Sources of Regional Growth in Non-Metro Appalachia 

Vol. 2. Case Studies of Local Economic 

Development Growth Processes 

Prepared for the Appalachian Regional Commission 

Prepared by: 

Economic Development Research Group, Inc. 

 Regional Technology Strategies, Inc. 

Revised 2007 
 
Vol.2 Case Studies of Economic Growth Processes 

SOURCES OF GROWTH PROJECT

The Sources of Growth project is part of a series of research efforts funded by the Appalachian 

Regional Commission to improve our understanding of factors affecting economic growth in 

rural and distressed areas. As stated in the Volume 1 Introduction, “the starting premise of 

this project is to go beyond the theory of comparative advantage to understand more 

concretely the multiple paths that an area can pursue in successfully enhancing job and income 

creation, and the effects of spatial linkages among communities in shaping these options. It is 

in this context that one can understand how communities may build on natural resources, 

cultural resources, human resources, local amenities, institutional facilities or location 

advantages. Furthermore, certain developmental path dependencies may shape the direction of 

economic growth may involve manufacturing or supply chain development, resource 

extraction or tourism development, educational development or trade center development.” 

This research is intended to provide a basis of information that can ultimately be useful for 

enhancing the effectiveness of policies and tools aimed at improving the region’s economic 

development. 

This is Volume 2 in a series of reports prepared as part of this project: 

• Executive Summary –synthesis of findings from all work products related to the 

study’s four main research components. 

• Volume 1, Project Background and Prior Research on Economic Growth Paths – 

study objectives, characteristics of non-metro Appalachian counties, classification of 

economic development growth paths, and a synopsis of white paper findings on theory

relating to economic development growth paths. 

• Volume 2, Case Studies of Local Economic Development Growth Processes –

findings related to growth paths as observed for selected case studies covering 

manufacturing industry specialization clusters, supply chain-based development,

tourism-based development, advanced technology development, and diversification 

from resource-based economies. 

• Volume 3, Empirical Studies of Spatial Economic Relationships – findings from a 

series of econometric modeling and GIS-based analyses, focusing on roles of spatial 

adjacency, market access and transportation in determining economic growth and 

development of trade centers. 

• Volume 4, Tools for Economic Development & Study Conclusions – description of 

new and updated tools available to ARC and its Local Development Districts to assess 

economic development opportunities and potential directions for economic growth. 

• Appendices – (A) Spatial Analysis of Economic Health, (B) Economic Analysis of 

Hub-Spoke Relationships, (C) White Papers on Economic Growth Theories, (D) 

Literature Review of Empirical Studies on Spatial Influences in Economic 

Development.

Sources of Growth in Non-Metro Appalachia 
Vol.2 Case Studies of Economic Growth Processes 

TABLE OF CONTENTS

ACKNOWLEDGEMENTS i 

1 INTRODUCTION..........................................................................................................................1

2 SCIOTO COUNTY, OH: REBUILDING AN ECONOMIC ENGINE.......................................5

2.1 INTRODUCTION........................................................................................................................5

2.2 REGIONAL PROFILE .................................................................................................................5

2.3 EVOLUTION OF PROGRESS .....................................................................................................10

2.4 CATALYSTS OF CHANGE........................................................................................................13

2.5 LESSONS LEARNED................................................................................................................18

2.6 INTERVIEWEES ......................................................................................................................19

3 CHAUTAUQUA COUNTY, NY: MANUFACTURING DIVERSIFICATION.......................21

3.1 INTRODUCTION......................................................................................................................21

3.2 REGIONAL PROFILE ...............................................................................................................21

3.3 EVOLUTION OF PROGRESS .....................................................................................................24

3.4 CATALYSTS OF CHANGE........................................................................................................33

3.5 LESSONS LEARNED................................................................................................................40

3.6 INTERVIEWEES ......................................................................................................................41

4 PIKE COUNTY, KY: EVOLUTION AS A TRADE CENTER..................................................43

4.1 INTRODUCTION......................................................................................................................43

4.2 REGIONAL PROFILE ...............................................................................................................43

4.3 EVOLUTION OF PROGRESS .....................................................................................................48

4.4 CATALYSTS OF CHANGE........................................................................................................53

4.5 LESSONS LEARNED................................................................................................................56

4.6 INTERVIEWEES ......................................................................................................................58

5 MARION & MONONGALIA CO, WV: HIGH-TECH INITIATIVE.....................................59

5.1 INTRODUCTION......................................................................................................................59

5.2 REGIONAL PROFILE ...............................................................................................................59

5.3 EVOLUTION OF PROGRESS .....................................................................................................67

5.4 CATALYSTS OF CHANGE........................................................................................................71

5.5 LESSONS LEARNED................................................................................................................72

5.6 INTERVIEWEES ......................................................................................................................73

6 SOUTHEAST TN & SOUTHWEST NC: RE-TOOLING ASSET-BASED GROWTH...........74

6.1 INTRODUCTION......................................................................................................................74

6.2 REGIONAL PROFILE ...............................................................................................................75

6.3 EVOLUTION OF PROGRESS .....................................................................................................80

6.4 CATALYSTS OF CHANGE........................................................................................................83

6.5 LESSONS LEARNED................................................................................................................88

6.6 INTERVIEWEES ......................................................................................................................89

7 ALABAMA: AUTO ALLEY ........................................................................................................91

7.1 INTRODUCTION......................................................................................................................91

7.2 REGIONAL PROFILE ...............................................................................................................91

7.3 EVOLUTION OF PROGRESS .....................................................................................................93

7.4 CATALYSTS OF CHANGE ........................................................................................................94

7.5 LESSONS LEARNED ................................................................................................................96

7.6 INTERVIEWEES ....................................................................................................................100

Sources of Growth in Non-Metro Appalachia 
Vol.2 Case Studies of Economic Growth Processes 

8.0 CONCLUSIONS – STRENGTH OF GROWTH PROCESSES..............................................101

Sources of Growth in Non-Metro Appalachia 
Vol.2 Case Studies of Economic Growth Processes 

ACKNOWLEDGEMENTS

This volume was authored by Economic Development Research Group, Inc. (EDRG) and 

Regional Technology Strategies, Inc. (RTS). EDRG directed the overall research study and 

edited final documents. Staff of EDRG and RTS each developed half of the case studies. 

Altogether, the Sources of Growth project involved a team of researchers including: 

• Economic Development Research Group, Inc. (EDRG) – Lisa Petraglia (Project 

Director), Glen Weisbrod and Teresa Lynch, with research support from Tyler 

Comings and Brett Piercy; 

• Regional Technology Strategies, Inc. (RTS) –Stuart Rosenfeld, Phil Psilos and Dan 

Broun; 

• Massachusetts Institute of Technology, Department of Urban Studies & Planning 

(MIT-DUSP) – Prof. Karen R. Polenske, Prof. Joseph Ferreira, Jr., Ayman Ismail and 

Li Xin, with research support from Tan Zhijun, and Isabelle Yi Xu.

The project also benefited from the expertise of outside policy and research experts who 

reviewed various project documents, participated in meetings and provided technical 

guidance: Deb Markley (Co-Director of the Center for Rural Entrepreneurship, a Rural Policy 

Research Institute), Joseph Cortwright (Vice-President of Impresa Consulting), Ken Poole 

(Executive Director of ACCRA: The Council for Community and Economic Research), David 

Freshwater (Professor of Agricultural Economics and Public Policy at the University of 

Kentucky), David McGranahan and Luc Anselin (Professor. Dept. of Agriculture & Consumer

Affairs and Regional Economics Applications Laboratory at the University of Illinois, 

Urbana- Champaign). 

Overall project direction and oversight was provided by Dr. Greg Bischak of the Appalachian 

Regional Commission, whose wide range of research experience served to focus the project 

team on the development of policy applications. Important insight and suggestions were also 

provided by officials of the Appalachian Regional Commission who participated in a day-long 

symposium with the project team, including Thomas Hunter (executive director of ARC, Ann 

Pope (federal co-chair of ARC) and Rick Peltz (alternate federal co-chair). In addition, Ken 

Wester and Jason Wang of ARC assisted the project team in collecting and assembling 

transportation and geographic data. 

Finally, the project team acknowledges the important role of prior ARC-funded research 

studies by Andrew Isserman, Ed Feser and Oleg Smirnov that provided a foundation for the 

work in Volume 3 this project to build upon. 

Sources of Growth in Non-Metro Appalachia page i
Vol.2 Case Studies of Economic Growth Processes Introduction 

INTRODUCTION

e

l context and history of economic development in these 

reas, in order to illuminate the processes of economic growth and change that have

to

hile also testing the

sefulness of economic statistics and spatial linkages in illuminating the economic 

outh,

in

ow a

reviously resource dependent, which has seen its prospects diminish, made the 

priorities for case study definition and development, 

ree specific outcomes from prior analysis studies were considered in identifying 

pot ti

•

ith “spoke”

potential. Case studies could illuminate how some of these areas have actually 

• e-series comparison (1960 & 2005) of Appalachia’s 

distressed counties, case studies focus on actions taken that helped some areas 

•

economic development efforts have 

affected the extension of -chain and knowledge-based development processes 

he following six locations represent the final selection for undertaking case study 

garding sources of growth:

1

Overview. This volume presents six case studies of local economic development in 

Appalachia. The study areas range from single counties to multi-county regions. Th

case studies document the loca

a

been and are occurring there. 

All of the case studies focus on non-metro parts of Appalachia. They were selected

a range of locations and a range of economic growth paths, w

u

development situations actually occurring across the region. 

Selection of Case Study Locations. Since the Appalachian region spans north, s

and central locations in the US it was desirable to have case study representation

each of these three major regions. Also of interest would be to examine h

p

transition to reorient their economy (such as leveraging cultural assets). 

In addition to these two general

th

en al case study locations:

Based on their analysis of trade centers and “hub-spoke” economic 

relationships between counties, Smirnov-Smirnova (2000) identified a sereies 

of Appalachian counties with “hub” potential and others w

been performing as trade center hubs or feeders to them. 

Based on ARC’s recent tim

transition out of distress.

Based on successful bids of two southern states to attract auto assembly plants,

community stakeholders examine how

into non-metro Appalachian counties. 

T

re

Sources of Growth in Non-Metro Appalachia page 1 
Vol.2 Case Studies of Economic Growth Processes Introduction 

• Scioto County, OH has been at the center of a ring of distress. It exhibits a 

services-oriented type of economy. While N-S highway improvements along 

US 23 have helped improve access to E-W traffic along US 50, the lack of an

interstate has hampered Scioto development and the county has been slow to 

advance into the possible trade center (hub) role that Smirnov’s analysis (2000) 

•

identified. The case study diagnoses the inertia and uncovers small positive 

steps now underway. 

Chautauqua County, NY has been maintaining its transitional status despite 

continued adverse forces tied to structural adjustments around U.S. 

manufacturing. Now attraction of jobs in transportation equipment 

manufacturing is serving to anchor the regional economy along with impetus 

ttempts to 

•

of HUD Renewal Community status, various enterprise zones, and a

diversify/foster entrepreneurial development around tourism.

Pike County, KY is the eastern-most county of a five county Local 

Development District that sits adjacent to the WV border. Pike County has

managed to move from distressed to transitional status since 2003. However 

the four remaining counties in this mining-dependent LDD area have not faired

the same. The case study explores reasons for Pike’s gradual success, the 

•

stalled spillover to its neighboring counties and transferable lessons to other 

mining-dependent areas of Appalachia. 

Marion & Monongalia Counties, WV represent contrasts; Monongalia (hom

to Morgantown) is a metro county, while adjacent Marion County is a 

“micropolitan” area. Marion County had prior mining roots. This case study 

e 

examines the development of a hi-tech initiative in these two counties with 

on and

.

•

emphasis on the role of university-based research and commercializati

the extent to which Marion County is achieving diversification in its economy

SE Tennessee/SW North Carolina are covered by two adjacent Local 

Development Districts that are connected by Appalachian Highway Corridor 

K. The case study traces economic development efforts to develop cultural 

•

and recreation tourism along Corridor K between Chattanooga, TN and 

Asheville, NC. 

Alabama provides a state-level case study that traces how northern Alabama’s 

automotive-related manufacturing activity (initiated by attracting MercedesBenz to Tuscaloosa, followed by auto parts suppliers) is raising the economic 

prospects in Appalachian AL. 

Sources of Growth in Non-Metro Appalachia page 2 
Vol.2 Case Studies of Economic Growth Processes Introduction 

Exhibit 1-1 below itemizes the case study locations, the research focus for each case 

study, its location, its ARC-rated economic status and the extent of urbanization. 

Exhibit 1-1. Attributes of Case Study Areas 

Case Study Area Focus Loc Econ Status 

2005

Type 

1. Scioto County, Ohio Potential economic hub 

(trade center) for services 

N Distressed Micropolitan

2. Chautauqua County, NY Manufacturing cluster 

diversification; Tourism

development

N Transitional Micropolitan

3. E. Kentucky (Big Sandy Area) Shift from mining, Medical

technology; Trade center 

C Distressed Rural

4. Monongalia and Marion, WV Learning-based devel.; 

High tech complex, 

C Transitional Micropolitan

5. SE Tennessee and 

 SW North Carolina 

Recreation-based amenity; 

Trade center 

S Transitional Mixed

6. Alabama Auto Alley Auto industry supply 

chain corridor 

S Mixed Mixed

Collectively, these six case study areas span seven states. There are two case studies 

each in the northern (N), central (C) and southern (S) parts of Appalachia. Two are 

rated as substantially “distressed,” while three are rated as “transitional” and the 

remaining one is a mix of those two classes. All are located primarily outside of 

metropolitan areas, though three feature micropolitan centers, one is completely rural 

and the other two have a mixture of rural and micropolitan settings. 

The focus of these case studies covers all of the growth paths discussed in Volume 1, 

including trade centers, manufacturing and technology clusters (agglomerations), 

learning-based development, amenity-based development and supply chains. In 

addition, each case study addresses different examples of spatial linkages with 

neighboring communities and the role of metro and micropolitan areas. 

Organization of Case Studies. Each case study is structured to present the following: 

1) Introduction – explanation of why the case study was selected and the types of 

growth paths that it illustrates 

2) Profile – brief description of the area’s economy and its economic history: 

Sources of Growth in Non-Metro Appalachia page 3 
Vol.2 Case Studies of Economic Growth Processes Introduction 

• Composition of economy, 

• Special features or assets; 

• Labor markets: commuting, migration and education;

• Educational institutions: public and private schools; colleges, vocational 

training, 

• Entrepreneurship: self-employed, startups, special services. 

3) Evolution of Progress –how regional economy has been changing, related policy 

interventions and the effectiveness of strategies and actual outcomes: 

• History of interventions, basis for economy, changes over time, business 

recruitments and closures, supplier development, 

• Plans and strategies: types of plans and/or visions that were pursued 

• Degree to which any of the place-specific assets have been exploited 

• Resources: previous federal grants, subsidies, local foundations, etc. 

4) Catalysts of Change – the organizational structures and technical changes that 

support collaboration:

• Social capital: civic infrastructure, associations, non-profits, local leadership, 

education, external linkages; 

• Physical infrastructure: transportation, broadband and utility enhancement 

• Politics: strength and interest of state and federal representatives, political 

access, funding and tax policy 

• External factors: globalization, logistics technology advances 

5) Lessons Learned –findings that can be useful for application elsewhere: 

• Flexibility in response to unforeseen changes; 

• Role of key players and institutions in leading change. 

6) Interviewees – credits to business and economic development representatives 

who were interviewed (Note: all findings are interpretations of the report 

authors and not the responsibility of interviewees.) 

 

Sources of Growth in Non-Metro Appalachia page 4 
Vol.2 Case Studies of Economic Growth Processes Scioto County 

: REBUILDING

AN ECONOMIC ENGINE

2 SCIOTO COUNTY, OH

2.1 Introduction 

Scioto County, OH has been at the center of a ring of distress. It exhibits a servicesoriented type of economy. While N-S highway access improvements to US 23 have

mitigated some of the effects of being bypassed by the interstate system Scioto County

has been slow to advance into the possible trade center (hub) role that Smirnov’s 

analysis (2000) identified. The case study diagnoses the inertia and uncovers positive 

steps now underway.

In the last half of the 20th century, Scioto County, Ohio went from being an industrial

powerhouse to a community struggling to meet the challenges of the new economy. 

However, some recent up-ticks in growth suggest that the county is showing s

progress as it adjusts to a new economic reality. Significantly, while neighboring Oh

counties have remained classified as distressed by the Appalachian Regional 

Commission, Scioto recently moved to a transitional designation. In addition, som

spatial analysis suggests that the county could serve as a regional hub for surrounding 

counties, drawing outside consumers to the county for the purchase

igns of

io

e

of goods and

ervices. In addition, Scioto County has moved from a community heavily dependent 

lay a prominent role. 

s

on manufacturing to one in which services p

2.2 Regional Profile 

Setting. Scioto County, population 79,195, sits in the far southern part of Ohio, j

across the river from Kentucky. It is almost equidistant from the large metropolit

areas of Cincinnati and Columbus and about 45 minutes from Huntington, West 

ust

an

irginia, a mid-sized city. The county seat of Scioto is Portsmouth, which, with 

0,909 residents, is also by far the largest city in the county. (See Exhibits 2-1,2,3.) 

V

2

Sources of Growth in Non-Metro Appalachia page 5
Vol.2 Case Studies of Economic Growth Processes Scioto County 

Exhibit 2-1 Scioto's Location Within Ohio 

Source: FedStats. 

Exhibit 2-2. Distance from Scioto County to Surrounding Metropolitan Cities 

Source: Microsoft Streets and Trips 

Sources of Growth in Non-Metro Appalachia page 6
Vol.2 Case Studies of Economic Growth Processes Scioto County 

Population 1970 1980 1990 2000 1970-80 1980-90 1990-2000 1970-2000

Scioto County 76,951 84,545 80,327 79,195 9.9% -5.0% -1.4% 2.9%

State of Ohio 10,652,017 10,495,445 10,847,115 11,353,140 -1.5% 3.4% 4.7% 6.6%

Source: US Census Bureau and EDR Group calculations.

Population % Change

Exhibit 2-3. Scioto County - Detail Map 

The county has been steadily losing population, with a decline of 1.4% between 2000 

and 1990 (Exhibit 2-4). This is in comparison to the rest of Appalachian Ohio, which 

enjoyed a modest population growth of six percent over the same time period. Scioto 

County also has a smaller population than it did in 1950, declining by 4.5% since that 

date. 

The county has been steadily losing population, with a decline of 1.4% between 2000 

and 1990 (Exhibit 2-4). This is in comparison to the rest of Appalachian Ohio, which 

enjoyed a modest population growth of six percent over the same time period. Scioto 

County also has a smaller population than it did in 1950, declining by 4.5% since that 

date. 

Exhibit 2-4. Population Growth, 1970-2000 

Population 1970 1980 1990 2000 1970-80 1980-90 1990-2000 1970-2000

Scioto County 76,951 84,545 80,327 79,195 9.9% -5.0% -1.4% 2.9%

State of Ohio 10,652,017 10,495,445 10,847,115 11,353,140 -1.5% 3.4% 4.7% 6.6%

Source: US Census Bureau and EDR Group calculations.

Population % Change

Economic Overview. The stagnant or negative growth in the county can be directly 

traced to the changing economy of the region. For most of its history, the county was 

dependent on manufacturing. The county, and Portsmouth specifically, were seen as 

attractive places to locate and operate industry. Access to transportation was the 

driving factor in much of the industry location. With a location on the Ohio River, 

industry had easy access to transport their goods and receive important supplies like 

Sources of Growth in Non-Metro Appalachia page 7
Vol.2 Case Studies of Economic Growth Processes Scioto County 

coal. As railroads became more important, the presence of an extensive rail network 

became beneficial for the county. 

Foremost in the development of the county in the first half of the 20th century was the 

steel industry. The community served as a focal point for the industry as Ohio took its 

place as a center of the national steel industry. As the industry declined due to 

globalization and mechanization so did the fortunes of the industry in Scioto County. 

By the early 1980s, the last steel manufacturer had left the county. 

The county’s other manufacturing industries suffered similar fates. For instance, 

Portsmouth had been a focal point for the shoe manufacturing industry in the US. But 

by the 1990s, there were basically no shoe manufacturers left in the US, much less in 

Scioto County. While the county remains the home to Mitchellace Inc., the only 

shoelace manufacturer in the country, the production of actual shoes has long ended. 

The production of bricks also ended leaving the county without a real export driven 

economic base. 

The decline of Scioto County’s manufacturing base is partly due to the fact that the 

particular sectors that the county specialized in were ones most vulnerable nationally. 

The county also suffered from a changing transportation environment. While the 

county once could rely on its prime access to the Ohio River and rail access to 

promote industrial advancement, it began to suffer as the highway became the 

economic driver. As one local resident put it: 

“First there was the river, and Scioto County thrived. Then there was the 

railroad and Scioto County thrived. Then came the interstate and Scioto 

County died.” 

Scioto County does not have an interstate within its borders and while the region’s 

best four lane North-South corridor US 23 has improved access to the East-West route 

of US 50 just north of Scioto, there are still accessibility issues, particularly with the 

bypass being built on the east side of the county. So due to both a general decline in its 

once prominent industries and a changing infrastructure environment, Scioto County 

no longer can be seen as a county whose economy is manufacturing dependent. 

Currently, 7.6 percent of the county’s workforce is employed in manufacturing. 

Instead, in a story similar to most of the country, the areas of economic specialization 

in the county are in the service industries. Exhibit 2-5 shows the percentage of county 

employment in various sectors. 

Sources of Growth in Non-Metro Appalachia page 8
Vol.2 Case Studies of Economic Growth Processes Scioto County 

Exhibit 2-5. Percentage of Scioto County by Sector 

Industry 

Percent of Total 

 Employment 

Government & non NAICs 16.5% 

Food services & drinking places 8.7% 

Ambulatory health care 7.1% 

Admin support services 6.6% 

Hospitals 6.6% 

Construction 6.2%

Nursing & residential care 4.8% 

Social assistance 3.2% 

Professional- scientific & tech svcs 2.5% 

Primary metal mfg 2.3% 

Source: IMPLAN data derived from BEA, 2002. 

The large percentage of Scioto County employment in the health care and social 

assistance sector is borne out in looking more closely at location quotients for the 

county. Examining sectors at a more detailed NAICS code reveals areas in which the 

county appears to have specialization relative to the United States as a whole. Exhibit 

2-6 shows the sectors in the county that have a location quotient greater than 1.2 and 

have more than 500 employees. (Note a location quotient above 1.2 means that the 

industry sector has a representation in the local area that is 20% or more above the 

national average for that industry.) 

Exhibit 2-6. Location Quotients of Scioto County Sectors 

Description 

Number of 

Employees

Location

Quotient 

Primary metal manufacturing 707 7.8 

Nursing & residential care 1,449 2.8 

Hospitals 2,001 2.8

Ambulatory health care 2,162 2.1 

Social assistance 970 1.7 

Food svcs & drinking places 2,653 1.4 

General merch stores 688 1.3 

Admin support svcs 2,013 1.2 

Government & non NAICs 5,022 1.2 

Food & beverage stores 676 1.2 

Source: IMPLAN data derived from BEA, 2002. 

As the above chart shows, with the exception of primary metal manufacturing, Scioto 

County’s comparative strengths lie in retail and services. The concentration of 

employment in such sectors as food services and food stores would suggest that Scioto 

County might serve as a hub for these activities. In addition, health care shows up as 

Sources of Growth in Non-Metro Appalachia page 9
Vol.2 Case Studies of Economic Growth Processes Scioto County 

being an industry in which the local economy has a high concentration. Hospitals, 

nursing and residential care, and ambulatory care all have extremely high location 

quotients. 

The center of Scioto County’s health care industry is Southern Ohio Medical Center 

(SOMC) in Portsmouth. SOMC is the largest medical center in Ohio, south of 

Columbus. It employs 2,100, making it the largest employer in the County. Later in 

this study, we will discuss the role that SOMC plays and could potentially play in the 

growth of the County. 

2.3 Evolution of Progress 

Economic Attainment. One reason for choosing Scioto County as a case study was its 

movement in economic status between ARC’s distressed and transitional categories. 

Exhibit 2-7 shows Scioto’s oscillation in economic status using the ARC categories of 

economic performance. The recent change in status can be attributed to the fact that 

Scioto’s three-year unemployment rate for 2001-2003, while relatively high at 7.8 

percent, was just below the critical ARC distressed threshold of 150 percent of the 

national unemployment rate during the three-year period of measurement. 

Exhibit 2-7. Scioto’s ARC Economic Status 

Period ARC Economic Attainment level

1988-1992 Transitional

1993-2004 Distressed

2005-2006 Transitional

Trade Center (Hub) Status. Another reason for choosing Scioto County as a case 

study was an earlier economic base study by Smirnov and Smirnova (2000), in which 

Scioto County was classified as a “Type 1 County” – one with both “a strong 

economic-base” and “strong local spatial linkages,” suggesting a likely regional trade 

center. That analysis of the industrial mix of the Scioto and surrounding counties 

concluded that residents and business in the more rural surrounding counties could be 

expected to utilize businesses in Scioto County. 

Further analysis, both quantitative and qualitative, indicated that despite the statistical

suggestions that Scioto could serve as a regional hub, the reality is far different. 

Indeed, representatives from the Ohio Regional Development Commission saw 

surrounding counties such as Ross and Pike (both transitional counties) as more the 

regional centers than Scioto, although they believe the county has strong growth 

potential. Community leaders within Scioto also doubted the county’s current ability 

to serve as a regional hub, several calling Portsmouth “ a typical Wal-Mart Town,” 

offering little beyond that store as an attraction to those living outside. “We were once 

Sources of Growth in Non-Metro Appalachia page 10 
Vol.2 Case Studies of Economic Growth Processes Scioto County 

a hub, but we are no longer,” said one community leader. “People go to Ashland (WV) 

or Huntington (KY) for their services, especially retail.” 

Scioto County’s failure to serve as a regional hub manifests itself in several ways, as 

described in the following pages. 

Commuting patterns. If it were a true regional hub, Scioto County could be expected 

to draw workers to its firms on a daily basis. In fact, as Exhibit 2-8 shows, Scioto is 

actually a net exporter of workers, with about 2,700 employees commuting on a daily 

basis. Indeed the only county in which Scioto appears to out commute to is Greenup 

County, Kentucky, which lies just across the Ohio River. 

Exhibit 2-8. Scioto County Area Commuting Patterns 

Sources of Growth in Non-Metro Appalachia page 11 
Vol.2 Case Studies of Economic Growth Processes Scioto County 

Retail patterns. If Scioto County operated as a true regional hub, it would be expected 

that residents of surrounding counties would migrate to the area to satisfy their retail 

needs such as shopping and eating. The location quotients of retail establishments 

shown earlier in Exhibit 2-6 also suggest that the county is drawing individuals from

surrounding counties. But it appears that this is more of a statistical quirk than any real 

proof that Scioto County or Portsmouth is acting as a regional hub. Indeed, most 

leaders and residents interviewed for the study reported that residents of the county 

were more likely to drive to other areas for destination shopping and dining. 

The main reason for Scioto County’s inability to attract retail customers is one of 

location. As shown earlier in Exhibit 2-2, Scioto is actually at the center of a set of 

counties that have much better metropolitan access. For instance, Pike County, to the 

north of Scioto, would be more likely drawn into the metropolitan sphere of 

Columbus. Similarly, Adams County, to the west, is drawn into Cincinnati’s service 

area. In addition, Scioto County does not have any large retail establishment such as a 

mall to draw shoppers. In fact, most interviewed residents of Scioto County 

themselves shopped at malls in Ashland, Kentucky or Huntington, West Virginia for 

their needs. 

Supplier-customer relationships. While retail and commuting patterns are critical, the 

interchange between businesses is even more important to an economy. If a county’s 

businesses draw their customers from surrounding locales, then they can be seen to 

serve as a regional hub. In the case of Scioto County that does not appear to be the 

case. The manufacturing firms that remain in Scioto County export their products on a 

national or larger regional basis than just surrounding counties. For example, 

Mitchellace in Portsmouth has a large contract with Kiwi, a company not located in 

Ohio. 

There is a small concentration of financial and other professional services but these 

tend to be more focused on the local market. Portsmouth is home to seven banks, five 

of which are nationally chartered. Again. conversations with local officials suggest 

that these banks do not draw heavily from surrounding companies but instead serve 

the relatively large Portsmouth market. 

One “industry” that does appear to attract regional usage is higher education. 

Portsmouth is home to Shawnee State University, a four-year institution that also 

offers two-year associate degrees. The university draws both students and employees 

from surrounding counties. For instance, 71 percent of Pike county residents who 

attend a four-year public university attend Shawnee State University. The university 

also employs a large number of employees who cross the bridge from Kentucky. The 

role of Shawnee State is discussed later in this paper. 

Sources of Growth in Non-Metro Appalachia page 12 
Vol.2 Case Studies of Economic Growth Processes Scioto County 

2.4 Catalysts of Change 

Responding to Growth Challenges. There are three areas of economic emphasis that 

merit closer examination. Each one of these categories represent ways in which Scioto 

County, either through intentional government intervention or through market forces, 

is attempting to grow its economy. This section of the paper examines: 

The Health Care Industry 

Higher Education 

Manufacturing 

For each of these categories, the ways in which growth is manifesting itself is 

discussed as well as the challenges pursuing such a strategy may pose to Scioto 

County. In addition, this section includes a discussion of how economic development 

agencies in the county and region are working to improve Scioto County. 

