Specific Regional Opportunities · GO Virginia – Talent Pipeline The Problems • Low...

Welcome

Advancing The Hampton Roads Economy

December 10, 2018

Specific Regional Opportunities

Agenda

2

III. Regional Economic Performance

Hampton Roads is blessed with an incredible set of key assets

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REGIONAL ASSETS

Virginia’s Global Gateway

Broadband

Military & Federal Presence

Public & Private Higher Education

Infrastructure Expansion

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REGIONAL ASSETS

Tourism, Arts, Culture Workforce

Research Capabilities

Location & Climate

Diversity of Place

Regional Economic Performance: DESPITE OUR RICH ASSET BASE, THE REGIONAL ECONOMY HAS

UNDERPERFORMED THE STATE, COMPETITOR REGIONS, AND THE US

ECONOMY FOR MANY YEARS.

6

PEAK TO TROUGH TO PEAK EMPLOYMENT GROWTH

Current Employment Volatility

(8,300) Jobs Lost March to May

Average Monthly Loss: -.36% mirroring

the 1990-91 & Great Recession

Decelerations

730

740

750

760

770

780

790

Source: Economic Research Division, St. Louis Federal Reserve- Data shown through May 2017, Seasonally Adjusted

Recession

Peak Employment: July 2007

Employment = 781,600

May 2016 – May 2017 Job

Change

(1,900)

12-month percent change May

2016 – May 2017

-.25%

12,500 Jobs shy of pre-recession peak

Previous Period: 3 Months

Consecutive Decline

Average Monthly Loss: -.08%

The 2007-2009 Recession and its Recovery through December 2016

4.96%

4.30%

-1.79%

-8%

-4%

-6%

0%

-2%

2%

4%

6%

Ch

an

ge

from

Pre

-Rec

essi

on

Peak

% Change in Total Non-farm Payroll Employment from Pre-Recession Peak

Months After Pre-Recession Peak

USA VA HR

0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 105 110

Pre-Recession Peak Dates: U.S.: January, 2008 Virginia: April, 2008

Hampton Roads: July, 2007

Hampton Roads 105.0

United States, 112.6

Virginia, 108.9

Baltimore, 110.8

Richmond, 112.9

Jacksonville, 120.1

Raleigh, 125.0

Charlotte, 125.4

Nashville, 132.3

95.0

100.0

105.0

110.0

115.0

120.0

125.0

130.0

135.0

Q2 2009 Q2 2010 Q2 2011 Q2 2012 Q2 2013 Q2 2014 Q2 2015 Q2 2016 Q2 2017 Q2 2018

Quarterly Job Growth

Source: U.S. Bureau of Labor Statistics

Data shown through Q2 2018, Seasonally Adjusted

Indexed Growth

Three-Year Gross Product Growth in Hampton Roads and Reference MSAs

0.8%

-1%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

An

nu

ali

ze

d C

ha

ng

e i

n G

ro

ss

P

ro

du

ct

(20

14

- 2

017

)

Metropolitan Areas with Population between 1 and 4 Million

Sources: Bureau of Labor Statistics and HRPDC

Three-Year Employment Growth in Hampton Roads and Reference MSAs

1.1%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

An

nu

ali

ze

d C

ha

ng

e i

n

Em

plo

ym

en

t (2

013

- 2

016

)

Metropolitan Areas with Population between 1 and 4 Million

U.S. Metro Area Average is 2.23%

Sources: Bureau of Labor Statistics and HRPDC

A Business-Led Statewide Initiative

To Grow and Diversify the Private Sector In Each Virginia Region

IV. Growth and Opportunity Program: “GO VA”

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What is GO Virginia?

A bipartisan, business-led, game-changing initiative…

That will provide a new framework for Strengthening the economy in each Virginia region…

Through enhanced collaboration by

business, education, and local government…

Go Virginia Purpose Statement

“Create more higher paying jobs through Incentivized collaboration, primarily through

out-of-state revenue, which diversifies and strengthens the economy in every region”

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14

Virginia’s Economic Climate Federal tax reform has significantly improved state fiscal

picture

Unemployment at historic lows

Average compensation for newly created jobs still lags pre-recession totals

Many Virginia regions still have not recovered all the jobs that existed pre-recession

Virginia still lags national economic trends

Virginia has structural and historical barriers that inhibit economic growth and cooperation

15

What are Virginia’s structural Problems?

