West Virginia Technology Industry - Anderson Economic Group · For much of the twentieth century West Virginia relied on coal mining and basic manufacturing for jobs and income. When

October 30, 2006

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Anderson Economic Group, LLC1555 Watertower Place, Suite 100East Lansing, Michigan 48823Tel: (517) 333-6984Fax: (517) 333-7058

http://www.AndersonEconomicGroup.com

North-Central West Virginia’s Technology Industry:

A Pathway Through the 21st Century

Prepared by: Scott D. Watkins, ConsultantCaroline M. Sallee, Senior Analyst

Executive Editor: Patrick L. Anderson, Principal and CEO

Table of Contents

I. Executive Summary............................................ 1Report Purpose and Overview ........................................ 1The West Virginia Economy: Historical Perspective ..... 3Emergence of the Technology Industry .......................... 3Technology Industry Today ............................................ 4Benefits of the Technology Industry ............................... 5Other Technology Activities ........................................... 6Looking Forward ............................................................. 7

II. West Virginia’s Economy: Historical Perspective............................................................ 8

Employment by Industry ................................................. 8Labor Force ................................................................... 11Income Data .................................................................. 15

III. Emergence of the Technology Industry ......... 16The Federal Anchors ..................................................... 17

IV. North-Central West Virginia’s Technology Industry Today..................................................... 21

Defining the Technology Industry ................................ 21Technology Employment: The Big Picture .................. 24Technology Industry Clusters ....................................... 26

V. Economic Benefits of the Technology Industry ............................................................... 28

Definition of Economic Impact ..................................... 28Technology Industry Economic Impacts ...................... 29Socioeconomic Benefits ................................................ 31Economic Impact Methodology .................................... 33

VI. Other Technology Industry Activities ............ 36Science and Engineering Graduate Students ................ 36University Research and Development ......................... 36Small Business Innovation Research (SBIR) Awards .. 40Industry Advocacy ........................................................ 41

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Table of Contents

VII. In Focus: North-Central West Virginia Technology Firms................................................ 45

Electronic Warfare Associates, Inc. .............................. 45National Biometric Security Project ............................. 45Azimuth ......................................................................... 46Information Research Corporation ................................ 47FMW Composite Systems Inc. ..................................... 47Global Science & Technology ...................................... 48Touchstone Research .................................................... 48

VIII. Looking Forward ........................................ 50

Appendix A: Technology Industry Definition Methodology ......................................................A-1

Review of Existing Definitions ....................................... 1Selecting NAICS to Include: First Cut ........................... 2Selecting NAICS to Include: Second and Third Cuts ..... 2Finalizing the Definition ................................................. 3Technology Cluster Classifications ................................ 3

Appendix B: Other Definitions of the Technology Industry ..............................................................B-1

American Electronics Association (AeA) ....................... 1The Pittsburgh Technology Council ............................... 1Carnegie Mellon and SSTI .............................................. 2Daniel Hecker, United States Bureau of Labor Statistics 2Anderson Economic Group (2001) ................................. 2

Appendix C: Technology Industry Data............ C-1About the Data ................................................................ 1

Appendix D: Demographic and Economic Data .................................................................. D-1

Appendix E: Economic Impact Data Sheets ......E-1

Appendix F: Bibliography..................................F-1


Table of Contents

Appendix G: Project Team................................ G-1Patrick L. Anderson ........................................................ 1Scott D. Watkins ............................................................. 1Caroline M. Sallee ........................................................... 2Other Contributors .......................................................... 2


Executive Summary

I. Executive Summary

REPORT PURPOSE AND OVERVIEW

Purpose. This report provides a comprehensive assessment of the technology industry in north-central West Virginia, including the I-79 Technology Corridor. The assessment provides businesses, government officials, educational institu-tions, and residents of West Virginia with a deeper understanding of the breadth of the technology industry in the region, and the economic impacts that are asso-ciated with it.

Report Overview. Following this executive summary, we provide a brief look at West Virginia’s economy during the later years of the 20th century. We then explore the emergence of the technology industry that began in the late 1980s in north-central West Virginia.

After establishing how the technology industry became rooted in the region, we turn our focus on quantifying the scope of the industry today. For this, we esti-mate the number of jobs and the average wage in the industry; profile selected technology employers to illustrate the advances they are making; and then esti-mate the economic impacts that the region’s technology industry has on the state. We also estimate the economic impact that has stemmed from construc-tion associated with the I-79 Technology Park and the new WVHTC Foundation Research Center.

We conclude with a discussion of other technology related activities taking place in the industry, such as the growing enrollment of science and engineering students at West Virginia University, SBIR funding for businesses, and R&D projects being conducted at universities and colleges throughout the region. The section also discusses important industry advocates, like the West Virginia High Technology Consortium (WVHTC) Foundation, the Polymer Alliance Zone, and the I-79 Development Council.

At the end of the document we provide supporting materials and more detailed data sets. Appendix A describes our methodology used in defining the technol-ogy industry, and Appendix B looks at how others have defined the industry. In Appendix C we discuss our employment estimation technique. We then present more detailed data sets, with demographic and historical economic data covered in Appendix D, and our economic impact data detailed in Appendix E. Appen-dix F features a bibliography, and Appendix G offers biographical information on this report’s project team.

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Executive Summary

THE WEST VIRGINIA ECONOMY: HISTORICAL PERSPECTIVE

For much of the twentieth century West Virginia relied on coal mining and basic manufacturing for jobs and income. When these traditional blue-collar indus-tries prospered, so did the people of West Virginia. This lack of industry diversi-fication, however, meant that when core industries faced hard economic times, the people of West Virginia also suffered.

Over time, the traditional, blue-collar jobs in mining and basic manufacturing have disappeared, and jobs in service industries have grown in the state. This transition to a service economy has not been painless. High-paying jobs in ser-vice-producing industries often require more education and skills, which are often harder for older workers to acquire. As noted in later sections, lower income and high unemployment was common in the early years of West Vir-ginia’s transition from coal mining and manufacturing and into the service industries.

EMERGENCE OF THE TECHNOLOGY INDUSTRY

Two West Virginians, Senator Robert C. Byrd and Congressman Alan B. Mollo-han, saw the aformentioned economic struggles as an opportunity to pursue fur-ther development of a technology industry in West Virginia. Through their efforts, and those of many others, north-central West Virginia’s technology industry took shape. Notable milestones in the emergence of the region’s tech-nology industry include:

• The location of federal anchors in the region. Technology in north-central West Virginia is well rooted by federal technology anchors. The Department of Energy’s National Energy Technology Laboratory (NETL) was the first federal agency in the region. A significant period of growth occurred in the early 1990’s when NASA opened the IV & V Facility, and Senator Byrd began negotiations for the arrival of the FBI’s Criminal Justice Information Services Division. In 1996, the National Institute for Occupational Safety and Health opened three divisions in Morgantown, and today the Department of Defense’s Biometrics Fusion Center is expanding in Clarksburg.

• The formation of the West Virginia High Technology Consortium (WVHTC). In 1990, the WVHTC began as a loose affiliation of six companies with a common goal to encourage the growth of technology throughout West Virginia. Estab-lished as the WVHTC Foundation in 1993, today the organization provides valuable resources to start-up companies, and manages initiatives such as the I-79 technology park, and the Global Grid Exchange.

• Programs established to help small companies grow in the region. In 1990 the WVHTC began a mentor-protégé program, where larger companies like Elec-tronic Warfare Associates (EWA), Mantech, and Lockheed Martin, served as mentors to smaller, upcoming technology companies. The first “Teaming to Win” conference, which provides local businesses an opportunity to explore collaborative opportunities with large firms, was also held in 1990.


Executive Summary

TECHNOLOGY INDUSTRY TODAY

Years of investment and work to establish a technology industry in north-central West Virginia have yielded a solid foundation. Today the industry is diverse, well rooted, and a significant source of employment and income. At the core is the I-79 Technology Corridor, which includes Harrison, Marion, and Mononga-lia counties. Over half of the region’s technology industry jobs are within the corridor, as are the federal technology anchors.

Technology employment is far from absent in the rest of north-central West Vir-ginia. With over 18,000 technology jobs that pay, on average, $53,325 a year, 9% of the jobs in the region are technology industry jobs. Perhaps even more significant is that these jobs account for 16% of all wages paid in the region, a clear indication that industry offers higher wages than others do.1

Also significant is the diverse scope of the technology industry in north-central West Virginia. As shown in Figure 1, technology employment across industry segments (clusters) is quite balanced. No single cluster accounts for more than 25% of technology employment (chemical and material has 24.4%), and no cluster represents less than 15% of technology employment (advanced manu-facturing has 15.9%).

Further, we found significant evidence of collaboration across clusters. For example, two advanced manufacturing firms that we visited (Touchstone Research and FMW Composites) integrate chemical and material expertise and information technology expertise in their product development and research.

FIGURE 1. Technology Industry Employment by Cluster, 2006

1. U.S. Census County Business Pattern data shows the average wage across all industries was $27,449 for West Virginia, and $36,967 for the United States, in 2004.

Technology employment in the region is well distributed across all five sectors, providing oppor-tunity for collaboration across sectors.


Executive Summary

BENEFITS OF THE TECHNOLOGY INDUSTRY

While more than 18,000 jobs with average wages of $53,000 is impressive, the true economic benefit stemming from north-central West Virginia’s technology industry reaches much deeper.

Our analysis provides an estimate of the economic impact that north-central West Virginia’s technology industry has on the state. We follow a rigorous methodology designed to provide a conservative, and realistic, economic impact assessment. We only account for net new economic activity, activity that would not be in the state if not for the technology industry in north-central West Vir-ginia. We exclude out-of-state expenditures and intra-industry transfers, such as one firm purchasing computer programming services from another. Further, we assume that some replacement economic activity, estimated to be 20% of the operating expenditures of the technology industry, would still occur if the tech-nology industry were not present.

Economic Impact from Industry Operating Expenditures. Every day technology firms in north-central West Virginia spend money on office supplies, accounting services, advertising, wages, and other normal operating items. Each of these expenditures has a direct economic impact on the state, but only if it is made in-state to an employee or a business that is not a part of the technology industry. Using U.S. Census Bureau data, industry-specific financial ratios, and our own first-hand information about the region and industry, we estimate that, in 2006, the north-central West Virginia technology industry will have a total economic impact of $5.2 billion on the State of West Virginia.

Economic Impact from Construction (I-79 Technology Park). Growth in the tech-nology industry has also resulted in significant construction activity throughout the region. While the total construction activity that has occurred due to the growing technology industry is too wide-spread to fully evaluate, we were able to obtain data on construction projects in the I-79 Technology Park, located in Fairmont, WV. From this data, we determined that 62% of all the construction expenditures associated with the park was spent in West Virginia. In total, this yields a direct economic impact of more than $111 million, and indirect eco-nomic impacts of over $200 million.

TABLE 1. Economic Impact on the State of West Virginia from Annual Operating Expenditures by Tech Firms in North-Central West Virginia (2006) Direct Economic Impact from Payroll Expenditures $769,635,702

Direct Economic Impact from Other Operating Expenditures $2,331,137,727

Indirect Economic Impact from Payroll Expenditures $275,864,373

Indirect Economic Impact from Other Operating Expenditures $1,799,867,476

Total Economic Impact $5,176,505,278

Source: Anderson Economic Group, LLC


Executive Summary

Other Benefits. Aside from quantifiable economic impacts, the growth of the technology industry has also had other benefits. For example, data is available to show that education attainment in north-central West Virginia is above state averages, and income in the I-79 Corridor is growing at a faster rate than the rest of the state and nation. Also, the I-79 Technology Corridor has had lower unem-ployment than the state of West Virginia since the end of 1997. It is impossible to determine the full impact of the growing technology industry on these factors, but there is most certainly some level of benefit.

OTHER TECHNOLOGY ACTIVITIES

In addition to the employment and economic impact data summarized above, there are important variables, such as public-sector research activities and fund-ing, to consider when assessing a region’s technology economy. Such informa-tion, is presented in “Other Technology Industry Activities” on page 36. Some of the more significant findings from this section include:

• West Virginia University had 1,761 science & engineering graduate students in 2003, up from 1,457 in 2001. The University consistently ranks among the top 20% of the nation’s universities for research and development expenditures in science and engineering.

• West Virginia University, Fairmont State University, Glenville State College, West Liberty State College, and Wheeling Jesuit University are all involved in research projects and technology initiatives that have been awarded grants by national organizations or federal agencies.

• Small Business Innovation Research (SBIR) awards granted to businesses in West Virginia have steadily increased over the past decade. In 2004, West Vir-ginia businesses received 22 SBIR awards, totaling more than $8 million. 13 of West Virginia’s 22 SBIR awards in 2004 were granted to three firms in north-central West Virginia.

• The region has an extensive network of advocates and resources for the technol-ogy industry, including the WVHTC Foundation, the Polymer Alliance Zone of West Virginia, and the I-79 Development Council.

TABLE 2. Economic Impact on the State of West Virginia from I-79 Technology Park Construction (2006 dollars)Direct Economic Impact $111,269,431

Indirect Economic Impact: Industry Output $122,396,374

Indirect Economic Impact: Earnings $77,888,602

Total Economic Impact $311,554,407



Executive Summary

LOOKING FORWARD The progress made towards growing the technology industry in north-central West Virginia in recent years is readily apparent. From the I-79 Technology Park, to the 18,000+ employees in the region’s technology sector who are earn-ing above-average wages and helping to support local retailers, charities, restau-rants, and other businesses, one can see that the region has a flourishing technology industry.

There is also an active and organized base of support for the technology indus-try in north-central West Virginia. Groups such as the WVHTC Foundation, the Polymer Alliance Zone, and the I-79 Development Council continue to promote the region to businesses from across the country and around the world as a cen-ter for technology. They also actively promote the industry at home by provid-ing business assistance programs, and by raising awareness in schools and communities to let the next generation of West Virginians know that exciting opportunities are available in the technology industry.

Despite the progress already made, the potential remains for even more advancement in coming years. However, without further concentrated efforts, the momentum in place may not be enough to carry the industry forward. Fortu-nately, leadership in the region appears committed to the industry and future efforts to facilitate its growth. Assuming this effort continues, the people of West Virginia can expect to further benefit from a growing technology industry for years to come.


West Virginia’s Economy: Historical Perspective

II. West Virginia’s Economy: Historical Perspective

The West Virginia economy—its labor force and industry mixture—has changed substantially in the last sixty years. Once dependent upon blue-collar industries such as coal mining and basic manufacturing for jobs, the state has seen these industries decline and employment in service industries grow. This transition has not been painless. Here we review the state’s early concentration on manufacturing and coal mining, and see why diversifying to service sector and other industry sectors, including technology, was an important step.

EMPLOYMENT BY INDUSTRY

Statewide Industry Employment 1940-1989

The story of West Virginia’s economy is one of reliance on coal mining, con-struction, and manufacturing. When these industries prospered, so too did the people of West Virginia. But during hard economic times, the lack of a diversi-fied economic base meant that when goods-producing industries suffered, total employment and population in the state fell too.

In the 1940s, most of West Virginia’s labor force was employed by goods-pro-ducing industries. Just under 30% of West Virginia’s non-farm employment was in mining. These traditional, blue-collar jobs began to disappear in the 1950s. Between 1940 and 1960, goods-producing industries lost 30,000 jobs. An additional 53,000 goods-producing jobs were lost by 1989. See Table 3.

TABLE 3. Employment (in thousands) in Non-Agricultural Industries in West Virginia, 1940-1989a

Industry 1940 1950 1960 1970 1980 1989Change

(1940-89)

Mining 118 123 56 50 66 33 -85

Construction 11 20 18 29 36 25 +14

Manufacturing 100 131 125 127 117 88 -12

Goods-Producing Industries Total 229 274 199 205 219 146 -83

Transportation, Communications, Utilities 39 54 44 42 43 37 -2

Trade 54 83 85 92 129 145 +91

Finance, Insurance, and Real Estate 8 10 13 16 22 24 +16

Services 28 44 51 67 100 138 +110

Government 43 60 68 96 133 126 +83

Service-Producing Industries Total 171 251 261 312 427 469 +296

Total Nonfarm Employment 400 524 460 517 646 615 +215

Base Data: U.S. Bureau of Labor Statistics; Source: Workforce West Virginia, Department of Commerce

a. Industry classification based on the Standard Industrial Classification (SIC) system.



While traditional blue-collar jobs have been lost, service industry employment has steadily grown in the state. In 1940, 43% of West Virginia’s labor force held a service sector job. By the end of the 1980s, this share had increased to 62%. Between 1940 and 1960, service-providing industries, such as wholesale trade, hospitality, and real estate, created more jobs (90,000) than were lost in goods-producing industries. See Table 3 as well as Appendix Table D-1 for details.

Statewide Industry Employment 1990-2005

West Virginia has experienced the same employment patterns in the last 15 years as it experienced in the previous 50 years. In 2005, employment in manu-facturing and mining was lower than it was in 1990, while employment in ser-vice-providing industries was higher. Most recently, mining employment has grown slightly, but the overall decline in goods-producing industries has contin-ued. See Table 4 below and Appendix Table D-2.

TABLE 4. Employment (in thousands) in Non-Agricultural Industries in West Virginia, 1990-2005a

Industry 1990 1995 2000 2005Change

(1990-2005)

Annual % Change,

1990-2005

Mining 34 28 21 26 -8 -1.8%

Construction 28 33 34 37 +9 1.8%

Manufacturing 82 78 76 62 -20 -1.9%

Goods-Producing Industries Total 144 139 131 125 -19 -1.0%

Trade, Transportation, Utilities 136 144 145 139 +3 0.2%

Information 12 12 14 11.6 -0.4 -0.2%

Finance, Insurance, and Real Estate 26 28 31 30 +4 0.6%

Servicesb 185 228 271 298 +113 3.2%

Government 127 136 143 144 +17 0.8%

Service-Producing Industries Total 486 549 605 622 +136 1.7%

Total Nonfarm Employment 630 688 736 747 +117 1.1%

Base Data: U.S. Bureau of Labor Statistics; Source: WorkForce West Virginia, Department of Commerce

a. Employment numbers are based on the North American Industrial Classification System (NAICS). NAICS classifi-cation of industries differs slightly from the previous SIC system. For this reason, we present historical SIC employ-ment data separately (see Table 3) from the NAICS employment data.

b. “Services” includes employment in four service categories: Professional and Business; Education and Health; Lei-sure and Hospitality; and Other.



Coal MiningAs Figure 2 illustrates, the total number of people employed in the mining industry has steadily declined since the late 1940s. This trend reversed briefly during the energy crisis of the 1970s, but the steady decline resumed in the 1980s. By 2005, less than 4% of West Virginia’s labor force worked in coal mines.

Despite declines in employment, the coal industry has remained competitive and has seen output of coal increase steadily since the late 1970s. After World War II, mining machines, conveyor belts, and other advances improved produc-tivity and increased tonnage. This increased productivity meant that more coal could be extracted with fewer workers.

The loss of these mining jobs has caused hardship for many West Virginians. Good-paying jobs in service-producing industries often require more education and skills; these are often harder for older workers to acquire. As noted in later sections, lower income and higher unemployment was the result for many as West Virginia’s economy transitioned away from mining and into service indus-tries.

FIGURE 2. Coal Production and Employment in West Virginia

As shown by Figure 2, coal production in West Virginia has remained fairly consistent over time, but productivity gains mean far fewer employees are now needed to extract just as much coal.



LABOR FORCE Population Trends. West Virginia’s population has historically been tied to employment in the coal mining industry. West Virginia’s population peaked in 1950 at a little over 2 million. Between 1950 and 1960 when employment in coal mining fell by 60%, the state’s total population also fell by 7.2%. State pop-ulation climbed 11.8% during the energy crisis of the early-to-mid 1970s when employment in coal mining increased, but declined again during the recession of the early 1980s. In 2004, 1.8 million Americans called West Virginia home.

FIGURE 3. Population by Decade, West Virginia, 1900-2000

During the contraction of goods-producing industries, the less experienced, and often younger, workers were the first to lose their jobs.2 Many of these workers left the state to find a new job. College-educated young adults have also left the state in search of employment. As a result, West Virginia has seen its share of elderly population rise steadily since World War II. In 1940, 5% of the popula-tion was over 64 years. In 2000, 15% of the population was in this age demo-graphic. Meanwhile, the percentage of persons under the age of 15 has declined during this same time period (see Figure 4).

2. Dilger, Robert Jay, and Tom Stuart Witt [ed]. West Virginia in the 1990s: Opportunities for Economic Progress. West Virginia University Press, 1994, p. 59.

West Virginia’s population grew rapidly in the early part of the century, and peaked around 1950. Since that time, population trends have closely followed employment in the mining industry (as shown in Figure 2).



In 2000, 66% of West Virginia’s population was between the ages of 15 and 64 years. Labor force participation (employed persons as a percentage of the civil-ian population 16 years +) was 55% in 2004, well below the national average.

FIGURE 4. Population Growth by Age Group in West Virginia, 1940-2000

Unemployment. The unemployment rate in West Virginia has historically been higher than that of the nation. During the recession of the early 1980s, when West Virginia lost over 63,000 jobs, the unemployment rate reached as high as 17.4%. During the early 1990s, the unemployment rate in West Virginia was consistently four percentage points higher than the national level.

In recent years, the unemployment rate difference between West Virginia and the U.S. has narrowed. In fact, West Virginia in some months has had a lower unemployment rate than the nation.