Health Care. As mentioned, Scioto County enjoys a high concentration of 

employment in the health care industry. While there are substantial numbers of private 

doctors’ offices, clinics and health care homes, the prime driver of this sector is 

Southern Ohio Medical Center located in Portsmouth. Located in Portsmouth, SOMC 

employs nearly 2,100 doctors, nurses and associated staff. The main hospital has more 

than 400 beds and the center owns several other health care offices and programs in 

the county. The hospital’s growth has been in part facilitated by a commitment to 

make SOMC a high-tech medical center. In the last few years, SOMC has added a 

cancer treatment facility as well as a cardiac care center. All told, the hospital has 

undergone $70 million in expansion in recent years. SOMC took its current form in 

1986, when several local health care facilities merged. The hospital operates as a nonprofit entity. SOMC’s impact on the economy comes primarily through direct 

employment. Doctor’s offices in the area can affiliate themselves with the hospital and 

at least seven do so. 

A major factor in the growth of the industry is the graying population of Scioto 

County. According to the 2000 Census, 14.9 percent of Scioto County’s residents are 

over 65 compared to 12.4 percent of the national average. The population is expected 

to get even older proportionally—31percent of the population is over 50 compared to 

27% of the US total. And SOMC is clearly geared to the local market: more than 80 

percent of patients come from Scioto County with the rest from surrounding counties 

including some from Kentucky. 

The population served by SOMC does present a problem for the hospital as a true 

economic growth strategy. The payer mix of the population is extremely dependent on 

government-assisted patients. Fully 75% of the patients use government insurance to 

pay for their services. This dependence reduces income for the hospital, as the hospital 

estimates it only collects a small portion of each dollar charged to these payers. 

Sources of Growth in Non-Metro Appalachia page 13 
Vol.2 Case Studies of Economic Growth Processes Scioto County 

One plus for the hospital has been its ability to attract and retain nurses and other staff. 

While rural locations can sometimes hurt hospitals, administrators report an extremely 

high retention rate. SOMC offers generous benefits including offering 100 percent 

tuition reimbursement for staff or their spouses to go back to school to become nurses. 

In addition to paying for school for staff, one of the reasons for the ability to attract 

employees are quality educational programs available locally. Shawnee State in 

particular provides a good source of nurses to SOMC. Students in the program are 

comfortable with Scioto County and are pleased with the opportunity to pursue 

employment in that area. 

Unfortunately attracting doctors to the area has been extremely difficult for SOMC. In 

a story repeated all over Rural America, SOMC relies heavily on foreign doctors who 

travel to the US on special visas or domestic doctors who are able to work off heir 

medical school loans by working in an economically disadvantaged regions. In either 

case, doctors that do come do not tend to stay long. Administrators report that the 

problem in keeping and attracting doctors tends to have more to with these personnel’s 

families comfort level with the community. Families often complain about the lack of 

cultural and shopping amenities. The results can often result in delays in implementing 

the high-tech facilities that the center rightly prides itself on. For instance, hospital 

administrators report that the state of the art cancer facility sat unused for a full year 

before doctors could be attracted to the site. 

To make up for the difficulty in attracting doctors, SOMC relies on different 

strategies. One is using osteopaths to perform many tasks. The hospital maintains a 

strong working relationship with Ohio University in Athens and their college of 

Osteopathic Medicine. This relationship allows graduates of that institution to provide 

a pipeline of qualified practitioners who understand life in small town Appalachian 

Ohio and who are committed to staying and working in a community such as 

Portsmouth. 

While the hospital is growing and continued expansion plans are in the work, there are 

limits to using SOMC, and indeed health care as an economic growth strategy. There 

is heavy competition in the region for medical services, and while SOMC is the largest 

facility in the surrounding counties, it is not the only one. Adena Health Systems in 

Pike County draws significant numbers of patients. In addition, for specialized 

medical care, patients are likely to journey to national medical centers in Cleveland 

and Cincinnati. Staff estimate that 70 percent of the “heart market” leaves the county. 

The fact that 80 percent of patients at SOMC come from Scioto suggests that new 

money is not being brought into the county. 

Higher Education. Shawnee State is clearly an institution that has the potential to 

impact the growth of Scioto County. Founded as a community college, Shawnee State 

became a university in 1986. The college has 3,800 students and college offers both 

four year degrees and associate degrees, making an interesting hybrid of a community 

college and a university. As a university, Shawnee State is increasing the numbers of 

Sources of Growth in Non-Metro Appalachia page 14 
Vol.2 Case Studies of Economic Growth Processes Scioto County 

students who live on campus. Currently, nearly 500 students a year reside in campus 

housing and plans are in the works to expand these numbers. 

The college possesses several especially strong programs. Of special import to 

Scioto’s “new” economy, is a strong allied health curriculum. As mentioned, Shawnee 

State provides a significant number of the nurses to SOMC and the hospital and the 

university have close relationships. In addition to offering traditional programs, 

Shawnee State also innovative programs that are drawing national attention. For 

instance, the university offers one of the nation’s only programs in gaming. This 

program trains students in creating and marketing video games. The program attracts 

students not only from around Ohio but from states all around the country. 

Shawnee State does represent one area where the notion of Scioto County serving as a 

hub is a reality. Exhibit 2-9 shows the percentage of college students from 

neighboring counties who attend Shawnee State. As it shows, Shawnee is by far the 

preferred destination for students in these counties. 

Exhibit 2-9. OH Public University Attendance at Shawnee State 

Scioto 80.1%

Pike 70.8%

Adams 61.7%

Lawrence 27.9%

Jackson 26.4%

Ross 15.2%

Gallia 14.5%

 

The university not only welcomes these students it, like many universities, is an 

engine of innovation. Several companies have spun out of activities at the university. 

For example, Yost Engineering, one of the most successful firms in the County, was 

founded by a former professor at Shawnee State. In addition to this spin off potential, 

the college offers training to companies in the area in a variety of areas including: 

Management and Human resources training 

Customer service 

Office skills such as using Microsoft programs 

A targeted industry program providing training for 201 employees in the 2004-5 

school year. Training was delivered at companies such as Mitchellace, Inc. 

Sun Coke and Scioto Plastics. 

The university has made an impact in the cultural life of the community as a hole. The 

university is responsible for the Verne Riffe Center for the Arts, a 1,140-seat 

performing arts center on campus. The Center brings national musical and performing 

Sources of Growth in Non-Metro Appalachia page 15 
Vol.2 Case Studies of Economic Growth Processes Scioto County 

arts to the area. These amenities are critical in attracting and just as important retaining 

families and young people to the area. 

Using Shawnee State as a growth strategy, however, is not without its problems. 

Foremost among these is the fact that Portsmouth is not structured right now as a 

traditional college town, or certainly not one that can cater to a large residential 

population. Several local officials and residents pointed out the lack of typical college 

student hangouts as just one example of how Portsmouth lacked amenities that could 

serve students and benefit from the dollars that they often spend. For instance, there is 

not a pizza place or a college-focused bar within walking distance of campus. 

Some individuals interviewed doubted whether or not Portsmouth really even wants to 

be a “college town. “They don’t want to be an Oxford, Ohio. They don’t want to be an 

Athens, Ohio.” 

There recently have been heated battles over the location of student housing, 

suggesting that not all county residents are comfortable with embracing a residential 

student population in the area. 

Manufacturing: Returning to Scioto County’s Roots. While Scioto County’s 

industrial mix has changed dramatically, leaders in the community have not 

abandoned what once was the heart of the region’s economy: a strong manufacturing 

base. Several steps have been taken to encourage the location of new industry in the 

county and making sure that companies that remain can prosper. 

The prime example of the community’s focus is the effort to redevelop a plot of land 

to host Sun Coke, Inc., a large steel manufacturer. Through grants through an 

empowerment zone project, Scioto County worked to turn a brownfield site into an 

area that could host an industry that provided good, high paying jobs. The site is not 

only home to Sun Coke but is the future home of large retail establishments such as a 

“big box” (e.g. Wal-Mart). 

A key in the location of Sun Coke was a regional approach to securing land for the 

facility. For example, Ohio Valley Regional Development Corporation gave Scioto 

County funds to provide sewer access for the plant. And although the plant was 

located in the small municipality of Franklin Furnace, representatives from

communities throughout the county were involved in the development of the project.

Indeed, regional cooperation is key to much of the manufacturing development that is 

occurring in the area. Another prime example is the focus on a facility in neighboring 

Pike County. Pike County as home to a large uranium enrichment plant that employed 

hundreds of workers, the majority of whom came from Scioto County. Community 

leaders in a variety of counties are cooperating through an organization called the 

Southern Ohio Development Initiative (SODI), to devise ways to turn this brownfield

into a viable industrial site. Recently, USEC, Inc. announced plans to build a large 

centrifuge plant that will employ more than 500 workers, providing opportunities for 

Sources of Growth in Non-Metro Appalachia page 16 
Vol.2 Case Studies of Economic Growth Processes Scioto County 

workers throughout the region, including Scioto County. Although the workers will 

not be employed within the county limits, the presence of a qualified workforce in 

Scioto County was critical to the decision to build the facility. 

A qualified and experienced manufacturing employment base is a strength of Scioto 

County. Sun Coke, for instance, reported that they were very pleased with the quality 

of employees that came to their facility once they opened. Other manufacturing firms 

may also be attracted by this strong cadre of qualified individuals when making site 

selection decisions. 

Another strength that Scioto County has tried to capitalize on is its continued access to 

rail and river transportation. Industries that rely on these two transportation modes 

could be drawn to the county to do business. However, according to the director of the 

port authority, significant improvement to the system of dams and locks along the 

river need to be made to take full advantage of the river’s potential draw. 

A more critical barrier to large-scale industrial/manufacturing growth is the lack of 

free engineering space. “We don’t have 200 acres to show people,” one community 

leader said, saying that brownfield redevelopment as in the case of Sun Coke, is the 

only real place that manufacturing firms can be expected to open new facilities. The 

reason for the lack of new development space has more to do with geography than an 

unwillingness to open land for development. The county is extremely hilly and the 

presence of two rivers (the Scioto and Ohio) means much available space lies in flood 

plains. Some available land is owned by Norfolk and Southern which is reluctant to 

sell the land unless a company that is extremely rail dependent would be willing to 

purchase the land. 

Formal intervention. Scioto County is fortunate to have a number of economic 

development organizations that are committed to its growth. Foremost among these is 

the Ohio Valley Regional Development Commission (OVRDC), the local 

development district, headquartered across the border in Pike County. OVRDC 

continues to work closely with local officials to see how more industry and commerce 

can be attracted to the county. For instance, OVRDC provided funding to the County 

to make infrastructure improvements to ensure that Sun Coke would come to the 

region. 

The Commission is not alone in trying to promote Scioto as part of a regional 

renaissance. SODI, mentioned in the previous section, is an example of an 

organization that is looking for regional solutions to vexing problems facing the 

county. Perhaps the greatest cooperation among economic development players came

through the enterprise zone/empowerment zone project in the New Boston Area. As 

discussed, the project brought together a wide range of community leaders to help 

convert what previously was a Brownfield site into one that can attract industry. 

Leaders in several counties help build a small business incubator in Pike County that 

is utilized by residents from Scioto County. In addition, the Southern Ohio Growth 

Partnership acts as a regional chamber of commerce, serving businesses within a 30 

Sources of Growth in Non-Metro Appalachia page 17 
Vol.2 Case Studies of Economic Growth Processes Scioto County 

mile radius of Portsmouth. 

Indeed, much of the formal economic development efforts underway concentrate on

both ensuring that existing manufacturing can prosper and helping to attract new 

businesses to the area. In terms of attracting new businesses, area leaders recognize the 

importance of helping firms compete in an era dependent on information exchange. 

The Scioto County Economic Development Office is active in HighTech Ohio, an 

initiative that highlights information and technology based companies in the county. 

While these efforts at improving Scioto County are impressive, there is not a 

comprehensive economic development strategy in place for the county that stresses a 

single economic sector or set of sectors. Rather efforts are made to make sure that the 

county continues to adjust as it moves away from being solely dependent on 

manufacturing to an economy that depends more heavily on the health care and 

educational sectors. 

2.5 Lessons Learned 

Scioto County represents an interesting model for those Appalachian counties that are 

struggling to reinvent themselves. In this case, Scioto County is trying to emerge from

an economic downturn related to the loss of manufacturing jobs, particularly in the 

steel industry. Several lessons emerge for counties facing similar challenges. 

Switching to a service-based economy is difficult. Scioto County’s economic future 

is increasingly tied into the service-based industries—particularly health care and 

higher education. Any community attempting to refocus itself will encounter 

difficulties. One of the main challenges is in providing a workforce that is equipped to 

handle this change in direction. Those trained in working in a manufacturing plant 

can’t necessarily turn on a dime to work in a hospital or university. Often service jobs

pay less than do manufacturing which means that the average wage in Scioto County 

may not grow as vibrantly as once expected. Creating better paying service jobs are a 

challenge but one that needs to be explored. Certainly Shawnee State’s strong allied 

health education program is one way to steer residents into higher paying medical 

professions. 

Manufacturing should not be ignored. Of course, Scioto County recognizes that 

concentrating solely on service industries is problematic. These types of businesses, as 

mentioned, pay lower wages and bring less outside money into a community. Thus, 

Scioto County has tried, when possible, to ensure that the County’s strong 

manufacturing base is not ignored. Programs such as the Sun Coke project and the 

regional cooperation around the former uranium enrichment plant allow the County to 

keep a foothold in manufacturing. 

Build upon existing assets. Scioto County recognizes that although it has undergone 

Sources of Growth in Non-Metro Appalachia page 18 
Vol.2 Case Studies of Economic Growth Processes Scioto County 

significant economic distress it does have something going for it. Foremost among 

these are access to rail and river transport. County leaders recognize that while the role 

of the Ohio River may not be what it once was, for certain industries it remains a 

critical component of trade. Industrial recruitment efforts promote the area’s river 

access—something that could draw more heavy industry to the county. 

The County is also recognizing that the more modern transportation choice of road 

access is a continued problem for the County. Accordingly, leaders are pushing for a 

by-pass that would provide better four-lane access through the County. The belief is 

that this will encourage development in the County and perhaps increase the County’s 

ability to attract consumers from neighboring areas. The proposal is not without its 

detractors of course. In particular, those who want to see a rebirth of downtown 

businesses worry that a bypass on the outskirts of town would further cripple retail 

traffic downtown. 

Creating a regional hub is problematic. This case study began with the hypothesis 

that Scioto County served as a regional hub for its neighbors. Ground truthing that 

belief revealed that the County does not draw significant business, consumers or 

workers from surrounding counties. The county faces special challenges due to the 

relative proximity of larger urban centers, which border Scioto County’s neighbors. 

This siphoning of periphery demand from an older, limited scale core economy to a 

larger, extra-regional metro area is an example of adverse spillover effect. Improved 

transportation access at the periphery and emanating away from the core facilitates 

this economic displacement. It is perhaps unrealistic to believe that Portsmouth could

draw individuals away from the bright lights of Columbus or Cincinnati. What Scioto 

County can do, and has in many cases, is to make sure that it retains the local market 

within the county. For instance, SOMC ‘s expansion goals are to capture as much of 

the Scioto County patient population as possible. The cancer center at SOMC was put 

into place because more than 75 percent of cancer patients in Scioto County were 

traveling elsewhere for treatment. 

In any case Scioto County is looking regionally for solutions through cooperation with 

the Ohio Valley Regional Development Commission and other economic development 

entities in the area. Other efforts include an active program that promotes better 

internet access in Appalachian Ohio, a shared incubator space, and continued 

cooperation around the uranium enrichment plant. The leaders in the county recognize 

that if the County is truly to be reborn it is going to take more than just the residents of 

Scioto County it will take regional cooperation and linkages with Appalachian Ohio. 

2.6 Interviewees 

• Elizabeth Blevins, Community Relations Director, Southern Ohio Medical Center 

• Steve Carter, Director, Scioto County Economic Development Office 

Sources of Growth in Non-Metro Appalachia page 19 
Vol.2 Case Studies of Economic Growth Processes Scioto County 

• Craig Gilliand, Administrative Director of Financial Support and Facilities, 

Southern Ohio Medical Center 

• Jason Gillow, Research/Planning Supervisor, Ohio Valley Regional Development 

Commission 

• Steve Gregory, Office of Career Services, Shawnee State University 

• Jennifer Hanlon, Director of Community Development, City of Portsmouth, 

Sondra Hash, Managed Care Manager, Southern Ohio Medical Center 

John Hemmings, Assistant Director, Ohio Valley Regional Development 

Commission 

• Robert Huff, President, Southern Ohio Growth Partnership 

• Jim Kalb, Mayor, City of Portsmouth 

Virginia Moore, Director University Outreach Services, Shawnee State 

University 

Greg Simonton, Executive Director, Southern Ohio Diversification Initiative 

Jeff Spencer, Executive Director, Ohio Valley Regional Development 

Commission 

Bob Walton, Director, Scioto County Community Action Program/ Southern 

Ohio Port Authority 

Susan Warsaw, Director of Development, Shawnee State University

Sources of Growth in Non-Metro Appalachia page 20 
Vol.2 Case Studies of Economic Growth Processes Chautauqua County 

MANUFACTURING DIVERSIFICATION

3 CHAUTAUQUA COUNTY, NY:

3.1 Introduction 

Chautauqua County, NY has been maintaining its transitional status despite continued

adverse forces tied to structural adjustments in U.S. manufacturing. Attraction of jobs

in transportation equipment manufacturing is now serving to anchor the regional 

economy along with impetus of HUD Renewal Community status, various enterprise 

zones, and attempts to diversify/foster entrepreneurial development around tourism.

Chautauqua County presents an interesting case study as a region in transition. Fo

much of the twentieth century, a strong manufacturing sector that relied on an 

established transportation network, a well-trained blue collar workforce, and the

county’s natural resources defined the region’s economy. Over the past twenty years,

the manufacturing sector has declined sharply as a result of global competition, 

changing consumer tastes, and technological advances. In the face of significan

loss in the manufacturing sector, the County has transitioned, with some succes

more diversified economy. It retained some of its manufacturing base through 

specialization and targeted economic development programs, and successfully 

expanded its base to include a growing tourist industry characterized by expansion in 

r

t job

s, to a

e service and retail sectors. The lessons learned by the County and its strategies for 

ddressing its changing economy offer useful insights for other regions in Appalachia. 

th

a

3.2 Regional Profile 

Chautauqua County is located in far western New York State, directly south of 

Buffalo. It is bordered by Lake Erie and Pennsylvania to the west and Pennsylvania to

e south. It is part of the Southern Tier West planning area along with the counties of 

Allegany and Cattaraugus. The county encompasses 1,062 square miles Exhibit 3-1. 

th

Sources of Growth in Non-Metro Appalachia page 21
Vol.2 Case Studies of Economic Growth Processes Chautauqua County 

Exhibit 3-1 Chautauqua County’s Location Within New York State 

Chautauqua is a rural county, with a population density of 131.6 persons per square 

mile. As shown in Exhibit 3-2, , the U.S. Census reports that 139,750 people lived in 

the County in 2000, a decrease of 5.1% since 1970. In comparison, New York State’s 

population increased by 4.1 percent over the same period. Census estimates for 2003 

indicate a continued decline in population of Chautauqua County to 137,645. 

Jamestown, with a population of approximately 31,000 people, is the County’s largest 

city. Dunkirk, located on the shores of Lake Erie, had a population of 13,131 in 2000 

and is the County’s only other city. The remainder of the County includes 27 towns 

and 15 villages. The Jamestown-Dunkirk-Fredonia area is the region’s designated 

micropolitan area. The region’s business and industry is concentrated around its two 

cities. Farmland and forests characterize much of the remainder of the County. 

Exhibit 3-2 Population Change, 1970-2000 - Chautauqua Co. and NY State 

Population 1970 1980 1990 2000 1970-80 1980-90 1990-2000 1970-2000

Chautauqua County 147,205 146,925 141,895 139,750 -0.2% -3.4% -1.5% -5.1%

New York State 18,236,967 17,558,072 17,990,455 18,976,457 -3.7% 2.5% 5.5% 4.1%

Source: US Census Bureau.

Population % Change

Historically, the geography, climate, and natural resources of Chautauqua County have 

shaped its economy. For over two hundred years, the rich soils have supported 

farming, and the microclimate along Lake Erie have proven ideal for growing grapes. 

The agricultural and viticulture industries in turn spawned a robust food processing 

industry in the County. The region boasts large areas of hard wood forests that have 

Sources of Growth in Non-Metro Appalachia page 22
Vol.2 Case Studies of Economic Growth Processes Chautauqua County 

supported the development of both wood products and furniture manufacturing 

industries. The primary and fabricated metals industries grew up along the Lake Erie 

Coast where the Great Lakes shipping lanes and rail road lines provided cheap and 

easy transportation access to the automobile manufacturing centers in Michigan. Tool 

and dye, machinery, and transportation equipment manufacturers located in the area to 

both support the metals industries and to have easy access to their products. 

These manufacturing industries remain important to the economic health of

Chautauqua County, although the region has struggled in the face of plant closures and

employment contractions. Exhibit 3-3 shows that manufacturing employment 

represented 31.3 percent of all jobs in the County in 1970. While manufacturing still 

accounts for 19.3 percent of the County’s employment, manufacturing jobs declined 

by over 24 percent between 1970 and 2000. 

Exhibit 3-3 Employment Change by Industry, Chautauqua County, 1970-2000 

1980 1990

EMPLOYMENT % of Tot. % of Tot.

Farm employment 3,070 5.1% 3,470 2,890 2,460 3.3%

Agricultural Services 280 0.5% 440 680 830 1.1%

Mining 30 0.1% 540 510 280 0.4%

Construction 2,290 3.8% 2,220 3,180 3,010 4.1%

Manufacturing 18,770 31.3% 18,120 15,400 14,190 19.3%

Transportation, Comm., PU 2,640 4.4% 2,320 2,460 2,840 3.9%

Wholesale Trade 1,830 3.1% 2,610 2,440 2,340 3.2%

Retail Trade 9,570 16.0% 10,290 12,780 13,240 18.0%

FIRE 3,710 6.2% 3,920 2,860 3,200 4.3%

Services 8,280 13.8% 13,190 17,730 21,100 28.6%

Government 9,480 15.8% 10,270 10,530 10,220 13.9%

Total 59,950 100.0% 67,390 71,460 73,710 100.0%

% CHANGE 1970-80 1980-90 1990-2000 1970-2000 1980-2000

Farm employment 13.0% -16.7% -14.9% -19.9% -29.1%

Agricultural Services 57.1% 54.5% 22.1% 196.4% 88.6%

Mining 1700.0% -5.6% -45.1% 833.3% -48.1%

Construction -3.1% 43.2% -5.3% 31.4% 35.6%

Manufacturing -3.5% -15.0% -7.9% -24.4% -21.7%

Transportation, Comm., PU -12.1% 6.0% 15.4% 7.6% 22.4%

Wholesale Trade 42.6% -6.5% -4.1% 27.9% -10.3%

Retail Trade 7.5% 24.2% 3.6% 38.3% 28.7%

FIRE 5.7% -27.0% 11.9% -13.7% -18.4%

Services 59.3% 34.4% 19.0% 154.8% 60.0%

Government 8.3% 2.5% -2.9% 7.8% -0.5%

Total 12.4% 6.0% 3.1% 23.0% 9.4%

Source: CEDDS Volume II, 2002 Woods and Poole Economics, Inc.; EDR Group

1970 2000

Sources of Growth in Non-Metro Appalachia page 23
Vol.2 Case Studies of Economic Growth Processes Chautauqua County 

Exhibit 3-4 displays the industry mix (location quotients) by industry for Chautauqua 

County compared to both New York State and the nation. The location quotients 

confirm that the region retains a concentration of manufacturing jobs, particularly in 

the food processing, furniture, fabricated metals, and machinery manufacturing 

categories. The continued viability of these industries in the County has been dictated 

by their ability to adapt to global competition; the availability of a well-trained, loyal 

workforce; and efforts by the economic development community to provide assistance 

and incentives. Some have faired better than others. 

As the manufacturing sector has struggled and lost employment, the tourism industry 

has expanded in the County. The County’s bucolic landscape and natural features such 

as Lake Chautauqua have helped attract visitors, as have successful efforts to develop 

destination attractions within the County. Growth in the tourism sector has helped 

mitigate job loss in manufacturing, and in recent years, the economic development 

community has recognized that tourism can provide an alternative source of job 

growth for the workforce. 

3.3 Evolution of Progress 

Despite contractions in important manufacturing sectors, the county has had some

success reinforcing existing industries such as primary and fabricated metals, 

transportation equipment, food processing and wood products. The region is also 

beginning to look to recreation and tourism assets to further diversify its economy. 

Manufacturing 

Primary and Fabricated Metals. The fabricated metals industry dominated the 

economy of Chautauqua County communities such as Dunkirk for several decades in 

the mid-1900s. Proximity to Detroit’s auto manufacturers provided by cheap water 

and rail transportation supported the development of the steel and related industries all 

along the shores of Lake Erie. 

Beginning in the early 1980s, international competition and resistance to the strong 

union workforce led to a sharp decline in the metals industries. Several businesses 

contracted or closed, including Roblin Steel and Alumax Extrusions. Empire Specialty 

Steel (formerly Al Tech Steel), which was once employed 800 people and was one of 

the largest steel manufacturers in the County, closed its doors in 2001 after several 

years of decline. Employment in the primary metals industry declined by 25.2 percent 

between 1997 and 2002, while employment in the fabricated metals sector declined by 

2.4 percent over the same time period. Reductions in these industries, and the impact 

of these reductions on the County’s local tool and dye and machinery manufacturers, 

account for a large percentage of the decline in the manufacturing sector in recent 

decades. 

Sources of Growth in Non-Metro Appalachia page 24
Vol.2 Case Studies of Economic Growth Processes Chautauqua County 

Exhibit 3-4. Industry Mix – Chautauqua County Compared with the State & U.S. 

Location Quotient 

NAICS Sector

Chautauqua / 

NY State 

Chautauqua / 

U.S. 

111 Crop Production 7.3 1.6 

112 Animal Production 5.8 2.4 

113 Forestry & Logging 3.2 1.2 

114 Fishing, Hunting & Trapping 0.0 0.0 

115 Support for Agriculture & Forestry 1.1 0.2 

211 Oil & Gas Extraction 46.8 7.3 

212-213 Mining & Support Activities 3.3 0.6 

221 Utilities 1.1 1.3

230 Construction 0.8 0.6

311 Food Products 7.6 4.4 

312 Beverage & Tobacco Products 3.2 1.8 

313 Textile Mills 0.0 0.0 

314 Textile Product Mills 0.0 0.4 

315 Apparel Manufacturing 0.0 0.1 

316 Leather & Allied Products 0.0 0.0 

321 Wood Products 4.1 1.3 

322 Paper Manufacturing 0.0 0.2 

323 Printing & Related Support Activities 0.7 0.6 

324 Petroleum & Coal Products 5.6 1.8 

325 Chemical Manufacturing 0.4 0.4 

326 Plastics & Rubber Products 1.1 0.6 

327 Nonmetallic Mineral Products 2.9 1.8 

331 Primary Metal Manufacturing 2.2 1.0 

332 Fabricated Metal Products 7.1 4.4 

333 Machinery Manufacturing 4.7 3.7 

334 Computer & Electronic Products 0.0 0.1 

335 Electric Equipment, Appliances, etc. 0.0 0.3 

336 Transportation Equipment 3.2 1.1 

337 Furniture & Related Products 19.8 10.4 

339 Miscellaneous Manufacturing 0.5 0.5 

420 Wholesale Trade 0.7 0.7 

441-454 Retail Trade 1.3 1.1 

481-487 Transportation 1.0 0.9 

491-493 Mail, package delivery & warehousing 0.5 0.5 

511 Publishing Industries (except Internet) 0.6 0.9 

512 Motion Picture & Sound Recording 0.0 0.3 

513 Broadcasting 0.8 0.9

514 Internet & data process svcs 0.0 0.1 

521-523 Monetary, Financial, & Credit Activity 0.3 0.4 

524 Insurance Carriers & Related Activities 0.3 0.3 

525 Funds, Trusts, & Other Financial Vehicles 0.0 0.0 

531 Real Estate 0.2 0.3 

532 Rental & Leasing Services 1.3 0.9 

533 Lessors of Nonfinancial Intangible Assets 0.0 0.0 

541-551 Professional Scientific, Technical, Services 0.4 0.4 

Sources of Growth in Non-Metro Appalachia page 25
Vol.2 Case Studies of Economic Growth Processes Chautauqua County 

561 Administrative & Support Services 0.5 0.4 

562 Waste Management & Remediation 0.9 0.8 

611 Educational Services 0.1 0.2 

621-624 Health Care & Social Services 1.0 1.3 

711-713 Amusement & Recreation 1.3 1.7 

721-722 Accommodations, Eating & Drinking 1.5 1.3 

811-812 Repair, Maintenance, & Personal Services 0.8 0.7 

813 Religious, Civic, Professional, Organizations 1.5 3.1 

814 Private Households 0.3 0.3 

920 Government & non NAICs 0.8 0.8 

Source: EDR-LEAP (with IMPLAN data) and EDR Group. 

Despite the sharp decline in the metals industries, both the private and public sectors 

remain determined to retain these important components of the economic base. After 

the closure of Empire Specialty Steel, the state took possession of the facility and 

worked diligently with the local economic development community to find a buyer for 

the plant. In 2002, Universal Steel, a Pennsylvania-based company purchased the 

facility, and opened Dunkirk Specialty Steel on the site. The firm streamlined 

production, hired 100 employees, and is now producing steel in Dunkirk, although at a 

much reduced level. Some additional metal fabricators have managed to remain in 

operation in Chautauqua County by identifying specialty markets such as galvanized 

rebar. Dawson Metals, a locally owned firm, has developed a niche making steel doors 

for clients including the Mayo Clinic and US Senate. Another manufacturer has 

developed a specialty market producing metal door handles. In 2002, the fabricated 

metals industry still accounted for four percent of the County’s employment (2,645 

jobs), making it the fifth largest employment sector in the region (see Exhibit 3-5). 

