Appalachian Small Business Series: Industries Of The Future

With the third installment in our series of ideas and tips for small businesses in Appalachia, we discuss the industries essential to the region's future growth.

Appalachia is, unfortunately, not well-known as the home of growth-oriented industries. People living inside the region often speak of how the economy was once stronger, typically due to a booming local extractive industry such as mining or logging. Interestingly, Appalachia's tremendous blessings of coal and timber also lead to what economists often term the "natural resource curse." This "curse" occurs in a region (or even an entire nation) where the prevalence of valuable natural resources actually deters economic diversification/long-term growth. When Appalachia's resources were in great demand, there was little incentive for communities and citizens to develop alternative employment opportunities because jobs were so plentiful. As good timber became less available and coal prices crashed, though, Appalachia's economic pillars crumbled with nothing to replace them. The more recent boom in natural gas was also short-lived as over-production crashed the market and many drillers in Appalachia underwent layoffs.

Appalachia can no longer afford to rely on boom-or-bust natural resource industries. We're not saying that communities in Appalachia should turn their backs on successful mining/logging/gas drilling businesses. Quite the opposite. Stable energy and timber companies should be encouraged to stay and grow! Forward View is not anti-coal/gas/oil/logging/etc. as long as the industry is responsible and economically viable. (For example, America still needs coal for over 30% of our electricity production and for almost all new steel.) We do, however, believe that Appalachia should diversify its economy so that communities aren't reliant upon a single cyclical industry for survival.

Our readers probably expect us to encourage leaders in Appalachia to pursue major manufacturing employers for job creation. Manufacturing, it seems, is this election season's #1 economic topic. Forward View, however, is absolutely certain that 21st century manufacturing will not be Appalachia's new economic engine. Why? It's very simple: Infrastructure.

Appalachia's transportation infrastructure was designed to deliver commodities such as coal and wood by rail to a few select locations. In a college Urban & Regional Economics course, our founder studied the highway infrastructure in Southwest Virginia. His research showed that billions of dollars would be needed in just this one corner of the state to satisfy the demands of large-scale manufacturing. Needless to say, we sincerely doubt that Appalachian communities will receive enough infrastructure investments to make manufacturers suddenly flock to the region in the foreseeable future. Forward View has an alternative solution, though, and it's perfect for small businesses.

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