The I-79 Technology Corridor has consistently had lower unemployment than the state of West Virginia since the end of 1997. The unemployment rate has continued to fall in this region resulting in the Technology Corridor having a substantially lower unemployment rate than the nation, state, and north-central region. See Figure 5.

As shown by Figure 4, West Virginia’s population has aged since 1940. A larger share of the state’s population was over the age of 64 years in 2000 than in 1940.



FIGURE 5. Unemployment Rate Comparison

Educational Attainment. Historically, West Virginia’s population has had lower levels of educational attainment than the national average. The share of the nation’s and West Virginia’s population that have completed a high school degree has steadily grown since 1940. In recent years, the gap in educational attainment between the nation and West Virginia has narrowed.

A more unsettling finding is that for the state as a whole, the percentage of adults 25 years and older who have completed a bachelor’s or higher degree is well below the national level. The gap between the U.S. and the state of West Virginia has grown in recent years. Part of the lower educational attainment in West Virginia can be explained by its greater number of persons over the age of 65 years who entered the workforce at a time when a college education was less common. Even so, lower educational attainment in the state is problematic as high-paying jobs in today’s economy often require more education.

As shown by Figure 5, the unemployment rate in the I-79 Tech Corridor has fallen steadily in the past 10 years. Unemployment in the Tech Corridor is well below that of the state, nation, and region.



FIGURE 6. Percent of Population 25 Years + with a High School Diploma or More

FIGURE 7. Percent of Population 25 Years + with a Bachelor’s Degree or More

As shown in the two charts above, West Virginia has followed the national trend of a rise in edu-cational attainment. However, educational attainment in West Virginia remains below the national average.



INCOME DATA Along with lower educational attainment and higher rates of unemployment, West Virginia has had lower real per capita income than the nation. The differ-ence in real per capita income widened in the 1980s and continues today. Nationally, per capita income was $34,586 in 2005, while in West Virginia it was $27,215.

FIGURE 8. Real Per Capita Personal Income, West Virginia v. United States

Not surprisingly, West Virginia’s poverty rate has been higher than the national level. The loss of high-paying jobs in coal mining pushed many more families into poverty in the 1960s and 1980s. During periods of high demand for coal, jobs were more plentiful and the poverty rate fell, but it remained significantly higher than the national poverty rate.

TABLE 5. Poverty Rate in West Virginia v. United States, 1969-2004

1969 1979 1989 1999 2004

West Virginia 22.2% 15.6% 19.7% 16.3% 16.1%

United States 13.7% 12.4% 13.1% 11.9% 12.4%

Source: U.S. Census Bureau

As shown above, real per capita income is lower in West Virginia than nationally. The difference in real per capita income widened in the 1980s, and persists today.


Emergence of the Technology Industry

III. Emergence of the Technology Industry

The need to diversify the West Virginia economy had become readily apparent by the end of the 1980s. Traditional manufacturing jobs were rapidly declining as productivity enhancing technologies meant fewer workers were needed, and the state’s traditionally blue collar, labor intensive workforce was struggling to find new employment. Concurrently, the nation was on the verge of a period of rapid technological advancement. Advances in computer science, engineering, and medicine were about to transform “business as usual,” and offered signifi-cant opportunities to those on the leading edge of technology.

Two West Virginians, Senator Robert C. Byrd and Congressman Alan B. Mollo-han, saw the aformentioned economic struggles as an opportunity to aggres-sively pursue the development of the technology industry in West Virginia. Over the years, their efforts, combined with the work and investment of many others, has culminated in the creation of an impressive hub of technological activity in north-central West Virginia.

In the late 1970’s Senator Byrd initiated the Software Valley movement, one of West Virginia’s first coalitions for economic development. In 1987, Congress-man Mollohan began to identify federal and commercial opportunities for West Virginia’s small businesses and created the First Congressional District Procure-ment Team. During their first conference in 1990, Congressman Mollohan per-sonally attended, and invited a number of high ranking NASA officials and 37 large prime contractors from Washington D.C. This marked the beginning of the “Teaming to Win” Conference, an annual event designed to promote the growth and development of small companies throughout West Virginia.3

Byrd and Mollohan continued to pursue efforts to promote West Virginia as a center for federal technology projects and a home for established and newly started private sector technology firms. There was a clear need for an organiza-tion that could help West Virginia’s technology businesses with commercializ-ing their research and development, and to better leverage opportunities with the region’s federal technology centers such as the FBI, the Department of Energy, and NASA. This led to the creation of the West Virginia High Technology Con-sortium (WVHTC) in 1990. The Consortium began as a loose affiliation of six companies with a common goal of encouraging the growth of the technology industry throughout West Virginia. As part of the Department of Defense’s Mentor-protégé Program, larger companies like Electronic Warfare Associates (EWA), Mantech, and Lockheed Martin, served as mentors to smaller, upcom-ing technology companies in the region.4

3. “The First Decade” Synopsis of the History of Teaming to Win, www.teamingtowin.org4. Department of Defense Office of Small Business Programs, Mentor protégé Program web site.

Available at: http://www.acq.osd.mil/osbp/mentor_protege.



In 1993, the WVHTC Foundation was established to administer grants and funds for various projects undertaken by the Consortium. In the same year, the NASA IV & V facility opened. By the time the Consortium and Foundation merged in 1996, they had an official headquarters in the Alan B. Mollohan Inno-vation Center, and over 100 affiliate members. By 2000, the WVHTC Founda-tion had reached 150 affiliate members and was strategically re-organizing to provide business assistance to start-up technology companies.5

THE FEDERAL ANCHORS

From the beginning, and throughout the continued growth of the technology industry in north-central West Virginia, the relationship between small and large businesses has played an important role in technological innovation and devel-opment. Additionally, several federal agencies have served as “anchors” for the region by providing jobs, resources, partnerships, and cutting-edge research. A closer look at these agencies follows.

National Energy Technology Laboratory. The National Energy Technology Laboratory (NETL) site is located on the northern edge of Morgantown, West Virginia. The Morgantown lab is one of only five Department of Energy NETL labs throughout the United States. NETL sites serve a unique role compared to other DOE labs: they function as insight science and technology research cen-ters and as the administrators of nearly 1,400 contracts with external organiza-tions.

The lab in Morgantown was the first NETL lab. In 1954 the Morgantown NETL facility was referred to as the Appalachian Experiment Station, originally a part of the Department of Interior. In 1976, after the Department of Energy was formed, the facility expanded to become an “Energy Research Center.” In 1999 the Center was elevated to National lab status and officially renamed the National Energy Technology Laboratory.

NETL’s Morgantown location has been a leading research center for cleaner coal technology (CCT) since the early 1990’s. Regionally, NETL provides sup-port for initiatives including clean and affordable energy, high technology, small businesses, education, and community support and improvement.6 In 2000, the Morgantown NETL received a $150 million dollar expansion in their budget for the research and development of cleaner coal technology.7

5. The State Journal: Technically Speaking, Dec. 15, 2005.6. U.S. Department of Energy, Office of Fossil Energy, National Energy Technology Laboratory:

Regional facts.7. United Mine Worker’s Journal, March-April, 2001.



Federal Bureau of Investigation, Criminal Justice Information Services Division. In January 1991, the FBI purchased 986 acres of land in Clarksburg, West Virginia. In 1995, this became home to the FBI’s Criminal Justice Infor-mation Services Division (CJIS). The main building of the CJIS complex is 500,000 square feet, 100,000 of which houses a computer center. The CJIS is the central repository for criminal justice information services in the FBI and is the largest division within the FBI. The CJIS is home to several of the FBI’s information systems, including the National Crime Information Center, and the Integrated Automated Fingerprint Identification System (IAFIS).8

The CJIS is not only an asset to criminal justice and law enforcement agencies throughout the U.S., but it also has made its mark on the region. The CJIS has been a valuable asset for West Virginia University’s program for forensic sci-ences.9 In 2000, the CJIS contracted Lockheed Martin to provide automated identification and information technology operations and maintenance services. To support the CJIS personnel with the new information technology, Lockheed Martin teamed up with companies in north-central West Virginia such as SAIC, DN America, and Azimuth.10

National Aeronautics and Space Administration (NASA). Fairmont West Virginia is home to the NASA Independent Verification and Validation (IV&V) Facility. The IV&V Facility was established in 1993 as part of an agency-wide strategy to provide the highest achievable levels of safety and cost-effectiveness for mission critical software. Since its beginning, the Facility’s efforts have con-tributed to NASA’s improved safety record and recently took part in NASA’s Mars Exploration Rover (MER) project.11 The facility’s main objectives are to provide IV&V services, research, and outreach. The facility provides NASA with cutting-edge safety critical software, while the facility’s research improves software and assurance methods, practices, and tools. The facility undertakes research to expand IV&V’s research presence in practical and applied initia-tives. Lastly, the IV&V facility is committed to community outreach through its commitment to inspire, inform, and pursue collaborations throughout the com-munity, and West Virginia as a whole.

NASA has also established several educational initiatives within the region. In 1991, NASA established the West Virginia Space Grant Consortium, whose mission is to promote research in science and engineering, along with high-tech

8. CJIS web site, available at: http://www.fbi.gov/hq/cjisd/about.htm.9. West Virginia University forensics program web site; available at: http://www.wvu.edu/

~forensic/.10.Lockheed Martin Press Releases, Nov. 9, 2000.11. “Mars Exploration Rover and Independent Verification and Validation,” Journal of Innova-

tion, Spring/Summer, 2004.



industries and workforce development throughout the State. The Consortium is made up of five universities and six colleges in the State, as well as the WVHTC Foundation and the WV Development office.12 NASA also has two prominent centers at Wheeling Jesuit University. The National Technology Transfer Center (NTTC) began in 1989, and helps to coordinate and optimize development opportunities for U.S. industries, federal labs, and universities. The National Technology Transfer Center and the Center for Educational Technologies (CET) opened in 1994, with a main mission to enhance the teaching and learning of math, science, and technology.

The National Institute for Occupational Safety and Health (NIOSH). NIOSH is the federal agency responsible for conducting research and making recommendations for the prevention of work-related injury and illness. NIOSH has maintained a research presence in Morgantown since the Institute's creation under the Occupational Safety and Health Act of 1970.

Today there are three NIOSH divisions based in Morgantown: the Division of Respiratory Disease Studies, the Division of Safety Research, and the Health Effects Laboratory Division. These divisions conduct research to prevent work-related lung diseases, to prevent work-related injuries, and to prevent adverse work-related health effects through advanced research. The NIOSH research in Morgantown is performed in conjunction with complementary research at other NIOSH locations, and as part of NIOSH's strategic research initiatives, includ-ing the National Occupational Research Agenda and Research to Practice. NIOSH is part of the U.S. Centers for Disease Control and Prevention. Some NIOSH/Morgantown research programs, such as research to prevent coal work-ers pneumoconiosis, have deep roots in programs conducted in Morgantown prior to 1970 by NIOSH's predecessor health agencies.

One of the most significant undertakings of the Division of Respiratory Disease Studies is administering the Coal Workers Health Surveillance Program. The Health Effects Laboratory Division (HELD) uses high-tech solutions to conduct biological research, control workplace hazards, and conduct health communica-tions studies.13

Department of Defense, Biometrics Fusion Center. The Biometrics Fusion Center (BFC) is a division of the Department of Defense’s Biometrics Manage-ment Office (BMO). The Center is currently in a temporary location in Clarks-burg area, but will move into its 100,000 square foot permanent facility in Clarksburg within the next few years.

12.“Space Grant Consortium Offers Workforce Development Opportunities,” Journal of Innova-tion, Winter/Spring, 2005.

13.The NIOSH web site is available at: http://www.cdc.gov/niosh.



The BFC is responsible for researching, developing, and administering various biometrics programs that are applied toward international, national, and com-mercial security. The Department of Defense uses biometrics such as finger prints, iris scans, and facial imagery to positively identify people. Some of their largest biometric systems are the Biometric Identification System for Access (BISA) and Automated Biometric Identification System (ABIS). The BISA sys-tem was developed in partnership with Computer Sciences Corporation, SRA, and Azimuth Inc. Together with the Department of Defense, these West Virginia companies designed a biometric “badging system” for use in hiring and screen-ing Iraqi nationals working in protected camps.14 The ABIS system helps coor-dinate biometric data collected from enemy combatants to ensure that threats to national security are positively and promptly identified.

Biometrics is not only a growing field for the Department of Defense, but it is a growing industry in West Virginia. The BFC works closely with WVU’s bio-metrics degrees program, while the BMO funds introductory and Master’s pro-grams in Information Assurance and Biometrics at WVU. Also, in 2002, the BFC awarded the majority of a $155 million biometics contract to companies within the region.15

14.The Charleston Gazette: Guard testing biometric ID gear, Mar. 17, 2006.15.According to a Galaxy Global Corporation Press Release from 2002, the WVHTC Foundation,

TMC Technologies, Azimuth, Galaxy Global Corporation, New-Bold Enterprises, Inc. and the WVU Institute of Technology comprised 51 percent of the contract. The other 49% of the con-tract was awarded to two international companies; (SAIC and SYTEX). SAIC has 6 locations in West Virginia.


North-Central West Virginia’s Technology Industry Today

IV. North-Central West Virginia’s Technology Industry Today

DEFINING THE TECHNOLOGY INDUSTRY

To analyze an industry’s size, scope, and role in a regional economy, it is neces-sary to first define the industry. To do this for the technology industry, we use a rigorous definition composed of specific industrial sectors identified by their North American Industry Classification System (NAICS) codes, which is how the United States Census reports industry data.

Table 6 below presents our definition of the technology industry, by cluster. The methodology we employed to define the technology industry is described in greater detail in “Appendix A: Technology Industry Definition Methodology.”

TABLE 6. Definition of the Technology Industry by Cluster

NAICS Industry Title

Advanced Manufacturing

3329 Other Fabricated Metal Product Manufacturing

3331 Agriculture, Construction, & Mining Machinery Manufacturing

3332 Industrial Machinery Manufacturing

3333 Commercial & Service Industry Machinery Manufacturing

3336 Engine, Turbine & Power Transmission Manufacturing

3339 Other General Purpose Machinery Manufacturing

3345 Navigational, Measuring, Electromedical, & Control Instruments Manufacturing

3353 Electrical Equipment Manufacturing

3359 Other Electrical Equipment & Component Manufacturing

3361 Motor Vehicle Manufacturing

3362 Motor Vehicle Body & Trailer Manufacturing

3363 Motor Vehicle Parts Manufacturing

3364 Aerospace Product & Parts Manufacturing

3369 Other Transportation Equipment Manufacturing

Chemical and Material

3241 Petroleum & Coal Products Manufacturing

3251 Basic Chemical Manufacturing

3252 Resin, Synthetic Rubber, Artificial Synthetic Fibers & Filaments Manufacturing

3253 Pesticide, Fertilizer, & Other Agricultural Chemical Manufacturing

3255 Paint, Coating & Adhesive Manufacturing

3256 Soap, Cleaners & Toilet Preparation Manufacturing

3259 Other Chemical Product & Preparation Manufacturing



Information Technology

3341 Computer & Peripheral Equipment Manufacturing

3342 Communications Equipment Manufacturing

3343 Audio & Video Equipment Manufacturing

3344 Semiconductor & Other Electronic Component Manufacturing

3346 Manufacturing & Reproducing Magnetic & Optical Media

5112 Software Publishers

5161a Internet Publishing & Broadcasting

5171 Wired Telecommunications Carriers

5172 Wireless Telecommunications Carriers (except Satellite)

5173 Telecommunications Resellers

5174 Satellite Telecommunications

5179 Other Telecommunications

5181b Internet Service Providers & Web Search Portals

5182 Data Processing, Hosting, & Related Services

5415 Computer Systems Design & Related Services

Other Technologies

2111 Oil & Gas Extraction

3254 Pharmaceutical & Medicine Manufacturing

3391 Medical Equipment & Supplies Manufacturing

4234c Professional and Commercial Equipment & Supplies Merchant Wholesalers

5413 Architectural, Engineering & Related Services

5417 Scientific R&D Services

Note: This definition uses 2002 NAICS codes. The 1998-2002 data used in our analysis is provided by 1997 NAICS codes. The U.S. Census Bureau introduced 2002 NAICS codes to account for new and emerging industries that could not be well classified using the 1997 definitions.

a. Year 2002 NAICS 5161, 5171, 5172, 5173, 5174, and 5179 were substituted with year 1997 NAICS 5133 for 1998-2002 data analysis.

b. Year 2002 NAICS 5181 and 5182 were substituted with year 1997 NAICS 5140 for 1998-2002 data analysis.

c. Year 2002 NAICS 4234 was substituted with year 1997 NAICS 4214 for 1998-2002 data analysis.

TABLE 6. Definition of the Technology Industry by Cluster (Continued)

NAICS Industry Title



Federal Agency Technology Cluster. Note that our above definition does not include NAICS codes relating to public administration. This is excluded as our data source for employment and payroll information (U.S. Census Bureau County Business Patterns) does not report these categories.

Thus, our base definition would fail to account for those working in federal agencies such as NASA, the Department of Defense, and the FBI. Recognizing that north-central West Virginia is home to several such federal agencies whose work is highly integrated with technology, we expand our definition of the tech-nology industry in north-central West Virginia to include five federal technol-ogy anchors located in the region. These are shown in the table below.

TABLE 7. Federal Technology Anchors Included in Technology Industry Definition

Federal Technology Anchorsa

a. U.S. Census County Business Pattern data excludes federal employees. As such, we include in this definition key federal facilities in the region that significantly contribute to the technology industry in north-central West Virginia.

DoD, Biometrics Fusion Center

FBI, Criminal Justice Information Services Division (CJIS)

CDC, National Institute for Occupational Safety and Health (NIOSH)

DoE, National Energy Technology Laboratory (NETL)

NASA, Independent Verification and Validation Facility (NASA IV & V)



TECHNOLOGY EMPLOYMENT: THE BIG PICTURE

The composition of north-central West Virginia’s technology industry, by clus-ter, is shown in Table 8, “2006 Employment and Average Wage Estimates by Technology Cluster.” The region has a diverse technology base, with significant employment in each of the clusters. Also notable is that the two largest clusters (chemical and materials and information technology), which account for a com-bined 47.6% of technology industry employment in the region, led the industry in terms of average wages.

In 2006, north-central West Virginia’s technology industry as a whole had over 18,000 jobs. These jobs, on average, paid $53,325 per year.16 Just over 50% of these jobs, including all of the federal anchor jobs, are found within the I-79 Technology Corridor. The rest are located throughout the region.

As shown in Figure 9, “Technology Industry’s Share of Total Employment and Total Payroll in North-Central West Virginia, 2006,” on page 25, technology industry employment accounts for 9% of all jobs in north-central West Virginia, and 16% of all payroll. This clearly indicates that jobs in the industry pay above average. The same is true in the I-79 technology corridor, where 11% of jobs are in technology, and 19% of payroll is generated by the sector. See Figure 10, “Technology Industry’s Share of Total Employment and Payroll in the I-79 Technology Corridor, 2006.”

For further information on the data used in these estimations, and a table of technology industry employment detailed at the NAICS code level, please see “Appendix C: Technology Industry Data.”

16. By comparison, the average wage in West Virginia, across all industries was $27,449 in 2004. It was $36,967 for the United States.

TABLE 8. 2006 Employment and Average Wage Estimates by Technology Cluster

North-Central WV Employment

I-79 Corridor Employment

Regional Average

Wage

Advanced Manufacturing 2,874 1,237 $49,285

Chemical and Material 4,402 184 $66,180

Information Technology 3,307 1,525 $43,355

Other Technology 4,186 3,126 $54,903

Federal Technology Anchors 3,271 3,271 $47,654

Total Technology Industry 18,049 9,352 $53,325




FIGURE 9. Technology Industry’s Share of Total Employment and Total Payroll in North-Central West Virginia, 2006

FIGURE 10. Technology Industry’s Share of Total Employment and Payroll in the I-79 Technology Corridor, 2006

On the left we see that 9% of all employment in north-central West Virginia is in the technology sector. This 9% of the employees however, earn 16% of all wages, as shown by the pie chart on the right.

In the I-79 Technology Corridor 11% of all employment is in the technology sector. This 11% of employees earns 19% of all wages, as shown by the pie chart on the right.



TECHNOLOGY INDUSTRY CLUSTERS

Advanced Manufacturing Cluster

Businesses in north-central West Virginia’s advanced manufacturing cluster develop and utilize technologies for electrical, mechanical, automotive, aero-space, and other advanced manufacturing processes. This includes carbon and graphite product manufacturing; manufacturing of office machines; industrial manufacturing equipment; air and gas compressors; fluid power cylinders (i.e., hydraulic and pneumatic); agricultural and mining equipment manufacturing; aerospace product and part manufacturing; navigational and electromedical equipment manufacturing; and other such businesses.

As shown in Table 8, “2006 Employment and Average Wage Estimates by Technology Cluster,” on page 24, there are 2,874 advanced manufacturing jobs in north-central West Virginia, and on average, the jobs pay an annual wage of $49,285. 43.0% of these jobs are within the I-79 Technology Corridor.

Chemical and Material Cluster

The chemical and material cluster includes businesses engaged in the produc-tion of petrochemicals, inorganic chemicals and gases, plastics and resins, paints and varnishes, and explosives.