Exhibit 3-5. Top Five Employment Sectors in Chautauqua County, 2002 

Rank Employment

Government & non-NAICS 1 7,149 

Food Services/Drinking Estbls 2 4,874 

Religious-grantmaking/Similar 3 3,707

Food Product Mfg 4 2,783 

Fabricated Metals MFG 5 2,645 

Source: MIT – DUSP Economic-base Analysis Update 

Transportation Equipment. The transportation equipment industry in Chautauqua has 

managed to remain viable, primarily as a result of continued expansion at two major 

employers. Cummins, Inc., an international manufacturer of diesel engines, 

consolidated its mid-west operations in 2002, shutting its plant in Indiana and 

expanding employment at its Lakeville site. The firm is now the fifth largest employer 

in the County with 1,020 employees, and is expected to increase employment to 1,250 

before the expansion is completed. The firm chose to expand operations in Jamestown 

because of the well-trained workforce, low energy rates ($0.04 per kilowatt hour) 

Sources of Growth in Non-Metro Appalachia page 26
Vol.2 Case Studies of Economic Growth Processes Chautauqua County 

available through the municipal utility (the remainder of the County’s energy is 

provided by a private firm, and is more than double the cost of competing regions), 

and tax incentives available through the Greater Jamestown Empire Zone. 

Truck-Lite Co., Inc., a manufacturer of vehicle safety lighting, opened in Jamestown 

50 years ago. The firm, which is now a subsidiary of Penske, retains it headquarters 

and a manufacturing plant in Chautauqua County, in addition to several plants 

throughout the world. The firm has 550 employees in Chautauqua County. The 

quality of the workforce and good union relationship are two important reasons why 

the firm remains in the County. It is located in the Greater Jamestown Empire Zone 

and has taken advantage of the employee tax credits available through the Empire 

Zone as it has expanded. Because of expansion at these two facilities, employment in 

the transportation equipment sector increased by 3.4 percent between 1997 and 2002. 

Food Processing. The County retains a strong food processing industry in the 

northern part of the County, even though today much of the raw product used in it 

manufacturing facilities is imported from out of state or abroad. The ability to quickly 

ship produce around the world for processing, as well as wage competition from other 

regions have created challenges for the food processing industry in Chautauqua. Kraft 

Foods closed its Chautauqua Operation, and within the past year, Welch’s 

significantly reduced its operations at its two facilities in the County. Despite these 

challenges, employment in the food products industry grew by 5 percent between 1997 

and 2002. Two off-label food processing companies, the locally-owned Cliffstar 

Corporation (635 employees) and the nationally-owned Carriage House Companies 

(793 employees) anchor these sectors in the County, producing products such as juice, 

ketchup, and peanut butter. The presence of these two off-label manufacturers proved 

important during the recent national economic downturn, as consumers increase their 

purchases of lower priced off-label goods when the economy falters. 

Other major food processors include Fieldbrook Foods (400 employees locally), the 

second largest producer of ice cream on the east coast. Fieldbrook Foods bought out 

the locally-owned Dunkirk Ice Cream Company in 1996. Another major food 

processing firm in the northern part of the region is Nestle Purina PetCare Company 

(270 local employees), which manufactures pet food in the Dunkirk area. Nestle 

Purina recently completed a $90 million expansion of its operations, and purchased 

more than 50 acres of land to accommodated future expansion plans. The Empire State 

Development Corporation has given a large grant to the firm to finance an electrical 

substation to reduce energy costs. 

In 1999, the County Industrial Development Agency invested in four industrial parks, 

including the Chadwick Bay Park in the Dunkirk-Sheridan Empire Zone. The County 

developed a spec building in the Park aimed at attracting businesses that support the 

food processing industry. In 2002, Grafco PET Packaging Technologies, which 

manufactures containers and bottles for the food processing industry, built a 120,000 

square foot manufacturing facility in the Chadwick Bay Industrial Park in close 

proximity to the existing food manufacturers. The firm located in Dunkirk to “better 

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Vol.2 Case Studies of Economic Growth Processes Chautauqua County 

serve its northeastern and Canadian markets” and because of the well-trained 

workforce. The plant supplies both Carriage House and Cliffstar. The plant employs 

over 300 people. The economic development community believes that Grafco will be 

an important factor in retaining and growing the region’s food processing industry. 

Wood Products. The southern part of the County around Jamestown is noted for its 

hardwood forests, which supported vibrant wood products and furniture industries for 

many years. The wood products industry has faltered in recent years, decreasing 

employment by 5.1 percent between 1997 and 2002. The decline in the County’s wood 

products industry is a result of changes in consumer tastes and competition from other 

regions with cheaper labor costs. Today, much of the high end furniture market, which 

once used the high quality hardwoods grown in Chautauqua County, now uses exotic 

woods from Asia and South America. Less expensive furniture is now manufactured 

using laminates and lesser quality woods grown elsewhere. 

Although the County’s furniture industry has faced strong competition from abroad 

(particularly Asia and the southern United States) and the closure of several plants 

including two Ethan Allen facilities, employment in the furniture and related products 

manufacturing sector has managed to remain stable (+0.8% between 1997 and 2002). 

The industry employs 2,783 people (4.2 percent of all jobs), ranking fourth among 

Chautauqua County industries. The importance of this industry to the region is 

underscored by its 19.16 location quotient compared to New York State, and 11.46 

compared to the nation. 

To compete, the County’s furniture manufacturers have developed niche markets. 

Bush Industries has moved away from using the high quality woods grown in the 

region to manufacturing pieces made from composites. The firm, which opened in 

Jamestown in 1959, is the third-largest employer in the County, with 1,249 employees 

in 2005. The firm has branch plants in several locations around the world. The locallyowned Crawford Furniture manufactures reproduction pieces in the Stickley style. 

Greco, a national firm, makes baby furniture, and Cold Craft manufactures conference 

furniture. The ability to identify and create specialty products has helped the furniture 

sector survive in the County, although according to the region’s economic 

development professionals, the industry continues to struggles to remain competitive. 

The decline in manufacturing employment in the County has certainly raised concerns 

about the economic future of the region. In particular, many of the jobs lost were in 

strongly unionized sectors that provided good wages for a skilled workforce. 

However, the ability of the County to retain and attract some new firms in its 

traditional industries through specialization and streamlining provides some

encouragement that the region can maintain, through creative approaches and targeted 

economic development programs, a solid manufacturing sector. 

Tourism. Chautauqua County has mitigated job loss in the manufacturing sector 

through diversification into other sectors. In 1970, the service sector accounted for 

13.8 percent of jobs in the County, and retail jobs made up 16 percent of the 

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Vol.2 Case Studies of Economic Growth Processes Chautauqua County 

employment base. In 2000, these industries accounted for 28.6 percent and 18 percent 

of the County’s jobs, respectively. Food service and drinking establishments employed 

4,874 people in 2002, ranking it second among employment sectors in the County. 

The strength of the retail and service sectors is attributable to growth in the tourism

industry, which has tapped the region’s natural resources, landscape, and history 

create destinations and activities to attract tourists. 

The cornerstone of the County’s tourist attractions is the world-renowned Chautauqua 

Institution (CI), founded in 1874 as a religious retreat on Lake Chautauqua. The CI is 

a unique community built on 750 acres of land. The gated community includes 1,200 

properties, including 300 year-round residents, hundreds of summer homes, a 160 

room hotel, and a 5,500 capacity amphitheater. Home values within the gates have 

soared and have anchored an escalating interest in summer homes in Chautauqua 

County. The CI is currently expanded, purchasing several acres of land adjacent to the 

facility and adding 32 housing lots. The Institution’s nine-week summer season 

features over 2,000 programs including lectures, theater, opera, symphonies, and other 

activities, which attract over 150,000 visitors (both day trippers and overnight guests) 

to the region. The CI is currently seeking to expand its draw beyond the summer 

season by marketing the facility for conferences, reunions and other events. 

The Peek’n Peak Resort and Conference Center is a four season destination that 

includes two golf courses and 27 trails of downhill and cross country skiing. Visitors 

come from surrounding states and Canada to use these facilities. The resort recently 

constructed 150 condominiums on-site. Golf Digest recently recognized the region as 

an outstanding golfing destination. Snowmobile clubs in the County also help promote 

winter tourism by maintaining hundreds of miles of trails, and summer tourist 

activities include fishing in Lake Erie and Chautauqua Lake. The grape growers and 

wine producers have developed a “wine trail” along Routes 5 and 20 near Lake Erie, 

which attracts visitors from surrounding states and Canada. The region is also 

attracting cyclists because of its rolling hills, scenic landscape and roads with wide 

shoulders. 

Chautauqua Lake has long drawn visitors from outside the County, including Ohio, 

Pennsylvania and Ontario. Attractions have included Bemus Point amusement park 

and numerous beaches along the shores of the Lake. The Lily Dale Assembly, a 

spiritual retreat on the eastern shores of the Lake attracts several thousand visitors 

during the summer. In recent years, interest in second homes around the Lake has 

increased, with real estate values increasing at a fast pace. The economic potential of 

the Lake area as a tourist attraction is demonstrated by the interest of at least one 

outside investor, who has purchased and opened four restaurants in the past few years. 

Attractions have also been built around the reputations of the region’s famous sons 

and daughters. Jamestown houses the Lucille Ball-Desi Arnaz Center and Museum, 

and hosts two Lucy-Desi festivals each year. The Roger Tory Peterson Institution of

Natural History, the Robert Jackson Center, and the Fenton History Center also 

celebrate the lives and legacies of famous Jamestonians. Other attractions in 

Sources of Growth in Non-Metro Appalachia page 29
Vol.2 Case Studies of Economic Growth Processes Chautauqua County 

Jamestown include the recently-completed ice arena, funded by the Gebbie 

Foundation. The arena successfully hosted the junior national ice skating 

championships in 2004, and expects to draw additional competitions in the future. A 

Best Western Hotel is under construction adjacent to the arena. 

The interest of the region’s economic development community in growing its tourism

industry has emerged in recent years. Jamestown currently is preparing a downtown 

urban design plan that will recommend the city pursue the development of a tourist 

attraction that can attract up to 100,000 people per year. The city is developing its 

river-walk, and has applied for federal transportation funds to redevelop its train 

station. In the Dunkirk area, an investor is promoting the creation of the Lake Erie 

Heritage Museum, focusing on the shipwrecks that have occurred on the lake 

throughout its history. In addition, the tourism industry is currently developing an 

agricultural trail that will highlight area farmers’ markets, seasonal farm stands, and 

the County’s maple syrup producers. After many years of ignoring the industry, the 

County government now provides funds to the Chautauqua County Visitors’ Bureau 

for marketing and development. 

Two recent changes are expected to heighten the appeal of Chautauqua County as a 

tourist destination. First, the upgrade of the Appalachian Development Highway 

corridor T (also known as US 17 and designated as I-86 in the upgraded sections) to 

Interstate standards has dramatically improved access to the region. Although some

businesses expressed concern that these improvements would simply facilitate the 

exodus of people from Chautauqua to shopping destinations in tax free Pennsylvania, 

there are indications that the highway is helping to bring more people to the County 

for recreation. There are two new hotels in Jamestown near the highway interchange, 

and representatives of the tourist industry report that visitation to the County’s 

attractions is increasing. The tourism community would also like to utilize the two rest 

areas along the Interstate to better promote the region’s attractions. 

Second, swayed by considerable lobbying by the Chautauqua County Chamber of 

Commerce, the County legislature voted this year to allow the County to abolish its 

sales tax, reducing the overall sales tax from 8.5 percent to 4.5 percent. Retailers and 

economic development professionals anticipate that this reduction will help dissuade 

residents from leaving the County to shop in Pennsylvania. 

Industry-setting Labor Markets. Because manufacturing dominated the economy of 

Chautauqua County for so many years, the region developed a highly skilled blue 

collar workforce with a strong work ethic. Despite the decline in manufacturing jobs, a 

blue collar “culture” continues to dominate the workforce. Many families have passed 

down to their children the expectation that they will work in manufacturing, a goal 

which has become harder to achieve as the sector has declined. Additionally, the 

earning potential of the blue collar workforce has decreased as manufacturing firms 

have been forced to cut wages to remain competitive in the global marketplace, and 

jobs in the tourism industry typically pay lower wages than manufacturing jobs. 

Sources of Growth in Non-Metro Appalachia page 30
Vol.2 Case Studies of Economic Growth Processes Chautauqua County 

Prior to the decline of the metals industries, Chautauqua County was known as a 

strong union area. Today, the strength of the unions has declined, as is evidenced by 

the $10/hour wages offered at the newly opened Dunkirk Specialty Steel. Some

economic development professionals believe that the history of union activity in 

Chautauqua and the proximity of the region to Buffalo, a once-strong union town, 

continue to hinder the County’s ability to attract new firms. The County’s economic 

development community often tries to downplay its proximity to Buffalo when 

courting new manufacturers to the region. 

In 2000, 91,261 Chautauqua County residents were over the age of 25, and the labor 

force participation rate was 61.4 percent. Just over eighty-one percent of the labor 

force had at least a high school education, compared to 45.6 percent in 1970. The 

percentage of the labor force with a four-year college education increased from 7.5 

percent in 1970 to 16.9 percent in 2000. Comparatively, 27.4 percent of the New York 

State workforce has at least a four-year college education. 

Chautauqua County suffers significant out-migration of its young, working age 

population. According to researchers at the Center for Rural Regional Development 

and Governance at the State University of New York at Fredonia (SUNY-Fredonia), 

young people between the ages of 15 and 29 account for more than 50 percent of the 

out-migration from the three counties that make up the southern tier west area of New 

York State. Further, the 2000 US Census reports that the Jamestown-DunkirkFredonia Micropolitan Statistical Area suffered the highest rate of out-migration of 

young, single, educated people (-344.8) in New York State. This compares to a state 

out-migration rate for this population group of -11.3. Economic development 

professionals report that the out-migration is particularly pronounced for the college 

educated population, and while many businesses can find skilled workers for factory 

jobs, they report difficulty filling vacancies for professional-level jobs. 

The Chautauqua County workforce primarily works within the County. The average 

travel time to work is 18.4 minutes, compared to a nation average of 25.5 minutes. 

Entrepreneurship. Economic development professionals in Chautauqua County 

indicated that there is some entrepreneurial activity in the County, but that success is 

limited. Those who are successful generally are professionals who have identified a 

specialty niche market, and spin off from a larger manufacturing establishment. There 

is also a growing number of people who grew up in the region returning to 

Chautauqua County to raise families. A small number of these people have developed 

internet-based businesses that allow them to effectively serve their clients from a 

location in Chautauqua County. However, entrepreneurship is not a major contributor 

to economic growth in the region. 

The success of entrepreneurial activity in the County can be measured by the ratios of

the number of proprietors in the County to the number of wage and salaried worker, 

and the income of proprietors to wage and salaried workers, as well as changes in 

these ratios over time. Exhibit 3-6 shows that the ratio of proprietors to wage and 

Sources of Growth in Non-Metro Appalachia page 31
Vol.2 Case Studies of Economic Growth Processes Chautauqua County 

salaried workers in Chautauqua County in 2003 was 0.238, a 6.9 percent increase 

since 1998. However, the ratio of non-farm proprietor income to wage and salaried 

employee income was only 0.083, and this ratio declined by 31.9 percent between 

1998 and 2003. These data indicate that while the number of people employed as 

proprietors is increasing, the income of these proprietors relative to the rest of the 

work force is declining. Further, the wages of proprietors in 2003 was considerably 

lower than that of wage and salaried employees. These trends suggest that, overall, 

entrepreneurial activity in Chautauqua County is not occurring in response to 

perceived opportunities for economic growth, but instead people are becoming selfemployed due to necessity (such as job loss.) 

Exhibit 3-6. Entrepreneurial Activity - Chautauqua County, New York

Indicator of Entrepreneurial Activity Ratio / %

 

Ratio of Non-farm Proprietors Income/wages - 2003 0.083 

Change in ratio (1998 to 2003) -31.9% 

Ratio of Proprietors/Wage & slary Workers - 2003 0.238 

Change in ratio (1998 to 2003) 6.9% 

Proprietors Employment Growth (1998 to 2003) 2.8% 

Source: EDR Group calculations and REIS data. 

Educational Institutions. The County’s three institutions of higher education also 

play a role in promoting and supporting economic growth. The State University of 

New York at Fredonia has a reputation for high academic standards. The university 

regularly partners with the business community and public sector to provide technical 

assistance and improve the business climate in the County. The Center for Regional 

Development and Governance was created eight years ago to provide assistance to the 

26 cities and towns in the County on ways to reduce the cost of government as well as 

the cost to do business in the County. The Center has been involved with the strategic 

planning study in Jamestown, and an evaluation of the impacts on Dunkirk’s tax base 

of allowing the NRG power station to provide a payment in lieu of taxes (PILOT) to 

the city of Dunkirk. The Center recently developed a masters degree program in 

accounting program to help serve the needs of Chautauqua County businesses. A 

computer science program is under development to help attract high technology firms 

to the area, and the Center is exploring the creation of an MBA program. 

The University has been working with the Dunkirk-Sheridan Empire Zone for the past 

five years on an effort to create a high technology incubator in Dunkirk. The 

university recently earmarked $5 million to be used for the construction of the 

incubator, although operating funding is still being sought. Supporters are currently 

defining the target market for the facility. One niche under consideration is computerbased food technology applications that can support the food processing industry. The 

University is already involved with a project to evaluate opportunities for technology 

Sources of Growth in Non-Metro Appalachia page 32
Vol.2 Case Studies of Economic Growth Processes Chautauqua County 

transfer between the University and the food processing industry. 

Jamestown Community College offers two-year liberal arts associates degrees. Many 

of the College’s students transfer to four-year colleges after graduation. The College 

also offers technical and career programs, and part-time study programs for job skill 

and cultural enrichment. The college has grown from an enrollment of 169 students at 

the local high school to over 4,000 students at multiple campuses in the Southern Tier 

region. Local businesses work with the college to design job training programs 

specific to their individual business needs. The Manufacturing Technical Center at the 

College provides training for high technology and machinery industries in the County, 

and works with businesses to develop courses specific to their needs. 

Jamestown Business College offers associate degrees and certificate programs in a 

variety of business fields. The College offers coursework in marketing and 

management, information technology, entrepreneurship, accounting, and medical and 

legal fields.

3.4 Catalysts of Change 

Prior to the 1980s, the people of Chautauqua County proudly identified their region as 

a manufacturing stronghold. For the most part, the region’s economic development 

efforts were aimed at supporting the manufacturing sector. The region boasted a 

workforce well-trained to serve the region’s metals, food processing, furniture, and 

related industries. Businesses prospered, employment and wages increased, and the 

economy grew. 

In the 1980s, regions within the United States and abroad began courting 

manufacturers with a lower wage work force, lower energy costs, and favorable tax 

structures. Chautauqua County found itself significantly handicapped by the high 

union wages that predominated, energy costs more than double other areas of the 

Country, and the notoriously high corporate, employee, and income tax rates in New 

York State. Further, innovations in shipping allowed for perishable items to be 

transported internationally, and reduced the costs of shipping bulky items overseas, 

thus improving the ability of foreign firms to serve American markets. Next day air 

services produced options for quickly delivering parts, equipment and products to 

markets around the world. Some analysts have suggested that environmental 

regulations within the United States increased manufacturing costs in the states 

relative to off-shore locations, although the evidence is mixed. In the 1980s, many 

analysts argued that while overseas companies eagerly adopted new production 

methods and innovations that produced high quality products more cheaply, American 

manufacturers failed to do so. 

Many if no all of these factors may have contributed to the decline of the 

manufacturing sector in Chautauqua County. Because the County’s identity was so 

Sources of Growth in Non-Metro Appalachia page 33
Vol.2 Case Studies of Economic Growth Processes Chautauqua County 

closely tied to manufacturing, the workforce, business community, and government 

were all slow to respond to the structural shifts occurring in the economy. Instead, the 

region expanded efforts to retain the existing economic base rather than exploring 

opportunities to diversify and change. Further, significant competition existed between 

the northern and southern parts of the county, as well as between individual 

jurisdictions. The various organizations working to grow the economy operated 

individually, and often in competition with each other to attract businesses. According 

to several economic development professionals in the region, the region needed to 

suffer through the considerable economic upheaval of the 1980s and 1990s before it 

was ready to embrace economic change and work together as a region to diversify and 

grow the economy. 

Today, the County has recast its image from being predominantly a manufacturing 

center. After years of refusing to acknowledge that tourism and service-based 

businesses could provide an important component of an economic development 

strategy, the economic development community has now embraced tourism as central 

the region’s future growth. The community also is reevaluating its assets to identify 

additional areas for growth and development, such as the development of a 

distribution center in Ripley, where Interstates 79, 90, and 86 converge. Furthermore, 

the business and economic development communities have moved from a territorial 

approach to economic development to embrace a team approach to economic growth. 

Strong leaders have emerged from both the business and public sectors to provide a 

strong voice for change both at home and in Albany. These changes in attitude and 

strategy form the basis of the County’s successful transformation to a more 

diversified, stable economy. 

A Strong Framework for Economic Development 

As Chautauqua County’s economy contracted over the past twenty years, the number 

and strength of economic development organizations in the County has increased. 

Furthermore, these organizations have dropped parochial attitudes and come together 

to attract businesses to the region instead of competing among themselves to attract 

firms. Collaborations include: 

• A partnership between the County Industrial Development Agency, the City of 

Jamestown, the two Empire Zones, the for-profit Buffalo Niagara Enterprise 

(responsible for business attraction and marketing), the Westfield Development 

Corporation, and the Workforce Investment Board. This group meets regularly 

to discuss strategies for business retention and growth. 

• The consolidation of the North county and South County Chambers of 

Commerce into a single Chamber representing the entire County. 

• The participation of the Chamber in the Committee for the Future, a superregional group of business and public sector leaders representing Chautauqua, 

Cattaraugus, Allegany, and Munroe Counties. 

• A partnership between the four Empire Zones in the Southern Tier Region, 

Sources of Growth in Non-Metro Appalachia page 34
Vol.2 Case Studies of Economic Growth Processes Chautauqua County 

facilitating the sharing of leads and information. 

The strength of these local efforts at collaboration have been rewarded with state and 

federal programs and grants aimed at stabilizing the economy in light of losses in the 

manufacturing sector. Organizations involved in economic development range from

super regional organizations to local community development agencies to business 

organizations and private foundations. Some of the most active organizations involved 

in economic development in the County and their roles are described below. 

• The Southern Tier West Regional Planning and Development Board 

(STWRPDB) provides economic development assistance to Chautauqua, 

Cattaraugus and Allegany Counties. This regional agency produces the annual 

Regional Economic Development Strategy, which is funded by the US Department 

of Commerce Economic Development Agency (EDA), and the Appalachian 

Regional Commission (ARC). The document includes an analysis of economic 

trends, an evaluation of the region’s successes in implementing programs and 

projects aimed at improving economic conditions in the region, and a strategy 

achieving economic growth in future years. The strategy is participatory, and 

includes input from other economic development agencies, the communities 

within the region, educational institutions, businesses, and other interested parties. 

As the conduit for EDA and ARC funding in the region, STWRPDB oversees 

major infrastructure and development projects funded by these federal agencies. 

STWRPDB also works on major regional initiatives, such as the purchase of 180 

miles of rail lines serving the Southern Tier, and the reinstitution of rail service in 

the region. The agency also works with other economic development groups 

throughout the county to attract and retain businesses. 

• Chautauqua County Industrial Development Agency (CCIDA) provides 

financial assistance to area businesses through two revolving loan funds, industrial 

development bonds, and tax leases. The CCIDA also provides training for area 

businesses and works with area businesses to retain jobs. The Agency manages 

four industrial parks in the County, and was instrumental in the development of 

two speculative industrial buildings at two of the parks, an aggressive initiative 

that has proven successful in attracting new firms to the County. 

• The Greater Jamestown and Dunkirk-Sheridan Empire Zones provide tax 

incentives to certified businesses located with the boundaries of the zones. 

Incentives include wage tax credits for newly created jobs, real property tax 

credits, sales tax exemption, employment incentive credits, business tax 

reductions, and infrastructure loans. Over 150 businesses have been certified to 

participate in the Empire Zone programs. 

• The City of Jamestown Development Office works within the City to attract, 

retain and grow businesses. The department provides planning, zoning, and 

building inspection services, and administers entitlement programs such as 

Sources of Growth in Non-Metro Appalachia page 35
Vol.2 Case Studies of Economic Growth Processes Chautauqua County 

Community Development Block Grants. The Development Office completed a 

consolidated plan for the City, as well as a Downtown Commercial 

Redevelopment Plan. An urban design plan and a traffic plan are currently 

underway. A key to the successful development of these plans has been 

participation by community leaders such as the president of the community 

college, the executive director of the hospital, and business and civic leaders. The 

agency has been successful in obtaining grants for these planning studies, as well 

as a Brownfields Redevelopment Grant to inventory the existing industrial 

buildings in the City and assess what is needed to clean up the sites. The 

Jamestown Local Development Corporation is housed within the Development 

Office, and provides $10,000 to $350,000 loans to local businesses through its $6 

million revolving loan fund. 

• Chautauqua Opportunities for Development, Inc. (CODI) provides assistance 

to micro-enterprises with five or fewer employees. CODI provides loans of up to 

$15,000 to businesses that are unable to secure traditional financing. CODI’s 

clients are generally retail and service businesses. The program started in 2000, 

capitalized through HUD’s Small Cities Program. The Small Business 

Development Center at Jamestown Community College provides management and 

technical assistance to small businesses throughout the County. 

• The Chautauqua County Workforce Investment Board (CCWIB) helps match 

businesses with workers. CCWIB works with businesses to train existing and new 

employees to keep area businesses competitive. CCWIB recently worked with the 

developer of a proposed distribution center in Ripley to ensure that the region 

could supply the 1,000 plus workers expected to be needed at the facility. The 

Manufacturing Training Institution at Jamestown Community College also 

provides workforce training tailored to the needs of specific businesses. 

• The Chautauqua County Chamber of Commerce works to promote business in 

the County in several ways. It provides a networking opportunity for businesses 

throughout the County to come together to discuss economic development issues 

and develop strategies to address these issues. Further, the Chamber has evolved 

into a strong regional voice on state-level policy issues that effect business 

operations in the state, and has been affective in influencing policy changes 

favorable to the County. The Chamber also works to attract new businesses to the 

County by compiling information about business resources and workforce 

statistics and making this information available when businesses inquire about 

Chautauqua County locations. 

• The for-profit Buffalo Niagara Enterprise (BNE), located in Buffalo, acts a 

clearing house for information about business locations in western New York. 

BNE collects and compiles economic and employment data for Chautauqua 

County, and keeps and up-to-date inventory of available industrial and commercial 

sites. BNE responds to business inquires and develops and distributes marketing 

materials promoting the area to businesses. 

Sources of Growth in Non-Metro Appalachia page 36
Vol.2 Case Studies of Economic Growth Processes Chautauqua County 

• The role of local foundations in economic development is unique in Chautauqua 

County. Four Jamestown area foundations have embraced efforts to improve the 

regions economy, at least one going so far as to adopt economic development as 

part of its mission. These foundations have helped fund Chautuaqua County staff 

at the NBE, paid to hire a community grant writer as well as an advocate for 

Jamestown and the region in Albany, partially funded Jamestown’s urban design 

plan and activities of the Jamestown Center City Development Corporation, and 

will fund the initial recommendations of the urban design plan. One foundation 

fully financed the development of the ice arena in Jamestown to provide an anchor 

for activity in the west end and create a destination for tourists. The active 

involvement of foundations has proven critical to the region’s ability to succeed in 

stabilizing and diversifying it economy, and provides a model for other regions to 

emulate. 

In addition to the above, there are several local agencies and organizations that work 

to promote economic growth in the County. 

Key Elements of Economic Development Successes. Six elements of the County’s 

economic development program emerge as central to its successful efforts to stabilize 

the region’s economy during the past several years. 

1. Broadening of focus beyond traditional manufacturing base. For many

years, Chautauqua County identified itself as a manufacturing area. The 

economic development community focused on attracting and retaining 

manufacturing facilities, and the workforce expected to obtain manufacturing 

employment. This strong cultural mindset prevented the region from moving 

forward with efforts to branch out and exploit other opportunities for economic 

development, including the service industry and tourism. More recently, the 

economic development community has recognized the potential of the tourism

industry in particular to help stem the loss of jobs in the County and to provide 

options for new directions. At the same time, the County continues to provide 

assistance to manufacturers interested in locating starting up, or expanding in 

the County. 

2. Within manufacturing, a focus on supporting existing businesses. While 

the County and its municipalities continue to work with organizations such as 

Buffalo Niagara Enterprises to attract businesses, the economic development 

community is focused on working with existing businesses in the sectors 

which have proven important to the region’s economy to ensure that they 

remain viable. Examples of efforts to support these businesses at both the local 

and state level include the purchase of the old ConRail lines and reinstitution 

of rail service to the area, the development of industrial parks with spec 

buildings aimed at attracting businesses that support the major manufacturing 

sectors, assistance with reducing energy costs through subsidies, the 

configuration of Empire Zones to incorporate major manufacturers, and 

Sources of Growth in Non-Metro Appalachia page 37
Vol.2 Case Studies of Economic Growth Processes Chautauqua County 

business assistance and job training programs created through the region’s 

institutions of higher education. 