Unique structural challenges related to independent cities and Dillon Rule

Region is the organizing unit of the economy-and Virginia

has historically not thought this way

Instead of collaborating on economic development, localities have been competing

(often with no net gain to the state economy)

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Go Virginia-Implementation

• 29 Projects approved for $12M in state funds

• Provided funding for enhanced capacity building for future

collaborations

• All projects must show collaboration between at least two

localities

• Leveraged nearly $20M in additional funds (1:1 outside match

required)

• 20% local match required – need to have skin in the game to

effect real change

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Growth and Opportunity (GO) Grants:

Potential Projects

Priority Clusters

Scale-ups of existing Small and Medium

Sized Businesses

Credentialing and Talent Development

Commercialization of R&D (Public and

Private)

Enhanced Star-Up and Initiatives and

Collaborations

Joint Site Development and

Economic Development

Projects

19

GO Virginia – Talent Pipeline

The Problems

• Low unemployment

• Flight of talent to other states with “better opportunities and equity- VA lost 14,000 highly educated 25+ year olds in past 5 years

• Questionable data on actual employment gaps

• Mismatch between needs of business and degree/credentialing/training efforts

Potential Strategies

• Systematic assessment of employers’ needs for talent

• Match talent with employment opportunities

• Promote more education-to-employment pipelines (apprenticeships and internships)

• Align curriculum and programs with business needs

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The Problems

• Insufficient number of sites to capitalize on major capital investment opportunities

• Sites that exist are not shovel ready

• Data on existing sites is incomplete

• Lack of cooperation among localities

Potential Strategies

• Systematic regional and statewide site inventory

• Demand analysis to prioritize site development

• Fund infrastructure that moves sites closer to being shovel ready

• RIFAs and other contractual obligations to share costs and revenues

GO Virginia – Site Development

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The Problems

• Virginia ranks 22nd of 25 large states in startup activity

• Venture capital growth 1/3 of national average

• New companies that leave create 50% more jobs than the ones that stayed

• Commercialization lags national peers

• 77% of university R&D licenses in 2017 were out-of-state companies

Potential Strategies

• Regional “quarterback” to coordinate and align entrepreneurship efforts

• Statewide backbone services to support the most promising business ventures

• Statewide seed fund

• Strong focus on most promising sectors for Virginia – cyber, big data, life sciences, IoT

GO Virginia – Entrepreneurship

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The Problems

• Often misunderstood, few national models

• Uncoordinated activities to help companies survive valley of death

• Growing our own companies leads to larger, sustainable clusters

Potential Strategies

• Growing our own companies leads to larger, sustainable clusters

• Augment supply chains around successful enterprises

GO Virginia – Scale Ups

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VI. Reinvent Hampton Roads

Background

Hampton Roads Community Foundation convenes examination of our region’s comparative economic underperformance

Involved 100+ individuals focused on key areas: Leadership Industry Clusters Entrepreneurship Workforce Development

Partners with Brookings Institution’s Metropolitan Policy Program

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Conclusion

We need to fundamentally alter the region’s economic profile and performance over time.

Create more and higher paying jobs

Create a culture where entrepreneurship can thrive

Diversify the economy

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Reinvent Hampton Roads

Reinvent Hampton Roads

Established January 2016

A business-led frame for game-changing work that will fundamentally alter the region’s economic profile and performance over time

Funded by: • Hampton Roads Community Foundation

• Go Virginia (Commonwealth of Va.)

• Port of Virginia

• Hampton Roads Business Roundtable

• Individual Support

• HREDA & GPNow (1st year)

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Our mission:

• To create and grow more higher paying traded sector jobs in Hampton Roads

• By creating a strategy that embraces both the traditional and emerging employment sectors in Hampton Roads. We will improve the region's economic profile by attracting new entrepreneurs, innovative industries, and high-paying employment opportunities.