Jobs in this cluster pay an average annual wage of $66,180, making this the technology cluster with the highest average wage in north-central West Vir-ginia’s technology industry. The chemical and materials cluster is also the larg-est technology cluster in north-central West Virginia, comprising almost a quarter (24.4%) of the technology industry jobs within the region. Most of these jobs, however, are located outside of the I-79 Technology Corridor. Only 184, or 4.2% of the total jobs in the cluster, are located in the three counties that com-prise the I-79 Technology Corridor.

Information Technology Cluster

The information technology cluster is comprised of electronics, computer, and telecommunications businesses. This includes manufacturers of computers and computer peripheral equipment; radio, television, and wireless communications equipment; and electronic capacitor, resistor, and connector devices. Also included are software publishers, wired and wireless telecommunication provid-ers, internet service providers, and custom computer programming services.

The Information Technology cluster employs 3,307 people in north-central West Virginia, and pays an average annual wage of $43,355. These jobs are found throughout the area, with 46.1% of the jobs in the I-79 Corridor, and the remaining 53.9% dispersed throughout the rest of the region. Within the Corri-dor, information technology is the largest cluster excluding the federal anchors.



Other Technology Cluster

Businesses not classified into a specific technology cluster, but that use, develop, or support technology, are included in the “Other Technologies” clus-ter. Businesses in this cluster include architectural and engineering services, as well as businesses that develop and use technology in the manufacturing of life sciences equipment such as surgical appliances and medical instruments, basic organic chemicals, and pharmaceuticals. The cluster also includes providers of research and development in the physical, engineering, and life sciences.

This is the second largest cluster in the region, employing 23.2% of all technol-ogy industry employees in north-central West Virginia. The majority of this employment (74.7% or 3,126 jobs) is found within the I-79 Technology Corri-dor. Jobs within this cluster pay an annual average wage of $54,903, second only to the chemical and material cluster among technology industry clusters.

Federal Technology AnchorsAs discussed in “Emergence of the Technology Industry” on page 16, the work of Senator Byrd, Congressman Mollohan, and many others to bring federal facilities with a technology concentration to the region provided the foundation for north-central West Virginia’s technology industry. These federal anchors not only were instrumental in the early days, but continue to serve as an important part of the region’s technology industry, as they employ 3,280 federal employes in the region, and pay an average wage of $47,654. The federal anchors include:

• The Department of Energy’s National Energy Technology Laboratory (DoE NETL) in Morgantown (see discussion on page 17).

• The Federal Bureau of Investigation’s Criminal Justice Information Services Division (FBI CJIS), located in Clarksburg (see page 18 for details).

• The National Aeronautics and Space Administration’s Independent Verification and Validation Facility (NASA IV & V), in the I-79 Technology Park in Fair-mont (more on page 18).

• The Department of Defense’s Biometric Fusion Center in Bridgeport (see page 19 for further information).

• The Center for Disease Control & Prevention’s National Institute for Occupa-tional Safety and Health laboratories (CDC NIOSH) in Morgantown (details on page 19).

Note that to avoid double counting employees, these figures represent only those employed directly by the federal government. Contractors from firms such as Azimuth, Mantech, and others who work at these federal facilities are accounted for in their firms’ respective cluster.


Economic Benefits of the Technology Industry

V. Economic Benefits of the Technology Industry

In this section we provide estimates of the economic impact that the technology industry in north-central West Virginia has on the state as a whole. We look first at the impact stemming from technology company expenditures, both on payroll and on goods and services. We consider direct economic impacts, such as pay-ments to employees or to office supply stores. We also consider indirect bene-fits, such as the economic activity that occurs as a result of that office supply store being able to hire additional staff, or a car dealership expanding to accom-modate increased demand resulting from technology firm employees moving to the region.

We next look separately at economic impacts that have stemmed from construc-tion related to the technology industry. Specifically, we analyzed four projects in the I-79 technology park and estimated the economic impact that was gener-ated by these one-time capital projects. Again, both direct and indirect impacts were assessed.

Finally, we conclude by presenting some of the intangible benefits that are at least in part related to the growth of the region’s technology industry. These include socio-economic benefits like higher educational attainment, household incomes, and stronger populational growth. First, however, we begin with a brief discussion of what an “economic impact” truly is.

DEFINITION OF ECONOMIC IMPACT

Anderson Economic Group has rigorously completed and critiqued numerous economic impact analyses. We depart from many other practitioners by insisting on a specific, conservative, and realistic definition of “economic impact.”

We define an economic impact as bona fide economic activity directly or indi-rectly caused by the subject, which in this case is the technology industry in north-central West Virginia. In calculating the effects, we take into account both costs and benefits. In particular, we subtract from the total net benefit figure any reductions in economic activity due to displacement or substitution effects. Activity that merely replaces or displaces other activity that would have occurred in the region is subtracted out. We also use caution only to count money generated from outside of the area, and spent locally, as a true economic impact.

The resulting findings are much more conservative, and realistic, than many other reports of this type, as they fail to subtract costs, ignore substitution effects, or exaggerate benefits. In this report, we provide only the net benefit figures.



TECHNOLOGY INDUSTRY ECONOMIC IMPACTS

Our assessment addresses two primary sources from which economic impacts associated with the technology industry in north-central West Virginia are derived: 1) regular business operations, including payroll and non-payroll oper-ating expenditures, and 2) expenditures associated with the construction of facilities for the technology industry.

Findings: Economic Impact of Technology Industry Operations

This portion of our economic impact assessment focuses only on the regular annual operating expenditures of technology industry employers. This provides a truer sense of the annual economic impact stemming from the industry, and is not inflated by one-time capital expenditures such as construction or equipment investments.

We estimate that the north-central West Virginia technology industry had a total economic impact of $5.2 billion on the State of West Virginia in 2006. Details of this impact are shown in Table 9, and our methodology is described beginning at “Economic Impact Methodology” on page 33.

Included in the total economic impact is a direct economic impact of $3.1 bil-lion. This direct impact is comprised of $769.6 million in wages paid directly to technology industry employees, and $2.3 billion in operating expenditures made by technology firms in the region, and paid to non-technology firms in the state.

TABLE 9. Estimated Statewide Economic Impact of North-Central West Virginia's Technology IndustryDirect Economic Impact

Payroll Expenditures $962,044,627

Operating Non-Payroll Expenditures $2,913,922,159

Substituted Economic Activity 20%

Direct Economic Impact from Payroll Expenditures $769,635,702

Direct Economic Impact from Other Operating Expenditures $2,331,137,727

Total Direct Economic Impact $3,100,773,429

Indirect Economic Impact

Payroll Multiplier 0.36

Non-Payroll Operating Expenditure Multiplier 0.77

Indirect Economic Impact from Payroll Expenditures $275,864,373

Indirect Economic Impact from Other Operating Expenditures $1,799,867,476

Total Indirect Economic Impact $2,075,731,849

Total Economic Impact (2006) $5,176,505,278




Also included in the total is an indirect economic impact of $2.1 billion. This stems from what is commonly know as the multiplier effect, by which each dol-lar of direct impact indirectly triggers other new economic activity in the area. For example, when a technology company buys supplies from a local retailer, that retailer is able to support paying more in wages, which in turn means more personal income to be spent on groceries, clothing, entertainment, etc.

Applying our payroll multiplier of 0.36 to the direct payroll impact of $769.6 million translates to an indirect impact from payroll of $275.9 million. The remaining $1.8 billion in indirect economic impact stems from applying the non-payroll operating expenditure multiplier of 0.77 to the direct other operat-ing expenditures.

Findings: Direct and Indirect Economic Impact of Construction Activity

The total construction activity that has occurred due to the growing technology industry is too wide-spread to fully recognize and evaluate, and the primary value of the projects is that they have enabled the industry to grow, thus provid-ing larger and lasting economic benefits. However, specific projects in the I-79 Technology Park can be reviewed to provide a measure of economic impacts stemming directly from the construction.

Our findings pertaining to the economic impact associated with construction activity in the I-79 Technology Park include:

• In total, some $179.0 million (2006 dollars) has been, or will be, spent on the construction projects for the Innovation Center, the Training Center, the WVHTC Foundation Research Center, and the two new buildings currently under construction.

• Approximately 62% of all construction-related expenditures were made directly in West Virginia, with the remaining portion being spent on goods and services provided by out of state sources (by way of example, steel from Pittsburgh, or engineering and design consulting from Washington D.C.). Construction expen-diture information was provided to us by the WVHTC Foundation and ISR, Inc.

Construction Economic Impacts. The total economic impact stemming from these construction projects, adjusted to 2006 dollars, is estimated at $311.6 mil-lion, as shown in Table 10.

TABLE 10. Summary of I-79 Technology Park Construction Impacts (2006 dollars)

Direct Economic Impact $111,269,431

Indirect Economic Impact: Industry Output $122,396,374

Indirect Economic Impact: Earnings $77,888,602

Total Economic Impact $311,554,407




The direct economic impact is the amount of total expenditures that stayed within the state. At 62% of $179.0 million in total expenditures, there is a direct economic impact of $111.3 million stemming from construction. Included in this are all direct payments to other businesses and their employees.

The indirect economic impact includes additional demand that flows throughout other industries, and the related additional earnings paid to households. In this case, the indirect economic benefits of construction come to $122.4 million in industry demand and $77.9 million in additional earnings.

Concluding Note. It is important to recognize that this estimated economic impact relates only to the one time construction expenditures associated with the building. In a broader sense, the construction should be understood to have a much more significant impact as the buildings have enabled day-to-day technol-ogy industry operations that allow the economic impact discussed in “Technol-ogy Industry Economic Impacts” on page 29 of this report to occur.

SOCIOECONOMIC BENEFITS

In addition to the quantifiable economic benefits estimated above, the develop-ment of the technology industry in north-central West Virginia has also qualita-tively enhanced the region in a number of ways.

Higher Educational Attainment. The residents of West Virginia’s I-79 Tech-nology Corridor and Region are highly educated. In 2000, a larger share of the north-central region’s population than the state’s population held a high school, college, graduate, or professional degree. The difference in education levels is apparent in the percentage of each areas’ populations with a college or higher degree. In 2000, 19.1% of the Technology Corridor’s residents had attained a college degree while 13.7% of the state’s population had. Further, the I-79 Tech-nology Corridor has a higher share of its population with a graduate or profes-sional degree than the state (8.3% v. 5.3%) and the nation (8.3% v. 7.8%). Part of this can be explained by West Virginia University’s location in the Technol-ogy Corridor. However, many of the high-skilled, high-paying technology jobs in the region require at least a college degree.

TABLE 11. Educational Attainment in I-79 Corridor, Region, State, and Nation, 2000

Total Persons 18

years+

High school graduate and

beyondAssociate’s

degree

College Graduate and

beyond

Graduate or professional

degree

North-Central WV 464,720 78.6% 4.5% 14.9% 5.8%

I-79 Tech Corridor 140,815 77.8% 3.4% 19.1% 8.3%

State of West Virginia 1,406,569 75.6% 4.2% 13.7% 5.3%

United States 209,279,149 79.7% 6.0% 22.3% 7.8%

Source: U.S. Census BureauAnalysis: Anderson Economic Group, LLC



Higher Income in Technology Region. Per capita income and mean household income are higher in the Technology Corridor than the State of West Virginia. Income has grown at a faster rate in the Technology Corridor than in the state as a whole and the nation. For example, between 1990 and 2000, per capita income in the Technology Corridor grew at an average annual rate of 5.6%, while the average annual rate was 4.6% for the state as a whole, and 4.1% nationally. Per capita income in the I-79 Technology Corridor is 86% that of the national PCI—up from 75% in 1990. The trend is similar with mean household incomes.

Population Growth. Between 1990 and 2004, the I-79 Technology Corridor experienced average annual growth in population of 1.8%. This growth was faster than the national average annual growth rate of 1%, and the opposite of the recent trend for the state as a whole. In the state, overall population dropped slightly between 2000 and 2004.

Lower Unemployment. As discussed earlier at “Unemployment” on page 12, the unemployment rate gap between West Virginia and the U.S. has narrowed in recent years. Further, The I-79 Technology Corridor has consistently had lower unemployment than the state of West Virginia since the end of 1997. The unem-ployment rate has continued to fall in this region resulting in the Technology

TABLE 12. Income Measures in I-79 Corridor, Region, State, and Nation, 1990-2000

Per Capita Income Mean Household Income

1990 2000Annual Change

(1990-2000) 1990 2000Annual Change

(1990-2000)

North-Central WV $10,648 $16,001 4.2% $27,303 $38,808 3.6%

I-79 Tech Corridor $10,792 $18,530 5.6% $27,515 $45,063 5.1%

State of West Virginia $10,520 $16,477 4.6% $27,122 $40,063 4.0%

United States $14,420 $21,587 4.1% $38,473 $56,675 3.9%


TABLE 13. Population in I-79 Corridor, Region, State, and Nation, 1990-2004

1990 2000 2004Annual Change

1990-2004

North-Central WV 603,602 602,545 598,200 -0.1%

I-79 Tech Corridor 161,795 207,116 208,674 1.8%

State of West Virginia 1,793,477 1,808,344 1,770,403 -0.1%

United States 248,709,873 281,421,906 285,691,501 1.0%

Source: Anderson Economic Group, LLCData: U.S. Census Bureau



Corridor having a substantially lower unemployment rate than the nation, state, and north-central region.

ECONOMIC IMPACT METHODOLOGY

Economic Impact from Technology industry Business Operations. To esti-mate the amount of north-central West Virginia technology industry operating expenditures that occur within the state, and the degree of the economic impact stemming from these expenditures, we:

1. Used the employment and average wage data, as reported in “Technology Employment: The Big Picture” on page 24 of this report, to approximate the “salaries and wages” line of a hypothetical income statement for the north-central West Virginia technology industry as a whole.

2. Collected financial ratios specific to the technology industry clusters, at the 4-digit NAICS level, to estimate operating expenditures using the payroll estimates from the previous step.17 For this we used IRS Tax Statistics, as compiled in the Almanac of Business and Industrial Financial Ratios: 2006.18 As such financial data is not available for federal anchors, we assumed that the “other technology” ratio would apply to the federal anchors. See Appendix E: Economic Impact Data Sheets.

3. Personally interviewed top managers at seven technology firms in north-cen-tral West Virginia and gathered data from them on their operating expendi-tures, payroll, in-state v. out-of-state spending, and other financial information relevant to our analysis.

4. Adjusted non-payroll operating expenditures of the technology industry to account for intra-industry transfers and payments made to out-of-state enti-ties. For example, payments from an advanced manufacturing firm to an IT firm do not produce an economic impact on the state from the technology sector. Likewise, when an IT firm purchases software from a California com-pany, the expenditure does not result in an economic benefit within West Vir-ginia.19 By excluding such transactions, we account only for expenditures made by the technology industry to other (non-technology) businesses within

17.Non-cash items that appear on an income statement, including depreciation, amortization, and deferred compensation, were excluded from our calculations to provide a more accurate reflec-tion of actual business expenditures.

18.Leo Troy. 2006. Almanac of Business and Industrial Financial Ratios. CCH Tax and Account-ing. IRS tax statistics are available at http://www.irs.gov/taxstats/index.html.

19.Our intra-industry tranfers and out-of-state payments determination was done using informa-tion provided to us by firms that we spoke with in the region, as well as our understanding of the industry’s structure, locations of suppliers of key inputs, and other such factors. For the information technology, federal anchor, and other technology clusters we estimated that 15% of the non-payroll cost of goods sold is in-state to non-technology industry businesses. Our assumption on this for advanced manufacturing and chemical & material were 25% and 30%, respectively. For each cluster we assumed the 85% of all advertising, benefits, and miscella-neous (other) regular expenditures were made in state and to non-technology industry firms.



the state, and thus avoid double counting expenditures. See Appendix E: Economic Impact Data Sheets.

5. Accounted for the likely substitution of other economic activity that might occur in the area if the technology industry were not present. These substitu-tion effects, estimated to be about 20%, are subtracted from direct expendi-tures in the region to arrive at a net direct economic impact figure.20

6. Applied a final-demand earnings multiplier of 0.36 to the technology indus-try’s direct payroll expenditures in the region, and a final-demand output multiplier of 0.77 to the industry’s non-payroll operating expenditures, to determine the indirect economic impact of the industry on the State of West Virginia.21

7. Summed the net direct and indirect impacts to arrive at an overall economic impact.

The results of this analysis are available at “Findings: Economic Impact of Technology Industry Operations” on page 29 on this report.

Economic Impact from I-79 Technology Park Construction. To evaluate how construction expenditures in the I-79 Technology Park translate into eco-nomic impacts for the state, we:

1. Collected detailed construction expenditure and budget data for the follow-ing projects: WVHTC Innovation Center, the WVHTC Foundation Research Center, WVHTC Training Center, and the new I-79 Center construction of two buildings, which is scheduled for completion in 2007.

2. Met with construction supervisors and WVHTC Foundation finance and operations staff to determine the share of overall expenditures that stayed within the state.

3. Considered the likely substitution of other economic activity that might occur in the area if the I-79 park were not developed. Given that there is an abundant availability of other land in the area for development, we estimated that no other activity was displaced because of the park.

4. Used specific economic multipliers to calculate the net indirect economic impact of the industry from the net direct impact. For each new dollar of

20.This substitution effect implies that if the technology industry did not exist in north-central West Virginia, 80% of the business activity and payroll associated with it would be lost, while the other 20% would be still be realized through other business activities. Our basis for this estimate is interviews with technology employers in the region, each of which was asked to estimate how many of their employees would not live in the area if employment in the technol-ogy industry was not available.

21.Multipliers are based on RIMS II data for Clarksburg-Fairmont, WV region (source: United States Bureau of Economic Analysis), and adjusted to statewide scale by Anderson Economic Group based on market observations and similar figures known for other states.



demand for output from the construction industry we used a multiplier of 1.1, and for each dollar of new household earnings we used a multiplier of 0.7.22

5. Summed the net direct and indirect impacts to arrive at an overall economic impact.

Please see “Findings: Direct and Indirect Economic Impact of Construction Activity” on page 30 of this report for the results of this analysis.

22.Source: United States Bureau of Economic Analysis, RIMS II data for Clarksburg-Fairmont, WV region, adjusted to statewide scale by Anderson Economic Group based on market obser-vations and similar figures known for other states.


Other Technology Industry Activities

VI. Other Technology Industry Activities

Throughout north-central West Virginia there are a variety of activities occur-ring that are indicative of technological growth and development. These activi-ties are illustrated through the following indicators:

• Science and Engineering Graduate Students• University Research and Development• Small Business Innovation Research (SBIR) Program Awards• Technical Councils, Institutes, and Other Industry Advocacy

SCIENCE AND ENGINEERING GRADUATE STUDENTS

A concentration of students trained in the fields of science and engineering is always an asset to employers in high-tech industries, as well as companies look-ing for new locations. West Virginia University (WVU) in Morgantown, West Virginia, is the largest university in West Virginia, with an enrollment of 26,051 students, 7,910 of which are graduate students.23 In 2003, West Virginia Univer-sity had 1,761 Graduate students in the fields of science and engineering.

UNIVERSITY RESEARCH AND DEVELOPMENT

In addition to West Virginia University, the region is home to several other col-leges and universities with centers and initiatives devoted to technology advanc-ing research.24 These centers are not only a valuable opportunity for students to gain first hand experience in high-tech fields, they also bring a variety of prod-ucts, processes, and innovation to the surrounding region. A few (though not all) of these research centers are highlighted below.

West Virginia University

West Virginia University (WVU) consistently ranks among the top 20 percent of the nation’s universities for R&D expenditures in the sciences. As Table 15 on page 37 illustrates, expenditures for research and development in the sciences

23.West Virginia University web site, available at: http://www.wvu.edu.

TABLE 14. WVU Science and Engineering Graduate Student Enrollment

Year 1999 2000 2001 2002 2003

Enrollment 1,473 1,458 1,457 1,600 1,761Source: National Science Foundation

24.The National Science Foundation publishes reports on research and development appropria-tions, graduate students, and various collegiate indicators for 599 universities throughout the nation. Detailed information on many smaller, regional, and private institutions is not always available in the National Science Foundation’s annual reports.



have increased in most fields over the past five years, for an overall average annual increase of 10.6 percent from 1999-2003.

The majority of WVU’s 2003 R&D expenditures went to the Life Sciences (57 percent). Engineering received the second largest percentage of expenditures at 27 percent, while the physical and environmental sciences comprised the third largest percentage of R&D spending, with 6 percent each.

WVU has a nationally renowned program for Forensic and Investigative Sci-ences, and offers the nation’s only undergraduate degree in biometrics. The pro-gram works in partnership with the numerous scientific and biometrics research initiatives in the region, and in 2005 was awarded full accreditation from the American Academy of Forensic Sciences.25

WVU’s forensics program also works in collaboration with the Nanoscale Sci-ence, Engineering, and Education Initiative. Nanotechnology is a rapidly grow-ing field and has become one of the most innovative research tools for fields ranging from manufacturing to cancer research. West Virginia University’s Nanoscale Initiative combines a variety of research disciplines that focus on topics from the forensic sciences to nano structured material development.26

WVU researchers are performing cutting edge research in several technological fields, including cell development, superalloys, Unmanned Aerial Vehicles (UAVs), and facial imaging technology. WVU has formed partnerships with multi-national companies such as Augusta Systems, Bristol-Myers Inc., Com-

TABLE 15. WVU Research & Development Expenditures (in thousands)

1999 2000 2001 2002 2003

Computer sciences $346 $1,814 $284 $183 $377

Environmental sciences $3,335 $5,671 $4,530 $5,777 $6,242

Life sciences $33,247 $32,628 $43,380 $48,372 $59,881

Mathematical sciences $91 $188 $312 $265 $432

Physical sciences $4,078 $4,295 $4,047 $4,308 $6,699

Psychology $365 $275 $177 $324 $462

Social sciences $634 $16 $67 $1,388 $1,593

Engineering $20,601 $20,560 $17,269 $22,563 $28,006

Total $64,696 $67,447 $72,067 $85,182 $105,695Source: National Science Foundation

25.West Virginia University, Forensic and Biometrics Gateway web site, available at: http://www.wvu.edu/~forensic.

