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Transcript

Tim Sablik: My guest today is Jay Langston, executive director of the Shenandoah Valley Partnership. Jay, welcome to the show.

Jay Langston: I'm very happy to be here.

Sablik: We've spoken a lot on the show about what we've learned at the Richmond Fed about rural economic development. That's a key research focus area for our group here. Most recently, Daniel Davis, group vice president for regional economics at the Richmond Fed, was on the show last month to share some of what he's learned and the rest of us had learned from talking to communities in our district and why this research is important to our bank.

I'm excited to have you with me today, Jay, to share your perspective on rural economic development as a practitioner, someone who's on the ground in our district. To start things off, I thought maybe you could tell us a bit about yourself and the community that you work in.

Langston: I have been in economic development for over 40 years. I have worked at the state level twice — two different states. I have worked at the local level and I have also been at the regional level twice.

The region that I'm in, albeit rural, has a lot of flavor of regions that are much larger. We have seven universities and colleges, and then three community colleges in our area.

The region is also topographically separate from Virginia. It truly is a valley — we are ringed by the Blue Ridge Mountains on our eastern border and the Alleghenies on the west. The Valley averages about 40 miles wide. It was settled by immigrants 300-plus years ago. We are a diverse region in terms of our economic sectors as well.

Sablik: What are some of the key industries in the Shenandoah Valley and how did some of those develop?

Langston: Yeah, how much time do we have?

Sablik: [Laughs]

Langston: Agriculture is, by far, the dominant economic sector for us. We have four of the top five ag-producing localities: number one, number two, number four, and number five. That is steady. I won't say that it's recession proof, but it is certainly something that continues every year. It's at the vagaries more of the climate than anything else.

That ag background has led to a large sector of food and beverage [companies]. That is relatively recession proof. That infrastructure that supports the food and beverage [industry] is also beneficial to us for other sectors. The chemical-related and the pharma-related sectors utilize the same kind of subcontractors [and] contractors.

That has allowed us to have a diversity of manufacturing. Pharmaceutical is part of that. Medical devices is part of that. Heavy equipment companies that make very heavy chillers are here in the Valley. Manufacturing is our largest private-sector employment base. That is a wealth generating sector for this region and it's much larger than our second largest, which is the healthcare area.

Sablik: It sounds like some of this diversity of industries is an organic result of ... the fact that they rely on similar inputs and there's a lot of complementarity between them. Have you and your colleagues at the Shenandoah Valley Partnership also taken any particular approaches to help attract new businesses to the area or foster the growth and development of these existing industries that you were talking about?

Langston: Heavier machinery, pharma, medical — they utilize technical skills. That has been part of the capabilities that allowed the diversification of manufacturing. Companies saw the opportunity from the food and beverage [industry] and knew that if they located here, they would have the kind of businesses that are required in order to also make them successful. They don't have to worry about the sourcing for maintenance or upgrades, those kinds of things. That is what we have really sold. The support network here, fortunately, is very deep. We're trying to be more intentional about this with foreign direct investment.

Sablik: You mentioned a key input is having workers with the right skills to work in all these different industries. Have you or your regional partners been involved in any efforts to ensure that there's a workforce pipeline to meet the needs of existing or prospective businesses in the Valley?

Langston: We recently did a talent pathways initiative through the workforce development board. No surprise to anybody that's a heavy manufacturing region, the technical skills are still the greatest need: maintenance, industrial hygiene, electricians. Because of the size of the manufacturers that we have here, they also have administrative organizations with them. So, we also need engineers. We need production managers. We need the business managers. We need the HR [personnel].

Honestly, we're like everyone else. We're in a battle for talent. We're working with our community colleges, but also four-year colleges and universities, to tell our story. You can have a great career, a great quality of life here without having to move. That is the message that we're sending to our organically growing population, but also those that go to school here and then are interested in staying in the Valley and introducing them to those opportunities.

Sablik: Colleges and universities are particularly important to the success of your region. Can you talk a little bit more about their role?

Langston: Community colleges really have their finger on the pulse of what businesses want. Dr. John Downey is the president of Blue Ridge Community College in my area. He's on my board and we talk continuously. He is engaged with the business community. He's always accepting input for what businesses need today. We have James Madison, which is our largest university. New president Jim Schmidt wants to build these bridges with the industry.

So, yes, we're engaged in telling that story and conveying back to our education community what we are hearing from our business sectors. We facilitate on their behalf three different sector quarterly meetings where businesses can get together, talk about these problems, let us know what those are, and then we can carry that message back to our education institutions here.

Sablik: Can you give a specific example of partnerships between higher ed and industry?

Langston: Merck has been in the Valley 80 years. They have continued to invest in their operations, which has been biologics.

I was very fortunate to be part of the team in 2019 when we were competing for a major expansion of Merck. We were one of the locations that were under consideration for this, but they indicated that they needed very specific skillsets for the operation. JMU and Blue Ridge Community College partnered to produce a talent pipeline of essentially 150 employees that had those particular talents. They got cross-trained between the university and the community college. Merck not only hired 150, they hired 185 through that program.