Our approach:

• Be comprehensive: Region is a system of systems • Partner with others: Stress alignment • Focus on actionable solutions

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Board of Directors

JOHN O. DUBBY” WYNNE (CHAIR) G. ROBERT ASTON, JR. (VICE CHAIR)

ROBERT CRUM JOHN LAWSON

HARRY LESTER JENNIFER R. BOYKIN

KEVIN MURPHY DEBORAH M. DICROCE

BOB SASSER JOHN REINHART

RONY THOMAS THOMAS FRANTZ

RICK WEDDLE ALAN WITT

HOWARD KERN

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Growth and Opportunity

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Go Virginia Region 5 Council

Thomas R. Frantz, Chair

Anne C. H. Conner, Vice Chair

Kenneth Alexander Robert McKenna Shawn Avery Jerry Miller

Patrick Coady J.D. Myers, II

Timothy J. Bentley John Olson

Bruce Bradley McKinley Price

John R. Broderick John F. Reinhart

John T. Dever Katherine Rowe

William B. Downey Jeffery Smith

Robert “Bobby” Dyer Bryan Stephens

Jack L. Ezzell, Jr. Bruce Thompson

Michael Gentry Thomas G. Tingle

Maria Herbert Gary Warren

Jeffrey Holland

Jim Kibler

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REGION 5

GO VIRGINIA CURRENT PROJECTS

Virginia Cyber

Alliance

757 Seed Fund

Virginia Digital

Shipbuilding

Hampton Roads

Unmanned Systems Facility

Drivers for Economic Growth and higher paying jobs

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Based upon sound research

Recognition of long-term nature or issues – no “silver bullet” or quick fix

Collective Impact model

Collaboration

Communication

Alignment of many efforts and initiatives

Conclusion

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Thank you!

Questions &

Comments

Visit our website www.reinventhr.org

Connect with our network and like our showcase page on and us on

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15 Minute Break

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VI: Next Gen Leadership:

Leadership for Strategic Change in Economic Development

The Dilemma: While Next Gen Leaders are involved in worthy projects and lead many community boards; with some exceptions, they are not leading our most important strategic, economic development initiatives

Next Gen Leadership

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Why is this important?

• In every community and every organization, the development of future senior leadership is the No 1. predictor of sustained success.

• Managers are important to deliver current results, but leaders think through needed strategic change, and then motivate and align the right people to pursue this change.

Next Gen Leadership

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Why is this important? (cont.)

• People who are comfortable with and are good at leading change are a minority of well intended citizens.

• Think of this as Community Leadership Succession.

Next Gen Leadership

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The Objective • To persuade, motivate, and support more

of our Next Gen Leaders (you and others) to assume responsibility for our high priority, strategic economic development opportunities.

• Explained earlier, the criticality of economic development.

• We can identify great projects, but unless led through implementation and success, ideas are not worth much.

Next Gen Leadership

42

• Participation and working with others for the benefit of the community at any level is worthy and helpful, but leading the most important strategic changes is most challenging, potentially impactful areas is what will elevate our community the most.

• Time, interest, and passion must combine.

Next Gen Leadership

43

Complexity of Volunteer Leadership • It is volunteer, not your business or family.

• Working with other volunteers-no real

control.

• Civic versus business standard of performance (can’t dabble and expect success).

• Need for team of volunteers and some dedicated resource to be successful.

Next Gen Leadership

44

Next Gen Leadership

Attributes of Strategic. Change Leaders

• Have shown commitment to the community. • Have achieved some success. • Respected by peers. • Have interest, even passion for the topic. • Senior enough that have flexible time to devote. • Power to convene. • Understands ability to persuade depends on

preparation. • Ability to marshal resources.

• Are these right? • What else?