26.West Virginia University, Nanoscale Science, Engineering, and Education Initiative web site, available at: http://www.wvu.edu/~wvnano/wvnanobackground.htm.



puter Sciences Corporation, Lockheed Martin, Mack Trucks, Mead Westvaco, Xanthus Life Sciences, and Miles Automotive to increase opportunities for commercialized research with market potential. Additionally they have collabo-rated with Federal Agencies throughout the nation, including the EPA, the Department of Defense, NASA, The Department of Energy, and the Department of Justice.

WVU’s work with the federal government is an important part of their research and development, In 2003, West Virginia University received $60.6 million dol-lars in federally financed R&D expenditures for science and engineering.27 WVU also partnered with the University of Pittsburgh and Carnegie-Mellon University to win the research component of the management contract with the National Energy Technology Laboratory (NETL).

Fairmont State University

In 2004, Fairmont State University, in conjunction with the Institute for Scien-tific Research (ISR), the EdVenture Group, and nine central West Virginia School Districts, formed a project for Comprehensive Information Technology Education in Rural Appalachia (CITERA). The project received a three year, $877,000 grant from the National Science Foundation, and provides informa-tion technology education to seventh through ninth grade students and teachers. In 2005, Fairmont State University, in partnership with the Institute for Scien-tific Research and Pierpont Community and Technical College continued to build upon the results of CITERA by implementing the Expanding Pathways for Educational Development and Information Technology Experiences (ExPE-DITE) project. This project received a two year $750,000 grant from the National Science Foundation to provide students educational pathways and resources to prepare them for careers in Information Technology.

FSU is working in partnership with the NASA IV&V center in Fairmont, WV to expand their research capacity in computer science and information systems to align with the needs of NASA IV & V. Fairmont State is also a partner in a five year National Institutes of Health IDeA Networks of Biomedical Research Excellence (INBRE) grant, where they receive $350,000 annually to support research in Biology, Chemistry, and Geoscience.

Fairmont State has been a valuable asset to the WVHTC Foundation’s Global Grid Exchange. In 2006, the university was the world’s leading donor of com-puting cycles to West Virginia’s Global Grid Exchange.28 The Global Grid

27.National Science Foundation, WVU Academic Institutional Profile.28.The Global Grid Exchange is an initiative of the WVHTC Foundation. More information

about the Grid can be located on their web site, available at: http://www.globalgridex-change.com.



Exchange delivers the spare processing power of Internet-connected computers to users involved in businesses, science, and medical research. FSU estimates that since they began sharing service with the Global Grid Exchange, they have provided $9 million worth of computer resources for academic research.29

Glenville State CollegeThrough a variety of partnerships and initiatives, Glenville State College has been committed to spreading high-tech communications technologies through-out central West Virginia. Glenville State College is located in Gilmer county, WV. Gilmer, along with Braxton County, partnered with Glenville State and Carnegie Mellon University’s Center for Appalachian Network Access (CANA) to establish West Virginia’s first technology research zone. The research zone has already made significant strides in developing communication technology, and Glenville State has worked to devise innovative ways to incorporate new communications technology with educational initiatives. Glenville State also hosts the National Corrections and Law Enforcement Training and Technology Center (NCLETTC), which opened their training facility for criminal justice students, as well as local and state public safety officials, in 2005.

Glenville is also working to develop a number of Distance Learning opportuni-ties. Glenville recently teamed up with the Clay Center in Charleston, West Vir-ginia in an effort to send live performances and educational opportunities to k-12 schools throughout central West Virginia. In 2006, Glenville received a $3.7 million grant from NASA to provide remote high schools with distance learning equipment. Glenville State will also use the grant to expand their work with sci-entific research equipment, and the computing resources they provide to the Global Grid Exchange.

West Liberty State College

Located in the Northern Panhandle of West Virginia, West Liberty State College (WLSC) has contributed valuable research to the region. The Chemistry depart-ment of West Liberty State College is currently working on a project that mod-els Cytochrome P450, a host of enzymes in the human body that break down potentially hazardous chemicals. Research on Cytochrom P450 can provide valuable insight to the medical world as to how medicine is going to effect or interact with the human body. Additionally, West Liberty is undertaking a research project that is using molecular mapping to determine the role that Hypertriglyceredemia plays in the genetic predisposition for cardiovascular dis-ease. Both of these projects have been funded through a $1.5 million grant from NASA.

29.Fairmont State University, News and Events, August 3, 2006.



WLSC is also home to the Science Math And Research Technology (SMART) center, a science center that provides hands-on educational opportunities, as well as educational events for schools within the region. The SMART center is a member of the Association of Science and Technology Centers.30

Wheeling Jesuit University

Wheeling Jesuit University is home to two prominent National Aeronautic and Space Administration (NASA) buildings, The National Technology Transfer Center and the Center for Educational Technologies. The National Technology Transfer Center (NTTC) links U.S. industry with federal labs and universities that have the technological facilities and researchers for product development. The NTTC provides a number of services to assist researchers, including tech-nology evaluation and market assessment, partnership development, computer information services, and strategic technical services. The Center for Educa-tional Technologies began in 1994, and consists of curriculum developers, sci-entists, educational researchers, computer programmers, teachers, professors, technology specialists, and videographers who work to design and incorporate technological innovations into classrooms and curriculum for all ages. The Cen-ter for Educational Technologies is also home to the NASA sponsored project, Classroom of The Future and is a Challenger Learning Center.31

SMALL BUSINESS INNOVATION RESEARCH (SBIR) AWARDS

One of the best ways to measure the innovative technology emerging from the private sector is through the amount of public investment in research and devel-opment projects. Each year, the federal Office of Technology awards small busi-nesses money for research and development for new technologies and products. The SBIR program was designed to encourage the technological potential of promising companies, and provide an incentive to profit from commercializa-tion. SBIR funds support two project phases for companies. Phase I awards sup-port projects in the start-up phase. In order for companies to be eligible for a Phase II award, they must have received funding for Phase I, and developed their Phase I technology enough to illustrate its commercialization potential. The SBIR is a highly competitive program, and awards are not guaranteed to companies throughout all fifty states.32

Because projects that move onto the Phase II stage can take up to two years to complete, the Phase I and Phase II awards can vary greatly from year to year (as

30.West Liberty State College web site, available at: http://www.wlsc.edu.31.Classroom of the Future creates high-quality materials that are technology intensive. These

curricular supplements incorporate NASA expertise and data sets and are used by students and educators. Challenger Learning Centers comprise an international network of educational sci-ence centers that educate children on math, science, and technology.

32.Small Business Administration, Office of Technology.



a successful project is starting up or winding down). As Table 16 on page 41 illustrates, West Virginia’s total SBIR awards have steadily increased since 1997, going from a total of 3 awards in 1997, to 22 awards in 2004. According to the WVHTC Foundation, 13 of West Virginia’s 22 SBIR awards in 2004 were granted to three firms in north-central West Virginia.33

INDUSTRY ADVOCACY

In addition to growing technological research and development, West Virginia has an extensive network of organizations that provide resources for technology industry growth and innovation. A few are highlighted below.

West Virginia High Technology Consortium Foundation

The vision of the WVHTC Foundation is to provide innovative, technology-based programs, products and services to the global marketplace by creating a network of high-tech resources throughout the State of West Virginia, and to provide a catalyst for high-tech growth and innovation within the region. Their headquarters are located in Fairmont, with additional West Virginia locations in Wheeling, Moundsville, and Glenville. They also have an office in Washington, D.C.

The WVHTC Foundation has seven major departments, which are described below.

• The Research and Development Group uses innovative technologies to manage, design, and build hardware and software systems. Its areas of particular focus and expertise include Web services, collaborative software solutions, system design, hardware design and integration, wireless broadband applications, grid computing, and robotics.

TABLE 16. West Virginia SBIR Awards, 1999-2004

Phase 1 Awards

Phase 1 Dollars

Phase 2 Awards

Phase 2 Dollars

Total Awards

Total Dollars

1999 3 $265,178 2 $1,478,995 5 $1,744,173

2000 6 $505,675 3 $1,544,808 9 $2,050,483

2001 4 $339,774 5 $3,413,541 9 $3,753,315

2002 13 $1,271,071 0 $0 13 $1,271,071

2003 20 $1,669,967 5 $6,182,069 25 $7,852,036

2004 12 $1,107,810 10 $6,927,201 22 $8,035,011Source: Small Business Administration, SBIR Program Statistics

33.Touchstone Research Laboratory received four phase I awards and four phase II awards; FMW Composites received three phase I awards; and ProLogic received two phase II awards.



• The IP Management Group provides effective and expedient evaluations of its clients' intellectual assets. IPMG plays an instrumental role in advancing research from labs to commercialization. In doing so, it also provides a compre-hensive range of intellectual property management services.

• The INNOVA Commercialization Group (INNOVA) is a professional services and seed stage investment initiative dedicated to creating successful entrepre-neurs and new ventures. INNOVA specializes in bringing vital knowledge and resources to seed and early stage companies and commercialization efforts, and assisting small businesses in pursuit of SBIR funds.

• The Affiliate Program is comprised of approximately 200 affiliate companies ranging from high-tech companies to private businesses with a demonstrable desire to do business in West Virginia. The program provides support to the members through the coordination of value-added services.

• The Public Safety and Homeland Security Group (PSHSG) serves as a support network for law enforcement, corrections, and public safety professionals. It offers these groups training, educational services, technical assistance, and tech-nology transfer assistance. The department offers unique and exceptional train-ing events such as the Office of Law Enforcement Technology Commercialization’s (OLETC) Mock Prison Riot, the National Corrections & Law Enforcement Training & Technology Center’s (NCLETTC) Mock Disas-ter, and OLETC's Commercialization Planning Workshops.

• The I-79 Technology Park Development Group provides support infrastructure to foster the growth of the I-79 Technology Park. Since its creation in 2000, the department has acquired more than 400 acres of new land for the park and administers six programs, including property development, community rela-tions, leasing, and facilities management.

• The Technology Services Group (TSG) offers visualization services as effective technology-related communications tools. This department seeks to utilize glo-bal communications technologies to enable companies to share information anytime, anywhere. This department administers the Global Grid Exchange, which is discussed in more detail below.

Some of the major accomplishments of the WVHTC Foundation as a whole include the I-79 Technology Park and the Global Grid Exchange. The I-79 Technology Park is the icon of the technological corridor committed to fostering the growth of high-tech businesses within the region. The Global Grid Exchange is an online exchange that aggregates the unused capacity of Internet-connected computers. Today, the Global Grid Exchange is the world's largest open-public-grid computing platform.34

The WVHTC Foundation is also currently in the process of integrating the Insti-tute for Scientific Research, Inc. (ISR). ISR performs cutting-edge research in science and engineering. Their main areas of expertise include intelligent con-trol systems; IT education, training and outreach, computational technologies,

34.WVHTC Foundation web site, available at: http://www.wvhtf.org.



dependable systems and assurance, sensors; and plasma sciences. Among those who have relied on and retained ISR’s research are NASA, the U.S. Department of Homeland Security, National Science Foundation, and the Department of Defense. ISR is also home to Black Diamond, a supercomputer that performs more than 100 billion calculations per second.

Polymer Alliance Zone of West Virginia

The Polymer Alliance Zone (PAZ) has one of the highest concentrations of pro-ducers of high specialty and engineering polymers in the world. PAZ is located in the Mid-Ohio Valley sector of West Virginia. The mission of the Polymer Alliance Zone is to create the most favorable business climate in the world for the plastics industry through a unique partnership among business, labor, educa-tion and government. It was built on the principles of collaborative partnerships between the public and private sectors all working to create the most favorable conditions possible to support both the new and existing polymer industry.

One of the core programs that the Polymer Alliance Zone has been associated with is the Mid-Atlantic Recycling Center for End-of Life Electronics (MAR-CEE) project. It is the first-ever total solution for developing an economical pro-cess to recycle end-of-life plastics found in electronics. The MARCEE project is at the forefront of providing a national solution to the growing problem of how to recycle, re-engineer, and remanufacture end-of-life electronics. To make this project successful, PAZ has worked diligently with West Virginia University’s Research Corporation, the Robert C. Byrd Institute, the WVHTC Foundation, the National Center for Electronic Recycling, the U.S. DoE and EPA, the West Virginia Economic Development Grant program, the West Virginia Develop-ment Office, the National Energy Technology Laboratory, and many private sector partners such as SDR Technologies, Amandi Services, Professional Ser-vices of America, IMTS, GE Plastics, E.I. DuPont, IBM, Sony, Toshiba, Pana-sonic, Sharp, and JVC.

I-79 Development Council

The I-79 Development Council is a non-profit corporation with members from businesses including banking, higher education, hospitals, legal, high technol-ogy, economic development authorities, chambers of commerce, media, and many other business groups. These members are located along the I-79 Inter-state Corridor, including Monongalia, Marion, Harrison, and Lewis counties.

The mission of the I-79 Development Council is to nurture and retain the tradi-tional business base within the region, while promoting the growth of new high-tech industries such as biometrics, aerospace, biotechnology, and forensic sci-ence. The Development Council also provides valuable resources to companies and organizations within the I-79 Corridor. In collaboration with the WVHTC Foundation, local economic development authorities and chambers of com-



merce, the Development Council provides regional businesses with networking opportunities, office location assistance, and other services to enhance their growth potential.35

35.The I-79 Development Council web site, available at: http://www.i79developmentcouncil.com/lifestyle.cfm.


In Focus: North-Central West Virginia Technology Firms

VII. In Focus: North-Central West Virginia Technology Firms

ELECTRONIC WARFARE ASSOCIATES, INC.

EWA Government Systems, Inc. (EWA GSI), an international technology con-tractor headquartered in Herndon, Virginia, was among the first large technol-ogy companies to locate in north-central West Virginia. Under the management of Dr. Frank Blake, EWA opened its Morgantown, WV office in 1989, seeing an advantage offered by the area’s knowledgeable workforce and lower employ-ment costs compared to the Washington, D.C. area. As a founding member of the West Virginia High Technology Consortium, EWA Fairmont has also served as a mentor to other technology companies, helping to grow the industry in north-central West Virginia. These companies have been both prime contractors and subcontractors to EWA.

EWA Government Systems, Inc. is an engineering company that provides engi-neering solutions to the Federal Government—primarily the Department of Defense. Three examples of ongoing programs are: secure communication sys-tems, battleforce tactical trainers, and tagging and tracking devices. Their com-munication systems are installed on military vehicles to allow commanders in the field to receive and analyze sensitive information. EWA battleforce training products interface directly with systems onboard military ships, allowing troops to train onboard their ships and directly on the instruments that would be used in battle. The training applications not only simulate real scenario events, but also track user keystrokes and decisions to provide better post-training feedback. Additionally, EWA has developed advanced tagging and tracking applications that are used to monitor enemy force movements. A similar EWA system, PER-MATS, was used to track refugees during the conflict in Bosnia, and in the United States after Hurricane Katrina, allowing relief agencies to identify and reunite family members who had been separated.

NATIONAL BIOMETRIC SECURITY PROJECT

The National Biometric Security Project (NBSP), a nonprofit organization established after the events of 9/11, supports government and private sector efforts to standardize, test, acquire, and deploy biometric technology; and to do so in an environment compatible with rational social objectives in preserving individual privacy and civil liberties. The NBSP has a Test, Research and Data Center in Morgantown, West Virginia that is tasked to support all non-defense agencies to protect the nation’s critical infrastructure, and to collaborate with and support Department of Defense biometric projects as needed.

The NBSP center in Morgantown is soon to be the world’s only ISO certified biometrics lab, and in 2007 will host the first national biometrics conference for state and federal government officials. The center is currently leading the devel-opment of a prototype database that will be used to secure and manage biomet-



ric information on all government employees and subcontractors. They have also worked with companies to develop technologies that allow weapons only to be fired if the user's biometric matches that associated with the weapon, and vehicles with smart devices that will scan a driver's biometrics to validate their authorization to drive that vehicle.

AZIMUTH Azimuth, Incorporated, established in 1988, was one of the founding member companies of the West Virginia High Technology Consortium. Azimuth employees over 110 people at five locations, four of which are in West Virginia. Azimuth is a diverse engineering firm specializing in rapid prototyping, elec-tronic engineering, software engineering, infrastructure assessment, and light manufacturing. They were awarded the Blue Chip Enterprise Award in 1994 and 1999, and were featured by Inc. Magazine as one of the 500 fastest growing companies in America. In 2004 the company received the District Director's Choice Award from the U.S. Small Business Administration for outstanding business achievement.

Azimuth works extensively with various federal agencies, including the U.S. Army, U.S. Navy, U.S. Special Operations Command, and the U.S. Department of Defense. They also team with major defense contractors such as Electronic Warfare Associates, Inc., Northrup Grumman, Computer Sciences Corporation (CSC), and Lockheed Martin. Azimuth recently teamed with Innovative Response Technologies, Inc., a subsidiary of the WVHTC Foundation, to develop and produce the BomBot, a small robot used to remotely explode road-side Improvised Explosive Devices (IEDs). Though similar devices are avail-able to the U.S. Military, the BomBot is advantageous because it is the most cost efficient and easily deployable. Over 2,300 BomBots are currently in the field, many of which are in Iraq.

Azimuth is also the prime contractor operating the West Virginia National Guard's Center for National Response in Gallagher, West Virginia. This facility is a counter-terrorism, counter-weapons of mass destruction (WMD) training facility for the Department of Defense, civil support teams, federal, state and local organizations, and rapid responder units from around the world. Training scenarios run by the Azimuth team include a post-blast rubble area with hazards and vehicles; a subway train and stations with mezzanine; three chemical, bio-logical or drug laboratories at different levels of sophistication; a highway WMD HAZMAT incident that can be configured with a wide variety of chemi-cal, biological and radiological sources; and a cave and bunker complex that can be used in a multitude of scenarios.



INFORMATION RESEARCH CORPORATION

Information Research Corporation (IRC) is an information technology company located in Fairmont, West Virginia. The company provides technical support, software development, enterprise architecture development, application devel-opment and deployment, and e-learning services to government and commercial clients. IRC was formed in 1998 by Bob Wentz, who continues to serve as the company's president. The company began in the incubator of the WVHTC Foundation, and through the Foundation's assistance and support, IRC has grown from one employee to its current level of 24 employees.

One of the services that IRC specializes in is e-learning software. Their software facilitates education in an interactive electronic format. E-learning programs walk the learner through a computer-based course or training program. IRC developed this product after receiving a Small Business Innovation Research Program (SBIR) award of $300,000 from the U.S. Department of Education. The award was given in two stages that allowed for the exploration of the e-learning software and then its actual development. Key outcomes included a structured evaluation process that addressed teacher attitudes, knowledge acqui-sition, and classroom integration of knowledge and skills. IRC e-learning tools are now being used by a variety of clients, including NASA, the FBI, and the Department of Defense.

FMW COMPOSITE SYSTEMS INC.

Located in Bridgeport, West Virginia, FMW Composite Systems has been in the I-79 Technology Corridor for almost 13 years. The company was founded in 1993 by Dale McBride, who had acquired patent rights for the Flexcel refueling system, a technology developed to provide the military with a fuel deployment system that could expend the range of track vehicles (tanks) without the use of traditional refueling vehicles. FMW soon developed a similar technology, named FAST, for use by wheeled vehicles and rotor craft. Flexcel and FAST are made of rubber composites reinforced with a proprietary filament winding pro-cess, making a material strong enough that it can be filled with a liquid and safely dropped from a helicopter to troops on the ground. Today, Flexcel and FAST are used by the Army and Marines to extend vehicle ranges, and to deploy liquids to troops in remote locations.

Other FMW products include titanium matrix composites, nano-enhanced tita-nium alloys, and ceramics. The titanium matrix composites, which are made by inserting fibers into titanium, provide a lightweight material that is stronger than steel. FMW is the world's first and only supplier of flight qualified titanium composites. Their materials are used to lighten landing gear on military and commercial aircrafts, and to reduce payload compartment weight on NASA shuttle vehicles. FMW is also working with NASA to develop ceramic materials that can withstand high temperatures. Prototypes of this material have been shown to withstand the heat experienced when entering the earth's atmosphere.



GLOBAL SCIENCE & TECHNOLOGY

Global Science & Technology's West Virginia Division (GST-WV) offers soft-ware engineering, data management, project management, network manage-ment, and research and development services to federal, state, and local governments, as well as commercial clients. GST-WV is led by Wade Linger, a native of West Virginia, and founder of TMC Technologies, Inc., the predeces-sor to GST-WV. GST acquired TMC Technologies in 2005 to expand operations in West Virginia by leveraging the strengths and qualifications of both organiza-tions and expand their customer base with federal agencies.