3. Regional partnerships for economic development. During the past five 

years, the County has witnessed a clear shift away from an attitude of 

competition among the many jurisdictions in the County to a regional 

partnership for economic development. This partnership is evident in the 

creation of the Partnership for Economic Development, the participants of 

which include the Southern Tier West Regional Planning and Development 

Board, the County Industrial Development Agency, the Greater Jamestown 

Empire Zone, the Dunkirk-Sheridan Empire Zone, the Cities of Jamestown and 

Dunkirk, the Chautauqua County Workforce Investment Board, and Westfield 

Development Corporation. The Partnership provides a forum for discussing 

and solving barriers to economic development within the County, as well as a 

one-stop shop for businesses interested in learning more about business 

development opportunities within the County. The partnership has reduced 

barriers to entry by opening up channels of communication and providing 

potential businesses with information about multiple municipalities and 

programs without needing to make multiple phone calls. Further, the four 

Empire Zones in the Southern Tier (Jamestown, Dunkirk-Sheridan, 

Cattagaurus, and Allegany all work together to share leads and to present a 

united voice in Albany. 

Another regional partnership developed five years ago when the north county 

and south county chambers of commerce merged into a single chamber serving 

the entire county. The County-wide chamber has a membership of 

approximately 1,600 firms, representing more than half the businesses in the 

County. This resulted in improved efficiencies and effectiveness in running the 

chamber, and better communications between all businesses in the County. 

Two additional examples of regional partnerships for economic development 

extend beyond Chautauqua County. One is the County’s involvement with 

Buffalo Niagara Enterprises (BNE), a for-profit entity that develops marketing 

information and provides marketing leads for participating organizations. BNE 

maintains an inventory of available commercial and industrial land within its 

service area, and works with businesses and localities to solve barriers to entry. 

The services provided by BNE allow local economic development 

professionals to focus on site specific issues rather than the maintenance of upto-date site inventories and marketing materials. In addition to BNE, the 

Committee for the Future is a consortium of four counties – Chautauqua, 

Cattaragus, Allegany, and Monroe – whose business and political leadership 

have come together to identify strategies for moving the region forward. 

On a smaller scale, the City of Dunkirk and Town of Dunkirk were able to 

come to overcome boundary issues by developing a revenue sharing agreement 

for development in the Town adjacent to the Interstate 90 interchange. In this 

Sources of Growth in Non-Metro Appalachia page 38
Vol.2 Case Studies of Economic Growth Processes Chautauqua County 

instance, the City was asked to extend services to the land around the 

interchange so that the Town could attract development. At first the City 

balked at extending services without benefit of any of the resulting tax 

revenue. Working with SUNY Fredonia, the City and Town worked out a 

revenue sharing agreement, and the City extended the necessary services. 

These regional approaches to economic development represent a significant 

shift away from parochial competition for single businesses. The organizations 

that have joined forces recognize that economic growth anywhere in the 

County or the broader region can benefit all of the partners by creating 

economic activity that can attract additional businesses, and by providing jobs 

for area residents. These regional efforts have been instrumental in creating a 

climate of cooperation that is evident to businesses and in helping to stabilize 

the economy of the County. 

4. Leadership. Another key element of the economic development efforts in the 

County is leadership by both the public and private sectors. Community 

leaders including private sector business executives, the president of SUNY 

Fredonia, and the County Executive have come together in efforts to stimulate 

economic growth. They have participated in strategic planning initiatives and 

in business attraction efforts. Business leaders participating in planning efforts 

bring a results- oriented attitude to the table, and insist on developing 

achievable goals with clearly defined steps and assigned responsibilities for 

making things happen. The County Executive and the Director of the County 

Industrial Development Agency have shown leadership in developing 

speculative buildings at the County’s businesses parks, which have succeeded 

in attracting new firms to the area. Both the County’s strong leadership and the 

united voice provided by its partnerships have been instrumental in garnering 

financial support and grants from both the state and federal governments. The 

can-do, won’t-take-no-for-an-answer attitudes of the County’s leadership and 

its elected representatives in Albany and Washington have been instrumental 

in helping the County move forward. 

5. The participation of non-profit foundations. Traditionally, non-profit 

family and community foundations do not target economic development 

activities for the focus of their giving. However, in Chautauqua County, four 

such foundations have proven instrumental in providing funding for economic 

development programs, and the Gebbie Foundation actually incorporated 

economic development into its mission. The Gebbie Foundation, as well as the 

Chautauqua Region Community Foundation, the Lenna Foundation and the 

Sheldon Foundation have all contributed to strategic planning efforts and local 

development corporations. The Gebbie Foundation funded the construction of 

the Jamestown Savings Bank Ice Arena in an effort to provide an anchor for 

the redevelopment of the west end of downtown Jamestown. By providing 

funding for key planning and economic development programs, these 

foundations have leveraged scarce public dollars to better achieve economic 

Sources of Growth in Non-Metro Appalachia page 39
Vol.2 Case Studies of Economic Growth Processes Chautauqua County 

development goals in the County. 

6. Transportation investments. Two significant transportation investments have 

occurred in Chautauqua County over the past decade, both of which have 

supported business attraction, retention and expansion efforts. In 1999, New 

York State Department of Transportation completed work on the upgrade of 

the two-lane Route 17 through Chautauqua County to the new four-lane 

Interstate 86. The project included upgrading 185 miles of two lane roadway to 

four lanes, as well as a bridge across Lake Chautauqua, saving significant time

for travelers. The impacts of the highway improvements are still being realized 

as more businesses take advantage of the improved access provided by the 

upgraded facility. Early business investments associated with the highway 

included new hotels built at or near the highway interchange at Jamestown, and 

expansion of retail and restaurant uses. The new highway also improves the 

attractiveness of Ripley as the location of a distribution center.

Another important transportation investment in the region was the purchase, 

rehabilitation and reopening of the old Southern Tier Extension railroad line, 

which serves southwestern New York Counties. The project resulted from the 

efforts of a large consortium that included Southern Tier West Regional 

Planning and Development Board, Norfolk Southern, Allegany County, 

Cattaraugus County, Chautauqua County, Steuben County, the Southern Tier 

Extension Railroad Authority (STERA - which was created to own the 

railroad), the New York Department of Transportation, and the Western New 

York and Pennsylvania Railroad. The railroad is owned by STERA and leased 

back to Norfolk Southern “to facilitate a tax abatement incentive program to 

redevelop the line.” (Southern Tier West Regional Planning and Development 

Board, p. 16). The line reopened in 2003. Prior to the redevelopment of the 

line, only 70 carloads per year were shipped on the line. Today, 35,000 

carloads per year pass over the line. Although not all of these shipments 

originate or terminate in Chautauqua County, several businesses including 

metal fabricators and farm suppliers are using rail sidings and shipping goods 

via rail. The cheaper cost of shipping by rail has also created competition for 

trucks, and led to a reduction in truck shipping costs for some businesses. 

3.5 Lessons Learned 

Chautauqua County’s success in stabilizing and diversifying its economy in response 

to significant structural changes provides several lessons for others facing similar 

circumstances. 

Work to identify and embrace non-traditional opportunities for economic growth. 

Many regions that have grown and prospered as a result of strong manufacturing 

sectors have difficulty embracing non-manufacturing sectors as opportunities for 

Sources of Growth in Non-Metro Appalachia page 40
Vol.2 Case Studies of Economic Growth Processes Chautauqua County 

growth and expansion. This was true of Chautauqua County for many years. However, 

in recent years, fueled by the undeniable robust growth in the tourism industry, the 

Chautauqua County economic development community has embraced tourism as an 

important component to successful economic diversification and growth. The 

County’s success in diversifying by being willing to look beyond its historical 

strengths to new opportunities for growth can provide an important role model for 

other Appalachian regions. 

Continued support for existing business sectors. A typical mistake that distressed 

regions make is to pursue new national growth sectors at the expense of their existing 

economic base. While the Chautauqua County economic development community 

embraced tourism, a new and growing sector, they did not abandon the existing 

manufacturing businesses within the County. Through selective retention the county 

recognized that, although declining, the manufacturing base still accounts for the 

largest share of jobs, and that many in the workforce still depend on these jobs. 

Therefore, the County continues to offer and develop programs to help the 

manufacturing businesses in the community. This strategy has proved effective in 

ensuring a diversified economy by adopting a multifaceted approach to economic 

development that embraces change while not abandoning its history. 

A united voice can provide results. Much of Chautauqua County’s success in 

stabilizing its economy is attributable to the many partnerships that developed to 

promote economic growth in the throughout the County. The recognition that growth 

anywhere in the County benefited the whole County, the region was able to come

together to provide a united, cohesive image to businesses. This united approached 

allows for efficiencies in program delivery, facilitates problem solving, and allows for 

effective, streamlined communication with the business community. In rural areas 

where economic development resources are in short supply, this approach can be 

particularly effective. A united voice can also prove effective in garnering state and 

federal attention and support. 

Engage community leaders in economic development efforts. Chautauqua County’s 

economic development program has greatly benefited from strong leadership. This has 

included the involvement of community leaders in planning initiatives, financial 

leadership provided by local foundations, and political leadership on policy issues at 

all levels of government. A successful economic development program, particularly in 

distressed areas, requires participation by people who do not accept the status quo and

who are committed to making change happen.

3.6 Interviewees 

Diane G. Hewitt, Director of Economic Development, Chautauqua Opportunities 

for Development 

Sources of Growth in Non-Metro Appalachia page 41
Vol.2 Case Studies of Economic Growth Processes Chautauqua County 

Michael P. Sullivan, Director of Institutional Relations and Public Affairs, 

Chautauqua Institution 

Richard L. Alexander, Director, County of Chautauqua Industrial Development 

Agency 

Pamela S. Lydic, President, Chautauqua County Chamber of Commerce 

Donald Rychnowski, Executive Director, Southern Tier West Regional Planning 

and Development Board 

Terry Norman, Comptroller, Cummins Engines 

Rebecca Congdon, Executive Director, Dunkirk-Sheridan Empire Zone 

Cory Zahm, Planner, Greater Jamestown Empire Zone 

Steven Centi, Director of Development, City of Jamestown 

Greg Lindquist, Economic Development Director, City of Jamestown 

Andrew Nixon, Executive Director, Chautauqua County Visitors’ Bureau 

Dr. Leonard Faulk, Director, Rural Regional Development Center, SUNY 

Fredonia 

Greg Serto, Plant Manager, Truck-Lite 

Pam Frank, Executive Director, Westfield Development Corporation

Sources of Growth in Non-Metro Appalachia page 42
Vol.2 Case Studies of Economic Growth Processes Pike County 

VOLUTION 

AS A TRADE CENTER

4 PIKE COUNTY, KY: E

4.1 Introduction 

Pike County, KY is the eastern-most county of a five county Local Development 

District that sits adjacent to the WV border. Pike County has managed to move from

distressed to transitional status since 2003. However the four remaining counties in 

this mining-dependent LDD area have not faired the same. The case study explores

reasons for Pike’s gradual success, the lack of beneficial spillover to its neighboring 

counties and transferable lessons to other mining-dependent areas of Appalachia. 

To many outsiders, Eastern Kentucky’s image has remained for decades as a region of

persistent poverty. However, the reality is far different. The region is populated with

ard working people who have worked diligently to change their image and fortune. 

pment, 

ccess and a spark of belief in itself. Pike’s past reliance on coal is being replaced by 

tail destination. 

h

Nowhere is this truer than in Pike County. 

This case study seeks to determine the root causes of Pike’s improvement through a 

survey of recent studies, statistics and interviews. It explains how Pike County’s

transformation took place over decades, through a combination of vision, leadership

and good fortune that allowed Pike to be transformed into a regional hub with a 

diversified economy. The “Cut-Thru Project” – a massive infrastructure initiative – 

was a first step in the County’s progress and has brought additional develo

a

new economic growth as a regional health, service and re

4.2 Regional Profile 

Pike County lies at the crossroads of eastern Kentucky, although it is located quite a 

distance from the nearest metropolitan areas in three states (Exhibits 4-1,2). It is also

the first in the Big Sandy Area (BSA) Local Development District to graduate from

“distressed” to “transitional” status (as designated by the Appalachian Regional

ommission in 2003), while its neighboring counties ― Floyd, Johnson, Martin and 

agoffin –have seen fewer economic opportunities.

C

M

Sources of Growth in Non-Metro Appalachia page 43
Vol.2 Case Studies of Economic Growth Processes Pike County 

unty, KY to Selected Major Cities 

l

ts subsequent influx of people and capital as the industry expanded because 

f a sharp increase in the price of coal due to regulatory changes and the OPEC oil 

mbargo. 

Exhibit 4-1. Pike County's Location Within Kentucky 

 

Exhibit 4-2. Distance from Pike Co

Pike County, with a population of 70,000 and square mileage of 788 is by far the 

largest county in the region. Although the local quality of life is improving, the area 

has been losing population since 1980 (see Exhibit 4-3). The 1970s brought the coa

boom and i

o

e

Sources of Growth in Non-Metro Appalachia page 44
Vol.2 Case Studies of Economic Growth Processes Pike County 

Exhibit 4-3. Big Sandy Region Changes in Population, 1970-2000 

Population by County 1970 1980 1990 2000 1970-80 1980-90 1990-2000 1970-2000

Floyd 35,889 48,764 43,586 42,441 36% -11% -3% 18%

Johnson 17,539 24,432 23,248 23,445 39% -5% 1% 34%

Magoffin 10,443 13,515 13,077 13,332 29% -3% 2% 28%

Martin 9,377 13,925 12,526 12,578 49% -10% 0% 34%

Pike 61,059 81,123 72,583 68,736 33% -11% -5% 13%

State of Kentucky 3,218,706 3,660,777 3,685,296 4,041,769 14% 1% 10% 26%

Source: US Census Bureau.

Population % Change

After the mid-1980s coal bust, brought about by declining oil prices, new mining in 

the Western US and industry technology changes, coal mining declined but still 

maintained a presence in the region. As mining technologies changed, workers were 

not as needed as pure labor, but rather as machine operators and technicians. This 

technology shift had a large impact on employment: once plentiful high-wage, lowskill jobs vanished. As jobs and amenities vanished, so did area residents.

While this decline is leveling off, it has left the region without much of an increase in 

population since the 1970s. Partially because of this stagnation, and partially because 

of lingering stereotypes about employee skill levels and poverty levels, businesses 

have hesitated to locate in the area. Travel to the metro Lexington or Ashland / 

Huntington / Charleston is necessary to go to a large shopping mall or national chain 

restaurant or for recreational activities like ice skating. As a result, area college 

graduates who have spent the last four-plus years in a metro area hesitate to return 

home. 

Changes in population are mirroring a dramatic change in the county’s industry mix. 

Once ruled by coal, Pike is now showing strength in services (especially healthcare) 

and retail, but this has not meant that coal has completely diminished as a vital sector

the county’s economy. 

Mining companies have been expanding recently, thanks to new demand for coal and 

new processing technology. However, employers report difficulty in finding qualified 

applicants. Many companies are willing to pay for training “for the right person,” and 

are offering high starting salaries ($40,000+). The importance of mining to the 

county’s economy is illustrated by the fact that despite dramatic reductions in 

employment levels from 1970, 14% of the workforce still is employed by the industry. 

Exhibit 4-4 shows just how concentrated the coal industry is in Pike County, with the 

county showing a location quotient of 16.8 compared with Kentucky as a whole and 

58.1 when compared with the nation. Considering that anything over a 1.0 is 

considered a higher than expected concentration, it is clear that Pike County remains a 

coal-based economy. 

Sources of Growth in Non-Metro Appalachia page 45
Vol.2 Case Studies of Economic Growth Processes Pike County 

But as Exhibits 4-4 and 4-5 show, there are other sectors that are emerging. Of special 

note is the location quotient of 1.2 for health care and social services. The increased 

importance of the health care industry suggests a new direction for Pike County, one 

that is having dramatic impact on the ways in which the county serves as a hub for 

neighboring communities. 

Exhibit 4-4. Pike County Employment by Industry, 1970-2000 

1980 1990

EMPLOYMENT % of Tot. % of Tot.

Farm employment 40 0.3% 50 60 50 0.2%

Agricultural Services 20 0.1% 40 140 200 0.6%

Mining 5,490 35.1% 9,950 6,420 5,200 16.8%

Construction 550 3.5% 1,360 1,150 1,200 3.9%

Manufacturing 260 1.7% 320 420 910 2.9%

Transportation, Comm., PU 1,110 7.1% 2,020 2,010 2,040 6.6%

Wholesale Trade 390 2.5% 810 840 930 3.0%

Retail Trade 2,500 16.0% 4,110 5,520 6,830 22.0%

FIRE 420 2.7% 750 1,160 1,380 4.4%

Services 2,550 16.3% 4,330 6,190 8,380 27.0%

Government 2,300 14.7% 3,350 3,750 3,910 12.6%

Total 15,630 100.0% 27,090 27,660 31,030 100.0%

% CHANGE 1970-80 1980-90 1990-2000 1970-2000 1980-2000

Farm employment 25.0% 20.0% -16.7% 25.0% 0.0%

Agricultural Services 100.0% 250.0% 42.9% 900.0% 400.0%

Mining 81.2% -35.5% -19.0% -5.3% -47.7%

Construction 147.3% -15.4% 4.3% 118.2% -11.8%

Manufacturing 23.1% 31.3% 116.7% 250.0% 184.4%

Transportation, Comm., PU 82.0% -0.5% 1.5% 83.8% 1.0%

Wholesale Trade 107.7% 3.7% 10.7% 138.5% 14.8%

Retail Trade 64.4% 34.3% 23.7% 173.2% 66.2%

FIRE 78.6% 54.7% 19.0% 228.6% 84.0%

Services 69.8% 43.0% 35.4% 228.6% 93.5%

Government 45.7% 11.9% 4.3% 70.0% 16.7%

Total 73.3% 2.1% 12.2% 98.5% 14.5%

Source: CEDDS Volume II, 2002 Woods and Poole Economics, Inc.; EDR Group

1970 2000

Sources of Growth in Non-Metro Appalachia page 46
Vol.2 Case Studies of Economic Growth Processes Pike County 

Exhibit 4-5. Selected Pike County Industry Location Quotients, 2002 

Location Quotients 

 Pike / Kentucky Pike / U.S. 

Crop Production 0 0.0 

Animal Production 0.05 0.2 

Forestry & Logging 1.14 1.6 

Fishing, Hunting & Trapping 0 0.0 

Support for Agriculture & Forestry 0 0.0 

Oil & Gas Extraction 7.3 5.1 

Mining & Support Activities 16.77 58.1 

Utilities 2.17 1.8

Construction 0.8 0.8

Food Products 1.11 1.2 

Beverage & Tobacco Products 0 0.2 

Textile Mills 0 0.0 

Textile Product Mills 0 0.1 

Apparel Manufacturing 0 0.0 

Leather & Allied Products 0 0.0 

Wood Products 0.16 0.3 

Paper Manufacturing 0 0.0 

Printing & Related Support Activities 0 0.1 

Petroleum & Coal Products 0 0.0 

Chemical Manufacturing 0 0.0 

Plastics & Rubber Products 0 0.0 

Nonmetallic Mineral Products 0.27 0.4 

Primary Metal Manufacturing 0 0.0 

Fabricated Metal Products 0 0.1 

Machinery Manufacturing 0.16 0.2 

Computer & Electronic Products 0 0.0 

Electric Equipment, Appliances, etc. 0 0.2 

Transportation Equipment 0 0.1 

Furniture & Related Products 0 0.0 

Miscellaneous Manufacturing 0 0.1 

Wholesale Trade 0.66 0.6 

Retail Trade 1.41 1.5 

Transportation 1.43 1.5

Mail, package delivery & warehousing 0.19 0.3 

Publishing Industries (except Internet) 0.66 0.4 

Motion Picture & Sound Recording 0 0.1 

Broadcasting 0.87 0.6

Internet & data process svcs 0 0.0 

Monetary, Financial, & Credit Activity 0.85 0.7 

Insurance Carriers & Related Activities 1 0.8 

Funds, Trusts, & Other Financial Vehicles 0 0.0 

Real Estate 0.63 0.5 

Rental & Leasing Services 0.82 0.8 

Lessors of Nonfinancial Intangible Assets 0 0.0 

Professional Scientific, Technical, Services 0.82 0.5 

Administrative & Support Services 1.33 1.1 

Sources of Growth in Non-Metro Appalachia page 47
Vol.2 Case Studies of Economic Growth Processes Pike County 

Waste Management & Remediation 0.55 0.6 

Educational Services 2.23 1.6 

Health Care & Social Services 1.21 1.2 

Amusement & Recreation 0.21 0.1 

Accommodations, Eating & Drinking 1.09 1.1 

Repair, Maintenance, & Personal Services 1.17 1.2 

Religious, Civic, Professional, Organizations 0.47 0.2 

Private Households 0.69 0.6 

Government & non NAICs 0.79 0.8 

Source: EDR-LEAP (with IMPLAN data) and EDR Group.

Pike County has acknowledged the need to diversify industry, and has strongly 

supported the development of two industrial parks: the 200-acre Honey Branch 

Regional Industrial Park (located in Martin County) and the 11-acre Mossy Bottom

Industrial Park (located in Pike County). The Honey Branch Park was a cooperative 

effort between all of the Big Sandy Area counties and is adjacent to a federal prison 

site. This park has been successful in attracting tenants, and the coalition of counties 

shares in the generated tax revenues. Mossy Bottom has had more difficulty in 

retaining tenants but has several successful firms. 

Another industrial force is the Kellogg Company’s Pikeville Plant. Originally 

recruited by former Kentucky Governor Paul Patton when he was Pike County Judge 

Executive, Kellogg has developed the facility into one of the country’s largest 

suppliers of Nutri-Grain bars and Pop-Tarts. Nearly 400 people are employed there. 

Pike also benefits from an innovative telecommunications company locating its 

headquarters in downtown Pikeville, and from focusing on additional training for both 

the police and fire departments. These two departments have state of the art equipment 

and have begun training other departments in the region. 

Perhaps the greatest influence in Pike’s changing industry mix and development into a 

regional center is the partnership between Pikeville College and Pikeville Medical 

Center (PMC). PMC is the largest private employer in Eastern Kentucky with 1,300 

employees; with 261 beds and over 535,000 square feet, it operates as the region’s 

medical center. Pikeville College is a private four-year college that offers four 

associate degree programs, 23 baccalaureate degree programs and one doctoral 

program – the School of Osteopathic Medicine, which ARC helped to fund. 

4.3 Evolution of Progress 

As the largest county in the Big Sandy Region, Pike County serves as the area’s hub of 

activity. Both people and materials flow into the county in a way that has helped spur 

the county’s relative growth. 

Transportation Access. Part of the reason for its ability to act as a hub among other 

Sources of Growth in Non-Metro Appalachia page 48
Vol.2 Case Studies of Economic Growth Processes Pike County 

counties in the region is the county’s location at the intersection at some of the best 

roads in the region. Pike County stands at the crossroads between Kentucky, West 

Virginia and Virginia and is the center hub between Lexington (KY), Knoxville (TN) 

and Huntington and Charleston (WV). It is home to four major US highways: US 

460, 23, 119 (ADHS Corridor G) and 80. Highway 23 (segment south of Pikeville, 

Corridor B), which was tuned into a four-lane highway nearly a decade ago, has 

become a major north-south connector. Another highway, 119, should be completed 

within the next year, and will connect Pikeville with South Williamson, WV (see 

Exhibit 4-6). Pike is also home to a regional private airport with a 5,000-foot runway 

and also has good rail line access. 

Exhibit 4-6. Highway Access for Pike County 

The newly built Eastern Kentucky Exposition Center in Pikeville, which also has a 

7,000-seat arena, is expected to be a strong area attraction because of its conventions, 

cultural events and entertainment. Built on land reclaimed as part of the Cut-Thru 

Project, it is estimated that the Center will have a $10 million impact on the local 

economy with the bulk of that figure coming from visitors outside the state. The 

Center’s projected impact will also bolster two currently booming industries in Pike

County: retail trade and services—and a new downtown hotel hopes to capture some

of the traffic generated by the facility. 

The improvements in infrastructure make Pike more “commuter friendly,” and are 

expected to bring more people into the region, which will further develop Pike’s 

reputation as a hub, especially its ability to attract shoppers from neighboring counties.

While it does not have a large mall with its typical mix of national retail 

establishments, it does offer a number of department-type retail stores in addition to 

big-box retailers. Pike offers nearly double the number of both food service/drinking 

Sources of Growth in Non-Metro Appalachia page 49
Vol.2 Case Studies of Economic Growth Processes Pike County 

places and retail trade establishments than the next largest concentration, as shown in 

Exhibit 4-7. 

The City of Pikeville is also burnishing its image through two major renovation 

projects: relocating all overhead wires (power, cable and phone) to underground 

conduits and the Main Street Renaissance Program, which is a large-scale 

beautification project. 

Sources of Growth in Non-Metro Appalachia page 50
Vol.2 Case Studies of Economic Growth Processes Pike County 

Exhibit 4-7. Number of Establishments and Revenue, 2002 

Type of 

Establishment County

Number in 

Category 

Business Revenue 

(in ‘000s) 

Pike 74 $50,943

Floyd 39 $19,831

Johnson 31 $19,393

Martin 13 D

Food services & 

drinking places 

Magoffin 11 $4,994

Pike 324 $783,587

Floyd 191 $341,056

Johnson 121 $267,789

Martin 46 $68,629

Retail trade

Magoffin 43 $51,515

Source: US Census Bureau D = not disclosable; data is suppressed 

Industry. In addition to being the region’s top coal producer (35 million tons, almost 

20 percent of Kentucky's total coal production), Pike County is headquarters for 

financial institutions and holding companies worth more than $1 billion in assets – the 

third largest concentration in Kentucky. It also ranks fifth in Kentucky in both total 

retail sales and effective buying income, and is the seventh biggest contributor to the 

state’s budget in individual income tax paid and eighth in sales tax paid. 

In terms of employment, Pike County’s commuting patterns (Exhibit 4-8) show that 

most of Pike County’s residents work in Pike County – only 14.6 percent of Pike 

County’s labor force participants working in another county. Pike County also attracts 

workers from throughout the region, with Floyd County providing the most workers 

from the Big Sandy region. However, as this data is nearly five years old, new patterns 

may have emerged, especially with new highways opening. The expansion of US 23, 

460 and 119 has – and will – enhance mobility throughout the region, making it easier 

for workers to travel for their jobs and for companies to expand and relocate. 

Exhibit 4-8. Workers Commuting to Pike County, 2000 

Lives in 

Works in 

Pike 

As % of home county 

employed labor force 

Percent of home county workers 

working elsewhere (not including Pike)

Pike 18,455 85% 15%

Floyd 2,221 18% 13%

Mingo, WV 1,244 16% 21% 

Martin 186 6% 27%

Johnson 395 5% 28%

Magoffin 206 5% 36%

Buchanan, VA 362 4% 24% 

Source: Kentucky State Data Center; Virginia Employment Commission; Bureau of Business and 

Economic Research, West Virginia University 

Sources of Growth in Non-Metro Appalachia page 51
Vol.2 Case Studies of Economic Growth Processes Pike County 

As noted before, the Pikeville Medical Center (PMC) has boosted Pike County’s 

economic and healthcare profile. It offers services unavailable elsewhere in the greater 

Big Sandy region, such as: 

• Neurosurgery 

• The Heart Institute with Philips Allura Interventional Catheterization Labs

• The Leonard Lawson Cancer Center 

• The Family Practice Clinic 

• 40-bed Inpatient Rehabilitation Hospital 

• Home Health 

• Medical Detoxification Unit 

• MedFlight of East Kentucky 

• Level II +/- III NICU 

• Sleep Disorders Clinic 

• The Birth Place (largest obstetrical service in the region) 

• Pediatric Transitional Care Unit 

• Siemens ONCOR Linear Accelerator (second in the nation)

• PET Scanning and other state of the art diagnostic department 

These divisions offer top-notch care to the residents of Eastern Kentucky and beyond, 

as it attracts patients who would rather be closer to home than travel to Lexington, 

Louisville, or Huntington/Charleston for top-tier services. With its almost holistic 

provision of services, the hospital is able to provide for almost any need the local 

population has, from heart surgery to addiction. Although there are several other 

hospitals in the region (Paul B. Hall in Johnson County, Highlands Regional Medical 

Center in Floyd and Our Lady of the Way in Martin), they do not offer the level of 

care PMC does. 

The hospital is also spurring some concurrent cluster growth, with physicians setting 

up private practice and medical service centers. Community leaders also hope for 

medical suppliers and research to locate in the area, especially because of the chronic 

health needs of the population. 

Part of the reason for this boom is the unique partnership between the PMC and 

Pikeville College’s School of Osteopathic Medicine, which opened in 1997 with a 

class of 60 students. Its genesis was the result of a Johnson County resident who 

believed the area needed a medical school to alleviate chronic shortages of doctors. 

Because Pikeville College had the existing infrastructure necessary to support such an 

initiative, the school was opened at the College. To date, 282 Doctors of Osteopathic 

Medicine have graduated from the school, and many have stayed in the region as 

primary care providers. The local medical community is very supportive of the 

medical college’s mission, and many medical students complete residencies at PMC. 

Sources of Growth in Non-Metro Appalachia page 52
Vol.2 Case Studies of Economic Growth Processes Pike County 

PMC also recently established the Pikeville Medical Development Corporation with 

the mission to: 

 • Develop collaborative research initiatives between PMC and major medical 

research entities in Louisville as well as Pikeville College School of 

Osteopathic Medicine and other similar institutions. 

• Create an e-Health system at PMC which will serve as a model for other

medical entities throughout the Commonwealth. 

• Obtain public and private funding for the development of the local economy

and for the expansion of the programs and facilities at PMC. 

• Create a high-tech, regional research and development Institute in eastern 

Kentucky to work with other medical partners in fostering advanced medicalrelated concepts and other new economy-type startup companies. 