45

Next Gen Leadership

Attributes of Strategic Change Leaders (Audience Answers)

• Pick a lane (recognized experts to move things forward). • Prepare to hear “no” • Competency/skill sets/achieve and execute • Good sense of timing • Support next gen via sponsorship by current leaders

(mentoring) • Be open and create opportunity for talent • Longer term commitment • Convey vision • Sacrifice time

45

Next Gen Leadership

Attributes of Strategic Change Leaders cont. Why do this? (Audience Answers)

• Pride for our community • Creating a better place for our children

45

Next Gen Leadership

Why haven’t we met our Objective?

46

Next Gen Leadership

Attributes of Strategic Change Leaders cont. Why haven’t we met the objective? (Audience Answers)

• Structural Change (corporate leadership) • Competing priorities/coordination and alignment • Sharing of ideas and the possible risks associated • Inability to function as one region • Partnership with Govt. with the purpose of improving the live

of all citizens

45

Next Gen Leadership

What can we do about it? Is it even possible to be this purposeful about this topic or should

we allow it to be serendipitous?

47

Next Gen Leadership

Many older senior leaders are willing to sponsor, help recruit, mentor, and advise as needed, but we want to move into the background and be available as needed. Put the right people in place and get out of the way.

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VII. Overview of Specific Regional Opportunities

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Regional Specific Opportunities Origin

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50

Regional Specific Opportunities Descriptions

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Regional Specific Opportunities

Group I: Currently Underway

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Jefferson Lab Expansion: Electron Ion Collider

Regional Branding

Hampton Roads Economic Development Alliance and the Structure of Reginal Economic Development

MEGA Region

Scale-Up of Small/Medium Enterprises

53

Jefferson Lab Expansion: Electron Ion Collider

54

Regional Branding

55

Hampton Roads Economic Development Alliance and the Structure of

Regional Economic Development

56

57

Scale-Up of

Small/Medium Enterprises

58

Group II: Ready to Pursue

Economic Development Sites

Entrepreneurial Eco-System

Military DoD/ Strategic Initiative

Broadband/Cyber/Big Data Analytics

Leadership

Workforce Development

Alternative Energy

Port Economic Development/Advanced Manufacturing and Logistics

Tourism

Bio-Science/Health

60

Economic Development Sites

61

Entrepreneurial Eco-System

62

Military/DoD Strategic Initiative

63

Broadband/ Cyber/Big Data

Analytics

65

Workforce Development

66

Alternative Energy

67

Port Economic Development/ Advanced Manufacturing/

Logistics

68

69

Bio-Science/ Health

VII. Regional Specific Opportunities

Examples

Developing Talent Pipelines Economic Development Sites HREDA/Regional Branding

Workforce Developing Talent

Pipelines

72

Few Examples of Sustained Talent Pipelines

Individual Companies

Phot cred. A Cowan,

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Developing Talent Pipeline

Even more difficult in times of high employment.

Conundrums? • Why haven’t businesses been more

aggressive in addressing critical talent needs?

• Why haven’t business and education partnered more to solve this issue?

• Why hasn’t the state and our regional

efforts done more to address this challenge?

Developing Talent Pipeline

75

In Economic Development, all would agree that the critical key to improvement and success is proving that a targeted pipeline can be developed and sustained.

Developing Talent Pipeline

76

• Step 1: Systematic assessment of employer needs. Deep data dive to validate critical few job categories (higher paying jobs) that are needed the most now, and likely to be needed for years to come.

• Hampton Roads, with funding from HRCF, is doing that now.

Developing Talent Pipeline

77

• Focus on critical few, prove it can be successful-do not get spread too thin and try to solve for all categories. Match talent to highest employer needs.

• Remember, higher paying jobs create lower paying jobs. The opposite is not true.

Developing Talent Pipeline

78

• What is the prototypical model that should be pursued?

• Good examples are emerging-Amazon, NNS, etc.

Developing Talent Pipeline

79

• Historically, education and 4 year institutions especially have been siloed in these efforts.

• Responsibility is to properly educate, not focus on business needs, or even essential credentials needed for a successful career-computer science?