Federal contracts have allowed the company to grow and expand its capabilities. For example, GST-WV supports NOAA by providing technology solutions to ingest, process, and store climate information gathered from satellites and make the information readily available to the scientific community. They also support NASA by providing software research and development, as well as independent verification and validation services for mission-critical NASA spacecraft soft-ware. GST-WV also supports national security by providing a number of differ-ent services on behalf of the Department of Defense, ranging from researching and evaluating biometrics systems for national defense to developing better ways of combating corrosion within aging military systems. At the state and local level, GST-WV provides services ranging from installation and mainte-nance of information systems, to research and development of electronic docu-mentation/imaging systems that aid local government agencies in storing and sharing information traditionally provided in paper form.

TOUCHSTONE RESEARCH

Touchstone Research Laboratory is one of North America’s leading materials testing, industrial problem-solving, and applied research companies. The com-pany was founded 1980 by Libby Kraftician and Brian Joseph in a basement in Wheeling, and has since expanded to 54 employees working in a four building facility in Triadelphia, West Virginia. Their facility, which was called “one of the best equipped labs of its size in the country” by Advanced Materials & Pro-cesses magazine, has over $10 million worth of scientific equipment in 40,000 square feet of space. The company has earned numerous awards, including con-tractor of the year nominations from NASA and 3M, and the U.S. Chamber of Commerce “National Blue Chip Enterprise” award.

Touchstone has served a wide range of R&D clients, including private compa-nies such as Toyota, Alcan Aluminium, and 3M; and federal agencies including the U.S. Navy, Air Force, and NASA. Their materials are used on Shuttle boost-ers, nuclear submarines, fighter jets, as well as in automotive radiators, race vehicles (including hyrdoplanes, canoes, and bikes), and commercial planes.

In addition to proprietary R&D, Touchstone has also developed two products in recent years that are likely to have broad applications. The first, CFOAM, is a coal based structural material that is inexpensive, lightweight, fire-resistant, and impact absorbing. Applications include fire-proof ship decking and bulkheads,



impact mitigation for aircraft, structural panels and firewalls for automobiles, composite tooling, and as part of aerospace thermal management systems. Their other product, MetPreg, is a lightweight and strong fiber reinforced aluminum. Applications for MetPreg are broad, and include lightening vehicles to increase fuel economy without sacrificing safety, and reinforcing aircraft components while reducing weight. As a result of the success of these products, plans are underway to build a fifth building at Touchstone.


Looking Forward


VIII. Looking Forward

The progress made in north-central West Virginia over the past several years is readily apparent. The more visible signs of this progress include the I-79 Tech-nology Park, which is home to the state-of-the-art WVHTC Foundation Research Center, NASA's IV&V facility, the Alan B. Mollohan Innovation Cen-ter, and a number of private sector technology companies. The success is also visible in news headlines, with announcements of SBIR awards for local com-panies, the use of local technologies around the world, and the discussions of expansion at federal facilities in the area, such as the FBI’s and DoD’s biomet-rics facilities. Residents and visitors alike also see the I-79 Technology Corridor signs along interstate 79, from north of Morgantown, to south of Clarksburg.

Other more indirect signs of success are also apparent, yet not as regularly attributed to the north-central West Virginia technology movement. Such signs include the increasing university enrollment of science and engineering stu-dents, and the growing amount of cutting-edge research being done at local uni-versities, colleges, and businesses. There are also the 18,000+ people who work in the region’s technology industry, earning above-average wages, and helping to support local retailers, charities, restaurants, and other businesses. These technology industry employees make breakthroughs each day, ranging from new applications of biometrics to improve security at home and abroad, to new lightweight materials for use in space shuttles, commercial planes, automobiles, and buildings.

In addition to a solid foundation of businesses, federal anchors, and university programs, the technology industry in north-central West Virginia also has an active and organized base of support. Groups such as the WVHTC Foundation, the Polymer Alliance Zone, and the I-79 Development Council continue to pro-mote technology based industry expansion by attracting firms from across the country, and around the world, to the region. They also actively promote the industry at home by providing existing technology companies with strategic support, startup assistance, and other valuable resources, and by raising aware-ness in schools and communities to let the next generation of West Virginians know that exciting opportunities are available in the technology industry.

Despite the progress already made in developing the technology industry in north-central West Virginia, there remains great potential for future growth and reward. Significant work and investment has already gone into the growth of the industry, but without further concentrated efforts, the momentum in place may not be enough to carry the industry forward. Fortunately, leadership in the region appears committed to the industry and future efforts to facilitate its growth. Assuming this effort continues, the people of West Virginia can expect to further benefit from a growing technology industry for years to come.

Appendix A: Technology Industry Definition Methodology

Our definition of the technology industry is composed of specific industrial sec-tors. These sectors are identified by North American Industry Classification System (NAICS) codes, which is how the U.S. Census Bureau reports industry data.1 Because there is not a universally accepted definition of technology, we employed the following methodology to determine an accurate and concise def-inition of the technology industry.

Specifically, this methodology involved:

1. Surveying existing definitions We reviewed definitions of the technology industry used in relevant industry reports, analyses, and other materials.

2. Making a first cut selectionWe made a first selection of industry sectors (as defined by NAICS codes) to be included in the definition. We based our decision at this step on the frequency with which a sector was cited in other studies. If the sector appeared in the U.S. Depart-ment of Commerce definition and one other definition, we included the industry in our definition.

3. Conducting an occupational testIf an industry was included in one or two other studies, and met a specific standard concerning the share of occupations in an industry with a technology focus, it was included in our definition.

4. Refining from the 6-digit NAICS codesWe took the selected 6-digit industry sectors back to the 4-digit level. This was done because estimates of employment and payroll are more available at the 4-digit level.

5. Breaking down the industry definition into technology subsectorsBased on the definition of each NAICS code, as given by the U.S. Census Bureau, we classified each 4-digit NAICS code into one of the following technology clus-ters: Advanced Manufacturing, Chemical and Material, Information Technology (including telecommunications), and Other Technologies.

REVIEW OF EXISTING DEFINITIONS

In our first step we reviewed past reports and other sources involving the tech-nology industry to determine what industry sectors are most commonly included when defining technology. A summary of which reports we reviewed

1. Our definition was done at the NAICS 4-digit level, as this is the most detailed level for which suf-ficient amounts of data is commonly available at the county level. A NAICS code can be between 2 and 6 digits, with each digit providing an additional level of detail. For example, NAICS code 325 represents chemical manufacturing, NAICS code 3254 represents pharmaceutical and medicine manufacturing, and 325411 represents medicinal and botanical manufacturing.

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and how they affected our definition can be found in “Appendix B: Other Defi-nitions of the Technology Industry”.

SELECTING NAICS TO INCLUDE: FIRST CUT

Upon reviewing the already established definitions of technology, we decided that the U.S. Department of Commerce, Office of Technology Policy definition used in the fourth edition of The Dynamics of Technology-Based Economic Development, would serve as the base for our definition.1 Specifically, if a NAICS code was used in the U.S. Department of Commerce definition, and at least one of the other five definitions, it was included in our definition.

NAICS code 5416 (Management, Scientific, and Technical Consulting Ser-vices) which met the criteria at this step, was later excluded from our definition. Our analysis found inconsistencies in the use of “Management Consulting Ser-vices” as a classification, which resulted in significantly more employment in this sector in 2003 than in 2002. It appears likely that a large number of jobs previously classified as “5613-Employment Services” or as “5511-Management of Companies & Enterprises” were reclassified under “54161-Management Consulting Services.” Given that the reclassified employment was significant, and that the reclassified employees appear not to work in a technology-related occupation, we removed NAICS code 5416 from our definition.

NAICS codes not meeting this criterion were retained for further analysis.

SELECTING NAICS TO INCLUDE: SECOND AND THIRD CUTS

If a NAICS code was not included after the first cut, we then further consulted the definitions of technology used by the AeA, Pittsburgh Technology Council, and Carnegie-Mellon/SSTI.2 If a remaining NAICS code was not included in any of these definitions, it was excluded from our definition. If it was included in all three, it was included in our definition; however, no NAICS codes met this criterion.

A quantitative analysis was then applied to NAICS codes that were included in one or two of the definitions presented by AeA, Pittsburgh Technology Council, and Carnegie-Mellon/SSTI. This involved assessing the occupational makeup of each industry, and keeping those industries in which more than double the

1. We based this decision on the fact that the U.S. Department of Commerce has used the defini-tion on three previous editions of its Dynamics of Technology-Based Economic Development report; the definition was based in the 1999 BLS definition as presented by Daniel Hecker; and, as it is a government source, the report is assumed to be unbiased.

2. We did not further consult the definitions used by Anderson Economic Group (AEG) in 2001, or the BLS in 1999, as these definitions are very similar to that used by U.S. Department of Commerce, Office of Technology Policy in The Dynamics of Technology-Based Economic Development, fourth edition. This is largely due to the fact that both the 2001 AEG definition and the BLS definition were based on the 1999 BLS definition.


national average of workers had technology-oriented occupations.1 Table 1, “Occupational Analysis of Industries Considered for Inclusion in Technology Industry Definition, summarizes this analysis for each industry on which we performed an occupational analysis. Industries that had a 10 percent or greater share of employment in technology occupations were included in our definition.

FINALIZING THE DEFINITION

After applying the above criteria we had a list of 186 6-digit NAICS codes. However, precise industry data is not commonly available at the 6-digit level for individual counties—the level of geography analyzed in this study. To accom-modate this, our definition—as presented in Table 6, “Definition of the Technol-ogy Industry by Cluster,” on page 22 of the report—is comprised of each industry’s 4-digit NAICS code. While this broadens the definition to some extent, it allows far greater precision in estimating industry data for employ-ment, payroll, and establishments where needed.2

TECHNOLOGY CLUSTER CLASSIFICATIONS

Upon completing our industry definition, we identified technology clusters by classifying each NAICS as involving information technology, advanced manu-facturing, or chemical and material. An “other technologies” classification was used for those not fitting a specified cluster, and a “federal anchors” classifica-tion was used for government-funded technology employers not captured by the Census Bureau in NAICS data.

The composition of each cluster is presented in Table 6, “Definition of the Tech-nology Industry by Cluster,” on page 22 of the report.

1. May 2004 occupation data was gathered at the 4-digit NAICS level (most detailed level avail-able) from the BLS Occupational Employment Statistics Survey. At the national level we found 5 percent of all occupations were classified as Computer and Mathematical; Architec-ture and Engineering; and Life, Physical, and Social Science.

2. The U.S. Census Bureau does not disclose industry payroll data when doing so would make apparent an individual business payroll. Industry employment data is also frequently reported as a range (i.e. 0-19 employees) for more specific NAICS levels. Thus, some estimates were made based on broader industry trends.


TABLE 1. Occupational Analysis of Industries Considered for Inclusion in Technology Industry Definition

NAICS code - Industry

Total Industry

Employment

Employment in Technology Occupations*

Share of Employment in a Technology Occupation**

2111 - Oil and Gas Extraction 119,200 26,700 22.4%

3334 - Ventilation, Heating, AC, and Commercial Refrig Equipment Manufacturing

151,650 9,610 6.3%

3335 - Metalworking Machinery Manufacturing 199,230 13,950 7.0%

3359 - Other Electrical Equipment and Component Manufacturing

137,450 12,060 8.8%

3369 - Other Transportation Equipment Manufacturing 37,700 4,280 11.4%

3399 - Other Miscellaneous Manufacturing 356,330 12,870 3.6%

4234 - Professional and Commercial Equipment and Supplies Merchant Wholesalers

637,820 111,510 17.5%

5161 - Internet Publishing and Broadcasting 29,250 10,210 34.9%

5171 - Wired Telecommunications Carriers 552,560 102,870 18.6%

5172 - Wireless Telecommunications Carriers (except Satellite)

192,100 29,100 15.1%

5173 - Telecommunications Resellers 111,800 25,320 22.6%

5174 - Satellite Telecommunications 16,520 2,000 12.1%

5175 - Cable and Other Program Distribution 128,920 9,250 7.2%

5179 - Other Telecommunications 7,460 1,760 23.6%

6114 - Business Schools and Computer and Management Training

83,780 4,830 5.8%

0000 - All United States Industries 128,127,360 6,419,460 5.0%

Source: Anderson Economic Group, LLCData: U.S. Bureau of Labor Statistics, Occupational Employment Statistics Survey (May 2004)* Technology occupations are those classified under the OCC Codes for Computer and Mathematical; Architecture and Engineering; and Life, Physical, and Social Science.

**Industries with a 10 percent or greater share of employment in a technology occupation are included in our definition.


Appendix B: Other Definitions of the Technology Industry

We reviewed a number of other publications before adopting the definition of the technology industry used in this report. Of the reports listed in “Appendix F: Bibliography” we looked most closely at those that used NAICS codes to iden-tify the technology industry. We documented these definitions in a matrix, which is presented as Table 1, “Technology Definition Matrix,” on page 3. Also, below you will find a brief narrative summary of the technology definition used in each of these reports.1

AMERICAN ELECTRONICS ASSOCIATION (AeA)

AeA used 45 NAICS codes to define the technology industry. Its guiding princi-ple was that “to be included in AeA’s core definition of high tech, an industry had to be a maker/creator of technology, whether it be in the form of products, communications, or services.”

Industries included in AeA’s definition broadly fall into two categories—high-tech manufacturing and high-tech services. AeA did not include a NAICS code if the high-tech portion did not represent a clear majority. The AeA definition of high-tech does not include the wholesale and retail trade of high-tech goods. AeA also leaves out biotechnology because, in their words, “there is no clear consensus on the definition of the biotechnology industry.”

THE PITTSBURGH TECHNOLOGY COUNCIL

The Pittsburgh Technology Council used 126 NAICS codes to define the tech-nology industry in its 2005 “State of the Industry” report. The Pittsburgh Tech-nology Council used three main criteria in determining if an industry qualified as being technology oriented. These criteria were: research and development activity; scientists and engineers employed; and specialty technology workers employed.

The Council looked at the percentage of sales invested in research and develop-ment, the number of scientists and engineers employed in industries, and the number of specialty technology workers who are employed in typically non-technology industries. Such workers might include information systems person-nel, computer programmers, lab personnel, and engineers involved in heavy industrial processes.

1. North American Industry Classification System (NAICS) was adopted in 1997 to replace the Standard Industrial Classification (SIC) system as the industry classification system used by the statistical agencies of the United States.

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CARNEGIE MELLON AND SSTI

Carnegie Mellon’s report “Technology Industries and Occupations for NAICS Industry Data” identifies three major areas of technology: Technology Employ-ers, Primary Technology Generators, and Secondary Technology Generators. Their work builds on a previous definition of technology industries identified by their 3-digit Standard Industrial Classification (SIC) code. In order to be defined as technology, an industry must be science and engineering intensive, with a share of employment in those occupations that exceeds three times the national average.

Using this methodology, Carnegie Mellon classified industries as Technology Employers if their share of employment in science- and engineering-intensive occupations exceeded more than three times the national average (3.3 percent). To be classified as a Primary Technology Generator, an industry must exceed the U.S. average for research and development expenditures per employee ($11,297) and the proportion of full-time-equivalent R&D scientists and engi-neers in the industry workforce (5.9 percent). Secondary Technology Generators are those industries that meet only one of these two criteria.

DANIEL HECKER, UNITED STATES BUREAU OF LABOR STATISTICS

Economist Daniel Hecker of the U.S. Bureau of Labor Statistics (BLS) defined high-tech industries in his 1999 article “High Technology Employment: A Broader View.” In the article, Hecker considered industries as high tech if employment in both research and development and in all technology-oriented occupations accounted for a proportion of employment that was at least twice the average for all industries in the Occupational Employment Survey. There-fore, an industry is high tech if it has at least six research and development workers per 1000 workers and 76 technology-oriented workers per 1000 work-ers. This definition, which was based on SIC codes, includes high-tech manu-facturing, information industries, and technology services.

ANDERSON ECONOMIC GROUP (2001)

In our 2001 report “Economic Diversification & High-Tech Employment in Oakland County” we referred to the definition given by Daniel Hecker of the BLS in “High Technology Employment: A Broader View.” The article provided a list of high-tech SIC codes. From this list, and with the relationships defined by the U.S. Census Bureau, we identified the appropriate NAICS industry groups to include in a definition of high-tech. This definition was done using NAICS codes at the 3-digit level. At the time few, if any, other definitions of the industry existed that were developed using the more accurate NAICS codes. Most others, including the BLS definition, were done using the older SIC data.

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Table 1. Matrix of Technology Industry Definitions From Selected Sources (continued)

NAI

Pittsburgh Anderson Economic Carnegie Mellon / Definition: gregate

U.S. Department of Commerce, Office of

Technology Policy

U.S. Bureau of Labor Statistics (1999, Converted From

SICs)2 x3 x x3 x3 x3 x3 x3 x x x3 x x x3 x x x3 x x3 x x3 x x x3 x x x3 x x3 x x x3 x x3 x x x3 x x x3 x x x3 x x3 x x3 x x x3 x x x3 x x x3 x x x3 x x x3 x x x3 x x x3 x x x3 x x3 x x3 x x3 x x3 x x3 x x3 x x3 x x3 x x3 x x3 x x3 x3 x

CS IndustryAeA

DefinitionTechnology

Council DefinitionGroup 2001 High-

Tech DefinitionSSTI

Ag11111 Crude Petroleum and Natural Gas Extraction x24110 Petroleum Refineries x24121 Asphalt Paving Mixture and Block Manufacturing x24122 Asphalt Shingle and Coating Materials Manufacturing x24191 Petroleum Lubricating Oil and Grease Manufacturing x24199 All Other Petroleum and Coal Products Manufacturing x25110 Petrochemical Manufacturing x x25120 Industrial Gas Manufacturing x x25131 Inorganic Dye and Pigment Manufacturing x x25132 Synthetic Organic Dye and Pigment Manufacturing x25181 Alkalies and Chlorine Manufacturing x25182 Carbon Black Manufacturing x x25188 All Other Basic Inorganic Chemical Manufacturing x x25191 Gum and Wood Chemical Manufacturing x25192 Cyclic Crude and Intermediate Manufacturing x x25193 Ethyl Alcohol Manufacturing x25199 All Other Basic Organic Chemical Manufacturing x x25211 Plastics Material and Resin Manufacturing x x25212 Synthetic Rubber Manufacturing x x25221 Cellulosic Organic Fiber Manufacturing x25222 Noncellulosic Organic Fiber Manufacturing x25311 Nitrogenous Fertilizer Manufacturing x25312 Phosphatic Fertilizer Manufacturing x25314 Fertilizer (Mixing Only) Manufacturing x25320 Pesticide and Other Agricultural Chemical Manufacturing x25411 Medicinal and Botanical Manufacturing x x25412 Pharmaceutical Preparation Manufacturing x x25413 In-Vitro Diagnostic Substance Manufacturing x x25414 Biological Product (except Diagnostic) Manufacturing x x25510 Paint and Coating Manufacturing x x25520 Adhesive Manufacturing x x25611 Soap and Other Detergent Manufacturing x x25612 Polish and Other Sanitation Good Manufacturing x x25613 Surface Active Agent Manufacturing x x25620 Toilet Preparation Manufacturing x x25910 Printing Ink Manufacturing x x25920 Explosives Manufacturing x x25991 Custom Compounding of Purchased Resins x x25992 Photographic Film, Paper, Plate, and Chemical Manufacturing x x25998 All Other Miscellaneous Chemical Product and Preparation Manufacturing x x32911 Industrial Valve Manufacturing32912 Fluid Power Valve and Hose Fitting Manufacturing


NAI



Technology Policy


SICs)3 x3 x3 x3 x x3 x x3 x x3 x x3 x3 x3 x3 x3 x x3 x x3 x x3 x x3 x x3 x x x3 x x x3 x x3 x x x3 x x x3 x x x3 x x x3 x x x3 x x3 x x3 x x x3 x x x3 x x x3 x x x3 x3 x3 x3 x3333333 x3 x x

CS IndustryAeA



Tech DefinitionSSTI

Ag32913 Plumbing Fixture Fitting and Trim Manufacturing32919 Other Metal Valve and Pipe Fitting Manufacturing32991 Ball and Roller Bearing Manufacturing32992 Small Arms Ammunition Manufacturing32993 Ammunition (except Small Arms) Manufacturing32994 Small Arms Manufacturing32995 Other Ordnance and Accessories Manufacturing32996 Fabricated Pipe and Pipe Fitting Manufacturing32997 Industrial Pattern Manufacturing32998 Enameled Iron and Metal Sanitary Ware Manufacturing32999 All Other Miscellaneous Fabricated Metal Product Manufacturing33111 Farm Machinery and Equipment Manufacturing x33112 Lawn and Garden Tractor and Home Lawn and Garden Equipment Manufacturing x33120 Construction Machinery Manufacturing x x33131 Mining Machinery and Equipment Manufacturing x x33132 Oil and Gas Field Machinery and Equipment Manufacturing x x33210 Sawmill and Woodworking Machinery Manufacturing x x33220 Plastics and Rubber Industry Machinery Manufacturing x x33291 Paper Industry Machinery Manufacturing x33292 Textile Machinery Manufacturing x x33293 Printing Machinery and Equipment Manufacturing x x33294 Food Product Machinery Manufacturing x x33295 Semiconductor Machinery Manufacturing x x x33298 All Other Industrial Machinery Manufacturing x x33311 Automatic Vending Machine Manufacturing x33312 Commercial Laundry, Drycleaning, and Pressing Machine Manufacturing x33313 Office Machinery Manufacturing x x33314 Optical Instrument and Lens Manufacturing x x x33315 Photographic and Photocopying Equipment Manufacturing x x x33319 Other Commercial and Service Industry Machinery Manufacturing x x33411 Air Purification Equipment Manufacturing x x33412 Industrial and Commercial Fan and Blower Manufacturing x x33414 Heating Equipment (except Warm Air Furnaces) Manufacturing x x33415 Air-Cond and Warm Air Heating Equip and Commercial and Industrial Refrig Equip Mfg x33511 Industrial Mold Manufacturing x x33512 Machine Tool (Metal Cutting Types) Manufacturing x x33513 Machine Tool (Metal Forming Types) Manufacturing x x33514 Special Die and Tool, Die Set, Jig, and Fixture Manufacturing x x33515 Cutting Tool and Machine Tool Accessory Manufacturing x x33516 Rolling Mill Machinery and Equipment Manufacturing x x33518 Other Metalworking Machinery Manufacturing x x33611 Turbine and Turbine Generator Set Units Manufacturing x x