• Encourage private companies to locate in eastern Kentucky so as to enhance 

economic stability. 

• Link the economic engine of PMC with the economic development activities 

of governmental, non-profit and for-profit entities in eastern Kentucky. 

 

While lofty, these goals provide an ideal – much like the Cut-Thru Project – for 

leaders to aspire. A 2003 report by the KY Rural Health Works estimates that the 

economic impact of Pike’s health care system was significant to the county’s growth. 

This report estimates that for every health care job, an additional .40 jobs are created 

in the local economy; for every dollar of health care labor income, an additional $0.25

of income was generated in the local economy. Assuming a similar effect in Pike 

County, an average wage of $30,000 would provide approximately $7,500 for the 

local economy. 

 

In addition to keeping local health care dollars local and attracting outside dollars, the 

industry also has the potential to act as a magnet for both similar and other industries. 

4.4 Catalysts of Change 

Pike County has benefited from three opportunities that are not as pronounced in the 

rest of the Big Sandy Region: vision and leadership, political fortune, and funding. 

Vision and Leadership. Shortly after his election in 1960, Pikeville Mayor William

Hambley first began talking about the Cut-Thru Project. Mayor Hambley’s vision was 

to move mountains – a mile and a half long channel through them – to provide a 

Sources of Growth in Non-Metro Appalachia page 53
Vol.2 Case Studies of Economic Growth Processes Pike County 

corridor that would contain railroad tracks, US highways 23, 80, 119 and 460, and the 

Levisa Fork of the Big Sandy River. This project, completed in 1987, alleviated 

annual flooding and provided nearly 400 acres of additional developable land, almost 

all of which has been developed. Although this project took nearly three decades, 

Mayor Hambley never wavered in his belief in the project, and was able to promote it 

to many other local leaders. 

Former Governor Patton, a protégé of Mayor Hambley, also developed programs that 

gave Pike County a good jumping-off point. As County Judge Executive, he instituted 

mandatory solid waste pickup and began the process of installing water and sewer 

lines throughout the county. While these projects may seem minor, it is important to 

remember Pike’s difficult terrain, as well as the difference made by water, sewer and 

solid waste pickup access. Governor Patton also provided momentum during his time

as governor and lieutenant governor by supporting progressive policies, infrastructure 

and investing state dollars in local initiatives; by some estimates, up to $500 million 

was brought to the area. 

The current Pikeville City Manager, Donovan Blackburn, has also initiated several 

recent projects to boost the area’s profile. A 2003 comprehensive strategic plan was 

the first in more than a decade and part of an initiative to modernize and enhance local 

development, which also included the hiring of a dedicated maintenance manager and 

an economic development officer, and the expansion of access to technology 

throughout city government. 

Other local leaders are promoting development strategies around tourism. Pike County 

Magistrate Chris Harris believes strongly in the potential of an ATV trail system. West 

Virginia’s trail system is heavily used and draws tourists from a wide geographic area. 

Harris believes that connecting West Virginia and Kentucky through a trail system

will bring additional visitors to the area, and keep visitors in the area longer. 

Another potential attraction is a series of reclaimed mining areas. These areas have

been used to demonstrate varying methods of reclamation, and some are fully forested 

and support elk populations. It is hoped that these areas will become nature preserves,

and they may also offer the possibility of an annual elk hunt. 

Political Fortune and Funding. While much of the credit for the area’s turnaround 

must be given to the local community, it is also very important to note the impact of 

state funding targeted to Pike during both Mayor Hambley’s tenure and Governor 

Patton’s time in Frankfurt. Estimates of state program funding during Patton’s tenure 

run as high as $500 million – a significant amount for a county of roughly 70,000 

people. Granted, the area’s needs were great, both in terms of infrastructure and social 

and development programs, but this amount gave Pike an extra boost as compared to 

its BSA neighbors. 

Pike also benefits from the Coal Severance Tax. This tax is designed to provide a 

resource for economic and social development as a means to replace the income lost 

Sources of Growth in Non-Metro Appalachia page 54
Vol.2 Case Studies of Economic Growth Processes Pike County 

when area coal resources are depleted. State statute requires that 50 percent of this tax 

is returned to coal-producing counties, with the remainder going to the state’s general 

fund; however, it is difficult to determine whether this mandate has been filled. 

According to the Kentucky Department of Revenue, tax receipts since the 1970s have 

totaled more than $4.6 billion dollars, with nearly $1 billion collected from coal mined 

and/or processed from Pike County. These dollars have been used to fund local 

projects, such as water and wastewater projects, osteopathic medical school loan 

forgiveness, and industrial park and economic development. 

Exhibit 4-9 shows the value of severed and processed coal, along with the tax receipts 

incurred by the Coal Severance Tax. The tax assesses 4.5 percent of the value of 

mined (“severed”) coal, for at least $0.50 per ton. Pike County provides the largest 

share of the tax receipts of all mining counties throughout the state, nearly $40 

million. Martin County accounts for the next highest share of revenue, with slightly 

over $8 million. Pike’s revenue from the tax, according to formula, should be $20 

million. 

Because of their larger tax base, Pike County has been able to take the “extra steps” 

needed to wean itself from traditional industries as well as provide development 

funding for the County. Nevertheless, Pike still faces challenges in industry 

diversification and workforce training. 

Exhibit 4-9. Coal Severance Tax Revenue, FY 2002-2003 

Gross Value of 

Severed Coal 

Tax on Severed 

Coal 

Gross Value of 

Processing

Total Tax

Receipts 

Kentucky Total $2,838,514,744 $125,530,144 $356,948,150 $141,488,813

E. Kentucky $2,390,638,851 $105,361,781 $300,451,561 $118,783,697

Pike $766,110,260 $34,112,484 $120,971,083 $39,568,774

Perry $250,870,326 $11,509,372 $39,392,890 $13,287,261

Knott $278,760,063 $12,295,994 $17,513,323 $13,156,757

Harlan $255,715,512 $11,497,770 $11,256,571 $12,024,444

Martin $155,881,929 $6,956,284 $27,915,765 $8,223,374

Leslie $129,087,420 $5,810,747 $19,042,562 $6,669,475

Bell $85,172,600 $3,793,572 $13,004,196 $4,414,843

Floyd $87,133,866 $3,789,958 $4,685,984 $3,994,261

Johnson $16,926,563 $761,696 $2,346,803 $867,303

Magoffin $17,155,789 $772,012 $246,405 $783,095

Source: Kentucky Revenue Cabinet 

Sources of Growth in Non-Metro Appalachia page 55
Vol.2 Case Studies of Economic Growth Processes Pike County 

4.5 Lessons Learned 

While it is difficult to replicate the specific factors that guided the Pike County’s 

growth, other mining dependent areas of Appalachia can take away some guidance 

from its experience. 

Leadership and Regionalism. Perhaps the most important asset of Pike County is the 

strong leadership by several public servants, including former Mayor Hambley and 

former Governor Patton. They both developed visions for Pike County, remained 

focused on the outcomes, and fought for resources to fulfill their goals. While this 

tactic was arguably simpler because of Governor Patton’s position and political skill,

their initial leadership was the starting point. While many in the area thought the CutThru Project would never come to fruition, it did – bringing respite from floods, 

additional developable land, and more importantly, a sense of pride and 

accomplishment. 

The five county region now works together more frequently, continuing a 

collaborative approach begun years ago. The BSA has been particularly successful on 

major projects such as the Honey Branch Regional Industrial Park, in which 200-acres 

was developed for industrial use and is adjacent to a federal prison. This initiative was 

perhaps one of the first collaborative projects in the BSA, and resulted in new jobs and 

a landmark profit-sharing agreement. Another example is the City of Pikeville’s 

willingness to install water and sewer lines outside of city limits, particularly along the 

US 23 corridor between Pikeville and Floyd County. This infrastructure will induce 

additional development and will benefit both counties. The counties are also 

benefiting from leaders who are willing to try new approaches, such as those in Pike 

and Johnson Counties. 

While relationships between the counties are not always ideal, and such bonds are 

difficult to form, it is important to note the possibilities and results from such 

communication. By having strong leaders willing to work as a region, municipal subunits of that area are more likely to prosper. This will be particularly important to 

Johnson, Martin, and Maggofin counties which while adjacent to the economic 

progress of Pike County are not sharing in the opportunity. Floyd County has decent 

highway access to Pike County which has clearly enabled 18% of Floyd’s labor force 

participants to import their wages from jobs held in Pike County. 

Determination, or, Slow and Steady Wins the Race. Pike County leaders developed 

some very ambitious projects – some would say overambitious or impossible, as in the

case with the Cut-Thru Project. However, these leaders persevered and continued to 

work on their goal: additional developable land and jobs. Although it has taken 

decades, Pike County has gained developable land, jobs, infrastructure and, as noted 

before, a spark of encouragement. This spark led to a number of projects, including a 

Sources of Growth in Non-Metro Appalachia page 56
Vol.2 Case Studies of Economic Growth Processes Pike County 

new multi-use park and a performing arts center in downtown Pikeville. Area leaders

believe this project will begin a chain reaction of development. Even before opening, 

Pikeville was able to attract a new chain hotel for its downtown, which will begin 

construction shortly. Pikeville approached a national chain about building a 

downtown hotel a few years ago and was told it wasn’t feasible. However, they went 

back after some time, made another presentation, and expect the new hotel to be ready 

soon. 

Industrial diversification is key but not easy

Pike County is growing in part because community leaders have recognized that 

depending on coal for their county’s livelihood no longer made sense. In 35 years, the 

percentage of the county’s employees in the mining industry has dropped from 35 

percent to 14 percent, a huge shift. Accordingly the county has begun to look to other 

industries to fill the void left by the shrinking mining industry. 

The best example occurs with the growing health care industry in the county. The 

partnership between Pikeville College and the Pike Medical Center show how a 

community asset, in this case the college, can build a new industry, in this case health 

care. It also shows how Pike is recognizing its role as a regional hub. The Medical 

Center now is the preeminent health care facility in the Big Sandy Region. 

Another key has been recognizing that the environmental impacts of the mining 

industry can be addressed in a way that is positive to the economy. The University of 

Kentucky’s College of Agriculture has been successful in determining the most 

effective ways of reclaiming former mine sites, and County leaders are looking at 

ways to reclaim this land into such uses as wildlife preserves and ATV trails that could 

attract tourists to the naturally beautiful region. 

Of course, the large-scale economic shift away from mining is not without its 

challenges. The biggest one being the presence of so many displaced, and in this case 

often disabled, workers. Helping these workers find new opportunities, especially in 

jobs that can pay beyond a living wage, is a consistent challenge facing both 

workforce and economic development teams. This is especially difficult given that 

manufacturing, which at least would seem to offer similar wages and use similar skills 

to mining, has been so slow to develop in the county. If the county wants to continue 

to grow, figuring out ways to enhance the manufacturing sector will be critical. 

Similarly, because the mining industry seems to be experiencing a resurgence, and 

because these firms provide crucial tax revenues, adequate workforce training should 

be made available to those seeking work as a miner. Because technology plays such an 

important role now, possible cross-training opportunities (i.e. safety or heavy 

equipment) could exist with other industries. 

Sources of Growth in Non-Metro Appalachia page 57
Vol.2 Case Studies of Economic Growth Processes Pike County 

4.6 Interviewees 

Donovan Blackburn, Pikeville City Manager 

R. Tucker Daniel, Johnson County Judge/Executive 

William Deskins, Pike County Judge/Executive

Dennis Dorton, President, Citizens National Bank 

Robert M. “Mike” Duncan, Chairman and CEO, Inez Deposit Bank and 

Republican National Committee General Counsel 

Don Graves, professor and former chair, University of Kentucky College of 

Agriculture 

Chris Harris, Pike County Magistrate (District 6) 

Paul Patton, former Kentucky Governor and Lieutenant Governor and Pike 

County Judge/Executive

David Pelphrey, Dean of Community, Workforce, Economic Development, Big 

Sandy Community and Technical College 

Karen Sue Ratliff, Deputy Pike County Judge/Executive 

Sandy Runyon, Executive Director, Big Sandy Area Development District 

Terry Spears, Vice President for Development, Pikeville College 

Sources of Growth in Non-Metro Appalachia page 58
Vol.2 Case Studies of Economic Growth Processes Marion & Monongalia 

IA CO, WV:

HIGH-TECH INITIATIVE

5 MARION & MONONGAL

5.1 Introduction 

Monongalia County, WV is a metro county (home to Morgantown), while adjacent 

Marion County is a “micropolitan” area. Marion County had prior mining roots. This

case study examines the development of a hi-tech initiative in these two counties with 

emphasis on the role of educational-training assets and the extent to which Marion 

County is achieving diversification in its economy. 

The two-county region of Monongalia County and Marion County, in West Virginia, 

show clear signs of economic growth and improvement over the past five years. The 

average income and average wage of the two counties have increased, and the rate of

job growth and entrepreneurship is also increasing. These changes are the product of

confluence of several factors: the presence of higher education assets; the increasing 

role of local capital; and, importantly, federal investments which have combined to 

create local and regional economies whose upward dynamics contrast with the trend

governing the economy of the rest of West Virginia. The hypothesis going into this 

study is that the role of technology development may have been pivotal in bringing 

about these changes. As the study shows, technology has

a

s

been a key factor but without

the region’s entrepreneurial energy and collaborative capacities, technology could not 

have brought about the changes that the region has seen. 

5.2 Regional Profile 

Tucked into the north central nook of uppermost West Virginia, the Monongaliaarion region is at the crossroads of two regions – often called the northernmost point 

in the South and the southernmost point in the North (Exhibits 5-1 and 5-2). 

M

Sources of Growth in Non-Metro Appalachia page 59
Vol.2 Case Studies of Economic Growth Processes Marion & Monongalia 

Exhibit 5-1. Location of Marion and Monongolia Counties 

Exhibit 5-2. Marion and Monongalia County Detail 

Sources of Growth in Non-Metro Appalachia page 60
Vol.2 Case Studies of Economic Growth Processes Marion & Monongalia 

The region’s economic, industrial, and cultural identity is distinct from that of West 

Virginia as a whole. While the rest of the state has experienced the loss of much of 

the mining and manufacturing jobs that have dominated its economy for years, 

Monongalia and Marion are experiencing increases in both jobs and income, as well as 

expansion in high-value growth industries. The growth in this region stands in strong 

contrast to the economic trends governing the rest of the state. In fact, the region 

added jobs at an average annual rate of 1.3 percent between 2000 and 2004, while the 

state as a whole (and the nation as a whole) lost jobs (source: West Virginia Economic 

Outlook: North Central Region and Morgantown MSA Outlook, Forecast 2005 – 

2009. Bureau of Business and Economic Research, West Virginia University).

Population Growth. As shown in Exhibit 5-3, population in Marion County has 

declined over the past 30 years while Monongalia County has continually gained 

population. In fact, between 1990 and 2000 while the State as a whole grew by less 

than 1 percent, Monongalia County grew by more than 8 percent. 

Exhibit 5-3. Population Growth, 1970-2000 

Population by County 1970 1980 1990 2000 1970-80 1980-90 1990-2000 1970-2000

Marion County 61,356 65,789 57,249 56,598 7.2% -13.0% -1.1% -7.8%

Monongalia County 63,714 75,024 75,509 81,866 17.8% 0.6% 8.4% 28.5%

State of West Virginia 1,744,237 1,949,644 1,793,477 1,808,344 11.8% -8.0% 0.8% 3.7%

Source: US Census Bureau.

Population % Change

In Monongalia County, the major city is Morgantown, which has recently grown 

enough to be designated a metropolitan statistical area (comprising Monongalia and 

Preston counties). Morgantown is the largest, fastest-growing, and most prosperous 

municipality in the region, with a population increase of 3.6% (25,879 to 26,809) 

between the 1990 and 2000 Census, and with an average income far exceeding other 

communities. Marion County’s corridor city is Fairmont, also growing, but less 

rapidly than Morgantown. Morgantown is the home of West Virginia University, 

which includes a large undergraduate and graduate student body as well as a 

comprehensive health system; the university employs over 5,000 faculty and is largely 

responsible for the region’s high concentration of employment in government. 

Composition of the Regional Economy. Exhibits 5-4 and 5-5 show employment by 

industry trends in each county between 1997 and 2002. However, the economy of this 

two-county region is heterogeneous, with quite distinct trends governing the economic 

changes in the region’s two major towns as compared to the region’s more rural areas. 

In fact, the regional economy is best understood by expanding the view beyond these 

two counties to include Preston County, directly east of Monongalia County, and 

Harrison County, directly south of Marion County. 

Sources of Growth in Non-Metro Appalachia page 61
Vol.2 Case Studies of Economic Growth Processes Marion & Monongalia 

Exhibit 5-4. Marion County Employment by Industry, 1997-2002

2002 LQ

NAICS Sector 1997 2002

Annual 

Growth

West 

Virginia U.S.

Marion /

W VA

111 Crop Production 293 127 -15.4% -9.38% -2.88% 0.5

112 Animal Production 116 198 11.3% 11.65% 8.09% 0.6

113 Forestry & Logging 17 0 -100.0% -3.96% -4.86% 0.0

114 Fishing, Hunting & Trapping 0 0 -100.0% 142.18% 12.33% 0.0

115 Support for Agriculture & Forestry 16 0 -100.0% -2.55% 1.13% 0.0

211 Oil & Gas Extraction 38 49 5.3% -1.24% -5.75% 0.3

212-213 Mining & Support Activities 1,288 954 -5.8% -1.82% 2.87% 1.6

221 Utilities 470 610 5.3% -5.31% -4.87% 3.4

230 Construction 2,598 2,492 -0.8% -3.65% 0.20% 1.6

311 Food Products 9 15 10.1% -0.02% 0.43% 0.1

312 Beverage & Tobacco Products 0 0 0.0% 3.00% -0.57% 0.0

313 Textile Mills 0 0 -100.0% -0.27% -6.79% 0.0

314 Textile Product Mills 20 3 -32.8% -7.18% -4.38% 0.4

315 Apparel Manufacturing 0 0 -100.0% -20.89% -13.59% 0.0

316 Leather & Allied Products 0 0 -100.0% -45.20% -11.46% 0.0

321 Wood Products 34 38 2.2% -1.27% -3.77% 0.2

322 Paper Manufacturing 31 163 39.6% -2.02% -3.56% 6.4

323 Printing & Related Support Activities 117 20 -29.7% -0.87% -3.57% 0.3

324 Petroleum & Coal Products 0 0 -100.0% 16.26% -2.91% 0.0

325 Chemical Manufacturing 2 0 -100.0% -4.53% -4.52% 0.0

326 Plastics & Rubber Products 31 61 14.2% 8.90% -3.05% 0.6

327 Nonmetallic Mineral Products 23 8 -19.5% -4.73% -2.59% 0.1

331 Primary Metal Manufacturing 538 168 -20.8% -6.05% -4.76% 0.7

332 Fabricated Metal Products 299 464 9.2% -4.30% -2.47% 2.3

333 Machinery Manufacturing 95 99 0.8% -4.89% -4.73% 1.5

334 Computer & Electronic Products 78 16 -26.9% -5.08% -5.30% 0.5

335 Electric Equipment, Appliances, etc. 694 118 -29.8% -12.75% -5.34% 4.7

336 Transportation Equipment 49 57 3.0% 3.20% -3.90% 0.4

337 Furniture & Related Products 54 79 7.9% 0.91% -0.04% 1.4

339 Miscellaneous Manufacturing 43 50 3.1% -2.51% -1.97% 0.8

420 Wholesale Trade 695 521 -5.6% -5.12% -3.18% 0.7

441-454 Retail Trade 3,592 2,944 -3.9% -0.85% -0.30% 0.9

481-487 Transportation 452 431 -1.0% 0.62% 1.75% 0.8

491-493 Mail, package delivery & warehousing 203 162 -4.4% 1.17% 6.41% 0.6

511 Publishing Industries (except Internet) 235 114 -13.5% -4.05% -6.03% 1.0

512 Motion Picture & Sound Recording 73 27 -17.7% -15.52% -4.38% 1.4

513 Broadcasting 197 154 -4.9% 0.34% 2.87% 0.7

514 Internet & data process svcs 75 136 12.7% -1.53% 6.10% 6.1

521-523 Monetary, Financial, & Credit Activity 593 418 -6.8% 0.75% 1.77% 0.9

524 Insurance Carriers & Related Activities 375 298 -4.5% 0.02% -1.21% 0.9

525 Funds, Trusts, & Other Financial Vehicles 3 13 35.9% 10.90% 12.29% 1.0

531 Real Estate 284 348 4.1% 9.48% 9.70% 0.8

532 Rental & Leasing Services 97 188 14.2% 7.70% 6.86% 1.2

533 Lessors of Nonfinancial Intangible Assets 1 2 12.8% -16.54% -8.48% 1.9

541-551 Professional Scientific, Technical, Service 1,227 1,650 6.1% 1.63% 6.95% 1.4

561 Administrative & Support Services 1,100 1,327 3.8% 2.32% 0.00% 1.3

562 Waste Management & Remediation 63 66 0.8% 3.55% 8.86% 1.2

611 Educational Services 192 149 -4.9% -0.64% 0.10% 0.5

621-624 Health Care & Social Services 1,871 2,359 4.7% 3.26% 2.60% 0.8

711-713 Amusement & Recreation 183 210 2.9% 7.30% 3.65% 0.5

721-722 Accommodations, Eating & Drinking 1,461 1,809 4.4% 1.44% 2.26% 1.0

811-812 Repair, Maintenance, & Personal Services 1,146 1,507 5.6% 3.50% 3.78% 1.7

813 Religious, Civic, Professional, Organizatio 453 240 -12.0% -4.51% 1.38% 0.7

814 Private Households 243 205 -3.3% 8.98% 10.06% 0.7

920 Government & non NAICs 3,781 4,141 1.8% 0.13% 1.04% 1.0

Marion County Annual Growth

Source: EDR-LEAP (with IMPLAN data).

Sources of Growth in Non-Metro Appalachia page 62
Vol.2 Case Studies of Economic Growth Processes Marion & Monongalia 

Exhibit 5-5. Monongalia Co. Employment by Industry, 1997-2002 

2002 LQ

NAICS Sector 1997 2002

111 Crop Production 325 170 -12.1% -8.8% -2.9% 0.3

112 Animal Production 179 294 10.4% 11.7% 8.1% 0.4

113 Forestry & Logging 46 40 -3.1% -4.0% -4.9% 0.0

114 Fishing, Hunting & Trapping 0 0 0.0% 142.2% 12.3% 0.0

115 Support for Agriculture & Forestry 13 6 -15.1% -2.3% 1.1% 0.0

211 Oil & Gas Extraction 3 128 106.6% -1.7% -5.7% 0.3

212-213 Mining & Support Activities 748 503 -7.6% -1.6% 2.9% 0.3

221 Utilities 367 305 -3.6% -5.4% -4.9% 0.7

230 Construction 2,717 2,891 1.2% -3.9% 0.2% 0.8

311 Food Products 14 62 34.5% -0.2% 0.4% 0.2

312 Beverage & Tobacco Products 0 3 0.0% 2.9% -0.6% 0.0

313 Textile Mills 0 0 -100.0% -0.2% -6.8% 0.0

314 Textile Product Mills 1 2 10.8% -6.6% -4.4% 0.0

315 Apparel Manufacturing 83 3 -47.4% -20.3% -13.6% 0.0

316 Leather & Allied Products 0 0 -100.0% -45.2% -11.5% 0.0

321 Wood Products 82 56 -7.1% -1.2% -3.8% 0.1

322 Paper Manufacturing 0 0 -100.0% -2.0% -3.6% 0.0

323 Printing & Related Support Activities 54 64 3.5% -0.8% -3.6% 0.5

324 Petroleum & Coal Products 0 14 0.0% 16.0% -2.9% 0.0

325 Chemical Manufacturing 818 1,316 10.0% -5.7% -4.5% 1.7

326 Plastics & Rubber Products 23 6 -23.1% 9.1% -3.0% 0.0

327 Nonmetallic Mineral Products 146 151 0.6% -4.9% -2.6% 0.4

331 Primary Metal Manufacturing 1 0 -100.0% -6.0% -4.8% 0.0

332 Fabricated Metal Products 535 289 -11.6% -3.9% -2.5% 0.6

333 Machinery Manufacturing 98 140 7.3% -5.5% -4.7% 1.0

334 Computer & Electronic Products 52 79 8.6% -5.7% -5.3% 1.0

335 Electric Equipment, Appliances, etc. 2 4 16.6% -12.8% -5.3% 0.0

336 Transportation Equipment 7 5 -5.8% 3.2% -3.9% 0.0

337 Furniture & Related Products 40 38 -1.2% 0.9% 0.0% 0.0

339 Miscellaneous Manufacturing 76 32 -16.2% -2.2% -2.0% 0.0

420 Wholesale Trade 1,137 989 -2.7% -5.2% -3.2% 0.6

441-454 Retail Trade 5,912 5,657 -0.9% -0.8% -0.3% 0.8

481-487 Transportation 396 419 1.1% 0.7% 1.7% 0.3

491-493 Mail, package delivery & warehousing 230 207 -2.1% 1.3% 6.4% 0.3

511 Publishing Industries (except Internet) 239 271 2.6% -4.4% -6.0% 1.0

512 Motion Picture & Sound Recording 62 34 -11.4% -15.7% -4.4% 0.0

513 Broadcasting 284 329 3.0% 0.2% 2.9% 0.6

514 Internet & data process svcs 50 189 30.4% -5.7% 6.1% 4.6

521-523 Monetary, Financial, & Credit Activity 728 724 -0.1% 0.8% 1.8% 0.7

524 Insurance Carriers & Related Activities 343 237 -7.1% 0.2% -1.2% 0.3

525 Funds, Trusts, & Other Financial Vehicles 19 153 51.3% 3.4% 12.3% 7.5

531 Real Estate 656 1,617 19.8% 8.6% 9.7% 1.6

532 Rental & Leasing Services 164 295 12.5% 7.4% 6.9% 0.8

533 Lessors of Nonfinancial Intangible Assets 7 0 -100.0% -15.3% -8.5% 0.0

541-551 Professional Scientific, Technical, Services 1,790 3,310 13.1% 0.9% 7.0% 1.3

561 Administrative & Support Services 1,337 2,444 12.8% 1.7% 0.0% 1.0

562 Waste Management & Remediation 39 50 5.5% 3.5% 8.9% 0.0

611 Educational Services 250 247 -0.2% -0.7% 0.1% 0.3

621-624 Health Care & Social Services 6,306 9,571 8.7% 2.8% 2.6% 1.4

711-713 Amusement & Recreation 457 413 -2.0% 7.7% 3.7% 0.4

721-722 Accommodations, Eating & Drinking 3,672 4,434 3.8% 1.3% 2.3% 1.1

811-812 Repair, Maintenance, & Personal Services 1,373 2,229 10.2% 3.1% 3.8% 1.1

813 Religious, Civic, Professional, Organizations 578 355 -9.3% -4.3% 1.4% 0.4

814 Private Households 222 336 8.7% 9.0% 10.1% 0.5

920 Government & non NAICs 12,568 16,700 5.8% -0.5% 1.0% 1.9

TOTAL 45,249 57,811

Source: EDR-LEAP (with IMPLAN data).

Monongalia Co./ 

West Virginia

Monongalia County Annual Growth

West Virginia

United 

States

Annual

Growth

Sources of Growth in Non-Metro Appalachia page 63
Vol.2 Case Studies of Economic Growth Processes Marion & Monongalia 

In this four-county region, there are two distinct economic trends – one governing the 

towns and small cities close to I-79, the other governing the rest of the four-county 

area. The towns and cities form a swath locally referred to as the I-79 Corridor. Along 

this corridor, incomes are higher, wages are greater, jobs are growing faster, and the 

growth industries are primarily those that require high levels of skill and technology to 

create competitive advantage. The I-79 corridor, in short, is booming. Along this 

corridor, communities are collaborating with each other to produce growth in 

technology-based industries, and the primary sites of this growth are Morgantown, in 

Monongalia County, and Fairmont, in Marion County. The corridor is not, however, 

taking the rest of the region with it. I-79 is a clear dividing line between the areas of 

the region that are prospering and those that are not. 

In both Monongalia and Marion, the strong concentration in government jobs is due 

primarily to the presence in Morgantown of West Virginia University and in Fairmont 

of Fairmont State University and Fairmont State Community and Technical College. 

And in both counties, the strong service sector is concentrated primarily in business 

services, engineering services, and computer services- skill-intensive, high-wage 

industries that are a strong indicator of the region’s growth in high-value industries. 

It has been years since Monongalia and Marion county depended to any real extent on 

the mining industries for their economic welfare – in fact, neither county has ever had 

the level of mining dependence seen in the rest of West Virginia. As the above tables 

show employment in Mining & Support Activities for both these counties has been 

shrinking at a faster rate than mining jobs in West Virginia. For at least the past ten 

years, the region’s economy has been much more strongly centered on services, retail, 

and government. 

Place-Based Amenities. Like much of West Virginia, Monongalia and Marion 

counties are abundant with considerable natural beauty. The region’s mountains, 

forests, and rivers combine to create a topography that is unpredictable and striking. 

Morgantown in particular is starting to build on its riverfront, with walking and biking 

trails that stretch for miles along the river’s edge and culminate in community 

gathering places close to the city’s downtown. Fairmont has not done as much with its 

riverfront, whose banks are beautiful but still obscured by various retail operations, a 

few private homes, and other structures; however, plans are being developed to 

develop the riverfront into a community amenity. 

