• long Read

Can West Virginia University Jump-Start A New Economy Based On Innovation–Not Coal?

As part of our series on the economy of coal country after coal, we go to Morgantown, West Virginia, where the university is trying to inspire a new generation of non-mining business.

Pittsburgh is often touted as a Rust Belt regeneration success story, the post-industrial city whose bets on the knowledge economy–institutional investment, entrepreneurialism, technology–paid off and thrust it into the future. One of the city’s major universities, Carnegie Mellon, played a huge role in that rebirth, creating jobs, fostering student entrepreneurs, and attracting tech companies like Google, Intel, and Apple. The latter two have research venues in CMU’s Collaborative Innovation Center; a CMU professor was the founding director of Google’s Pittsburgh office. CMU played such a huge role, in fact, that the New England Board of Higher Education named it a “savior” school, one that dramatically improved the economy and quality of life of its hometown.

About an hour south of Pittsburgh, in Morgantown, West Virginia, West Virginia University is trying to make a similar impact–on the state level. At a time when the state’s economy, like much of central Appalachia’s, is facing the severe, arguably final decline of coal, the industry that has defined it for decades, Morgantown sits in the heart of one of the state’s strongest economic regions. The small town of 30,000 is home to several major employers, notably the university and West Virginia-born Mylan Pharmaceuticals (late of the EpiPen pricing scandal). Though the area’s mining jobs have dropped, the greater Morgantown area has seen more job growth in most other major industrial sectors than the state as a whole in recent years.

In 2013, when Matt Harbaugh took his job at West Virginia University, he saw many similarities to the Pittsburgh of the 1990s: a place still wrestling with its industrial past but with the potential to reinvent itself. Harbaugh is the associate vice president of WVU’s Office of Transformation, an entity within the school that’s part of a larger mission to redefine the role of the land-grant university. In the vacuum that coal’s downturn has created, WVU sees itself–a university system that, throughout its satellite campuses, is responsible for 53% of the state’s college graduates–as a major player in its state’s economic future, supporting investment and entrepreneurship and educating students to believe in the opportunities that exist both in themselves and in their state.

Matt Harbaugh, associate vice president of West Virginia University’s
Office of Transformation, says the university has to play an anchor role in the state economy, due to the void of Fortune 500 companies.

“We don’t have Fortune 500s that can be the anchors for the state, so WVU needs to play that role,” Harbaugh says. “We need to think about how we create companies, how we build jobs, how we build the economy, especially with the downturn of the energy industry: What’s gonna replace it, and how can the university play a role in that transformation?”

One possibility is the place where Elaine and I met Harbaugh, the Health Sciences Innovation Center’s incubator. Housed at WVU’s Blanchette Rockefeller Neurosciences Institute, the incubator currently hosts three life-sciences startups, with two more expected to join by the end of the year, and mentors three additional startups, which use the facility as well. We sat down with Harbaugh and the people behind CereDx, a firm developing a groundbreaking test for diagnosing strokes. Taura L. Barr, a West Virginia native, began the research that would become CereDx in 2006, while she was a predoctoral student at the University of Pittsburgh and a fellow at the National Institutes of Health.

The Health Sciences Innovation Center’s incubator, at West Virginia University’s Blanchette Rockefeller Neurosciences Institute, hosts three life-sciences startups, with two more expected to join by the end of the year.

A couple of years later, at West Virginia University, she and colleague Richard Giersch, a venture-capital executive and WVU’s director of Health Sciences Innovation, Entrepreneurship, and Commercialization, turned the concept into a business. They’ve currently raised $1.2 million of their $1.75 million seed-funding goal. Eventually, Barr and Giersch hope, they could add 40 to 50 jobs to the local workforce, with starting salaries in the $50,000 to $60,000 range. And if the incubator goes as planned, they wouldn’t be the only private life-sciences game in town.

The incubator fits into several of what WVU president E. Gordon Gee, a lawyer by training with a penchant for bow ties, likes to call his three pillars: education, prosperity, and health care. (WVU Medicine, the state’s largest medical provider, with eight hospitals around the state, is also the state’s largest private employer, with about 16,000 workers; it brings in nearly $2 billion annually.) It’s a multi-faceted approach to building a stronger economy and a stronger culture. Gee also wants WVU to play a bigger political role, working through its government relations staff to offer suggestions and ideas to policy makers.