NAI



Technology Policy


SICs)3 x x3 x x3 x x3 x x3 x x3 x x3 x x3 x x3 x x3 x x3 x x3 x x3 x x3 x x3 x x3 x x3 x x3 x x3 x x x3 x x3 x x x3 x x x3 x x x3 x x x3 x x x3 x x x3 x x3 x x x3 x x x3 x x x3 x x x3 x x3 x x x3 x x x3 x x x3 x x x3 x x x3 x x x3 x x x3 x x x3 x x x3 x x x

CS IndustryAeA



Tech DefinitionSSTI

Ag33612 Speed Changer, Industrial High-Speed Drive, and Gear Manufacturing x x33613 Mechanical Power Transmission Equipment Manufacturing x x33618 Other Engine Equipment Manufacturing x33911 Pump and Pumping Equipment Manufacturing x x33912 Air and Gas Compressor Manufacturing x x33913 Measuring and Dispensing Pump Manufacturing x33921 Elevator and Moving Stairway Manufacturing x x33922 Conveyor and Conveying Equipment Manufacturing x x33923 Overhead Traveling Crane, Hoist, and Monorail System Manufacturing x x33924 Industrial Truck, Tractor, Trailer, and Stacker Machinery Manufacturing x x33991 Power-Driven Handtool Manufacturing x x33992 Welding and Soldering Equipment Manufacturing x x33993 Packaging Machinery Manufacturing x x33994 Industrial Process Furnace and Oven Manufacturing x x33995 Fluid Power Cylinder and Actuator Manufacturing x x33996 Fluid Power Pump and Motor Manufacturing x x33997 Scale and Balance (except Laboratory) Manufacturing x x33999 All Other Miscellaneous General Purpose Machinery Manufacturing x x34111 Electronic Computer Manufacturing x x x34112 Computer Storage Device Manufacturing x x34113 Computer Terminal Manufacturing x x x34119 Other Computer Peripheral Equipment Manufacturing x x x34210 Telephone Apparatus Manufacturing x x x34220 Radio and Television Broadcasting and Wireless Comm Equipment Manufacturing x x x34290 Other Communications Equipment Manufacturing x x x34310 Audio and Video Equipment Manufacturing x x x34411 Electron Tube Manufacturing x x34412 Bare Printed Circuit Board Manufacturing x x x34413 Semiconductor and Related Device Manufacturing x x x34414 Electronic Capacitor Manufacturing x x x34415 Electronic Resistor Manufacturing x x x34416 Electronic Coil, Transformer, and Other Inductor Manufacturing x x34417 Electronic Connector Manufacturing x x x34418 Printed Circuit Assembly (Electronic Assembly) Manufacturing x x x34419 Other Electronic Component Manufacturing x x x34510 Electromedical and Electrotherapeutic Apparatus Manufacturing x x x34511 Search, Detection, Navig, Guidance, Aeronauy, and Naut Syst and Instrument Mng x x x34512 Auto Environmental Control Manufacturing for Residential, Comm, and Appliance Use x x x34513 Instruments and Mfg for Measuring, Displaying, and Cntrl Ind Process Variables x x x34514 Totalizing Fluid Meter and Counting Device Manufacturing x x x34515 Instrument Manufacturing for Measuring and Testing Electricity and Electrical Signals x x x34516 Analytical Laboratory Instrument Manufacturing x x x


NAI



Technology Policy


SICs)3 x x x3 x x3 x x x3 x x3 x x3 x x3 x x3 x x3 x x3 x x3 x3 x3 x3 x3 x3 x3 x x3 x x3 x x x3 x x x3 x x x3 x x x3 x x x3 x x3 x x x3 x x3 x x x3 x x3 x x x3 x x3 x x x3 x x x3 x x3 x x3 x x3 x x x3 x x x3 x x x3 x x x3 x x3 x x3 x x x

CS IndustryAeA



Tech DefinitionSSTI

Ag34517 Irradiation Apparatus Manufacturing x x x34518 Watch, Clock, and Part Manufacturing x34519 Other Measuring and Controlling Device Manufacturing x x x34611 Software Reproducing x x34612 Prerecorded Compact Disc (except Software), Tape, and Record Reproducing x x34613 Magnetic and Optical Recording Media Manufacturing x x35311 Power, Distribution, and Specialty Transformer Manufacturing x35312 Motor and Generator Manufacturing x35313 Switchgear and Switchboard Apparatus Manufacturing x35314 Relay and Industrial Control Manufacturing x35911 Storage Battery Manufacturing x35912 Primary Battery Manufacturing x35921 Fiber Optic Cable Manufacturing x x35929 Other Communication and Energy Wire Manufacturing x35931 Current-Carrying Wiring Device Manufacturing x35932 Noncurrent-Carrying Wiring Device Manufacturing x35991 Carbon and Graphite Product Manufacturing x35999 All Other Miscellaneous Electrical Equipment and Component Manufacturing x36111 Automobile Manufacturing x x36112 Light Truck and Utility Vehicle Manufacturing x x36120 Heavy Duty Truck Manufacturing x x36211 Motor Vehicle Body Manufacturing x x36212 Truck Trailer Manufacturing x x36213 Motor Home Manufacturing x36214 Travel Trailer and Camper Manufacturing x x36311 Carburetor, Piston, Piston Ring, and Valve Manufacturing x36312 Gasoline Engine and Engine Parts Manufacturing x x36321 Vehicular Lighting Equipment Manufacturing x36322 Other Motor Vehicle Electrical and Electronic Equipment Manufacturing x x36330 Motor Vehicle Steering and Suspension Components (except Spring) Manufacturing x36340 Motor Vehicle Brake System Manufacturing x x36350 Motor Vehicle Transmission and Power Train Parts Manufacturing x x36360 Motor Vehicle Seating and Interior Trim Manufacturing x36370 Motor Vehicle Metal Stamping x36391 Motor Vehicle Air-Conditioning Manufacturing x36399 All Other Motor Vehicle Parts Manufacturing x x36411 Aircraft Manufacturing x x36412 Aircraft Engine and Engine Parts Manufacturing x x36413 Other Aircraft Parts and Auxiliary Equipment Manufacturing x x36414 Guided Missile and Space Vehicle Manufacturing x36415 Guided Missile and Space Vehicle Propulsion and Propulsion Unit Parts Manufacturing x36419 Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing x x


NAI



Technology Policy


SICs)33333 x x3 x x3 x x3 x x3 x x3 x x3334 x4 x4 x4 x4 x4 x4 x5555555 x x x5 x5555555 x5 x x5 x5 x x5 x5 x5 x5 x x

CS IndustryAeA



Tech DefinitionSSTI

Ag36611 Ship Building and Repairing x36612 Boat Building x36992 Military Armored Vehicle, Tank, and Tank Component Manufacturing x x36999 All Other Transportation Equipment Manufacturing x x39111 Laboratory Apparatus and Furniture Manufacturing x x39112 Surgical and Medical Instrument Manufacturing x x39113 Surgical Appliance and Supplies Manufacturing x x39114 Dental Equipment and Supplies Manufacturing x x39115 Ophthalmic Goods Manufacturing x39116 Dental Laboratories x39932 Game, Toy, and Children's Vehicle Manufacturing x x39991 Gasket, Packing, and Sealing Device Manufacturing x x39999 All Other Miscellaneous Manufacturing x x23410 Photographic Equipment and Supplies Merchant Wholesalers23420 Office Equipment Merchant Wholesalers23430 Computer and Computer Peripheral Equipment and Software Merchant Wholesalers23440 Other Commercial Equipment Merchant Wholesalers23450 Medical, Dental, and Hospital Equipment and Supplies Merchant Wholesalers23460 Ophthalmic Goods Merchant Wholesalers23490 Other Professional Equipment and Supplies Merchant Wholesalers11110 Newspaper Publishers x11120 Periodical Publishers x11130 Book Publishers x11140 Directory and Mailing List Publishers x11191 Greeting Card Publishers x11199 All Other Publishers x11210 Software Publishers x x x16110 Internet Publishing and Broadcasting17110 Wired Telecommunications Carriers x x17211 Paging Services x x17212 Cellular and Other Wireless Communications x x17310 Telecommunications Resellers x x17410 Satellite Telecommunications x17510 Cable and Other Program Distribution x17910 Other Telecommunications x18111 Internet Service Providers x x18112 Web Search Portals x18210 Data Processing, Hosting, and Related Services x x19110 News Syndicates x19120 Libraries and Archives x19190 All Other Information Services x19191 On-Line Information Services x


NAI



Technology Policy


SICs)5 x x x5 x x5 x x x5 x x5 x x5 x x5 x x x5 x x x55555 x x x5 x x x5 x x5 x x5 x x x5 x x x5 x x x5 x x x5 x x x5 x x x5 x x x5 x x x5 x x x5 x5 x5 x5 x5 x5 x66 x8 x

CS IndustryAeA



Tech DefinitionSSTI

Ag41310 Architectural Services x x41320 Landscape Architectural Services x41330 Engineering Services x x x41340 Drafting Services x41350 Building Inspection Services x41360 Geophysical Surveying and Mapping Services x41370 Surveying and Mapping (except Geophysical) Services x x41380 Testing Laboratories x x x41410 Interior Design Services x41420 Industrial Design Services x41430 Graphic Design Services x41490 Other Specialized Design Services x41511 Custom Computer Programming Services x x x41512 Computer Systems Design Services x x x41513 Computer Facilities Management Services x x41519 Other Computer Related Services x x41611 Administrative Management and General Management Consulting Services x41612 Human Resources and Executive Search Consulting Services x41613 Marketing Consulting Services x41614 Process, Physical Distribution, and Logistics Consulting Services x41618 Other Management Consulting Services x41620 Environmental Consulting Services x41690 Other Scientific and Technical Consulting Services x41710 Research and Development in the Physical, Engineering, and Life Sciences x x x41720 Research and Development in the Social Sciences and Humanities x x41910 Marketing Research and Public Opinion Polling x41921 Photography Studios, Portrait x41922 Commercial Photography x41930 Translation and Interpretation Services x41940 Veterinary Services x41990 All Other Professional, Scientific, and Technical Services x11420 Computer Training x11710 Educational Support Services11212 Computer and Office Machine Repair and Maintenance

Appendix C: Technology Industry Data

ABOUT THE DATA Sources. The industry data used in this report is from the U.S. Census Bureau’s County Business Patterns (CBP) reports for 2004. Employment, Payroll, and Establishment data was collected for each 4-digit NAICS code included in our technology industry definition. In instances where the CBP data was incom-plete, we also used data from WorkForce West Virginia (part of West Virginia’s Department of Commerce). Data on employment at federal anchors were obtained through secondary sources, including magazine and newspaper arti-cles, press releases, and personal interviews. The data were then refined based on information provided by personnel at the federal anchors.

Data Limitations. For many industries, the U.S. Census Bureau and Work-Force West Virginia do not provide the exact number of employees at the county or state level in order to prevent consumers of the data from learning too much about any individual company. In these cases, the Census Bureau provides a range in which the true number of employees falls and no information about the total payroll of the industry. WorkForce West Virginia provides no information about employment or payroll in these cases.

In order to examine industry-by-industry employment at the state and county-level, we were required to estimate for some industries the number of employ-ees from the range provided by the Census Bureau.

Estimating County-Level Employment and Payroll. For industries (identi-fied by their 4-digit NAICS code) where only a range was provided by the Cen-sus Bureau, we used the following techniques to estimate employment and payroll.

1. We narrowed the range using data that was provided about the industry’s parent industry (the three-digit NAICS code under which the industry falls) and sibling industries (other four-digit NAICS codes under the same parent industry). This information was sometimes provided by either the Census Bureau, WorkForce West Virginia, or both. The industry’s payroll could also often be determined to fall within a range in this way.

2. In some cases, there was only one firm in a county for a particular industry. In some of these cases, a narrower range for the number of employees in the firm was provided by the Census Bureau. We also spoke with employers in the region, who were sometimes able to provide us with a specific firm’s employ-ment.

3. By examining the number or range of employees in an industry in previous years, we could sometimes identify a trend that would allow us to estimate whether employment was near the higher or the lower end of the range.

Anderson Economic Group, LLC C-1

4. Left with a narrowed range of employees and clues from previous years, we estimated the number of employees by making a conservative guess, toward the lower end of the range, in order not to overestimate the size of the industry.

5. After narrowing the possible payroll, we estimated the average wage of the industry in a given county by assuming it is equal to the same industry’s average wage at the state level, and multiplied it by the estimated number of employees. If the payroll was not available at the state level, we looked for further clues from past years, and from the average wage at the national level—picking the more conservative estimate, guided by information about similar industries in the county.

Forecasting Employment For 2006. In order to project the number of technol-ogy employees by 4-digit NAICS industry for 2006, we relied on data from the U.S. Census Bureau and WorkForce West Virginia. We reviewed the employ-ment forecasts by Workforce West Virginia for each industry sector at the state and regional level. To further refine our projections, we analyzed past growth by industry at the state level using County Business Pattern data.

We estimated technology employment by 4-digit NAICS industry using an aver-age annual growth rate of 1.0% for all industries. Based on our analysis of the state and regional forecasts by Workforce West Virginia, our 1.0% growth rate provides a conservative estimate of future technology employment in the region.

Forecasting Wages For 2006. In order to make our 2006 average wage projec-tions, we calculated an annual growth rate for each technology cluster for the two-year time period between 2004 and 2006. We did this by first reviewing average annual wage growth between 2002 and 2004 by technology cluster at the state level. We compared this historic wage growth by each technology clus-ter with average wage growth in high employment 4 digit-NAICS sectors in each of our technology clusters. We also reviewed recent wage growth by national industries important in the North-Central region.

Using this information, and current wage information from Workforce First West Virginia, we developed an average annual growth rate for the two-year period for each technology cluster. The annual growth rates we used are 5.0% for chemical and materials; 3.9% for information technology; 6.5% for other technologies; and 10.5% for advanced manufacturing.

Anderson Economic Group, LLC C-2

Appendix Table C-1. North Central West Virginia and I-79 Technology Clusters, 4-Digit NAICS Data, 2004 and 06

Cluster NAICS IndustryNorthern West Virginia I-79 Tech Corridor Northern West Virginia I-79 Tech Corridor

Advanced Manufacturing588 133 178 171

14 7 40 7

7 7 218 86

46 46 5 5

347 235 265 51

10 5 1,154 485

2 - Total 2,874 1,237

Chemica200 5

2,313 - 1,590 -

2 - 35 -

262 179 Total 4,402 184

Informat260 - 179 -

21 10 902 537 249 161

12 5 106 93 518 156

1,060 563 Total 3,307 1,525

- - Other Te - -

506 222 1,382 1,331

30 15 381 258

1,514 1,017 373 282

Total 4,186 3,126

Federal 9 9

2,551 2,551 361 361 239 239 120 120

Total 3,280 3,280

Total Te 18,049 9,352

Base DataAnalysis:

Employment 2004 Employment 2006

And10/16/2006

TechIndustry06\Data & Analysis\CBP Tech Industry\WV_bycounty_naics

3329 Other Fabricated Metal Product Manufacturing 576 130 3331 Agriculture, Construction & Mining Machinery Manufacturing 174 168 3332 Industrial Machinery Manufacturing 14 7 3333 Commercial & Service Industry Machinery Manufacturing 39 7 3336 Engine, Turbine & Power Transmission Equipment Manufacturing 7 7 3339 Other General Purpose Machinery Manufacturing 214 84 3345 Navigational, Measuring, Electromedical, Control Instruments Manufacturing 45 45 3353 Electrical Equipment Manufacturing 5 5 3359 Other Electrical Equipment & Component Manufacturing 340 230 3362 Motor Vehicle Body & Trailer Manufacturing 260 50 3363 Motor Vehicle Parts Manufacturing 10 5 3364 Aerospace Product & Parts Manufacturing 1,131 475 3369 Other Transportation Equipment Manufacturing 2 -

2,817 1,213

l and Material3241 Petroleum & Coal Products Manufacturing 196 5 3251 Basic Chemical Manufacturing 2,267 - 3252 Resin, Synthetic Rubber, & Artificial Synthetic Fibers Manufacturing 1,559 - 3253 Pesticide, Fertilizer & Other Ag Chemical Manufacturing 2 - 3255 Paint, Coating & Adhesive Manufacturing 34 - 3259 Other Chemical Product & Preparation Manufacturing 257 175

4,315 180

ion Technology3341 Computer & Peripheral Equipment Manufacturing 255 - 3344 Semiconductor & Other Electronic Component Manufacturing 175 - 5112 Software Publishers 21 10 5171 Wired Telecommunications Carriers 884 526 5172 Wireless Telecommunications Carriers (Except Satellite) 244 158 5173 Telecommunications Resellers 12 5 5181 Internet Service Providers and Web Search Portals 104 91 5182 Data Processing, Hosting, and Related Services 508 153 5415 Computer Systems Design & Related Services 1,039 552

3,242 1,495

chnologies 2111 Oil & Gas Extraction 496 218 3254 Pharmaceutical & Medicine Manufacturing 1,355 1,305 3391 Medical Equipment & Supplies Manufacturing 29 15 4234 Professional and Commercial Equipment and Supplies Merchant Wholesalers 373 253 5413 Architectural, Engineering & Related Services 1,484 997 5417 Scientific R&D Services 366 276

4,103 3,064

Anchors---- DoD, Biometrics Fusion Center ---- ---- ---- FBI, Criminal Justice Information Services Division (CJIS) ---- ---- ---- CDC, National Institute for Occupational Safety and Health (NIOSH) ---- ---- ---- DoE, National Energy Technology Laboratory (NETL) ---- ---- ---- NASA, Independent Verification and Validation Facility (NASA IV & V) ---- ----

chology Industry Employment ---- ----

: U.S. Census, County Business PatternsAnderson Economic Group

erson Economic Group, LLC P:\Current Projects\WVHTC-

Appendix D: Demographic and Economic Data

In this section we include the following tables:

Table D-1: Nonfarm Employment (1,000s) by Industry in West Virginia, Annual Averages 1940-1989

Table D-2: Nonfarm Employment (1,000s) by Industry in West Virginia, Annual Averages 1990-2005

Table D-3: West Virginia Coal Production and Employment, 1940-2004

Table D-4: Population by County in West Virginia, 2000-2004

Table D-5: Labor Force Statistics and Unemployment Rate in West Virginia, 1976-2005

Table D-6: Unemployment Rate by County in North Central West Virginia, 1990-2005

Table D-7: Educational Attainment by County in West Virginia, 2000

Table D-8: Per Capita Income by County in West Virginia, 2000

Anderson Economic Group, LLC D-1

Appendix Table D-1. Nonfarm Employment (1,000s) by Industry in West Virginia, Annual Averages 1940-1989

1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956

Goods Producing 228.5 257.0 288.0 279.4 266.2 262.1 267.6 285.7 300.9 274.2 273.7 282.5 268.8 257.2 223.1 226.0 238.8 Mining 118.4 122.4 140.6 129.4 123.6 117.5 122.2 129.1 138.1 125.8 122.8 123.9 114.3 97.7 77.0 76.2 83.0 Coal Mining NA NA NA NA NA NA NA NA 131.7 120.0 117.5 118.9 108.9 92.1 71.3 70.9 77.8 Construction 10.6 14.4 19.1 16.4 9.3 10.2 13.1 18.1 21.0 19.8 19.5 18.7 18.2 21.6 18.8 19.3 22.9 Manufacturing 99.5 120.2 128.3 133.6 133.3 134.4 132.3 138.5 141.8 128.6 131.4 139.9 136.3 137.9 127.3 130.5 132.9

Service Producing 171.0 181.6 185.6 187.2 192.6 198.8 215.1 234.0 250.0 248.9 250.7 255.1 257.7 256.0 252.2 254.6 263.6 Transportation & Public Utilities 38.9 41.5 43.4 45.2 46.4 46.9 47.6 52.2 56.8 52.6 53.7 57.2 55.6 54.3 49.8 49.8 52.4 Trade 54.3 56.9 55.6 54.8 55.8 58.1 66.8 75.0 82.9 83.6 83.1 84.0 85.3 84.7 83.0 84.3 87.4 Finance, Insurance, & Real Estate 7.8 8.5 7.9 7.4 7.4 7.5 8.3 8.8 9.0 9.4 10.1 10.4 10.8 11.0 11.5 11.9 12.4 Services 27.4 28.4 30.0 30.3 32.5 33.5 38.3 42.7 45.0 44.6 44.3 45.1 46.3 46.4 46.6 47.3 48.9 Government 42.6 46.3 48.7 49.5 50.5 52.8 54.1 55.3 56.3 58.7 59.5 58.4 59.7 59.6 61.3 61.3 62.5