As beautiful as the region is, some of the same factors that create this beauty also 

contribute to the economic disparities between its rural and metro areas. The 

mountainous terrain makes it very difficult to move around within the counties – not 

only making it harder for residents of the counties to reach jobs in Fairmont and 

Morgantown, but also creating significant infrastructure challenges. Transportation, 

water and sewer, landfills, construction – all are made very difficult by the rugged 

topography, with the result that all are in poor condition. Transportation in particular is 

frequently cited as one of the major challenges of the region outside Morgantown and 

Fairmont; as Figure 3 below shows, there are virtually no good east-west connectors in 

Sources of Growth in Non-Metro Appalachia page 64
Vol.2 Case Studies of Economic Growth Processes Marion & Monongalia 

the entire northern half of the state, and the roads that do exist are, to a great extent, 

old and in disrepair. 

The effects of the mountainous terrain are seen not only in the region’s infrastructure, 

but also in its culture. West Virginians are famous for their local orientation; many 

residents agree that a typical West Virginian identifies with the smallest community 

possible, thinking of himself not as a resident of a particular county, but of the west 

side of that county, of a small town within the county, or even of one side of the river 

in that small town. The topography plays a large role (and reinforces) insularity; 

because it is so difficult to get from one place to another, residents of towns and 

communities become used to thinking of themselves as isolated and independent, and 

resist attempts to connect them with outside communities. While insularity is not 

necessarily a negative quality –in fact often helping to promote a sense of 

independence and self-reliance that can be necessary when isolated from external 

assistance and support – it can make it more difficult to create the kind of regionally 

coordinated approach that is often necessary for building on place-specific assets to 

create economic growth that reaches all of the region’s citizens. 

Labor Markets. Like other aspects of the region’s economy, the labor market in the 

Monongalia – Marion region is an uneven picture. Though unemployment is fairly 

low throughout the region (4.2 percent, compared to 5.2 for the state and 5.5 for the 

nation), the region’s urban areas have distinctly different labor markets from its rural 

areas. As discussed earlier, poor transportation infrastructure and the mountainous 

terrain make it difficult for those outside the urban areas to have access to these job 

markets. Even in areas where the commute would not be physically difficult, 

however, there appears to be a strong cultural bias regionwide against commuting. 

County planners and workforce development directors report that most people in the 

area expect to drive no more than 10-15 minutes to work, and simply do not tend to 

consider employment options outside that radius. One exception to this rule, however, 

is that many of the people filling high-level and technology-intensive jobs in Fairmont 

live in Morgantown instead and commute to Fairmont, which can’t offer the same

level of amenities and housing options that Morgantown can. Approximately 9.5 

percent of the workforce in Marion County commutes to Monongalia County for work 

and 7.5 percent of the workforce in Monongalia County commutes to Marion County 

for work. In fact, one of the key factors hindering the technology-intensive job growth 

in Fairmont is that it’s difficult for employers in these industries to find enough 

workers. 

Educational Institutions. Both Monongalia and Marion have high-performing K-12 

school systems; Monongalia’s, in fact, was rated by Offspring Magazine and 

Expansion Management Magazine as one of the best public school systems in the 

country. Exhibit 5-6 displays some recent education statistics for Monongalia County.

Sources of Growth in Non-Metro Appalachia page 65
Vol.2 Case Studies of Economic Growth Processes Marion & Monongalia 

Exhibit 5-6. Monongalia County Public School Statistics, 2003-2004 

Total Public School Enrollment 10,206

Total Graduates (from three high schools) 691

Average SAT Test Scores (Math) 538 

Average SAT Test Scores (Verbal) 538 

Pupil/Teacher Ratio 15:1 

Source: National Center for Education Statistics, <http:www//nces.ed.gov>; accessed 12/5/2005 

As discussed earlier, the region is also home to several excellent post-secondary 

institutions. West Virginia University in Morgantown is the flagship institution of the 

state’s 14-college state university system. Fairmont State University is a regional 

public university that merged, a few years ago, with Fairmont State Community and 

Technical College. The two institutions now operate somewhat independently, but are 

administrated jointly and coordinate their offerings and outreach activities to ensure 

that they do not overlap and that where possible they leverage and build on each other. 

Fairmont State University has focused primarily on its education mission; until now, it 

has thought of its role in economic development to be primarily educating the 

workforce that will drive economic growth. The leadership has begun, however, to 

consider the possibility of becoming involved in research and development and other 

more industry-focused economic development activities. 

Fairmont State Community and Technical College, in Fairmont, is the two-county 

region’s only post-secondary institution of career and technical education. It serves 

7,200 students from a wide-ranging service area that covers thirteen of West 

Virginia’s counties (some of which are served by satellite campuses and/or mobile 

programs). Nevertheless, much of the population of the two-county region lives 

outside practical commuting range from most of what FSCTC offers, and has little 

access to postsecondary technical education. 

Entrepreneurship. Most of the region’s entrepreneurial activity is centered in 

Morgantown. The university has begun playing a major role, as will be discussed 

below, in technology-based spin-offs, and the city attracts a considerable number of 

entrepreneurs who locate their businesses there primarily because it’s where they want 

to live. Many of the entrepreneurs currently doing business in Morgantown say that 

they located there because the city has a “buzz,” an “entrepreneurial energy,” that 

makes it feel like a place where things are happening. The city has a wide range of 

public and private organizations that support entrepreneurs at all stages; however, 

these appear to be more an outgrowth of the entrepreneurial activity rather than its 

cause. The services and support they provide are important to entrepreneurs currently 

doing business in Morgantown, but they appear to value even more the connections 

and networks that these organizations, and the people in them, help create. Exhibit 5-7 

shows how each of these counties compare to state-level averages for several 

measures gauging entrepreneurial activity. 

Sources of Growth in Non-Metro Appalachia page 66
Vol.2 Case Studies of Economic Growth Processes Marion & Monongalia 

Exhibit 5-7 Growth for Self-Employed and Wage Earning Segments of Economy 

 Growth # Selfemployed 

1998-2003 

# Self-Emp: 

Wage

Earners

Growth in Income 

of Self-employed 

1998-2003 

Growth in Wage 

Earnings 1998-

2003 

Marion County 3.0% 1:4 53% 21% 

Monongalia County 9.3% 1:6 138% 37% 

West Virginia 4.3% 1:5 33% 16% 

Source: REIS data and EDR Group calculations 

5.3 Evolution of Progress 

The two-county region of Marion and Monongalia has seen significant economic 

improvements over the past five to ten years. Income, employment, educational 

attainment, and other indicators all tell the story of a region on the rise. Exhibit 5-8 

shows the economic indicators for the two counties over 1990 to 2003. 

Exhibit 5-8. Economic Trends in Monongalia and Marion Counties, 1990-2003 

Monongalia County Marion County West Virginia U.S. 

1990 2000 2003 1990 2000 2003 1990 2003 1990 2003

Median

household 

income

$22,183 $28,625 $32,971 $20,386 $28,626 $31,468 $23,147 $32,967 $29,943 $43,318

Median

housing 

value 

$64,600 $95,500 n/a $42,300 $63,600 n/a $47,900 $85,709 $79,100 $147, 

275 

%>25 w/ 

H.S. 

dipoma

75% 83.6% n/a 71.4% 79.5% n/a 66% 78.3% 75.2% 83.6%

%>25 w/ 

college 

degress 

45% 32.4% n/a 12.5% 16.0% n/a 12.3% 17.0% 20.3% 26.5%

Unemployment 

rate 

6.6% 4% 4% 11.2% 6% 6% 8.6% 8.4% 5.6% 7.6%

Poverty

rate 32% 15.3% 15.3% 16.3% 16.2% 16.2% 16.3% 13.5% 13.1% 12.5%

Source: U.S. Census Bureau, “State and County Quick Facts” >

Differences between these two centers of growth. In this analysis, Morgantown and 

Fairmont have been singled out from the two-county region as the actual locations of 

the growth that has been detected at the county level, because the economic trends and

dynamics that are producing the growth appear to be at work in these two towns much 

more than in any other place in either county. Morgantown and Fairmont are much 

more like each other than either of them is like the rest of their respective counties. 

Sources of Growth in Non-Metro Appalachia page 67
Vol.2 Case Studies of Economic Growth Processes Marion & Monongalia 

Yet the resemblance between the two places, seemingly so strong when they are 

viewed in the context of their counties, the larger region, and the rest of West Virginia, 

fades when the two cities are compared just to each other. 

The large student population in Morgantown makes it difficult to find indicators such 

as income, wage, and employment to demonstrate Morgantown’s better position, but 

reports from stakeholders in both towns confirm that Morgantown has made a leap to

a new plane of growth and development that has not occurred (yet) in Fairmont. In 

fact, more than one stakeholder (including those that are working in and invested in 

Fairmont’s economy) referred to the path of recent prosperity growth as flowing 

between Morgantown and Harrison County but “hopping over” Fairmont. 

One area in which this can be clearly seen is in the level of entrepreneurship and of 

reinvestment in the community by local entrepreneurs, which is much greater in 

Morgantown than in Fairmont. The entrepreneurial buzz that is so frequently 

referenced in descriptions of Morgantown is not mentioned in descriptions of 

Fairmont – even by those whose job it is to sell the town and its economic assets. 

Clearly, one major reason for this is that Morgantown has WVU and Fairmont does 

not – though that is not as clear a reason as it might appear. 

The two towns are about a twenty to thirty minutes’ drive apart – even allowing for 

increased travel difficulties at different times of the day and due to inadequate 

transportation infrastructure, the distance is certainly far less than the informal (and 

admittedly unscientific) “one day’s drive” rule of thumb often observed in the flow of

venture capital – i.e., that the majority of funds will flow less than one day’s drive 

away from their source, so that funders can easily keep an eye on their investments. In 

other words, the distance between the two towns should not be a deterrent to the 

university’s evolving technology development and commercialization relationships 

with firms in Fairmont. Morgantown must clearly be the primary beneficiary of 

WVU’s economic energy – but shouldn’t lower development costs, if nothing else, be 

encouraging at least some spillover into Fairmont? Why shouldn’t university spin-offs 

be locating in Fairmont, perhaps not just as much as in Morgantown, but at least to a 

noticeable extent?

Several reasons are responsible. For one thing, Fairmont is working with certain 

disadvantages that Morgantown is not. One is its degraded physical assets and 

housing stock. Simply on the basis of its residential real estate offerings, Fairmont 

cannot compete with Morgantown in the attraction and development of the type of 

entrepreneur who makes business location decisions based on where he or she wants 

to live. Less tangibly, Fairmont also is said to be lacking in the entrepreneurial 

energy, as well as the dense network of connections and resources, that are so 

important, if hard to quantify, in attracting and growing entrepreneurs. 

Fairmont also is described as having relatively undeveloped retail offerings (though, 

as shown in the entrepreneurship analysis, this may be changing), which both detracts 

from its attractiveness as a place to live and works against its potential role as a retail 

Sources of Growth in Non-Metro Appalachia page 68
Vol.2 Case Studies of Economic Growth Processes Marion & Monongalia 

hub for the adjacent counties. According to econometric and spatial analyses, 

Fairmont should be serving as a center of retail activity for the more rural areas 

surrounding it that lack a micropolitan areas of their own, and so look to Fairmont for 

goods and services. Instead, as described above, nearly the opposite is happening. 

Economic activity, instead of flowing naturally into Fairmont, is “hopping over” 

Fairmont to get between Morgantown and Harrison County. At one point in its 

history, about forty years ago, Fairmont was serving as a retail center for the region, 

with a thriving downtown that provided retail, restaurants, services, and other 

attractions that pulled in consumers from the surrounding rural areas, as well as from 

Monongalia (including Morgantown, whose retail offerings were limited at that time) 

and from Harrison County. Then the fateful decision was made to build a mall on the 

outskirts of town. The mall, quite modest by today’s standards, was the first in the 

region, and effectively killed Fairmont’s downtown in a matter of two or three years. 

By that time, a larger and fancier mall was under construction in Harrison County, 

drawing business away from Fairmont, and the Mall War, much like those that have

been waged in similar communities all over the U.S., was on. 

At the same time, the purchasing power of the rural areas that, theoretically, would be 

looking to Fairmont as a retail center, has been steadily eroding, along with the 

transportation assets that would facilitate the flow of consumers from the rural areas 

into Fairmont. (The only truly well-developed transportation route in the region is 

Interstate 79, which connects throughout the region all the way up to Pittsburgh and 

beyond – with the result that those in the region willing to travel to find consumer 

opportunities often simply drive into Pittsburgh, which of course has retail options 

well beyond anything northern West Virginia has to offer.) Fairmont’s retail offerings 

have been relatively under-invested ever since, to the point where they not only do not 

attract much business from outside Fairmont but are a detriment to its attractiveness as

a place to settle and live. Consequently potential entrepreneurs may be discouraged 

from locating there not only on their own account, but also because of the increased 

difficulty of finding, attracting, and keeping talented employees. 

Another major difference between the two towns is in the role that federal investment 

has played in the local economy. Both have been the beneficiary of federal dollars. If 

anything, Fairmont has received more direct investment than Morgantown, since 

Congressman Mollohan is focusing primarily on Marion County while Senator Byrd 

looks at the entire state. In fact, one of the major investments that Senator Byrd 

secured for West Virginia, the FBI laboratory, was located in Harrison County rather 

than in Morgantown in order to keep it from being too close to the state border and 

providing jobs for Pennsylvania residents rather than West Virginians. 

It appears, however, that the investments made in the Morgantown area have been 

parlayed into increased economic capacity, while those made in Fairmont have not. 

The firms in the Morgantown area that have been the beneficiaries of federal contracts 

have, for the most part, used the federal work to create or expand their ability to 

compete in the private sector, while the Fairmont firms are still quite dependent on 

federal contracts. If the federal investments dried up tomorrow, most of the affected 

Sources of Growth in Non-Metro Appalachia page 69
Vol.2 Case Studies of Economic Growth Processes Marion & Monongalia 

firms in Morgantown would be able to survive through their private sector work; most 

or all of the Fairmont firms would close immediately. 

This continued dependence on the federal dollars is partly due to the fact that at the 

time the federal investments started coming in, Morgantown was simply farther along 

in its economic development path than Fairmont was. There were more assets already 

in place for the federal dollars to leverage, and the firms already had some experience 

in competing in the private sector technology-intensive marketplace. The most 

significant investments in Fairmont were not building on existing technology capacity; 

many of the firms now working on federal contracts did not exist prior to the federal 

investment. Being at an earlier stage than Morgantown in its technology development, 

added to the disadvantages described above, has meant that Fairmont has not yet used 

its federal dollars to create lasting technology and economic capacity. 

A brighter future for Fairmont. There is, however, good reason for optimism 

regarding future progress in Fairmont. As mentioned above, Fairmont is in an earlier 

stage of development than Morgantown, and has many strong public and private sector 

players working to move the town along its development path to a point similar to 

where Morgantown is now – at which technology, entrepreneurship, and outside 

investment all converge to create a surge of economic activity. The West Virginia 

High Technology Center, for example, located in Fairmont and created through federal 

funds obtained by Congressman Mollohan, works to help technology-based businesses 

that focus primarily on federal contracts diversify and develop the capacity to compete 

in the private sector. At the same time, Fairmont’s economic development authorities 

and Chamber of Commerce are thinking about how to parlay the technology-based 

businesses that have developed as a result of federal investment into more economic 

growth in other sectors. 

One way in which they are already learning from Morgantown’s example is in the 

reinvestment of entrepreneurial wealth into the community. Technology 

commercialization combined with entrepreneurial energy has produced a great deal of

wealth in Morgantown, and the Chamber of Commerce and city planners have been 

successful in securing some of this wealth as investment in new development in the 

city. Several new retail, service, and other amenity developments are underway in 

Morgantown, financed by local entrepreneurs. These developments continue to add to 

Morgantown’s attractiveness as a place to live, work, and invest. 

Fairmont stakeholders see the wealth that is being created in its technology-based 

businesses as a result of federal investment, and know that one of the primary ways in

which that wealth can be parlayed into greater overall prosperity for the town is for the 

entrepreneurs creating the wealth to reinvest in the community. They also know, 

however, that it is difficult to attract investors to a place that does not appear to be

receiving other kinds of investment – not to mention that if they want to create the sort 

of attachment to place that helps inspire Morgantown’s entrepreneurs to invest there, 

the town itself must work to make Fairmont a place in which entrepreneurs want to 

live and build. The town is therefore about to start a comprehensive downtown 

Sources of Growth in Non-Metro Appalachia page 70
Vol.2 Case Studies of Economic Growth Processes Marion & Monongalia 

revitalization project that will create new access to downtown from I-79 (also partly 

financed through federal funds) and will include riverfront development and retail and

street-level renovation as well. The project will address some of Fairmont’s primary 

obstacles to growth: difficulty of access, minimal retail offerings, and undeveloped 

amenities, and may prove the catalyst that, by improving the town’s aesthetic and 

place-based appeal to its entrepreneurs and other potential investors, will help move 

Fairmont onto a different trajectory of growth – the one that has brought prosperity to 

its neighbor and collaborator Morgantown. 

5.4 Catalysts of Change 

Several notable individuals were identified as connected to growth initiatives in 

Morgantown and Fairmont, particularly Senator Byrd and Congressman Mollohan for 

the federal investment that they have brought to the region, and President Hardisty for 

the focus on technology commercialization that he has brought to West Virginia 

University. 

Even more significant than these key individuals, however, and what makes the region 

truly distinctive, is the strong network of connections that brings together stakeholders 

from different realms – the university, the economic development community, the 

workforce development fields, community planners, the private sector, and others. 

While it may seem that networks like these exist in all economically dynamic 

communities, the capacity to connect and collaborate outside the borders of a given 

identified community is not one that is native to most of West Virginia (though West 

Virginians are known for fierce loyalty and strong community feeling within the 

communities they claim as their own). 

Earlier, it was described how the state’s counties, towns, and communities tend to 

define themselves inwardly, rather than as part of a larger unit, and to resist 

connecting with those they consider outsiders. One rather extreme illustration of this

point is found in the experience of the Monongalia County officials have made more 

than one attempt to spread some of the wealth from Morgantown into the rest of the 

county. The officials met with intense resistance from the county residents, who 

resented intruders from outside their own communities attempting to influence the 

path of their development. When the officials persisted, the county residents 

responded by calling a special referendum and voting to disband the county planning 

commission. Just as, in resisting commuting, the county’s residents resist a 

geographical connection with Morgantown and other “outsider” communities, they 

also resist any sort of external planning or development process that might take some

control out of their own hands – even if, on their own, they cannot hope to develop 

very far. 

In contrast, Morgantown and Fairmont are part of a vibrant network of collaborators 

and connectors, entrepreneurs and entrepreneurially minded public sector officials 

Sources of Growth in Non-Metro Appalachia page 71
Vol.2 Case Studies of Economic Growth Processes Marion & Monongalia 

who include other towns, communities, and counties in nearly every initiative they 

undertake. In fact, they are much more identified with the I-79 Corridor, and the 

people and organizations behind it, than they are with the rest of their own counties. 

This spirit of collaboration was noted by more than one community stakeholder as 

what truly makes Morgantown, in particular, and Fairmont as well, different from the 

rest of their respective counties. 

5.5 Lessons Learned 

One of the most difficult aspects of discerning the lessons learned in a place like 

Morgantown/Fairmont is separating out the effects of non-replicable advantages, such 

as large flagship universities and federal investment, and the effects of what has been

created here and could be created elsewhere. The most fruitful way to think about it is 

not to say that every community should have a university and powerful Congressional 

representation if it possibly can, but rather to hold Morgantown and Fairmont up 

against comparable communities. There are other communities that have universities,

and even some level of federal investment, that do not embark on a tech boom. Given 

the presence of these advantages, what should a community do with the resources it 

can control to try to parlay them into lasting economic growth?

First, follow the example of WVU’s President Hardisty: give the university a specific 

and focused role in local technology commercialization. Many state and regional 

universities consider themselves economic assets merely because of the jobs they 

create or even the technology they deploy and sell; it is the explicit focus and followthrough on the creation of new businesses, or new product lines in existing businesses, 

that makes WVU not just an economic asset, but an economic driver. 

Second, think and act regionally and in complementary fashion. Morgantown and 

Fairmont, alone out of their counties, are thriving; and they alone are connected to 

communities beyond their own, and show an awareness in their planning of being 

situated in a regional economic context that has little to do with political borders. 

While it is the work of years to overturn a community’s insular tendencies, a few 

leaders who are willing to do the uphill work of making the initial connections, and 

demonstrating the economic power of these connections, especially when each city’s 

economic activity has been focused to complement rather than compete with the 

other’s. 

Third, turn investment into capacity. By connecting its federal investments with 

other industries, by using its developing technology expertise and workforce to attract 

private sector firms and private capital, by assisting federally-invested firms to expand 

into the private sector market, Morgantown has avoided the dependency trap into 

which so many recipients of federal investment fall. Fairmont, on the other hand, has 

yet to make these connections, and is still mostly dependent on its government 

contracts. 

Sources of Growth in Non-Metro Appalachia page 72
Vol.2 Case Studies of Economic Growth Processes Marion & Monongalia 

Finally, what do you do if you are the “other” city – the Fairmont, the town that is 

doing pretty well, considering its context – but receiving less attention than

Morgantown, the university city that attracts all the attention, entrepreneurs, new 

firms, and venture capital? The primary thing is to assess where your success can fit 

into the other city’s and the region’s success. In Fairmont’s case, it is beginning to 

realize that there are considerable opportunities to be had in supporting and facilitating 

the economic activity taking place in Morgantown—more than there are in attempting 

to compete with Morgantown for that activity. For instance, Fairmont is not likely to

create another center of commercially-oriented, high-technology research and 

development. It can, however, create a center of R&D that focuses on technology 

application and transfer, to complement the R&D being performed in Morgantown, 

and to foster the growth of businesses that can serve as complements to the high-level 

technology firms spinning off WVU. Fairmont State University is beginning to 

examine how it can develop its own R&D capacities to complement those of WVU. 

5.6 Interviewees 

Charlie Reese, Director, Marion Regional Development Corporation

Bruce McDaniel, City Manager, City of Fairmont 

Dr. Dan Bradley, President, Fairmont State University 

Blair Montgomery, President, Fairmont State Community and Technical College 

Dale Bradley, Assistant Provost of Workforce Development at Fairmont State 

Community and Technical College 

Paul Schreffler, Director of Economic Development and Workforce Education at 

Fairmont State Community and Technical College 

Jim Hall, LDD Director 

Don Reinke, Director, Morgantown Area Economic Partnership and Monongalia 

County Economic Development Authority 

Bob McLaughlin, President, I-79 Economic Development Council 

Russ Lorince, Director of Economic Development at West Virginia University 

Christopher Fletcher, Monongalia county planner 

Scott Rostruck, Morgantown Area Chamber of Commerce 

Jim Estep, President, West Virginia High Technology Consortium. 

Barbara DeMary, Executive Director, Region VI Workforce Investment Board 

Sources of Growth in Non-Metro Appalachia page 73
Vol.2 Case Studies of Economic Growth Processes SE Tenn & SW N. Carolina 

RE-TOOLING ASSET-BASED GROWTH 

6 SOUTHEAST TN & SOUTHWEST NC:

6.1 Introduction 

SE Tennessee/SW North Carolina are covered by two adjacent Local Development

Districts that are connected by Appalachian Highway Corridor K. For McMinn 

County, TN the case study examines the role of entrepreneurship and the arts in 

maintaining the economic viability of a rural area that has had substantial loss of

manufacturing employment. In addition, the case study traces economic development 

efforts to develop cultural and recreation tourism along Corridor K between 

Chattanooga, TN and Asheville, NC. 

This case study profiles economic development efforts focused on tourism potential in

recreation-based and cultural heritage, principally along Corridor K in the

outheastern Tennessee and Southwestern North Carolina located between the metro 

th

ed

c development 

mines—that were once a 

ource of industrial activity are now being used diversify their economy by building a 

urism industry based on recreation and cultural heritage. 

S

areas of Chattanooga, TN and Asheville, NC. 

This region presents an interesting case study as it spans multiple counties, state, and 

the Local Development District boundaries. These jurisdictions are competing wi

each other for employers, workforce, tourists and resources, yet they have organiz

themselves for economic development as a cohesive unit, pooling resources and 

efforts to create the critical mass necessary to attain their economi

goals. One reason is that the case study counties are linked by Corridor K – a planned 

link in the Appalachian Development Highway System (ADHS) 

The region is also of interest as a case study because the geographic factors that 

isolated it also led to the emergence of a regional trade center in Murphy, NC. Finally, 

the region’s natural resources—forests, rivers, railroads, and

s

to

Sources of Growth in Non-Metro Appalachia page 74
Vol.2 Case Studies of Economic Growth Processes SE Tenn & SW N. Carolina 

6.2 Regional Profile 

The study area is comprised of counties that are linked by the planned highway of 

Appalachian Corridor K, including the North Carolina counties of Cherokee, Graham, 

Jackson, Swain and the Tennessee counties of Bradley, Hamilton, and Polk (Exhibit 6-

1). The study area also includes the adjacent counties of Clay and Macon (NC) and 

McMinn and Meigs (TN) because their economies are closely linked to those located

along the corridor (Exhibit 6-2). Though not part of this study, the area also has 

economic ties to northern Georgia, particularly with Fannin, Union and Towns 

Counties. 

While the counties of interest have a combined population of nearly 589,000, more 

than half of this is attributable to the Chattanooga metro area. This case study focuses 

on economic development potential in the non-metropolitan areas east of Chattanooga, 

TN and southwest of Asheville, NC. This area is isolated from the State capitals, and

at one time even harbored an independence movement to succeed from Tennessee, 

North Carolina and Georgia to form their own state to be called Franklin. 

Large portions of the study area are public lands including Cherokee National Forest, 

Nantahala National Forest, and Hiwassee Lake State Park. For example, Swain 

County is approximately 87 percent public lands. The region is relatively isolated, 

ringed in high mountains and bisected by dramatic river gorges. 

Sources of Growth in Non-Metro Appalachia page 75
Vol.2 Case Studies of Economic Growth Processes SE Tenn & SW N. Carolina 

Exhibit 6-1. Corridor K of the Appalachian Development Highway System 

Exhibit 5-2. Map of the Full Case Study Area 

Source: Microsoft Streets & Trips and EDR Group 

Sources of Growth in Non-Metro Appalachia page 76
Vol.2 Case Studies of Economic Growth Processes SE Tenn & SW N. Carolina 

Originally home to the Cherokee and vibrant early-American trade paths, the region 

has been populated since before the 1700s. In the 1820s, gold was discovered and in 

the 1840s copper was discovered. The copper mining industry in particular drove 

boom-town style growth. Railroads were constructed to serve the mining industry, 

which allowed the logging and textile industries to flourish. The textile industry 

remained strong until the late 1980s when the national textile industry began to 

experience significant losses as the industry shifted to lower-cost manufacturing in 

China. The furniture industry, which had grown out of the region’s logging activities,

remained strong until the last decade when this industry also went abroad. 

Population Growth. Exhibit 6-3 presents population in each of the study area counties 

for the past four decennial Censuses. The largest county by far is Hamilton, TN (pop. 

307,896), which includes Chattanooga. Bradley and McMinn Counties also have 

relatively large populations, while Graham and Clay have populations under 9,000. 

During the 1990s, population growth in three of the six North Carolina counties 

outstripped that of the state as a whole, while three of the five Tennessee counties 

surpassed the rate of growth statewide. 

Exhibit 6-3. Population and Population Growth 

Population by County 1970 1980 1990 2000 1970-80 1980-90 1990-2000 1970-2000

Hamilton County, TN 256,190 288,370 285,536 307,896 13% -1% 8% 20%

Bradley County, TN 51,230 67,770 73,712 87,965 32% 9% 19% 72%

McMinn County, TN 35,600 42,030 42,383 49,015 18% 1% 16% 38%

Jackson County, NC 21,593 25,811 26,846 33,121 20% 4% 23% 53%

Macon County, NC 15,910 20,380 23,499 29,811 28% 15% 27% 87%

Cherokee County, NC 16,410 18,990 20,170 24,298 16% 6% 20% 48%

Polk County, TN 11,720 13,650 13,643 16,050 16% 0% 18% 37%

Swain County, NC 8,835 10,283 11,268 12,968 16% 10% 15% 47%

Meigs County, TN 5,250 7,450 8,033 11,086 42% 8% 38% 111%

Clay County, NC 5,200 6,660 7,155 8,775 28% 7% 23% 69%

Graham County, NC 6,560 7,210 7,196 7,993 10% 0% 11% 22%

State of Tennessee 3,926,018 4,591,120 4,877,185 5,689,283 17% 6% 17% 45%

State of North Carolina 5,082,059 5,881,813 6,628,637 8,049,313 16% 13% 21% 58%

Source: US Census Bureau.

Population % Change

Economic Profile. Exhibit 6-4 presents employment trends by NAICS sector in the 

study area for 1997 and 2002. The top three sectors across both years are government, 

retail trade, and health care/social services which is typical for many areas in the 

nation, particularly under-performing areas such as those found in Appalachia. 

Accommodations, eating & drinking is the fourth largest source of employment, and is 

important to regional tourism. Construction is fifth, which is supported by the pace of 

second-home construction discussed later in this case study. Transportation is sixth, 

which reflects the presence of Interstate 75 at the western edge of the study area, a 

major east coast north-south trade corridor. 