Developing Talent Pipeline

80

The Prototype: 1. Business and educators agree on content of

credential/degrees. Improve alignment. • Need to plan for one, excellent product

delivery, not 23 variations. • Need to plan for better use of online

components-Online Virginia Network Authority (ODU &GMU)

Developing Talent Pipeline

81

The Prototype: 2. Internships, apprenticeships, and

work study need to be discussed and put in place.

3. Addressing continuing education of existing workforce is important.

Developing Talent Pipeline

82

The Prototype: 4.Must create a pipeline of people

who can be persuaded to persuse these incentives: awareness, marketing, recruitment, and retention programs; economic incentives, etc.

5.Must have full-time resources devoted to leading this effort

Developing Talent Pipeline

83

The Prototype: 2. Internships, apprenticeships, and

course study need to be discussed and put in place.

3. Addressing continuing education of existing workforce is important.

Developing Talent Pipeline

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Developing Talent Pipeline

Targeted Talent

Pipeline

Match To Next Generation Leadership

85

VII.Examples Economic Development Sites

Regional Economic Development

Sites Inventory

January 18, 2018

“You can’t sell from an empty wagon”

Sites Inventory Need

Major job-creating investments are won because of a pipeline of development-ready sites

Sites Inventory Need

“We have lost out on billions and billions of dollars and thousands and thousands of jobs … because we did not have development-ready sites prepared quickly enough to meet the company’s needs”

- Stephen Moret

Virginia Economic Development Partnership (VEDP)

Sites Inventory Need

“Over the last five to six years, we’ve had somewhere between 40 and 50 companies totaling about $6.5 billion in capital investment who have said the first reason they walk away from Virginia was site readiness”

- Todd Haymore

Former Secretary of Commerce & Trade

Sites Inventory Need

- Virginia has only half as many certified ready sites as North Carolina and one-third as many as Tennessee

- Lack of development-ready sites is the #1 reason Virginia loses projects to other states

- VEDP Site-Readiness Study

What Does “Shovel-Ready” Mean?

Virginia Business Ready Sites Program

Tier 1 Tier 2 Tier 3 Tier 4 Tier 5

Ownership

Land Use

Sales Price

Zoning

Due Diligence

Infrastructure > 1 Year < 1 Year

What Does “Shovel-Ready” Mean?

Virginia Business Ready Sites Program - Tier 4

– Public ownership or willing seller

– Industrial or commercial land use designation

– Industrial or commercial zoning

– Due diligence studies complete

– Infrastructure in place or deliverable within 1 year

Building on a Strength

Small Sites

Large Sites - Over 100 Acres

Redevelopment Sites

Priority Industry Clusters

1. Logistics and Warehousing

2. Advanced Manufacturing

3. Cyber Security

4. Shipbuilding

5. Water Technologies

6. Unmanned Systems

Site Types

Building on a Strength

Advanced Manufacturing Project

Capital Investment: $325MM

Headcount: 650

Average Salary: $55,000

Evaluation Process

HRPDC Screening and VirginiaScan Listings

Ownership, Land Use, and Zoning

Utilities

Due

Diligence • >100-acre parcel

• Within public service areas

• < 50% wetlands or open water

• < 20% developed (impervious area)

Findings Placeholder

• Text

100-Acre Sites

Findings Placeholder

• Text

Appropriately Zoned Sites

Findings Placeholder

• Text

Shovel-Ready Sites

VII.Examples HREDA- Regional Branding

Status Report

Hampton Roads Economic Development Alliance

for Hampton Roads

Business Roundtable December 5, 2018

Current Approach to Regional Economic Development is not Working

• Not Aligned • Too Fragmented • Uncoordinated • Poorly Marketed • Not a True Partnership • Not Adequately Resourced

Conclusion: A New Local/Regional Relationship Needed

Business Attraction

by HREDA

Local Economic

Development Agencies

Local Economic

Development Agencies

Refocused HREDA

IBM/P L I Came to Same Conclusion

5

Transforming the HREDA Role to Enhance Business Growth

Current HREDA Focus

Marketing/promotion for inward investment

Lead generation

Business facilitation

Research and analysis

Recommended Future HREDA Direction Lead targeted pro-active marketing and promotion of Hampton Roads to investors and companies (in collaboration with VEDP and local EDOs), coupled with active business facilitation and support.