Total Nonfarm Payroll Employment 399.5 438.6 473.6 466.6 458.8 460.9 482.7 519.7 550.9 523.1 524.3 537.5 526.4 513.1 475.4 480.5 502.3

1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973

Goods Producing 243.3 212.0 207.5 199.3 188.8 189.6 190.3 195.0 199.0 205.1 204.9 203.9 204.9 205.0 201.8 211.2 215.8 Mining 82.3 69.7 60.9 56.3 49.9 49.2 47.7 48.3 47.9 47.2 47.5 45.5 47.1 49.9 48.1 53.7 52.4 Coal Mining 77.4 64.2 55.6 51.0 44.2 43.3 42.2 43.8 42.4 42.0 42.6 40.7 42.3 45.3 43.6 49.5 48.1 Construction 28.0 20.1 20.0 18.4 18.8 17.8 18.4 20.5 21.9 24.9 24.2 26.0 26.8 28.6 30.8 34.2 34.4 Manufacturing 133.0 122.2 126.6 124.6 120.1 122.6 124.2 126.2 129.2 133.0 133.2 132.4 131.0 126.5 122.9 123.3 129.0

Service Producing 265.0 258.3 257.6 260.8 259.3 258.0 259.6 266.0 277.6 290.2 298.7 304.5 307.3 311.5 318.2 329.3 345.8 Transportation & Public Utilities 52.7 46.8 45.5 44.4 41.6 41.3 40.8 40.8 40.7 40.6 40.9 41.3 41.1 41.5 40.9 40.4 40.7 Trade 88.8 85.2 84.0 84.5 81.4 79.3 79.5 81.5 85.0 87.7 89.0 90.8 91.4 91.6 96.1 102.0 108.8 Finance, Insurance, & Real Estate 12.5 12.5 12.6 13.3 13.3 13.4 13.5 13.7 14.1 14.3 14.5 14.7 15.1 15.7 15.9 17.1 17.7 Services 49.4 49.5 50.2 51.1 51.5 52.6 53.7 54.7 56.1 59.1 62.2 62.8 64.7 66.8 67.3 70.4 74.4 Government 61.6 64.3 65.3 67.5 71.5 71.4 72.1 75.3 81.7 88.5 92.1 94.9 95.0 95.9 98.0 99.4 104.2

Total Nonfarm Payroll Employment 508.5 470.3 465.0 460.0 448.1 447.5 449.9 460.9 476.6 495.1 503.6 508.4 512.3 516.5 520.0 540.5 561.6

1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989

Goods Producing 219.6 215.5 226.2 229.5 227.0 233.1 218.7 200.8 186.0 160.0 162.3 157.1 150.1 146.6 145.9 145.7 Mining 55.8 63.9 68.6 66.7 56.7 68.0 65.7 59.0 63.5 48.6 48.8 44.8 40.5 36.4 34.6 33.3 Coal Mining 51.3 59.5 64.1 62.1 51.6 62.5 59.7 52.1 56.3 41.8 41.8 38.2 34.8 31.1 29.4 27.8 Construction 31.7 30.5 33.2 39.0 43.7 39.0 35.8 30.3 24.4 21.6 22.0 22.8 22.8 24.0 24.3 24.6 Manufacturing 132.1 121.1 124.4 123.8 126.6 126.1 117.2 111.5 98.1 89.8 91.5 89.5 86.8 86.2 87.0 87.8

Service Producing 352.9 359.2 370.0 382.0 406.2 425.3 427.1 427.8 421.9 422.3 434.3 440.2 447.5 452.4 463.9 469.0 Transportation & Public Utilities 40.7 39.6 39.6 40.7 40.2 43.8 43.1 41.9 41.7 39.4 39.3 38.2 36.9 36.4 36.6 36.6 Trade 110.5 113.5 117.8 123.4 131.8 131.9 129.4 131.9 127.9 127.4 131.9 134.5 136.7 138.9 142.7 144.8 Finance, Insurance, & Real Estate 18.0 18.4 18.9 20.0 21.2 21.7 22.0 22.1 22.1 22.2 23.2 23.6 23.7 24.1 24.3 24.1 Services 77.3 79.6 84.1 86.9 92.7 97.8 99.5 101.7 103.4 105.5 109.2 116.4 121.3 124.8 131.1 137.5 Government 106.4 108.1 109.6 111.0 120.3 130.1 133.1 130.2 126.8 127.8 130.7 127.5 128.9 128.2 129.3 125.9

Total Nonfarm Payroll Employment 572.4 574.7 596.3 611.6 633.1 658.6 645.9 628.5 607.8 582.3 596.6 597.2 597.5 599.0 609.8 614.7

Base Data: U.S. Bureau of Labor StatisticsSource: Workforce West Virginia, Department of Commerce


Appendix Table D-2. Nonfarm Employment (1,000s) by Industry in West Virginia, Annual Averages 1990-2005

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Private Sector 502.6 501.2 507.5 519.6 537.9 551.4 559.9 568.7 578.5 585.1 592.7 594.2 590.2 585.1 593.7 602.9

Goods Producing 144.2 139.1 137.1 136.0 139.1 139.2 138.1 136.9 136.7 133.0 131.2 130.6 125.2 119.2 121.4 124.5Natural Resources and Mining 34.0 32.6 30.9 26.2 28.2 27.7 26.2 25.1 24.6 22.3 21.4 23.5 23.1 22.0 23.8 25.9

Mining 32.8 31.5 29.7 24.9 26.8 26.3 24.8 23.7 23.1 20.8 19.8 22.1 21.7 20.7 22.5 24.7Coal Mining 26.8 25.7 24.1 19.3 21.2 21.1 19.8 18.6 17.5 15.5 14.9 16.6 16.1 14.7 15.8 17.3

Construction 28.2 27.5 27.9 31.1 33.7 33.1 34.3 34.9 34.4 33.8 34.0 34.9 33.4 32.7 34.6 36.8Manufacturing 82.0 79.0 78.3 78.8 77.2 78.4 77.6 76.9 77.7 76.9 75.9 72.2 68.7 64.5 63.0 61.9

Service Producing 485.8 489.7 502.7 516.4 535.3 548.6 560.5 570.9 582.5 593.0 604.6 604.7 607.8 608.4 615.5 622.1Trade, Transportation, and Utilities 135.6 133.8 134.2 137.6 142.5 144.0 143.9 143.4 143.8 145.2 144.7 140.0 136.9 135.5 137.3 139.3

Wholesale Trade 24.0 23.5 22.7 22.3 22.5 22.8 22.8 24.0 24.3 24.3 24.1 23.9 23.2 22.7 23.2 24.2Retail Trade 82.3 81.4 81.9 84.2 86.9 89.8 90.7 90.3 91.1 92.7 93.3 89.7 88.2 87.7 88.7 89.4Transportation, Warehousing, and Utilities 29.3 28.9 29.6 31.1 33.2 31.5 30.4 29.0 28.5 28.3 27.4 26.4 25.6 25.1 25.4 25.8

Information 12.0 12.0 12.0 12.0 12.3 12.4 12.8 12.9 13.4 14.0 14.1 14.1 13.3 12.5 11.9 11.6Financial Activities 26.2 26.1 26.0 26.6 27.3 27.9 28.3 29.4 29.8 30.6 31.2 30.7 31.2 30.8 30.3 29.8

Finance and Insurance 20.3 20.3 20.1 20.5 21.0 21.3 21.7 22.7 23.0 23.8 24.3 23.7 24.0 23.6 23.1 22.4Real Estate and Rental and Leasing 5.9 5.8 6.0 6.1 6.3 6.7 6.6 6.7 6.7 6.8 6.9 7.0 7.2 7.2 7.2 7.4

Professional and Business Services 32.7 33.3 35.0 37.4 39.7 43.1 45.5 47.8 51.0 53.7 55.9 57.4 56.7 56.7 58.4 58.8Educational and Health Services 70.0 75.0 79.2 83.5 86.7 89.6 91.0 93.6 96.8 98.0 99.8 103.2 107.2 108.8 110.8 113.5Leisure and Hospitality 47.8 47.7 49.5 51.4 53.8 57.2 58.3 59.2 60.3 60.6 62.0 63.0 64.4 66.4 68.2 69.5Other Services 34.1 34.1 34.4 35.0 36.5 38.0 42.0 45.5 46.6 49.9 53.7 55.3 55.3 55.2 55.5 55.9Government 127.4 127.7 132.3 132.8 136.5 136.4 138.7 139.1 140.8 140.9 143.1 141.1 142.8 142.5 143.2 143.7

Total Nonfarm Payroll Employment 630.0 628.8 639.8 652.4 674.4 687.8 698.6 707.8 719.3 726.0 735.8 735.3 733.1 727.6 736.9 746.6

Note: The BLS provides employment and payroll figures by NAICS sectors after 1990. Prior to 1990, employment figures are based on SIC codes.

Base Data: U.S. Bureau of Labor StatisticsSource: Workforce West Virginia, Department of Commerce


Year Output EmploymentAverage Labor

Productivity (O/E) Year Output EmploymentAverage Labor

Productivity (O/E)

1940 126,619,825 130,457 971 1973 115,239,146 45,041 2,559 1941 140,944,744 112,875 1,249 1974 101,713,580 46,026 2,210 1942 156,752,598 112,817 1,389 1975 109,048,898 55,256 1,974 1943 160,429,576 105,585 1,519 1976 108,793,594 59,802 1,819 1944 164,954,218 103,146 1,599 1977 95,405,977 61,815 1,543 1945 151,909,714 97,380 1,560 1978 84,697,048 62,982 1,345 1946 143,977,874 102,393 1,406 1979 112,380,883 58,565 1,919 1947 173,653,816 116,421 1,492 1980 121,583,762 55,502 2,191 1948 168,589,033 125,669 1,342 1981 112,813,972 55,411 2,036 1949 122,913,540 121,121 1,015 1982 128,778,076 53,941 2,387 1950 145,563,295 119,568 1,217 1983 115,135,454 35,831 3,213 1951 163,448,001 111,562 1,465 1984 131,040,566 39,950 3,280 1952 142,181,271 100,862 1,410 1985 127,867,375 35,913 3,560 1953 131,872,563 84,093 1,568 1986 130,787,233 32,329 4,046 1954 113,039,046 64,849 1,743 1987 137,672,276 28,885 4,766 1955 137,073,372 54,321 2,523 1988 144,917,788 28,100 5,157 1956 150,401,233 68,318 2,201 1989 151,834,721 28,323 5,361 1957 150,220,548 66,792 2,249 1990 171,155,053 28,876 5,927 1958 115,245,791 55,065 2,093 1991 166,715,271 27,479 6,067 1959 117,770,002 52,352 2,250 1992 163,797,710 27,065 6,052 1960 120,107,994 48,696 2,466 1993 133,700,856 22,386 5,973 1961 111,370,863 42,557 2,617 1994 164,200,572 21,414 7,668 1962 117,018,419 43,456 2,693 1995 167,096,211 21,602 7,735 1963 128,924,165 44,854 2,874 1996 174,008,217 18,939 9,188 1964 139,361,204 44,205 3,153 1997 181,914,000 18,165 10,015 1965 149,236,013 44,885 3,325 1998 180,794,012 17,382 10,401 1966 148,826,592 43,344 3,434 1999 169,206,834 14,845 11,398 1967 152,461,567 42,742 3,567 2000 169,370,602 14,281 11,860 1968 145,113,560 41,573 3,491 2001 175,052,857 15,729 11,129 1969 139,315,720 41,941 3,322 2002 163,896,890 15,377 10,659 1970 143,132,284 45,261 3,162 2003 144,899,599 14,871 9,744 1971 118,317,785 48,858 2,422 2004 153,631,633 16,037 9,580 1972 122,856,378 48,190 2,549

Source: West Virginia Coal Association, "Coal Facts 2005"Analysis: Anderson Economic Group, LLC

Appendix Table D-3. West Virginia Coal Production and Employment, 1940-2004


Appendix Table D-4. Population by County in West Virginia, 2000-2004

Geographic Area July 1, 2004 July 1, 2003 July 1, 2002 July 1, 2001 July 1, 2000 2000 Census

.Barbour County 15,476 15,602 15,541 15,445 15,548 15,557

.Brooke County 24,785 24,983 25,053 25,194 25,375 25,447

.Doddridge County 7,418 7,468 7,452 7,458 7,416 7,403

.Gilmer County 6,982 7,032 7,016 7,119 7,166 7,160

.Grant County 11,537 11,442 11,353 11,349 11,287 11,299

.Hancock County 31,507 31,808 32,070 32,303 32,627 32,667

.Harrison County 68,303 68,093 68,001 68,061 68,597 68,652

.Marion County 56,453 56,512 56,334 56,267 56,513 56,598

.Marshall County 34,722 34,916 35,022 35,303 35,404 35,519

.Mineral County 27,145 27,143 27,115 27,038 27,043 27,078

.Monongalia County 83,918 83,734 82,723 82,320 81,862 81,866

.Ohio County 45,410 45,659 46,273 46,665 47,336 47,427

.Pleasants County 7,441 7,411 7,541 7,540 7,507 7,514

.Preston County 29,856 29,768 29,650 29,309 29,307 29,334

.Ritchie County 10,486 10,513 10,423 10,351 10,337 10,343

.Taylor County 16,202 16,171 16,138 16,109 16,102 16,089

.Tucker County 7,046 7,160 7,237 7,219 7,298 7,321

.Tyler County 9,365 9,438 9,413 9,529 9,592 9,592

.Wetzel County 17,048 17,117 17,264 17,314 17,679 17,693

.Wood County 87,100 87,430 87,731 87,742 87,898 87,986

North Central WV 598,200 599,400 599,350 599,635 601,894 602,545

.Berkeley County 89,362 85,439 81,462 78,719 76,440 75,905

.Boone County 25,721 25,745 25,667 25,501 25,512 25,535

.Braxton County 14,950 14,837 14,809 14,763 14,713 14,702

.Cabell County 94,801 95,110 95,432 95,829 96,665 96,784

.Calhoun County 7,415 7,356 7,372 7,419 7,583 7,582

.Clay County 10,424 10,329 10,398 10,296 10,341 10,330

.Fayette County 47,049 47,351 47,153 47,226 47,518 47,579

.Greenbrier County 34,886 34,778 34,609 34,444 34,421 34,453

.Hampshire County 21,542 21,272 20,969 20,674 20,318 20,203

.Hardy County 13,209 13,064 12,841 12,809 12,695 12,669

.Jackson County 28,477 28,238 28,239 28,057 28,056 28,000

.Jefferson County 47,663 46,414 44,972 43,448 42,449 42,190

.Kanawha County 195,218 195,823 196,109 197,766 199,687 200,073

.Lewis County 17,132 17,082 16,909 16,926 16,877 16,919

.Lincoln County 22,564 22,423 22,325 22,181 22,132 22,108

.Logan County 36,502 36,769 37,010 36,897 37,585 37,710

.Mason County 25,941 26,091 26,056 26,080 25,967 25,957

.McDowell County 24,726 25,341 26,062 26,561 27,171 27,329

.Mercer County 62,070 62,134 62,170 62,022 62,943 62,980

.Mingo County 27,389 27,610 27,735 27,578 28,034 28,253

.Monroe County 13,568 13,470 13,330 13,258 13,218 14,583

.Morgan County 15,810 15,571 15,327 15,232 15,015 14,943

.Nicholas County 26,276 26,289 26,381 26,322 26,558 26,562

.Pendleton County 7,897 7,910 7,939 8,073 8,167 8,196

.Pocahontas County 8,995 8,991 8,959 8,942 9,111 9,131

.Putnam County 53,836 53,033 52,309 51,730 51,752 51,589

.Raleigh County 79,175 79,252 79,252 78,546 79,092 79,220

.Randolph County 28,495 28,261 28,388 28,273 28,218 28,262

.Roane County 15,359 15,392 15,299 15,461 15,469 15,446

.Summers County 13,809 13,958 14,009 14,224 14,323 12,999

.Upshur County 23,996 23,770 23,402 23,358 23,412 23,404

.Wayne County 42,515 42,468 42,439 42,778 42,911 42,903

.Webster County 9,849 9,777 9,749 9,681 9,700 9,719

.Wirt County 5,835 5,804 5,851 5,889 5,881 5,873

.Wyoming County 24,698 24,888 24,947 25,226 25,608 25,708

Total West Virginia 1,815,354 1,811,440 1,805,230 1,801,824 1,807,436 1,808,344

Data Source: U.S. Census Bureau, Population DivisionAnalysis: Anderson Economic Group, LLC

Population Estimates


Appendix Table D-5. Labor Force Statistics and Unemployment Rate in West Virginia, 1976-2005

Year Labor force Employment Unemployment Unemployment Rate

1976 698,047 646,629 51,418 7.4%1977 718,080 670,524 47,556 6.6%1978 741,651 697,281 44,370 6.0%1979 763,238 710,401 52,837 6.9%1980 776,583 701,820 74,763 9.6%1981 770,684 688,256 82,428 10.7%1982 771,250 660,867 110,383 14.3%1983 774,919 639,713 135,206 17.4%1984 759,243 647,587 111,656 14.7%1985 749,518 648,775 100,743 13.4%1986 744,309 654,958 89,351 12.0%1987 743,922 663,451 80,471 10.8%1988 746,505 674,110 72,395 9.7%1989 749,438 684,483 64,955 8.7%1990 756,306 691,184 65,122 8.6%1991 769,291 688,512 80,779 10.5%1992 777,421 689,628 87,793 11.3%1993 778,015 696,784 81,231 10.4%1994 780,764 712,664 68,100 8.7%1995 785,582 723,904 61,678 7.9%1996 794,589 735,710 58,879 7.4%1997 800,715 746,442 54,273 6.8%1998 807,092 754,629 52,463 6.5%1999 813,380 762,395 50,985 6.3%2000 808,861 764,649 44,212 5.5%2001 800,623 758,904 41,719 5.2%2002 798,003 750,888 47,115 5.9%2003 793,833 746,276 47,557 6.0%2004 790,936 748,994 41,942 5.3%2005 800,383 760,640 39,743 5.0%

Data Source: U.S. Bureau of Labor Statistics


Appendix Table D-6. Unemployment Rate* (%) by County in North-Central West Virginia, 1990-2005

County 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005Barbour 12.8 17.6 17.2 13.7 11.4 13.6 13.4 11.0 11.4 10.5 7.9 6.8 7.2 7.1 6.4 6.0Brooke 6.4 9.3 11.7 9.6 8.4 6.1 5.9 7.9 5.6 5.6 4.5 5.0 5.8 6.2 7.3 7.1Doddridge 7.6 7.1 10.0 10.2 8.8 8.3 7.3 6.2 7.6 5.7 5.8 5.7 6.6 5.9 5.0 4.8Gilmer 11.2 12.0 12.8 10.6 9.2 10.7 9.0 7.2 7.6 9.1 7.3 5.5 6.6 6.1 4.5 4.4Grant 7.1 9.7 10.3 9.2 10.7 10.2 10.4 10.6 9.5 8.1 5.3 4.5 6.4 7.6 6.7 6.1Hancock 5.8 8.6 10.8 9.0 8.4 6.1 6.3 6.9 5.4 6.0 4.5 4.5 5.3 5.9 7.6 7.3Harrison 8.8 10.3 11.2 10.2 8.2 8.6 7.9 7.1 7.0 6.6 5.7 5.4 5.9 5.9 5.3 4.6Marshall 7.6 10.3 12.1 11.8 9.0 7.6 6.5 7.2 6.0 6.1 5.7 6.0 6.6 6.4 6.0 5.6Marion 9.1 10.6 14.8 15.7 11.0 8.8 10.5 9.5 7.7 7.6 5.7 5.2 5.9 5.6 4.9 4.4Monongalia 6.6 7.0 8.0 8.2 4.8 4.3 5.1 4.5 3.5 3.2 4.4 3.7 4.0 3.9 3.4 3.2Mineral 6.9 8.4 9.7 7.2 6.4 6.2 6.0 4.9 6.8 6.7 5.4 5.6 6.5 6.3 5.7 5.1Ohio 5.4 6.8 8.5 7.9 7.4 5.1 4.5 5.6 4.4 3.9 4.4 4.4 5.1 5.4 5.1 4.8Pleasants 10.3 13.7 12.7 14.2 10.9 10.4 9.2 7.9 10.8 8.4 5.8 5.9 6.9 7.6 6.1 6.2Preston 10.2 11.3 12.5 11.7 9.0 8.4 9.4 8.6 6.8 5.9 5.6 5.1 6.0 6.0 5.1 4.5Ritchie 14.4 14.2 14.5 15.7 14.9 13.4 13.5 11.1 10.9 9.3 6.2 6.8 7.1 7.8 6.6 5.7Taylor 10.1 12.1 11.8 13.6 9.2 9.4 10.2 7.9 7.7 7.5 5.4 5.5 5.8 5.8 4.9 5.1Tucker 12.3 12.9 13.7 13.9 12.8 11.3 12.9 11.8 10.8 8.8 6.3 5.9 7.8 7.3 6.6 6.2Tyler 10.1 10.0 10.5 9.9 7.9 8.5 7.3 6.7 8.3 7.1 5.9 6.1 6.8 7.4 7.4 7.2Wetzel 11.2 12.8 13.8 13.5 10.5 11.3 9.8 8.9 10.2 10.3 8.0 8.3 8.2 8.2 8.7 9.2Wood 7.1 8.7 9.6 8.6 7.2 7.3 5.9 5.3 6.2 5.1 4.5 4.9 5.6 6.0 5.4 5.4

I-79 Tech Corridor 8.0 9.1 10.8 10.8 7.5 6.9 7.4 6.7 5.8 5.5 5.2 4.6 5.1 5.0 4.4 3.9

North Central Region 8.6 10.5 12.3 11.5 8.9 8.1 7.9 7.4 6.9 6.4 5.5 5.3 6.1 6.2 5.7 5.3

* Unemployment rate is not seasonally adjusted.