Sources of Growth in Non-Metro Appalachia page 77
Vol.2 Case Studies of Economic Growth Processes SE Tenn & SW N. Carolina 

Exhibit 6-4. Employment by Industry, 1997-2002 

2002 LQ

Annual

NAICS Sector 1997 2002 Growth

524 Insurance Carriers & Related Activities 10,147 14,241 7.0% -0.3% -1.2% 2.7

335 Electric Equipment, Appliances, etc. 5,703 6,612 3.0% -4.2% -5.3% 2.5

325 Chemical Manufacturing 4,349 8,355 13.9% -3.0% -4.5% 2.4

311 Food Products 8,413 9,373 2.2% 1.4% 0.4% 2.2

481-487 Transportation 10,344 20,878 15.1% 1.1% 1.7% 2.2

322 Paper Manufacturing 3,268 3,765 2.9% -1.3% -3.6% 2.0

114 Fishing, Hunting & Trapping 23 552 88.4% 44.1% 12.3% 1.9

331 Primary Metal Manufacturing 3,887 1,570 -16.6% -7.3% -4.8% 1.8

813 Religious, Civic, Professional, Organizations 6,751 6,781 0.1% -1.6% 1.4% 1.3

212-213 Mining & Support Activities 328 455 6.8% -3.6% 2.9% 1.2

315 Apparel Manufacturing 6,328 2,707 -15.6% -17.2% -13.6% 1.2

441-454 Retail Trade 45,460 45,340 -0.1% -0.4% -0.3% 1.1

333 Machinery Manufacturing 4,095 3,218 -4.7% -3.3% -4.7% 1.0

339 Miscellaneous Manufacturing 1,913 1,589 -3.6% -3.7% -2.0% 1.0

491-493 Mail, package delivery & warehousing 3,675 5,944 10.1% 8.3% 6.4% 1.0

531 Real Estate 7,100 9,913 6.9% 8.2% 9.7% 1.0

541-551 Professional Scientific, Technical, Services 17,006 21,846 5.1% 7.3% 7.0% 1.0

721-722 Accommodations, Eating & Drinking 23,510 26,377 2.3% 2.6% 2.3% 1.0

811-812 Repair, Maintenance, & Personal Services 9,912 12,883 5.4% 4.9% 3.8% 1.0

113 Forestry & Logging 811 423 -12.2% -7.3% -4.9% 0.9

221 Utilities 1,005 747 -5.8% -9.0% -4.9% 0.9

230 Construction 26,505 22,965 -2.8% -0.7% 0.2% 0.9

332 Fabricated Metal Products 4,003 3,486 -2.7% -1.5% -2.5% 0.9

532 Rental & Leasing Services 1,148 1,908 10.7% 7.6% 6.9% 0.9

621-624 Health Care & Social Services 27,790 29,153 1.0% 2.7% 2.6% 0.9

814 Private Households 1,886 3,646 14.1% 11.0% 10.1% 0.9

920 Government & non NAICs 44,422 47,674 1.4% 1.4% 1.0% 0.9

112 Animal Production 2,269 2,659 3.2% 4.9% 8.1% 0.8

323 Printing & Related Support Activities 2,130 1,420 -7.8% -4.0% -3.6% 0.8

337 Furniture & Related Products 4,676 3,160 -7.5% -4.3% 0.0% 0.8

420 Wholesale Trade 14,036 11,800 -3.4% -2.6% -3.2% 0.8

521-523 Monetary, Financial, & Credit Activity 6,053 6,797 2.3% 2.3% 1.8% 0.8

561 Administrative & Support Services 20,388 18,300 -2.1% 1.1% 0.0% 0.8

562 Waste Management & Remediation 895 533 -9.8% 1.0% 8.9% 0.8

611 Educational Services 3,212 4,098 5.0% 1.9% 0.1% 0.8

711-713 Amusement & Recreation 4,709 5,320 2.5% 4.9% 3.7% 0.8

312 Beverage & Tobacco Products 1,135 842 -5.8% -1.3% -0.6% 0.7

313 Textile Mills 3,199 2,908 -1.9% -8.6% -6.8% 0.7

336 Transportation Equipment 1,683 3,123 13.2% -2.5% -3.9% 0.7

512 Motion Picture & Sound Recording 647 414 -8.6% -7.1% -4.4% 0.6

513 Broadcasting 1,717 1,762 0.5% 2.8% 2.9% 0.6

321 Wood Products 1,398 1,110 -4.5% -5.3% -3.8% 0.5

326 Plastics & Rubber Products 2,078 1,583 -5.3% -2.4% -3.0% 0.5

327 Nonmetallic Mineral Products 1,602 751 -14.1% -3.6% -2.6% 0.5

511 Publishing Industries (except Internet) 1,463 927 -8.7% -4.6% -6.0% 0.5

111 Crop Production 2,377 1,598 -7.6% -4.3% -2.9% 0.4

314 Textile Product Mills 1,752 384 -26.2% -5.5% -4.4% 0.4

334 Computer & Electronic Products 189 932 37.6% -4.6% -5.3% 0.4

115 Support for Agriculture & Forestry 272 219 -4.2% 10.4% 1.1% 0.0

211 Oil & Gas Extraction 120 0 -100.0% 40.5% -5.7% 0.0

316 Leather & Allied Products 283 177 -9.0% -15.5% -11.5% 0.0

324 Petroleum & Coal Products 48 208 34.2% 4.4% -2.9% 0.0

514 Internet & data process svcs 196 242 4.3% 15.7% 6.1% 0.0

525 Funds, Trusts, & Other Financial Vehicles 172 27 -30.9% 4.9% 12.3% 0.0

533 Lessors of Nonfinancial Intangible Assets 58 41 -7.0% -2.9% -8.5% 0.0

TOTAL 358,539 383,736 7.0%

Source: EDR-LEAP (with IMPLAN data) and EDR Group.

Study Area/ TN

& NC

Study Area Annual Growth

TN & NC

Combined

United

States

Sources of Growth in Non-Metro Appalachia page 78
Vol.2 Case Studies of Economic Growth Processes SE Tenn & SW N. Carolina 

As shown in Exhibit 6-4, the region’s major manufacturing sectors include food 

products, chemical manufacturing, electrical equipment and appliances, furniture, 

paper, textiles, apparel, fabricated metal products, machinery, and transportation 

equipment. 

Despite losses between 1997 and 2002 in historically important sectors such as textile 

mills, apparel manufacturing, forestry and logging, furniture and wood products, and

mining, the region experienced a net gain of more than 25,000 jobs. The computer and 

electronic products industry grew from under 200 employees to nearly 1,000 and other 

large gains occurred in the transportation services, chemical manufacturing,

transportation equipment manufacturing, and package delivery & warehousing 

industries. 

The last column of Exhibit 6-4 also shows the 2002 location quotients (LQ) for the 

study area. In comparison to the employment mix of Tennessee and North Carolina 

combined, the study area has particularly high shares of employment in insurance, 

electric equipment and appliance manufacturing, chemical manufacturing, food 

products and transportation. The region also has relatively higher shares of 

employment in paper manufacturing, fishing/hunting/trapping, primary metal 

manufacturing, mining, apparel manufacturing, apparel manufacturing, furniture 

manufacturing, and mining. These industries reflect historical strongholds of the 

region. 

Regional Connections. One of the most notable features of the region is the lack of 

connection between Chattanooga and Asheville/Charlotte (Exhibit 6-5). Currently, the 

trip from Chattanooga to Asheville involves a five-hour, 230 mile journey around 

Great Smoky Mountains National Park through Knoxville on I-75 and I-40. An 

alternative route runs through Cherokee and Nantahala National Forests, a 200-mile 

journey taking nearly six hours. This second route along Corridor K involves several 

stretches of modern 4-lane divided highway, however in two key spots along the 

Ocoee and Nantahala Gorges, the road narrows to just two lanes, so that trucks must 

sometimes maneuver into oncoming traffic to negotiate tight curves. During the 

summer months, the route becomes congested with tourists flocking to rafting, 

mountain biking, hiking and other recreational activities in the two gorges. 

Traditionally, Chattanooga was the industrial anchor of the region, connected to 

Cincinnati and Atlanta via I-75 and to Nashville via I-24. Murphy, NC also developed 

an industrial concentration, and has a highway connection south to Atlanta. However, 

the region has weak east-west linkages, which economic development leaders see as a 

barrier to business attraction and job growth. In particular, it is seen as limiting access

to East Coast international trade and European market connections. 

Economic development leaders in the region have identified the potential for job 

growth and economic benefits for Chattanooga; increased commerce between 

Chattanooga and points east; and the opportunity for Murphy and Sylva, NC to tie into 

the I-65 “Auto Parts Alley” as likely outcomes of improved east-west connection and 

Sources of Growth in Non-Metro Appalachia page 79
Vol.2 Case Studies of Economic Growth Processes SE Tenn & SW N. Carolina 

improved linkages to the Interstate Highway system. Though regional leaders see 

Chattanooga experiencing the greatest benefits from such improved connections, they 

expect positive spillover effects to occur throughout the region. 

Exhibit 6-5. Study Area Interstate and Highway Connections 

Corridor K

Corridor A

Study Area

6.3 Evolution of Progress 

Despite the region’s relative isolation and manufacturing losses which parallel those 

that have occurred in the national economy, the region has experienced some

economic development success by fostering its tourism industry, and building on 

manufacturing assets to recoup a portion of jobs lost. 

Tourism. The study area is outside of higher profile tourist areas near Asheville such 

as the Great Smoky Mountains and Blue Ridge Parkway. However, as the tourism

industry has shifted away from more traditional types of outdoor recreation based on 

relaxation and visual beauty toward more active forms of recreation such as hiking, 

rafting, mountain biking and so-called “ultimate sports”, the region has been able to 

capitalize on its outdoor and cultural heritage assets. For example, Cherokee County 

Chamber of Commerce has changed its strategy from promoting “Peace in the 

Mountains” to promoting “Fun in the Mountains”. Regional outdoor recreation, 

cultural heritage, and second-home market assets are described below. Later ections 

describe how regional leaders have cooperated to develop and promote these assets. 

Sources of Growth in Non-Metro Appalachia page 80
Vol.2 Case Studies of Economic Growth Processes SE Tenn & SW N. Carolina 

Outdoor Recreation. Outdoor recreation assets include the challenging class IV rapids 

of the Ocoee River, which was the site of the 1996 Atlanta Olympic Games. The 

Nantahala River has class II and III rapids which are less challenging and more 

oriented towards beginner and intermediate rafters (though Ocoee outfitters offer trips 

that do not require previous rafting experience). Local companies also facilitate 

outdoor activities including hiking, mountain biking, horseback riding, fishing, 

hunting, rock climbing and repelling, water skiing, llama trekking, hang gliding, and 

bird-watching, though many of these activities can also be done by individuals on their 

own. Outdoor attractions include the Unicoi Turnpike Trail, Benton-MacKaye Trail, 

Appalachian Trail, Lost Sea cavern and underground lake, and Cherohala Skyway. 

Cultural Heritage Tourism. In addition to outdoor recreation amenities, the region is 

rich in cultural heritage sites and activities. The region is crisscrossed by 1,000 year 

old trade passages, steeped in Native American history, and has many remnants of the 

Industrial Revolution. Organizations such as the Tennessee Overhill Heritage 

Association (discussed below) are working to restore, revitalize, and interpret these 

cultural heritage amenities to attract visitors, increase visitor spending, and contribute 

to the region’s economic base. Cultural heritage attractions include the John C. 

Campbell Folk School, Sequoyah Birthplace Museum, Ducktown Basin Museum, 

L&N Depot and Rail Museum, McMinn County Living Heritage Museum, Swift 

Museum (Globe and Temco Swift airplanes), Englewood Textile Museum, Mason’s 

Corn Maze, and Fields of the Wood Bible Park. 

Second Home Market. In recent years, the region has experienced a surge in second

home construction. In fact, Murphy, NC recently appeared on Forbes list of emerging 

second home markets. This is seen as a positive development as seasonal residents 

demand very little of municipal services while contributing to the local economy 

through dining, entertainment, health care, property taxes and other expenditures. 

Recently, the completion of Corridor A to the east of the study area has improved the 

region’s connection with points east, which has fanned the second home market in 

counties toward the eastern end of the study area. In fact, several area towns double in 

population during the summer as city-dwellers primarily from Florida and Georgia 

escape to their vacation homes. In some areas, the pace of growth is beginning to 

generate concerns of gentrification, though there has not yet been a movement for 

zoning or land use restrictions most areas. A zoning referendum recently put to voters 

in McMinn County was defeated. The more isolated counties such as Polk and 

Cherokee have not yet experienced the same pace of growth, thus there has been little 

interest in regulation. 

Building Critical Mass. Many of the region’s tourism assets have traditionally drawn 

either from a day-trip market or catered to very specialized interests such as bird 

watchers or crafts enthusiasts. In a later section, this case study shows how regional 

organizations are working together to expand their offerings and bundle them in a way 

that transforms the region from a local attraction drawing from adjacent areas into a 

major tourist area drawing overnight visitors from throughout the southeastern US. 

Sources of Growth in Non-Metro Appalachia page 81
Vol.2 Case Studies of Economic Growth Processes SE Tenn & SW N. Carolina 

Industry and Trade Center. Throughout the region’s history, its topography 

reinforced regional cohesiveness. The high mountains that ring the region create a 

“bowl” around the Tennessee county of Polk, North Carolina counties of Cherokee 

and Clay, and Georgia counties of Fannin, Union (GA) and Towns (GA), with 

Cherokee County at the center. This bowl, together with highway connections 

centered on Cherokee County, made the county a natural regional trade center (Exhibit 

6-6A-B.) Though the county itself has a population of only about 24,300, the market 

area population is approximately four times that. As evidence of Cherokee County’s 

role as a trade center, in 2005 the county ranked 71st in population but 20th in per 

capita retail sales among the state’s 100 counties. Most of this activity takes place in 

Murphy, the county’s largest city. 

Exhibit 6-6A Topography Defining the Murphy, NC Trade Center 

Exhibit 6-6B Highway Links to the Murphy, NC Trade Center 

Sources of Growth in Non-Metro Appalachia page 82
Vol.2 Case Studies of Economic Growth Processes SE Tenn & SW N. Carolina 

In addition to creating a retail trade center, topography and highways supported a 

natural labor market. This labor market combined with metals from the mining 

industries, and extensive railroad connections, fostered significant manufacturing 

activity that would have been unlikely without this labor market. Despite 

manufacturing losses that mirror those experienced in the nation as a whole, the region 

has a strong presence of metal fabrication and machine and equipment manufacturing. 

Major companies in Murphy include MGM Brakes, Moog Components and Sioux 

Tools. 

Though much of the economy is in transition toward tourism, regional leaders are still 

pursuing industrial development to ensure that the regional economy stays balanced 

and includes jobs with health care and retirement benefits. Through industrial 

recruitment efforts, the region has been able to regain about half the manufacturing 

jobs lost due to the relocation of the textile and furniture industries. 

Industrial recruitment is primarily achieved through networking with companies 

familiar with the area. Though Murphy has connection south to Atlanta in which the 

journey is all interstate after the first seven miles, industrial recruitment efforts are still 

challenged by the perception of greater transportation access difficulties going east or 

west. This is compounded when business prospects arrive via alternative routes 

through narrow, winding, mountain roads. Furthermore, though there is an abundance 

of flat land suitable for industrial sites, outsiders often harbor the perception that the 

entire region is mountainous. 

While Corridor K will help to address the access problem, for now much of this area is 

poorly connected to both Asheville and Chattanooga. The lack of access is felt to 

substantially reduce the representation of auto parts related industry in the region, 

though that could change if future highway improvements better link it to the “Auto 

Alley” of parts and assembly plants located along I-75. At the other end of the study 

area, an improved connection with Ashville would also connect the area to Charlotte, 

which is a key location for export-oriented industries. 

6.4 Catalysts of Change 

The study area spans several County, State and Local Development District 

boundaries. Though these jurisdictions are competing with each other for jobs, 

workforce, tourists and resources, they have organized themselves for economic 

development as a cohesive unit, pooling resources and efforts to create the critical 

mass necessary to attain their economic development goals. 

Local Development Districts. The study area spans the jurisdiction of two 

Appalachian Regional Commission (ARC) Local Development Districts (LDDs), the 

Southeast Tennessee Development District and Southwestern North Carolina Planning 

Sources of Growth in Non-Metro Appalachia page 83
Vol.2 Case Studies of Economic Growth Processes SE Tenn & SW N. Carolina 

and Economic Development Commission. In addition to addressing their local 

responsibilities, they have also created a partnership organization, the Southeast 

Industrial Development Association (SEIDA), which has been a catalyst for the 

region’s major economic development efforts. 

Southwestern North Carolina Planning and Economic Development Commission. 

This LDD encompasses North Carolina’s seven western-most counties and addresses 

housing and community development, land and water conservation and preservation, 

transportation planning, infrastructure, workforce development, and education. The 

organization also operates a revolving loan fund to promote access to capital for local 

businesses. 

Southeast Tennessee Development District. The Southeast Tennessee Development 

District covers a 12-county service area which includes three Georgia Counties (Dade, 

Walker, and Catoosa). The organization encompasses 11 functional areas: Aging and 

disability planning, regional planning, utility development, tourism development, 

housing development, industrial recruitment and marketing, transportation planning, 

economic development, recreation and cultural resources, solid waste and natural 

resources and workforce development. 

The LLD operates as part of a consortium called the Southeast Development Resource 

Group, which includes the Chattanooga Area Regional Council of Governments, 

Southeast Tennessee Local Development Corporation, and several other business, 

industrial and community development agencies all of which are staffed and 

administered by the LDD. The LDD also staffs and operates SEIDA, which has been a 

powerful force for regional economic development. 

Southeast Industrial Development Association. The Southeast Industrial 

Development Association (SEIDA) is a unique example of cross-jurisdictional 

cooperation. The organization is comprised of the economic development arms of the 

Tennessee Valley Authority (TVA) power districts in Tennessee, North Carolina and 

Georgia as well as three regional LDDs— Southeast Tennessee Development District, 

Southwestern North Carolina Planning and Economic Development Commission, and 

the Coosa Valley Regional Development Center (Georgia). These three organizations

contract with the Southeast Tennessee Development District to staff and administer 

SEIDA programs and initiatives. In turn, SEIDA promotes and coordinates industrial 

development and tourism initiatives in the region. 

Three decades ago, the organization laid out a comprehensive plan for regional 

economic development with 10 functional areas and capital budgeting. Preservation of 

the region’s natural resources was a key element of the strategy, and the organization 

has been involved in land swaps that have allowed large tracts of land to remain 

pristine and undisturbed while preserving the natural beauty of recreation lands and 

facilitating industrial development on less sensitive areas. 

Sources of Growth in Non-Metro Appalachia page 84
Vol.2 Case Studies of Economic Growth Processes SE Tenn & SW N. Carolina 

According to local economic developers, the willingness of local leaders to work 

together emerged several decades ago through participation in ARC project 

prioritization exercises. Rather than seeing themselves as leaders of individual 

counties, they see themselves as regional leaders. They are comfortable promoting 

projects outside of their own jurisdiction because they recognize that they will benefit 

either as “the rising tide lifts all boats” or simply because working together provides 

the critical mass necessary to fund and execute projects that each county alone could 

not. 

In terms of tourism promotion, regional leaders have realized that outdoor recreation is 

a given, thus their focus is on extending the season beyond the Memorial Day-Labor 

Day period (“add shoulders to the season”), extending stays (adding room nights and 

meals), and promoting activities that generate revenue (“make the cash registers 

ring”). 

One strategy to achieve these goals is water releases on the upper Ocoee River. 

Currently, the river has approximately 120 days of water on the lower portion which is 

long enough for half-day rafting excursions. Releases into the upper portion of the 

Ocoee River would allow for full-day rafting trips. Half-day rafting trips draw visitors 

from about a 150-miles radius, whereas full-day excursions draw from beyond that 

and encourage overnight stays even from visitors from within the current market area,

as a full day of rafting is physically taxing. After a long, complicated planning 

process, SEIDA was able to borrow $1.1 million to buy water from TVA for release 

into the upper Ocoee River for 34 of the existing 120 days. SEIDA has signed longterm contracts with rafting outfitters wishing to operate on the upper Ocoee, and will 

repay the loan using fees collected from these outfitters. 

Tennessee Overhill Heritage Association. One successful example of crossjurisdictional cooperation for tourism development is the Tennessee Overhill Heritage 

Association, which focuses on McMinn, Monroe, and Polk Counties in Tennessee. 

SEIDA formed this organization in 1990 as a pilot through the National Trust for 

Historic Preservation’s Heritage Tourism Initiative. During that period, the 

development of I-75 just west of the study area had shifted manufacturing away from

the McMinn, Monroe, and Polk Counties and towards the I-75 corridor. Around the 

same time, there was a reduction in the amount of timber allowed to be cut, drastically 

limiting a major source of local government revenues. 

Regional leaders realized the need to diversify their economic development strategy to 

include more emphasis on cultural heritage tourism. Tennessee Overhill was created to 

jointly market the region’s small museums with the idea that though each individual 

museum would not attract many overnight visitors, together they would form enough 

of an attraction to draw from a larger overnight market. Within the first year, the need 

to include the region’s recreation and outdoor assets became apparent. At the end of 

the three-year pilot, the organization became permanent, receiving operational support 

from the three county governments, City of Etowah, and special projects support 

through grants, donations and earned income. 

Sources of Growth in Non-Metro Appalachia page 85
Vol.2 Case Studies of Economic Growth Processes SE Tenn & SW N. Carolina 

Tennessee Overhill is unique in several ways. First, it does not operate on a “pay to 

play” basis which requires attractions to pay to be included in marketing efforts. 

Instead, Overhill considers each attraction’s contribution to area hotels, restaurants 

and shops and its role as a piece of the whole tourism experience. Second, rather than 

a blanket marketing campaign, Overhill advertises in less expensive and more targeted 

venues, such as birding and whitewater rafting publications. Finally, cultural heritage 

travelers are not motivated by a list of an area’s attractions. Instead, they are looking 

for content and interpretation, which Overhill brochures, publications and website 

provide. 

The organization’s major outdoor initiative is the rehabilitation of the 40-mile Old 

Line Haiwasee River Gorge Rail Road and operation of passenger excursions. This 

railroad used to serve a major copper mine operated by Tennessee Minerals, LLC that 

has since left the region. As the line was no longer in use, CSX planned to dismantle 

it. Seeing an opportunity to preserve a piece of the region’s history and offer passenger 

excursions through otherwise inaccessible wilderness, SEIDA negotiated acquisition 

of line from CSX and entrusted it to Tennessee Overhill. Before acquiring the railroad, 

SEIDA and Overhill invited a team from the National Forest Rails to Trails program

to inspect its condition, and the team found that if necessary the materials could be 

salvaged with minimal invasiveness, leaving the bridges and surrounding landscape in 

tact. This provided SEIDA and Overhill with the confidence of a “plan B” in the event 

that it was not profitable. 

SEIDA also oversaw an ARC-sponsored feasibility study which determined that the 

line would need to run approximately 500 cars of freight in addition to passenger 

excursions to remain profitable. Some 10 million tons of iron oxide, commonly called 

calcine and recognizable as rust remain on the former mine site, and Tennessee 

Minerals has decided to sell it to “pig iron” manufacturing operations in China. Thus, 

Glenn Springs Holdings, a wholly owned subsidiary of Occidental Petroleum charged 

with the environmental remediation of the former mine, restored the tracks to the point 

that they could carry the freight. The company then entered a contract with Overhill 

for use of the tracks for cargo and in 2005, the first eight trainloads were shipped out. 

The contract also preserved the right for Overhill to operate passenger excursions, 

which will consist of shorter trips to the Appalachia Powerhouse, the Bald Mountain 

Loop, and a few full-day excursions to the Copperhill mine. 

The organization sees potential for future tourism development associated with the 

Benton-MacKaye trail, a 300 mile footpath between Springer Mountain in Georgia to 

Davenport Gap on the northern edge of the Great Smoky Mountains National Park 

through isolated backcountry and numerous federally designated Wilderness and 

Wilderness Study Areas. Overhill has observed that there are numerous cultural and 

historic points of interest along the trail that could be further developed and promoted. 

Southeast Tennessee Tourism Association. Another entity staffed and administered 

by the Southeast Tennessee Development District is the Southeast Tennessee Tourism 

Sources of Growth in Non-Metro Appalachia page 86
Vol.2 Case Studies of Economic Growth Processes SE Tenn & SW N. Carolina 

Association, which markets the region as a visitor destination. Recently, the 

organization embarked upon an interesting project to promote the region’s diverse 

religious heritage. In 2005, the organization secured a $60,000 relief grant from the 

Economic Development Administration to help the region overcome damage done by 

a severe infestation of Southern Pine Beetles that hit two key regional industries, 

logging and agriculture. 

The organization used the funds to hire a consultant from the National Trust for 

Historic Preservation to identify regional assets. The consultant identified the 

opportunity for the development of a religious heritage trail, which would capitalize 

on the region’s diverse religious history. The concept was well received by the public,

and the concept has been developed into the “Glory Land Road”. The self-guided trail 

features the courthouse where the “Scopes Monkey Trial” took place; a Holocaust 

Museum in Whitwell; Beth Salem, a historic black church in McMinn County; the 

Brainerd Mission in Chattanooga where Cherokee Indians were converted to 

Christianity; and Our Lady of the Poor Shrine in Marion County which is a replica of 

a famous church in Belgium where the Virgin Mary is said to have appeared. The 

Tourism Association estimates that the region draws approximately 60,000 to 80,000 

visitors each year for religious events and conferences, and the Religious Heritage

Trail is designed to lengthen their stay, generate return visits, and increase 

expenditures. 

Among other efforts, the organization also publishes the Outdoor Recreation Guide, 

Shopping Guide to the Art Trails, and Out to The Farm Agritourism Guide, all of

which string smaller attractions together into a more comprehensive experience. 

Coker Creek Economic Development Group. CCEDC provides an example of a local 

economic development organization’s tourism promotion efforts. Coker Creek, 

Tennessee is surrounded by National Forest and is cut off from industrial development 

alternatives by Tellico Mountain on the North, Farner Mountain on the south, Unicoi 

Mountain on the east, and Cataska mountain on the west. Despite a lack of 

manufacturing, the area is rich in craft and folk art tradition, and the Coker Creek 

Economic Development Group (CCEDG) was initially formed to preserve and pass on

these traditions to local residents. The organization found that outsiders were also 

interested in learning folk art traditions, and now craft workshops include visitors from

Georgia, Florida and other areas. CCEDG operates the local post office which is 

adjacent to the organization’s Welcome Center and arts and crafts retail space. 

Barriers to Cooperation. Though the organizations discussed above have coordinated 

to overcome jurisdictional barriers to economic development, some difficulties 

remain. The State tourism bureaus of Tennessee, North Carolina, and Georgia have 

resisted funding cross-jurisdictional marketing efforts. A result is that though tourists 

consider the region a contiguous recreation area, there are separate guide materials for 

each of the three states. 

Sources of Growth in Non-Metro Appalachia page 87
Vol.2 Case Studies of Economic Growth Processes SE Tenn & SW N. Carolina 

The State transportation departments also lack mechanisms for working together, 

which has challenged the region’s efforts to improve transportation connections. 

Priorities for the Future. Regional economic development leaders are virtually 

unanimous regarding the region’s leading economic development priority, and that is 

the completion of Corridor K. Corridor K is part of the Appalachian Development 

Highway System (ADHS) authorized by the Appalachian Development Act of 1965. 

As a whole, the ADHS encompassed more than 3,000 miles of highway necessary to 

connect Appalachia with economic development opportunities, and to date 85 percent 

of the system has been completed. Corridor K is one of the last remaining pieces of the

system. Though the final alignment has not yet been determined, Corridor K would 

run from I-75 near Cleveland, Tennessee to Corridor A near Sylva, North Carolina, 

resulting in a direct connection from Chattanooga to Ashville (and consequently, 

Charlotte). 

The North Carolina portion of Corridor K has already gone through the Environmental 

Impact Study (EIS) process and been approved. The Tennessee portion has been more 

contentious, however. The initial alternatives considered by the EIS received heavy 

criticism because among other concerns, the alignments included several bridges over 

the Ocoee River which stakeholders felt would detract from the natural beauty of the 

Gorge as well as the river rafting experience. A second alternative that cut expensive 

passes and tunnels through the mountains was rejected due to its billion dollar price 

tag. 

A second regional priority, which is primarily relevant to the western end of the study 

area is the potential for a high speed rail connection from Chattanooga to Atlanta. 

Atlanta is a major airline hub and hosts the headquarters of numerous major 

companies. The two metropolitan areas already have strong economic ties, but 

increasing traffic congestion around Atlanta is limiting further integration of the two 

economies. A high speed rail connection would mitigate the barrier of traffic 

congestion by allowing tourists, businesspeople and residents to move more freely 

between the two regions. 

6.5 Lessons Learned

1. Cross-Jurisdictional Planning, Coordination and Implementation - Potential 

employers and tourists alike view the study area as a region, rather than a collection of 

counties spanning multiple states. If regional leaders insisted upon marketing only 

their own individual tourist attractions and improving business conditions and 

transportation linkages only within their own jurisdictions, they would lack the critical

mass needed to draw overnight tourists, and create and retain jobs in key industries. 

By creating an organization that rewards county leaders for thinking and acting like 

regional leaders (SEIDA), they have been able to better leverage resources from their 

Sources of Growth in Non-Metro Appalachia page 88
Vol.2 Case Studies of Economic Growth Processes SE Tenn & SW N. Carolina 

respective states and raise the profile of their tourism assets to create a destination for 

overnight visitors who come to the are from a greater distance than the day trippers. 

2. Understanding that Tourism Preferences are Changing - Just as the 

manufacturing sector has changed over the past several decades, the tourism sector is 

changing as well. Tourism once centered on relaxation and natural beauty. Two key 

emerging trends are eco-tourism and cultural heritage tourism, which reflect a 

preference for activity-based vacations. Thus the industry is shifting away from “one 

size fits all” attractions and toward those that allow visitors to create a more tailored, 

specialized vacation experience. 