Function as the prime point of contact for companies and coordinator for promotion activities and support with other organizations and stakeholders.

Pro-actively support the indigenous growth of Hampton Roads companies through international promotion of capabilities

Act as facilitator for partnerships between inward investment firms and local companies and support regional efforts for industry-university collaboration for research, skills and cluster development.

Play a strong policy advocacy role towards cities, region organizations and Commonwealth government authorities in support of economic development.

Organize and support after care and investor/cluster development programs.

HREDA should become a pro-active marketing organization acting as catalyst for growth through integrated support and effective promotion, cluster

development and advocacy

Current activities are too focused on promotion, facilitation and support

HREDA should become a more pro-active and effective investment promotion agency in line with global best practice, working in close collaboration with VEDP and local EDOs.

HREDA should support indigenously grown sectors and help promote these capabilities internationally and help foster the growth of regional clusters in Hampton Roads

Emerging Economic Model

$1,849,084

$1,398,915

$1,212,250

$658,350

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$2,067,265 2017 Funding Outlook

$3,111,334 Peak Funding

$500,000

$- 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2017

Public Funding Private Funding Other Budget Outlook

Total Funding Decline of $1,044,069 (33.6%). Private Decline $569,940 (46.4%). Public Decline $450,169 (24.3%)

Historical HREDA Funding Support by Source

•Mandate: Clear, specific and comprehensive regional mission and

mandate for New ED Model and action

•Support: Public endorsement, support and engagement of top public

& private leadership

•Overall Funding: Minimum of $2.35 per capita

•Revenue Mix: 50:50 public-private funding ratio

•Spending Mix: 50% or less committed to personnel expense

•Timeframe: 3-5 year program and funding commitment

•Evaluation: Measurable goals and annual performance targets

Requirements: Competitive Regional ED Model

$601,085

$1,341,650 $1,398,915

$658,350

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Public Funding Current Revenue

Private Funding Revenue Gap

$2,000,000 $2,000,000

Percent of Current Funding Compared to Proposed Funding

Revenue Gap at Competitive $2.35 Per Capita Funding

• $4 MILLION GOAL PER YEAR BEGINNING July 1, 2019

• 50% PRIVATE / 50% PUBLIC

• FUNDING STEPS UP OVER 3 YEARS

• HREDA BUDGET AND PRIVATE SUPPORT BASED ON CALENDAR YEAR

• PUBLIC SUPPORT ON JULY /JUNE FISCAL YEAR

• FUNDING STEP UP SCHEDULE

Proposed Funding: $20 million over 5 Years*

YEAR PRIVATE ADDT’L. $

TOTAL PRIVATE

ADDT’L. PUBLIC

TOTAL PUBLIC

TOTAL

2019 $.9 M $1.6 M $.26 M $1.6 M $3.2 M

2020 $1.1 M $1.8 M $.46 M $1.8 M $3.6 M

2021 $1.3 M $2.0 M $.66 M $2.0 M $4.0 M

*NOTES: • Assumes Regional Population of 1.7 million

• Adjustments may be necessary based on HREDA membership changes

Engaged Business Leadership and Proper Resourcing Required to

Achieve Results

Current Activities & Next Steps:

• December 5, 2018 Master Agreement to Business Roundtable and CAOs.

• December 13, 2018 Master Agreement to Full HREDA Board.

• By end of year, Comments received and final draft prepared.

• By end of year, interim HREDA President selected.

• January 2019 Establish Joint Public/Private Steering Committee to guide transformation.

• Once Master Agreement in place and first year funding secured, begin executive search for permanent president.

Significance of Proposed Direction:

• The public and private sectors must urgently and jointly address the chronic underperformance of the regional economy by putting in place a partnership founded on a new model of Economic Development that is aligned and adequately funded.

• If the recommended partnership is implemented, Hampton Roads will cease being the Commonwealth's most dysfunctional Economic Development region and become the most forward looking and collaborative.

Next Steps?