Sablik: You described the benefits of these industry partnerships with schools and throughout the community. Maybe you can talk a little bit more about the importance of those relationships. What sort of local, regional, or state support is needed to do successful economic development?

Langston: It's knowing where to find the resources and asking the right questions to get the resources. We need the infrastructure. We need the assistance of all of those various levels. We are trying to accommodate what is necessary at the local level, we have a bigger picture of the economic development and the impact on the region, and then we have the state that sets a lot of the regulatory climate but also is a provider of resources for us.

It takes the involvement of each one of those levels within the domains that they oversee to help make the environment attractive for both the businesses and the citizens to stay. Do you want the amenities? Do you want the quality of life that you enjoy here, and do you want it to continue for your children?

We're growing in population. [It] probably would be hard to stop it at this point. But we want to shape our future, not have it done to us. And I think that's also what is possible when you engage with all of those levels because, again, each one has a certain scope of work and a span of authority.

Sablik: Keeping on that thought, one challenge that we've talked about on this show before, when it comes to growing the workforce, you mentioned the skills, the training, the need to collaborate with industry to make sure the right skills are in place. Another challenge is related to the infrastructure — having enough affordable housing or childcare to sustain workforce growth.

What approaches have you taken to those challenges in the Valley, keeping in mind what you mentioned about wanting to shape how your growth is progressing?

Langston: It's quality of life. That was once important when I was young and got into this business, and then it fell away in the '90s and early 2000s. It was not hard to find people to fill jobs. That has changed, as we all know.

I come at this from three different angles. Tourism development — I love going and doing the hiking and the mountain biking in this region. The cultural amenities from our universities are also a part of that. One of the things that we sell [are] those amenities and the opportunity to enjoy that is really important. So, we embrace tourism development.

We embrace community development. I think community development for a lot of economic developers, particularly in the past, was "somebody else does that." We can no longer not play in that space. If we're hoping to be successful, you have to have the water and the sewer. You have to have all of the other amenities that people want. But it's more about that. It's the storefronts. It's helping entrepreneurship. It is working with smaller businesses.

The last part is traditional economic development. I always believe that the decisionmakers and businesses are looking for the same things they would if it's like their home. Would you invest in an area that is run down and nobody wants to invest in?

Sablik: I mentioned at the outset of the conversation that we learn a lot at the Richmond Fed from our visits and conversations around the District. In fact, recently our president, Tom Barkin, and several members of our team joined you in the Valley for some discussions with local business and community leaders. Could you talk a little bit about what you did together, and maybe any interesting learnings that you got out of those conversations?

Langston: It was perfect timing for us because one of the things that we do is to have meetings with our different sectors quarterly. We were able to convert one of those meetings into a great meeting at Mckee Baking — a lot of people don't know the name Mckee, but I bet they know the name Little Debbie — talking about the needs of manufacturers in the area. We had preceded that with a visit at Blue Ridge Community College and talked about one of our major wins most recently with Merck, and the programs that were being discussed related to workforce.

We talked about healthcare and what's going on at the federal level. That is something that is often overlooked as part of the discussion, but it's a fundamental portion of quality of life.

Then we had a wonderful dinner. Two of Governor Spanberger's cabinet — Secretary of Commerce and Trade Carrie Chenery and Secretary of Agriculture Katie Frazier — both attended that dinner. We had business people from the food and beverage sector also there. I thought that that was extraordinarily informative, talking about the challenges and opportunities of what is going on in the agricultural sector.

We finished the trip the next day with a business forum with a one-on-one with President Barkin to talk about what regional business people [are] seeing in the community and in the region, their thoughts on regulations, tariffs, you name it. One of the takeaways for me was that our region right now is bucking the trend a little bit. We're growing, particularly in the manufacturing sector. Our companies are worried about finding the talent.

Sablik: So, if we had to distill down what we've been talking about here today, what sort of advice would you give for other rural communities that are hoping to do what you're doing to diversify their economies, to build on the assets that they have, or rebuild the industries and the assets that they have? Is there some sort of secret sauce that you've identified in your 40-year career, or at least a good starting point?

Langston: Good economic development, in my opinion, is asset based. Understand the strengths that you have and the challenges that you may have, and work to improve the negatives with the assets, and match that with what is going on in your region and your state.

I know that sounds simple, but it really does start with what do your existing industries have. What is making them successful? What are the challenges that they have? If you can address the challenges and retain your existing businesses, that gives you a start.

I am a big believer in "economic gardening," working with your smaller existing companies and helping them make it to that next stage. If you're not paying attention to your existing businesses and making sure that they are comfortable and believe in their current investment in your community [and] in your region, you're not going to be successful with recruiting companies. That takes some self-reflection. It takes some strength to address the issues. It takes effort to focus on improvement. It's not the fun, shiny, bright things that we like to chase.

Sablik: Well, Jay, thank you so much for joining me today to talk all about the Valley.