Regional efforts are helping ensure that local tourism attractions cater to these new 

preferences. Tennessee Overhill efforts such as “Furs to Factories Heritage Area: 

Exploring the Industrial Revolution in the Tennessee Overhill” and “From Native 

Gardens to Cheese Farms: AgriCulture in the Tennessee Overhill” string together

individual attractions into a more unified, complete experience. 

3. Sheer Creativity - This case study illustrates the importance of creatively using one 

problem to leverage a solution for another. For example, the concept for the “On the 

Glory Land Road” religious heritage trail emerged from a National Trust for Historic 

Preservation study funded by monies apportioned by TVA as relief from a devastating 

infestation of Southern Pine Beetles. 

Another example was the acquisition of the Old Line Haiwasee River Gorge Rail 

Road by the Tennessee Overhill Heritage Association through SEIDA. The closure of 

the mine could have been a net loss for the region, but instead it is being used as a 

recreation asset and generating earned income through cargo shipments. 

4. An Asset-Based Economy Depends on Market Access. Though the region has 

managed to assemble a unique and diverse selection of tourism offerings, regional 

leaders recognize that their ability to fully capitalize on them depends upon 

transportation access. Expansion beyond the day trip market and attracting visitors 

from throughout the southeast depends on safe and efficient highway linkages to the 

southeast’s major metropolitan areas and tie-ins with the Interstate Highway system. 

6.6 Interviewees 

Hale Booth, Executive Director, Southeast Tennessee Development District

Linda Caldwell, Executive Director, Tennessee Overhill Heritage Association 

John Carringer, Manager, Murphy Electric Power Board 

Vicki Greene, Director of Planning and Development, Southwestern North 

Carolina Planning and Economic Development Commission 

Sources of Growth in Non-Metro Appalachia page 89
Vol.2 Case Studies of Economic Growth Processes SE Tenn & SW N. Carolina 

Bill Gribson, Executive Director, Southwestern North Carolina Planning and 

Economic Development Commission 

Joe Guthrie, Manager, Southeast Local Development Corporation 

Larry Kernea, Assistant Manager, Murphy Electric Power Board 

Sandra H. Kimball, Executive Director, Cherokee County Chamber of 

Commerce 

Hoyt T. Firestone, County Executive, Polk County 

Bill Forsyth, Executive Director, Cherokee County Economic Development 

Commission 

Beth Jones, Deputy Director, Southeast Tennessee Development District 

Larry Mashburn, President, Ocoee Adventure Company 

Delos Monteith, Institutional Research and Planning Officer, Southwestern 

Community College 

Barbara Palmer Vicknair, Vice-Chairman (District 2), Cherokee County Board 

of Commissioners

Sources of Growth in Non-Metro Appalachia page 90
Vol.1 Project Background and Summary Alabama Auto Alley 

7 ALABAMA: AUTO ALLEY

7.1 Introduction 

Alabama provides a state-level case study that traces how Alabama’s automotiverelated manufacturing activity (initiated by attracting Mercedes-Benz to Tuscaloosa, 

followed by auto parts suppliers) is raising the economic prospects in the Appalachian 

portion of the state.

The Appalachian counties of Alabama have been at the center of a major industrial 

revival powered by foreign investments in the auto industry. The efforts Alabama 

made to attract Daimler Chrysler, Honda, Hyundai, and key suppliers resulted in the 

growth of an auto cluster that is now a well-known story. This case study examines 

e conditions that led to that success but also the extent to which the benefits reached 

ral

-metro counties by attracting the best and brightest to the 

igher paying jobs in the auto companies locating in metro Alabama? These issues 

motivated this case study. 

th

the Appalachian non-metro parts of the state. 

The strategy to attract the auto industry was an economic development, not a ru

development strategy. Conditions in rural Appalachian Alabama, though not as dire 

as more southern areas or as other parts of Appalachia, nonetheless were poor 

compared to national standards. How did the auto cluster affect rural Alabama? Was 

there a spillover of investment and jobs into rural areas? Did it create new jobs and

wealth or did it deplete non

h

7.2 Regional Profile 

The Appalachian region covers the northern half of the state, as shown in Exhibit 7-1. 

Since this case study is vastly different from the other case studies in terms of its 

geographic size and level of diversity, the economic development context of the region 

best understood by reviewing its historical evolution, and the predicament that it 

resented.

is

p

Sources of Growth in Non-Metro Appalachia page 91
Vol.1 Project Background and Summary Alabama Auto Alley 

thin the Appalachian Region 

laws.

ate’s

centives, physical infrastructure, low wages, and federal investments. 

ward

in the

rt of the state), metals, and apparel/textiles, rather than technology 

dustries.

Exhibit 7-1. Northern Half of Alabama is wi

This northern part of Alabama has a long industrial history that was built on the steel

and related industries in and around Birmingham and, in the more rural counties, the 

traditional non-durable goods industries that migrated South during the middle third of

the 20th century to take advantage of surplus labor, low costs, and right-to-work

The Appalachian counties of Alabama, in particular, benefited from the st

in

During this period, manufacturing industry thrived in the rural areas. In 1984, the 

percent of employment in non-metro Alabama was 41.1 percent—and growing. The 

percent in metro counties was 18.5 and dropping. (source: Stuart Rosenfeld and Ed

Bergman, Making Connections: After the Factories Revisited. Research Triangle Park:

Southern Growth Policies Board, 1989). The share of metro workers employed in 

technical occupations, however was more than double the technical work force in nonmetro counties. The biggest non-metro employers were furniture/wood (mainly

northwest pa

in

Sources of Growth in Non-Metro Appalachia page 92
Vol.1 Project Background and Summary Alabama Auto Alley 

nenhower dedicated the NASA-funded

arshall Space Fight Center there, and Huntsville became “Rocket City,” one of the 

tensive branch plants was increasingly precarious. Less 

eveloped countries could promise much lower costs with adequate skill levels and 

technological capacities. 

At the northernmost fringe of the state, in Madison County, Huntsville emerged as a 

high tech oasis. In the late 1940s, when Huntsville was still a small city in a no

metro county, the military brought German rocket scientist Werner Von Braun to the 

Redstone Arsenal. In1960 President Eis

M

leading high tech centers in the nation. 

The benefits of the space programs, however, did not reach out very far across the 

state, and in the early 1980s, Alabama began to realize that its still heavy reliance on

low costs to recruit labor-in

d

7.3 Evolution of progress 

In the1980s the University of Alabama, influenced by the work of the Southern 

Growth Policies Board and Southern Technology Center to connect universities and

economic development, began looking for new investment. The northern area was 

ome to the Southern Research Institute, University of Alabama, and a recognized 

te

ng

tion

r a large new production facility, in large part to gain entry to the growing American 

place in the United States that it could manufacture for both U.S. 

and p ished the

foll

ach suppliers and markets 

work, taxes)

d engineering graduates

t

h

high tech industry capability. 

As part of the search for new and more stable industry, a university team and sta

officials together saw a window of opportunity in autos, a product for which growi

domestic demand was likely to provide continued advantage and stability. The 

University of Alabama had prepared a strong proposal in the bidding to locate the 

Saturn plant in Tuscaloosa. Although GM ultimately chose the Nashville area, 

Huntsville came close enough that the die was cast to pursue the next big opportunity. 

That came in 1993, when Mercedes Benz announced it was looking for a U.S. loca

fo

SUV market, avoid currency fluctuations, and access new sources of knowledge. 

Mercedes’ needed a

ex ort markets. To narrow down the options, the company establ

owing criteria:

1. labor force (underemployed but capable) and training system

2. physical infrastructure to make it easy to quickly re

3. supportive business climate (right-to4. existing and potential supplier base 

5. strong university presence for access to business an

plus adding to the area’s “melting pot” environmen

6. good quality of life, melting pot of auto cultures 

Sources of Growth in Non-Metro Appalachia page 93
Vol.1 Project Background and Summary Alabama Auto Alley 

k force, logistics to accommodate movement

f supplies and products, physical infrastructure, and opportunities for growth, and an 

accepting and cooperative community. 

Later, Honda’s criteria would be quite similar, focusing first and foremost on the 

availability of a trained and trainable wor

o

7.4 Catalysts of change 

On all counts, Alabama was competitive. Its extensive road, rail, port, and air system

were essential parts of the infrastructure. Some suppliers were in place. The 

Appalachian region of Alabama was already home to a small part of the auto supply 

chain, including two General Motors suppliers in Tuscaloosa. Mercedes visited JVC 

s 

uring its decision-making process to see how the company operated in Alabama and 

to

rimary impacts of the 

niversities were the cultural and multi-cultural amenities and hospitable and open 

f

nce and 

ibution of the university,

owever, was the open and tolerant environment they instilled in their communities, 

loyees were

rawn from metro counties, overall statistics were not as barrier. It may, however, be 

d

observe any differences from what they were accustomed to in their German facilities.

Education and training, in particular, greatly enhanced the state’s competitive position,

but for different reasons. The most important, according to those involved in the 

process, was its customized training. The Alabama Industrial Development Training,

which is funded through a direct state budget line item, was set up to deliver various 

levels of training plus a wide range of recruitment, filtering, and selection activities.

The state’s community and technical college system was not only already organized

prepare skilled technicians for many of the occupations critical to the auto industry 

through its Bevill Centers but also was a principal part of the state’s manufacturing 

extension partnership (Alabama Technology Network). The p

u

social environment they created in their respective regions. 

The University of Alabama, with one of the first U.S. Department of Commercefunded International Trade Centers, played a key role in convincing the German 

company to choose Alabama for its U.S. home. The universities also were sources o

local expertise and problem solutions via their faculty and students in their scie

engineering programs. The research capabilities of the universities have been more 

important to suppliers than the OEMs which continue to conduct most of their 

research near their home offices. The most valued contr

h

particularly important to welcoming different cultures. 

The elementary school system was undoubtedly the weakest link in the educational 

system. Although on average, Alabama is very close to the South’s average, it has 

some of the most pressing rural education problems in the nation—ranked fifth most 

serious among all states(source: Jerry Johnson and Marty Strange, Why Rural Matters

2005, Rural School and Community Trust, 2005). But so long as a selection of good 

schools, public and private, were available to the employees and most emp

d

one of the reasons that employment was so concentrated in urban areas. 

Sources of Growth in Non-Metro Appalachia page 94
Vol.1 Project Background and Summary Alabama Auto Alley 

er sweetened the pot—as did all the final candidates—with a sizable 

centive package of $372 million, one of the largest given for new investment at that 

the

facturing corridor along 

terstates 65 and 75 dubbed “Auto Alley” that ran from Detroit through Indiana, 

a

k force,

e no auto

ssembly in Alabama.” In 1998, the first year of production, Mercedes produced 

The state furth

in

point in time. 

Giving Birth to the Auto Supply Chain Cluster. The site selection team from

Mercedes began with proposals from 30 states, reduced it to 12, then six, then three 

(North Carolina, South Carolina, and Alabama). In 1997 Mercedes announced its 

decision to build its plant in Tuscaloosa, Alabama. That decision put Alabama on

map of the U.S. auto industry, extending the automotive manu

In

Ohio, Kentucky, and Tennessee into Appalachian Alabama. 

With the rapid growth of auto industry in Alabama (and Nissan in Mississippi), the 

center of gravity of that dispersed supply chain has drifted farther and farther south.

The choice of Tuscaloosa by Mercedes proved to be the birth of a full-blown regional 

supply chain cluster—that is, the state eventually developed the exporter-OEMs,

base of suppliers some of which are shared, specialized support, expertise, wor

education and training system, and social infrastructure that together comprise a

cluster. The key was landing Mercedes. According to University Chancellor 

Malcolm Portera, “Had Alabama not landed Mercedes, there would b

a

68,800 units. (See map of the Alabama auto cluster in Exhibit 7-2.) 

Exhibit 7-2. Alabama Auto Assembly and Parts Manufacturers 

Sources of Growth in Non-Metro Appalachia page 95
Vol.1 Project Background and Summary Alabama Auto Alley 

ction

al decision

ions, but they all agreed that

resence of a trainable labor force and state supported industry oriented education and 

training programs were the most important assets. 

The incentives were important to the location decision but, according to site sele

team members and economic developers, the value of incentives to the fin

was overrated and they were not the deciding factor. (Of course, only DaimlerChrysler knows whether or not incentives were decisive and like all auto 

manufacturers, are unlikely to speak forthrightly about their importance.) They 

remain important, however, because virtually all U.S. regions offer them, and the

absence of incentives could rule a location out of contention. State and business

leaders offered different perspectives on the relative importance of the different 

reasons the two OEMs gave for their location decis

p

7.5 Lessons learned 

The Human Capital Factor - Alabama is a good example of how an educational 

system can be focused to prepare for new job opportunities. The key to acquiring

growing the auto cluster was the presence of an underemployed but trainable labor

force with the work ethic and learning potential the plants needed. The assembly 

plants had to hire large numbers of pre-qualified workers in a relatively short time

since they did not intend to bring their work force with them. Mercedes officials 

initially were somewhat skeptical of the ability of Alabama to match the skills of

Mercedes’ German work force that was trained in its renowned “dual” vocationa

system (classroom theory combined with extensive work-based experience). By the 

time Honda arrived, however, it was clear that export-quality vehicles could be 

assembled in Alabama. A by-product of this workforce redirection towards in-state

automotive assembly functions also meant that Alabama could be home to other 

vertically-linked businesses claiming a node position in several

and

l

automotive supplyhains. These firms are then tied to auto-related business in Tennessee, Kentucky, 

ieved

then, would have to replenish their work force from

e school systems. But this also meant that new job opportunities would eventually 

,

now

c

Ohio, Michigan, Georgia, South Carolina and North Carolina. 

Although Alabama as a state had lower levels of education than most states (in 1980

almost of third of adults living in non-metro counties had no more than eight years of 

education), attainment levels were higher in the Huntsville area and the state had a

good record in vocational-technical education. Mercedes was concerned but bel

the work ethic and training capabilities were on balance an advantage. They also 

realized that because their pay and benefits were going to be far above the state 

average, they would be able to attract the best from the incumbent work force. The 

companies that lost employees,

th

be dispersed across the region. 

Alabama Industrial Development and Training (AIDT), according to multiple sources

was particularly important to both assemblers. Although customized training is

ubiquitous across the U.S., AIDT offers a fuller set of services than most competing 

Sources of Growth in Non-Metro Appalachia page 96
Vol.1 Project Background and Summary Alabama Auto Alley 

e of

a

ariety of technical training needs. The state’s community and technical college

the services and capabilities of Alabama’s 

dustrial Development Training (AIDT) program quickly became a key to workforce 

te

owever,

rojects in cooperation with the industry. The presence of the schools offers 

skills.

d

might be the case, as one local official 

uggested, that the auto industry might rely more on University of Alabama’s business 

-

nd company-based education and training, continuing and management 

ducation and informal learning. In Alabama, the public sector plays a major role at 

1.

d

states, including advertising positions, taking applications, screening and then 

interviewing applicants, and conducting pre-employment training at plant sites, on

its permanent training centers, or in one of its 34 mobile units outfitted to meet

v

system, which extended across the state, was an additional plus for Mercedes. 

Mercedes initially brought over 150 Germans to conduct in-plant training and took 

workers to Germany for experience in German industry. But with the need to gear up 

and train a large workforce in a short time,

In

recruitment, selection, and development. 

The role of the university system is less clear cut. According to one state leader, it 

was “the spark that caused the automobile manufacturing fire” in the state. In this 

view, Alabama’s engineering programs would provide the stream of engineers, student

interns, and faculty consultants required to produce high-quality automobiles in a sta

with little experience in automotive manufacturing. Some graduating engineering did

enter the industry but in general in the upper tiers of the auto industry, searches for 

engineers and top level managers tend to be national to attract the most experienced

people possible. At the same time, engineering graduates from Alabama universities 

look nationally for employment—the majority of the state’s engineering graduates 

leave Alabama to find jobs. The role of engineering students and programs, h

is clearer. Many students enter into coops with the industry and/or design engineering 

p

opportunities for employees to get more advanced degrees or just upgrade their

In the supply sector, there is little demand for engineering skills, as design an

engineering are generally performed at existing sites in places like Michigan, Ohio, 

Germany, and Japan, rather than at new branch plants. There has been some

movement into engineering functions at the 4th tier in Alabama and some prospects for 

further involvement. Overall, though, it

s

school than on its engineering school. 

Building blocks of human resource development - The state’s formal education 

system starts with pre-school and continues through post-graduate education. But a 

comprehensive human resource development system also includes a variety of vendor

, industry- a

e

all levels. 

Alabama Industrial Development Training, created in 1971 by the state 

legislature to support economic development, was a major resource for the auto 

cluster. Administered by the Department of Postsecondary Education, AIDT’s

highly placed advisory council from business, industry, and education guide an

advise its work. In 2004, the governor and Mercedes jointly announced a new 

Sources of Growth in Non-Metro Appalachia page 97
Vol.1 Project Background and Summary Alabama Auto Alley 

d

Certified Worker credential recognized by many of the state employers. To

2.

key

. It

s with 

vanced Vehicle Technologies was established in 

1998, the year Mercedes began production, with funding from the U.S. 

3.

es

wn

tuart Rosenfeld, New Technologies 

and New Skills: Two- Year Colleges at the Vanguard of Modernization, American 

t

k

g shifts, the college system has arranged programs in which faculty 

alternate their class hours between day and evening consistent with the shift 

4. a’s 

d to

“backfill” program called Focused Industry Training at 34 sites to help fill the 

positions left open by those hired by the auto industry. Sites are located in an

around the three assembly sites. A 400-hour curriculum produced an Alabama 

underline its importance to Alabama, AIDT has a line item in the state’s budget. 

The University of Alabama was instrumental in focusing the state’s resources on

the auto industry and in developing the proposals for both Mercedes and Honda.

Its engineering and business schools and its International Trade Center were

factors, but it also created a welcoming environment for foreign investment

runs, for example, a German Saturday school on campus that teaches math, 

science, and German language. It helped orchestrate the “Commission on 

Community Change” to help improve the quality of life in the area. The Alabama

Productivity Center at UA was available to work on production problem

companies and the Center for Ad

Department of Transportation. 

Alabama’s community college system was also an important factor. In the final 

competition, North Carolina’s governor even offered as part of its package of 

incentives to build a “Mercedes University” within its already strong community

college system. Alabama’s approach, however, was to offer to target the resourc

of its existing system. Bessemer Technical College (now merged with Lawson 

State Community College) and Shelton State Community Colleges both offered 

relevant education and training. The well-equipped Bevill Center for Advanced

Manufacturing at Gadsden State Community College offered a nationally kno

and respected education and training programs in precision manufacturing and 

they housed a key part of Alabama’s manufacturing extension service. That 

Center was the result of a historic partnership between the college, the University 

of Alabama, and the city of Gadsden growing out of successful efforts there to 

save a GM plant in the early 1980s. (source: S

Association of Community Colleges, 1995). 

The auto industry relies on the community college system for its more advanced 

training and to improve employees’ opportunities for advancement. Honda 

encourages (and reimburses) its associates to work towards Associate Degrees a

the community colleges. To accommodate Honda’s policy of rotating its wor

force amon

changes. 

The state’s public school system was probably the weakest link in Alabam

human resource development chain. While improving, it remains low compare

most other states, and was given a “D” by the Corporation for Enterprise 

development in its 2005 scorecard. Alabama ranks in the bottom ten states in 

Sources of Growth in Non-Metro Appalachia page 98
Vol.1 Project Background and Summary Alabama Auto Alley 

r

ty

poverty rates. (source: Jerry Johnson, Marty Strange. 2005. Why Rural Matters: The 

t .) 

tomotive 

assembly activities in Alabama has been the availability of readily developable, 

affordable land amidst situated within an ample highway network.

reading and math proficiency of 4th and 8th graders. One place the state has 

improved is in reducing the disparities among races and between genders, although

disparities according to income were second highest in the nation. Graduation 

rates, while climbing, are still among the lowest in the nation. This is a particula

issue for non-metro counties that, according to the Rural School and Communi

Trust. Alabama has the fifth most critical rural educational needs in the nation 

based on availability and distribution of educational funds, special needs, and 

Facts about Rural Education in the 50 States. Rural School and Community Trus

The Topography Factor – also conducive to the entrenchment of au

Sources of Growth in Non-Metro Appalachia page 99
Vol.1 Project Background and Summary Alabama Auto Alley 

7.6 Interviewees 

Gregg Bennett, Alabama Technology Network and The Bevill Center for 

Advanced Manufacturing 

Ernie Cowart, Senior Economic Development Specialist, Economic Development 

Partnership of Alabama 

Robert Culver, Top Alabama Regional Council of Governments 

Austin Dare, Mercedes-Benz

Brad Davis, Director, Alabama Technology Network 

Steven Dean, Randolph County Chamber of Commerce

Dale Greer, Cullman Economic Development 

Lee Hammett, Automotive Group Manager, AIDT 

James Hayes, President, Economic Development Partnership of Alabama 

Greg Knighton, Director of Business Information, Economic Development 

Partnership of Alabama 

Jeff Newman, University of Alabama 

Linda Paulmeno, Mercedes-Benz

Ray Perez, Honda Corporation 

Malcolm Portera, Chancellor, University of Alabama 

Bernard Schroer, Alabama Automotive Manufacturers Association 

Steve Sewell, Executive Vice President, Economic Development Partnership of 

Alabama 

Dana Stone, Program Manager, Alabama Technology Network 

Perry Ward, President, Lawson State Community College

Sources of Growth in Non-Metro Appalachia page 100
Vol.1 Project Background and Summary Conclusions 

8.0 Conclusions – Strength of Growth Processes 

The preceding six locations examined through case study exhibit distinct bases upon 

which their regional economies are organized, and varying degrees of success in 

achieving growth. Why do some of these studies show more pronounced evidence of 

a growth path than others? For locations with improving economic results can we 

attribute this to a growth orientation that’s just right for the local conditions regardless 

of whether the evolution was organic or achieved by planning intervention? Or even if

regional planners and local stakeholders diligently frame a growth path and strategy 

are they guaranteed success? What role does geography play in determining the 

strength of growing trade center, or a tourism market for example? 

We summarize the highlights as follows: 

Growth Affirming Case Studies 

Case Study Chautauqua, NY 

Growth 

Process 

Tourism Development 

 

 

What worked

*Working to organize, market and leverage tourism assets into a yearround offering

 

*Diversify the county’s economy to reduce the exposure to shrinking 

manufacturing presence 

 

What Else worked 

*Reinforced a vital segment of its Trans Equip MFG base & facilitated its 

expansion creating higher value-added/paying jobs and advancing the 

skills of the workforce. The latter with the help of the county’s Workforce 

Investment Board and the community college’s Manufacturing Training 

Institute 

 

*Selective retention of this firm and other manufacturing likely not possible 

without ADHS corridor “T “ which offers a viable connection to I-79 and I90. 

 

Sources of Growth in Non-Metro Appalachia page 101
Vol.1 Project Background and Summary Conclusions 

Growth Affirming Case Studies 

Case Study Alabama's Manufacturing Resurgence 

Growth 

Process 

Automotive Assembly 

What worked

*Incentives alone were not expected to be the silver bullet 

*State's Educational system (k-12, Community Colleges and advanced 

degree conferring institutions) has been a proactive and responsive element 

to assuring the workforce needs of all aspects of the vertical-chain of firms 

*Leadership from both state and regional agencies persevered to succeed in 

the germinal event - attracting Mercedes-Benz to Tuscaloosa 

What Else worked

*Workforce programs assisted in retraining textile workers from jobs going

overseas to automotive applications growing in state. 

* Ample land resources (typically flat green fields) with relatively 

unencumbered permitting process 

*Good highway accessibility to parcels developed 

Growth Affirming Case Studies 

Case Study Corridor K Region 

Growth 

Process 

Tourism Development 

What worked

*Regional collaboration (e.g. SEIDA) between SE TN and SW NC to further 

develop eco-recreational-cultural tourism assets 

*Addressing the road access capacity to carry regional visitors 

*Water resource planning to support rafting tourism 

What Else Needs to Happen

*Establish a direct connection between the terminating corridor cities of 

Chattanooga and Asheville that will separate through traffic from tourism trips 

to corridor communities

*Ensure that cities such as Murphy (Cherokee Co., NC) that desire to retain a 

healthy industrial component obtain efficient highway links to I-85, and I-65. 

Sources of Growth in Non-Metro Appalachia page 102
Vol.1 Project Background and Summary Conclusions 

Growth Affirming Case Studies 

Case Study Morgantown-Fairmont 

Growth 

Process 

Hi-Tech Spin-offs from Educational Assets 

What worked

*I-79 backbone through the Morgantown MSA has facilitated regional collaboration, 

most predominantly between Morgantown and Fairmont. 

*Infusion of federal research grants secured by U.S. Congressional representative & 

research readiness

*City of Morgantown provides good entrepreneurial support 

*Ample higher education assets: WVU (Morgantown), Fairmont State University & 

Fairmont State Community Technical College 

*Technology-transfer office of WVU and WV High Tech Consortium in Fairmont 

Fairmont’s smaller hi-tech economy appears to serve as a complement to Morgantown's 

economy 

What Else Works 

*I-68 connection (ADHS corridor E) links Morgantown to Baltimore-Washington area 

What Else needs to Happen 

*Fairmont needs to find opportunities to commercialize federal support research and 

incubate local start-up firms 

*Region needs additional east-west access without which the current limited extent of 

beneficial urban spillovers intraregionally goes unchanged 

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Vol.1 Project Background and Summary Conclusions 

Growth Ambiguous Case Studies 

Case Study Scioto County Ohio 

Growth 

Process 

Alleged Trade Center 

What Happened 

Extra-regional N-S and E-W highways bypassed the county 

Difficult transition since 1980 as key manufacturing sectors (e.g. Steel, 

Shoes) moved jobs overseas 

Lack of critical mass in services to effectively draw surrounding rural 

consumers (household or business) 

Adverse urban backwash effect on Scioto as surrounding rural counties 

gained access to extra-regional metro area markets in Columbus, Cincinnati 

and Huntington WV. 

Geographic constraints of hilly terrain and flood plains of the Scioto and Ohio

rivers limit developable land

What Else needs to Happen 

Develop cultural and shopping amenities

Remedy recruitment problem for doctors to the So. OH medical Center 

Launch high-tech health care services for hospital to serve a broad regional 

market in a realistic niche 

Build on the regional collaboration success of SODI in securing a new 

manufacturing resurgence in Scioto using joint infrastructure financing, 

brownfield redevelopment

Build from/retrain the remnants of Scioto's strong manufacturing workforce 

Sources of Growth in Non-Metro Appalachia page 104
Vol.1 Project Background and Summary Conclusions 

Growth Ambiguous Case Studies

Case Study Pike Co., KY and Big Sandy Area 

Growth Process Diversifying from Extraction Industry reliance 

What Happened 

*Unique cut-through project completed in 1987 provided Pike Co. new developable land and better 

access 

*County as recipient of Coal Severance Tax to fund community development projects

*Though still an economy based on coal mining, Pike Co. has taken on a function as a regional 

economic hub for other counties in the BSA 

*Emergence in healthcare services the result of cooperative efforts between Pikeville Medical College

& Pikeville Medical Development Corporation (PMDC) 

*PMDC also champions non-healthcare economic development opportunities for the county 

*Pike Co. has good highway access, offers rail freight service and a regional airport 

What Else needs to Happen 

*Furthering industry diversification will require retraining of former mining workforce given population 

losses 

*More multi-county planning initiatives to remedy the paucity of positive economic spillover from Pike 

Co. to the four other BSA counties which remained distressed 

*Investment in regional amenities to retain/attract working age population 

These examples each show that numerous interventions or aspects contribute to the 

economic situation counties find themselves with. Whether economic progress or 

stagnation is the situation, these processes take time. This is both double-edged. First, 

there is no quick turn-around strategy. Well conceived program investments and 

targeted policy must be committed to with patience and a willingness to reassess over 

time and readjust as the background regional or macroeconomic conditions change. 

Second, there is always a time to take action towards improving the economic 

prospects of communities that have been in persistent distress. Some of these 

communities have high hurdles to ever developing a modest sized employment centers 

for their working age residents. This does not however preclude ensuring that 

Sources of Growth in Non-Metro Appalachia page 105
Vol.1 Project Background and Summary Conclusions 

populations gain access to regional employment opportunities – so that expanding 

healthcare services growth in Pike County may spell more of an opportunity for 

workers from Floyd, Martin, Magofinn and Johnson counties as well. 

Likewise Scioto County, a distressed micropolitan area, along with six other distressed 

Appalachian counties in the local development district need to build more regional 

solutions that can leverage the economic success at the periphery of the district and 

Appalachian boundary (in Brown, Clermont, Highland & Ross counties) to help 

revitalize the core of the region. 

Many of the barriers or challenges to growth can be named: topographical (land 

constraints or access barriers), underserved by necessary transportation infrastructure, 

limited local market demand, limited local services, limited labor supply and quality 

from persistent out migration and limited educational-training resources, neighboring 

economies that compete or fail to synergize regional opportunity, adverse urban/core 

backwash effects. 

Last, the case studies demonstrate that several key aspects must improve in sync to 

welcome economic development. All growth paths require good transport access and 

a suitably trained workforce for the employment center they will access. Other 

important components depending on the growth strategy are attracting federal research 

dollars to advance the role of higher-education institutions that are present, and 

learning to commercialize research and spur small business starts; evolving recreation 

and cultural assets into a tourism product with critical mass and learning to market the 

product; and improving both housing stock and local amenities as a mean to retain and 

attract working age population. 

In the next volume of findings for the study of Sources of Growth in non-metro 

Appalachia, we interpret several statistical tests of the possible spatial influences at 

work in the economic outcomes of Appalachian counties. 

Sources of Growth in Non-Metro Appalachia page 106
Vol.1 Project Background and Summary Conclusions 

Sources of Growth in Non-Metro Appalachia page 107