It is clear that the foremost economic development imperative in Hampton Roads is diversification.
The Hampton Roads economy has been dominated by the national defense industry for decades. According to the 2016 State of the Region report from Old Dominion University, over the last 30 years U.S. Department of Defense spending has accounted for over 40% of the local economy.
In 1984, that number was 49.5%. In 2014, the number dipped to 40.3%. For 2016, ODU economists predicted defense spending to sink even further - below the 40% mark - to 39%.
Between sequestration, base realignment and closure (BRAC), changes to military strategies and budgets, and geopolitical shifts, continued reliance on unpredictable federal defense spending will hamper the Hampton Roads economy. It is because of the volatility of defense spending that diversifying is the economic development imperative in Hampton Roads.
Similarly, in Currituck County, we are dependent on the unpredictability of tourists.
Not surprisingly, people from all over the world come to Currituck to enjoy our world-class beaches. While we welcome this revenue source, we also seek to find stable, year-round economic development opportunities to grow the County’s economy.
While there may not be one, sure-fire “magic bullet” to create the sustainable, expanding economy we all want for our region, here are a few ideas that can lead to the diversified economy we need.
It is estimated that 13,000 skilled workers finish their military service in Hampton Roads and enter the workforce every year. We need to create clear pathways for these talented people to enter our region’s well-equipped institutions of higher education, gain the training and skills they need, and contribute to growing our economy rather than some other community’s.
Perhaps a stronger alliance between Virginia and North Carolina workforce development organizations and US Navy and Department of Defense career readiness programs would yield the results our economy needs.
There are many reasons hiring a Veteran makes sense, and there are lots of resources in Hampton Roads that can help encourage these talented workers to stay here when they complete their service. Strengthening this Veteran-workforce pipeline is truly a win-win for Hampton Roads.
We can and should spend less time and effort to recruit new people and businesses to the region, and pay more attention to the dynamic start-ups and entrepreneurs already here. Purposeful gestation and economic gardening of new industries and businesses with startup financing and support could lead to the creation of new industries not yet on the map.
We’ve made strides in the modeling and simulation (MODSIM) industry, and now we need to explore others. Investing in a coordinated and purposeful Science, Technology, Engineering and Math (STEM) curriculum can lead to new businesses in emerging industries that suit our region’s geographic and economic advantages.
We can galvanize angel investment groups in Hampton Roads; leverage the services provided by the Hampton Roads small business development center, chamber of commerce, and other business-minded organizations; and meld these services with those in North Carolina; and make ours the next hot region for technological innovation.
But to do so, we need to do a better job of capturing creativity and supporting the entrepreneurial spirit of our region.
How can we start with what we have and do well – shipbuilding, technical contracting, maritime services – and find the next best thing within that industry?
Here are three ideas:
Private citizen space exploration. We have the Wallops Flight Facility here, how can we transform it into an economic driver?
Revolutionize port to business automation. The privately owned Virginia International Gateway (VIG) is one of a handful of fully automated container terminals in the Western Hemisphere. If we can replicate that ingenuity and enhance it with piloted trucks and other automated functions, Hampton Roads can become a world leader in port commerce efficiency.
Sea level response. The Hampton Roads region is experiencing the highest rise in sea level of any region on the east coast, and is second only to New Orleans as the highest populated region most vulnerable to the rise in sea level. With predictions of a widespread rise in sea level in cities all over the world, if we are able to engineer an efficient and effective response in Hampton Roads, we could become the global leader in protecting built areas from the encroaching ocean.
From Gates and Currituck Counties in North Carolina to Matthews and Gloucester Counties in Virginia, the communities of Hampton Roads have everything we need to recreate a thriving regional economy. If the economic development imperative in Hampton Roads is to diversify, why not examine the key economic drivers of our region rather than of our cities and towns?
Recent economic reports indicated professional and business services, healthcare, and retail are the growing job areas in the region. If we take a regional approach to transportation, energy, education and training, and resources, all Hampton Roads boats can be lifted by the rising economic tide.
There may be disagreement about which economic sector makes the most sense for our region. But there can be no disputing what the numbers and forecasts have been saying for years. The economic development imperative in Hampton Roads is to develop a more diversified economy.
Let that work begin.
This article was published in the October 31, 2016 edition of Inside Business, The Hampton Roads Business Journal.