28 <24 24-55 >55 30#11THREE STRATEGIES FOR WV TOURISM Capture more tourism spend: Regional strategy keeps WV brand with diversified offerings. 1 2 3 Expand adventure options in the southern region Attract second home buyers in the eastern region Attract higher-income retirees in the north 1 V 3 2#12IMPLEMENTATION STRUCTURE / MOU between WVU, the Commerce Department and Marshall University / Will create a structure of accountability / Engage stakeholders / Steering committee / Implementation working groups#13IMPLEMENTATION WORKING GROUPS / Energy / Business Climate / Human Capital / Entrepreneurship#14CONCLUSION West Virginia Forward has formulated a strategic plan to diversify West Virginia's economy by indentifying growing sectors the State could move to capture, as well as highlighting areas of strength and providing insight into how to address opportunities for improvement across economic enablers. Effective implementation will be key to success.#15QUESTIONS?