Source: U.S. Bureau of Labor StatisticsAnalysis: Anderson Economic Group, LLC


Appendix Table D-7. Educational Attainment by County in West Virginia, 2000

CountyGraduate or

Professional Degree Bachelor's Degree Some College Associate Degree HS Diploma or Equivalent

Some HS, No diploma

Less than 9th grade

Barbour 4.5% 6.4% 14.4% 3.1% 44.9% 15.2% 11.6%Brooke 3.7% 9.0% 20.0% 5.5% 42.1% 12.5% 7.2%Doddridge 2.0% 7.3% 16.2% 2.6% 41.1% 19.3% 11.6%Gilmer 5.2% 8.9% 24.3% 3.1% 31.9% 15.2% 11.3%Grant 3.5% 7.0% 13.3% 3.0% 44.4% 16.1% 12.6%Hancock 3.3% 7.7% 18.2% 6.1% 47.0% 11.9% 5.8%Harrison 5.0% 10.0% 18.9% 4.3% 39.6% 16.0% 6.2%Marion 2.1% 3.1% 10.4% 1.7% 33.6% 26.5% 22.7%Marshall 5.2% 9.8% 22.0% 5.2% 38.4% 12.8% 6.8%Mineral 4.8% 6.1% 17.9% 6.4% 45.5% 13.2% 6.1%Monongalia 12.8% 13.9% 29.9% 3.3% 26.3% 9.8% 3.9%Ohio 8.5% 12.2% 23.2% 5.0% 34.3% 11.5% 5.3%Pleasants 3.4% 5.6% 17.0% 4.7% 48.0% 13.0% 8.4%Preston 4.1% 6.0% 14.0% 2.8% 47.2% 15.3% 10.6%Ritchie 2.2% 4.5% 17.8% 4.9% 43.4% 17.1% 10.0%Taylor 3.6% 6.8% 16.1% 3.8% 43.8% 16.7% 9.1%Tucker 4.1% 6.1% 14.2% 2.7% 49.0% 14.5% 9.5%Tyler 2.9% 5.1% 18.7% 4.2% 44.2% 16.1% 8.7%Wetzel 3.9% 5.7% 15.9% 4.5% 47.3% 15.4% 7.3%Wood 5.1% 9.0% 22.6% 6.1% 37.9% 12.9% 6.4%

North Central WV 5.8% 9.0% 20.6% 4.5% 38.6% 13.9% 7.5%

Berkeley 5.3% 8.7% 17.8% 4.2% 40.9% 15.6% 7.5%Boone 2.1% 4.4% 13.4% 3.8% 41.7% 20.9% 13.7%Braxton 2.9% 5.6% 14.0% 2.9% 42.8% 17.8% 14.1%Cabell 7.4% 11.3% 25.6% 4.5% 32.1% 13.3% 5.8%Calhoun 3.5% 4.9% 13.2% 2.2% 38.8% 16.0% 21.5%Clay 2.6% 3.9% 10.6% 2.2% 44.6% 19.0% 17.1%Fayette 3.6% 6.4% 16.6% 3.5% 39.7% 18.1% 12.2%Greenbrier 5.4% 7.2% 16.1% 3.8% 40.9% 16.7% 9.9%Hampshire 4.5% 6.0% 12.7% 3.4% 44.5% 18.4% 10.6%Hardy 3.4% 5.3% 13.6% 3.1% 45.3% 17.3% 12.0%Jackson 3.9% 7.5% 20.9% 5.4% 39.5% 13.5% 9.3%Jefferson 7.5% 11.6% 21.3% 4.0% 34.4% 14.5% 6.7%Kanawha 7.3% 11.8% 19.4% 4.7% 36.2% 14.1% 6.4%Lewis 3.8% 6.5% 16.5% 2.4% 44.3% 15.7% 10.9%Lincoln 2.5% 2.9% 12.8% 2.8% 42.3% 19.7% 17.1%Logan 3.8% 4.2% 15.2% 5.2% 35.6% 21.7% 14.3%Mason 3.6% 6.6% 18.6% 5.2% 45.4% 13.4% 7.3%McDowell 3.5% 4.6% 14.0% 4.0% 46.1% 17.1% 10.7%Mercer 4.6% 8.2% 19.4% 4.1% 36.3% 17.3% 10.1%Mingo 3.1% 3.4% 13.8% 4.2% 36.0% 22.1% 17.4%Monroe 2.6% 5.0% 15.9% 2.9% 47.5% 13.3% 12.8%Morgan 4.4% 6.1% 15.9% 2.9% 46.0% 16.5% 8.3%Nicholas 3.7% 5.4% 14.9% 2.7% 44.0% 17.1% 12.1%Pendleton 3.6% 6.6% 15.9% 3.9% 42.4% 14.6% 13.0%Pocahontas 3.5% 7.5% 13.8% 3.6% 43.2% 16.7% 11.7%Putnam 6.4% 12.0% 21.0% 5.4% 38.2% 11.2% 5.8%Raleigh 4.2% 7.5% 20.2% 4.3% 36.5% 17.7% 9.5%Randolph 4.3% 8.4% 15.6% 3.4% 42.3% 15.9% 10.2%Roane 3.7% 4.6% 13.8% 2.8% 42.1% 19.8% 13.4%Summers 3.3% 6.4% 14.3% 1.7% 40.5% 17.1% 16.7%Upshur 4.4% 7.7% 19.0% 2.7% 42.5% 14.1% 9.7%Wayne 4.2% 6.7% 17.4% 3.8% 38.3% 18.7% 10.9%Webster 2.8% 5.4% 11.3% 2.2% 37.4% 20.7% 20.4%Wirt 2.6% 6.4% 15.3% 3.1% 44.2% 17.4% 10.8%Wyoming 2.7% 3.8% 13.5% 3.1% 42.7% 17.4% 16.9%

State of West Virginia 5.3% 8.4% 18.9% 4.2% 38.8% 15.4% 9.0%

Base Data: U.S. Census BureauAnalysis: Anderson Economic Group, LLC


Appendix Table D-8. Per Capita Income by County in West Virginia, 2000

Barbour County 12,440$ Berkeley County 17,982$ Monroe County 18,109$ Brooke County 17,131 Boone County 14,453 Morgan County 15,207 Doddridge County 13,507 Braxton County 13,349 Nicholas County 15,805 Gilmer County 12,498 Cabell County 17,638 Pendleton County 16,920 Grant County 15,696 Calhoun County 11,491 Pocahontas County 14,384 Hancock County 17,724 Clay County 12,021 Putnam County 20,471 Harrison County 16,810 Fayette County 13,809 Raleigh County 16,233 Marion County 16,246 Greenbrier County 16,247 Randolph County 14,918 Marshall County 16,472 Hampshire County 14,851 Roane County 13,195 Mineral County 15,384 Hardy County 15,859 Summers County 12,419 Monongalia County 17,106 Jackson County 16,205 Upshur County 13,559 Ohio County 17,734 Jefferson County 20,441 Wayne County 14,906 Pleasants County 16,920 Kanawha County 20,354 Webster County 12,284 Preston County 13,596 Lewis County 13,933 Wirt County 14,000 Ritchie County 15,175 Lincoln County 13,073 Wyoming County 14,220 Taylor County 13,681 Logan County 14,102 Tucker County 16,349 Mason County 14,804 Tyler County 15,216 Mercer County 15,564 Wetzel County 16,818 McDowell County 10,174 Wood County 18,073 Mingo County 12,445


North Central WV Remaining WV Counties


Appendix E: Economic Impact Data Sheets

In this section we include the following tables:

Table E-1: Economic Impact of Construction, Selected I-79 Technology Park Projects

Table E-2: Ratio of Salary to In-State, Out-of-Industry Operating Expenses, by Technology Cluster

Table E-3: Operating Expenditures by North-Central West Virginia Technology Industry, by Cluster

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Table E-1. Economic Impact of Construction, Selected I-79 Technology Park Projects

Total Construction Expenditure: 179,009,351$ Share In-State (%) 62%

Net In-State Expenditure (Direct Impact): 111,269,431$

Final Demand Multipliers* Output: 1.10 Earnings: 0.70

Indirect Impact on Output: 122,396,374$ ((net in-state * output multiplier)-direct impact)Indirect Impact on Earnings: 77,888,602$ (net in-state * earnings multiplier)

Total Direct and Indirect Impact: 311,554,407$

*Source: United States Bureau of Economic Analysis, RIMS II data for Clarksburg-Fairmont, WV region, adjusted to statewide scale by Anderson Economic Group based on market observations and similiar figures known for other states.


Table E-2. Ratio of Salary to In-State, Out-of-Industry Operating Expenses, by Technology Cluster

Advanced Manufacturing Cluster Operating Costs / Operating Income (%) Data, by NAICS

3329 3331 3332 3333 3336 3339 3345 3353 3362 3363 3364 3369Cost of Operations 65.9 75.1 65.8 53.4 65.3 65.2 61 68.6 78.1 78.1 67.8 71.7Salaries and Wages 6.8 6.5 11.5 16.8 14 9.1 16.6 6.8 4 4 11.9 5.8

Cost of Goods Sold 72.7 81.6 77.3 70.2 79.3 74.3 77.6 75.4 82.1 82.1 79.7 77.5

Employee Benefits 2.6 1.5 2.8 4.9 2.4 2.1 2.9 2.7 1.6 1.6 2.3 2.7Advertising 1.3 0.5 0.7 1.7 0.7 0.8 1 0.6 1.6 1.6 0.3 0.9Other Expenses 11.4 14.8 12.2 18.7 10.3 12.2 16.4 12.2 12.5 12.5 10.8 10.2

Total Other Expenditures 15.3 16.8 15.7 25.3 13.4 15.1 20.3 15.5 15.7 15.7 13.4 13.8

Total Annual Cash Expenditure Est. 88 98.4 93 95.5 92.7 89.4 97.9 90.9 97.8 97.8 93.1 91.3

Operation Costs: In-state, out-of-industry 25% 25% 25% 25% 25% 25% 25% 25% 25% 25% 25% 25%Other Expenditures: In-state, out-of-industry 85% 85% 85% 85% 85% 85% 85% 85% 85% 85% 85% 85%

Salaries to in-state, out-of-industry expenditures 23% 20% 39% 48% 51% 31% 51% 22% 12% 12% 42% 20%Weighted Average Ratio for Cluster: 30%

Number of Establishments in NC WV 6 11 3 5 1 13 2 1 5 3 3 1

Chemical and Material Cluster Operating Costs / Operating Income (%) Data, by NAICS

3241 3251 3252 3255 3259Cost of Operations 72.8 72 66.6 58.5 67.7Salaries and Wages 6 6.9 3.1 11.3 8.4

Cost of Goods Sold 78.8 78.9 69.7 69.8 76.1

Employee Benefits 0.8 2.5 2.6 2.2 1.5Advertising 0.4 0.8 0.4 1.6 2.2Other Expenses 9.9 11.5 23.8 14.6 14.4

Total Other Expenditures 11.1 14.8 26.8 18.4 18.1

Total Annual Cash Expenditure Est. 89.9 93.7 96.5 88.2 94.2

Operation Costs: In-state, out-of-industry 30% 30% 30% 30% 30%Other Expenditures: In-state, out-of-industry 85% 85% 85% 85% 85%

Salaries to in-state, out-of-industry expenditures 19% 20% 7% 34% 24%

Weighted Average Ratio for Cluster: 19%Number of Establishments in NC WV 9 14 4 1 5

Anderson Economic Group, LLC

IT Cluster Operating Costs / Operating Income (%) Data, by NAICS Segments

3341 3344 5112 5181 5415Cost of Operations 65.3 72.5 19.1 27.3 32.4Salaries and Wages 16.2 12 40.5 26.7 29.1

Total Cost of Goods Sold 81.5 84.5 59.6 54 61.5

Employee Benefits 2.3 2.1 3.3 2.4 2.5Advertising 2.2 0.7 5.2 4.8 0.9Other Expenses 21.1 14.8 31.8 39.7 30.3

Total Other Expenditures 25.6 17.6 40.3 46.9 33.7

Total Annual Cash Expenditure Est. 107.1 102.1 99.9 100.9 95.2

Operation Costs: In-state, out-of-industry 15% 15% 15% 15% 15%Other Expenditures: In-state, out-of-industry 85% 85% 85% 85% 85%

Salaries to in-state, out-of-industry expenditures 51% 46% 109% 61% 87%Weighted Average Ratio for Cluster: 84%

Number of Establishments in NC WV 3 2 4 6 66

Other Technology Cluster Operating Costs / Operating Income (%) Data, by NAICS

2111 3254 3391 4234 5413 5417Cost of Operations 48.3 52.3 48.8 76.6 40.8 32.8Salaries and Wages 5.6 13.6 16 8.2 20 34.4

Cost of Goods Sold 53.9 65.9 64.8 84.8 60.8 67.2

Employee Benefits 0.8 1.6 2.2 0.7 2.3 3.2Advertising 0 4 1.2 0.8 0.3 1Other Expenses 28.8 24.5 21 8 20.8 52.1

Total Other Expenditures 29.6 30.1 24.4 9.5 23.4 56.3

Total Annual Cash Expenditure Est. 83.5 96 89.2 94.3 84.2 123.5

Operation Costs: In-state, out-of-industry 15% 15% 15% 15% 15% 15%Other Expenditures: In-state, out-of-industry 85% 85% 85% 85% 85% 85%

Salaries to in-state, out-of-industry expenditures 17% 41% 57% 42% 77% 65%

Weighted Average Ratio for Cluster: 55%Number of Establishments in NC WV 70 3 9 34 138 20

Notes: Operating Costs / Operating Income (%) Data is from the 2006 Almanac of Business & Industrial Financial Rations, Leo Troy, PhD. Prentice Hall. In-state, out of industry estimates made by Anderson Economic Group, LLC based on personal interviews with technology firms in the region. Federal anchor technology cluster assumed to have same pattern as the other technology cluster.

Anderson Economic Group, LLC

Table E-3. Estimated Operating Expenditures by North-central West Virginia Technology Industry

Advanced Manufacturing ClusterEmployment 2,874Average Annual Wage in Industry 49,285$ Total Wages Paid (household earnings) 141,645,090$

Wage to Operating Expense Ratio 30%

In-state, Non-payroll Operating Expenditure Estimate 472,938,636$

Chemical and Materials ClusterEmployment 4,402Average Annual Wage in Industry 66,180$ Total Wages Paid (household earnings) 291,324,360$


In-state, Non-payroll Operating Expenditure Estimate 1,573,727,498$

Information Technology ClusterEmployment 3,307Average Annual Wage in Industry 43,355$ Total Wages Paid (household earnings) 143,374,985$

Wage to Total Operating Expense Ratio 84%


Other Technology ClusterEmployment 4,186Average Annual Wage in Industry 54,903$ Total Wages Paid (household earnings) 229,823,958$



Federal Anchor Technology ClusterEmployment 3,271Average Annual Wage in Industry 47,654$ Total Wages Paid (household earnings) 155,876,234$

Wage to Operating Expense Ratio* 55%


Technology Industry Total (non-payroll operating) 2,913,922,159$

* Federal anchor ratio assumed to be equal to "other technology" ratio.


Anderson Economic Group, LLC F-1

Appendix F: Bibliography

In arriving at a definition of the technology industry, we reviewed a number of past reports with a range of definitions of the industry. A bibliography of these reports is presented below.

Anderson, Patrick, Ian Clemens, and Christopher Cotton. Economic Diversifi-cation and High-Tech Employment in Oakland County. Anderson Eco-nomic Group, 2001.

Anderson, Patrick, and Scott Watkins. The Life Sciences Industry in Michigan: Employment, Economic, and Fiscal Contributions to the State’s Economy. Anderson Economic Group, 2004.

Anderson, Patrick, and Scott Watkins. Automation Alley’s First Annual Technol-ogy Industry Report: Driving Southeast Michigan Forward. Anderson Economic Group, 2005.

Cyberstates 2005. American Electronics Association, 2005.

DeJonge, Alissa. Defining High Tech. CERC, 2001. http://www.cerc.com/detpages/services951.html.

Feinstein, Abel, and Sean P. McAlinden. Michigan: The High-Technology Auto-motive State. Center for Automotive Research in the Altarum Institute, 2002.

Hecker, Daniel. “High-Technology Employment: A Broader View”. Monthly Labor Review, June 1999.

High Technology and the Third Frontier. Ohio Department of Job and Family Services, Bureau of Labor Market Information, October 2003.

Paytas, Jerry, and Dan Berglund. Technology Industries and Occupations for NAICS Industry Data. Carnegie Mellon Heinz School Center for Eco-nomic Development in conjunction with the State Science & Technology Institute, February 2004.

State of the Industry Report 2005: The Pittsburgh Region. Pittsburgh Technol-ogy Council, 2005.

The Dynamics of Technology-Based Economic Development: State Science and Technology Indicators, 4th edition. U.S. Department of Commerce, Office of Technology Policy, March 2004.

Appendix G: Project Team

This project was completed under the direction of Patrick L. Anderson, Princi-pal and CEO of Anderson Economic Group. Scott D. Watkins, a consultant in the firm’s public policy, fiscal, and economic analysis practice area, managed the project and co-authored the report with Caroline Sallee, senior analyst. Also contributing to this report were Alexander Rosaen and Lisa Asmus. Brief bio-graphical information of the project team follows.

PATRICK L. ANDERSON

Mr. Anderson, principal and CEO, founded the consulting firm of Anderson Economic Group in 1996. Since founding the firm, he has successfully directed projects for state governments, cities, counties, nonprofit organizations, and cor-porations in over half of the United States.

Prior to founding Anderson Economic Group, Mr. Anderson served as the chief of staff of the Michigan Department of State, and as a deputy director of the Michigan Department of Management and Budget, where he was involved in the largest state privatization project in U.S. history and the landmark 1994 school finance reform constitutional amendment. Prior to his involvement in state government, Mr. Anderson was an assistant vice president of Alexander Hamilton Life Insurance, an economist for Manufacturers National Bank of Detroit, and a graduate fellow with the Central Intelligence Agency.

Mr. Anderson has written over 100 articles published in periodicals such as The Wall Street Journal, The Detroit News, The Detroit Free Press, Crain’s Detroit Business. His book Business Economics and Finance was published by CRC Press in August 2004, and his paper on “Pocketbook Issues and the Presidency” was awarded the Edmund Mennis Award for best contributed paper in 2004 by the National Association for Business Economics.

He is a graduate of the University of Michigan, where he earned a masters degree in public policy and a bachelors degree in political science.

SCOTT D. WATKINS Mr. Watkins is a consultant with Anderson Economic Group. He works on projects involving policy analyses, economic impacts, and market assessments. He is also the director of marketing and administration for the firm.

Among the clients for whom he has worked are the Michigan Chamber of Com-merce, Michigan Retailers Association, Michigan State University, Wayne State University, and Collier County, Florida. He was also the author of the 2005 and 2006 technology industry reports for Automation Alley, as well as a 2004 study on the economic benefits of the Life Sciences industry in Michigan. Addition-ally, Mr. Watkins recently completed economic impact studies on the Super-bowl, Ryder Cup, and Detroit Tiger’s playoff baseball games.

Anderson Economic Group, LLC G-1

Prior to joining Anderson Economic Group, Mr. Watkins was an analyst in the automotive market and planning group at J.D. Power and Associates, and a mar-keting assistant with Foster, Swift, Collins, and Smith P.C. Mr. Watkins is a graduate of Michigan State University with a B.A. in marketing from Eli Broad College of Business and a B.A. in international relations from Michigan State’s James Madison College.

CAROLINE M. SALLEE Ms. Sallee is a senior analyst at Anderson Economic Group, working in the pub-lic policy, economic, and fiscal analysis practice area. Her background is in applied economics and public finance, and her recent work includes the bench-marking of Michigan’s business taxes with other states in a project for the Mich-igan House of Representatives. She has worked on previous technology industry reports for Automation Alley.

Ms. Sallee holds a masters degree in public policy from the University of Mich-igan and a bachelor of arts degree in economics and history from Augustana College in Rock Island, Illinois.

OTHER CONTRIBUTORS

Alexander L. Rosaen. Mr. Rosaen is a senior analyst at Anderson Economic Group, working in the economic and fiscal impact and policy and regulatory analysis practice areas. Mr. Rosaen holds a masters in public policy from the University of Michigan. He also has a masters of science and bachelors of sci-ence in mechanical engineering from the University of Michigan.

Lisa Asmus. Ms. Asmus is an office assistant with Anderson Economic Group. She conducts economic and market research, collects and analyzes data, and contributes written analysis for reports. She also performs office management tasks, including accounts payable, inventory, and quality control. Ms. Asmus is a graduate of the James Madison College at Michigan State University.

Anderson Economic Group, LLC G-2

Documents

West Virginia Technology Industry - Anderson Economic Group · For much of the twentieth century West Virginia relied on coal mining and basic manufacturing for jobs and income. When