He wants to retrain coal miners at the university’s new WVU Tech campus in Beckley, where they could pursue careers in engineering, business, and health care, and develop investment strategy for small companies. And he wants to change the culture both on campus and in the state at large, where populations are dropping. Enrollment across the WVU system has contracted 4% since 2012, and the state is losing people faster than any other in the nation. Only 19% of the population of West Virginia has bachelor degrees or higher, though last year the state had a record number of two- and four-year graduates. (Projections suggest that 52% of West Virginia’s jobs will require post-secondary degrees by 2020.) WVU and the West Virginia Higher Education Policy Commission are working to improve graduation rates with student-centered programs that target rural counties with low college attendance and offer on-campus support in addition to supporting entrepreneurialism.

“The greatest fault of West Virginians is their humility,” Gee says. “We need people to get out of what I call negative elitism: ‘If we’re really so damn good, then why are we here?’ We need to convince people that there is opportunity.” Bolstering this shift, Gee hopes, is the love West Virginia’s 1.8 million people have for his Mountaineers, who West Virginians follow religiously on the football field and basketball court. “This university represents almost everything possible in this state,” he says. “We don’t have the Detroit Lions, we don’t have the Chicago Bears, we have us.”

In part, that means normalizing the idea of business creation and independent success with on-campus projects. In addition to the incubator, WVU has begun IDEA faculty fellowships–Innovation, Design, and Entrepreneurship Academy–in which professors in fields from engineering to women’s studies receive stipends and training (at WVU and Babson College, a leader in entrepreneurship education) to support entrepreneurship at the university. It’s also created the Launch Lab, a hands-on resource center, to help students who want to start businesses. The WVU Innovation Corporation, an organization operating outside the university, assists labs with things like contracting, accounting, and legal services.

Beyond fostering this spirit of entrepreneurship, experimentation, and curiosity, though, there is also the need to grow–almost from scratch–a financial support system for West Virginia startups, scientific or otherwise. Currently, there is not a single traditional venture capital firm in the state. (Harbaugh and a local investor are working to create one.) The university worked with investors to create WV Growth Investment LLC, a now fully invested angel fund that operates outside the university, although the university is the fund’s largest investor, contributing $200,000 of its $1.6 million in capital. The WVU Foundation, the university’s fundraising arm, has a donor-based fund dedicated to startup capital.

Taura L. Barr and Richard Giersch, founders of CereDx, are developing a groundbreaking test for diagnosing strokes at West Virginia University’s Health Sciences Innovation Center incubator.

Barr and Giersch know the challenges of fundraising in the current entrepreneurial environment. Even though they’re close to their goal, Giersch says, “all money doesn’t carry the same weight when you’re looking for additional money.” Local investors outside CereDx’s wheelhouse, however generous, can’t carry them through series A and B rounds. It’s just one of the hurdles that such startups miles from hubs like Silicon Valley face–and those issues aren’t just logistical, Harbaugh says.

“In a lot of ways, the companies here have to be better, because there’s not an abundance of capital, and they’re gonna start with an assumption maybe that they’re not as good,” he says. “So you have to go in and really surprise people with the qualities of the companies you’re creating.”

Appropriately enough, education was also the buzzword of our next stop. From Morgantown, we drove 36 miles south to Bridgeport, where–several miles of winding road off Interstate 79–we pulled up to a hub of aerospace industry that we born-and-raised West Virginians didn’t know existed. The Mid-Atlantic Aerospace Complex–home to a 7,000-foot commercial runway, the state’s longest–is nestled into a hillside, a cluster of unassuming campuses that house the Robert C. Byrd National Aerospace Education Center and maintenance facilities for major aerospace manufacturers like Pratt-Whitney and Bombardier. (Lockheed Martin’s is a few miles away in downtown Clarksburg.)

The Mid-Atlantic Aerospace Complex is home to the Robert C. Byrd National Aerospace Education Center and maintenance facilities for major aerospace manufacturers like Pratt-Whitney and Bombardier.

The Mid-Atlantic Aerospace Complex (MAAC) is a thriving example of what an economic-development expert in Kentucky would later describe to us as “the long arm of Robert C. Byrd.” In the 1993, the late senator began developing what would become the MAAC, with the prescient goal of diversifying the state economy. His efforts helped create an airport that specializes in maintenance, repair, and overhaul of commercial and defense aircraft, plus an FAA-certified school with two- and four-year degrees that typically cost $10,000-$12,000. (Stose says 90% of students are on financial aid.) There is also an eight-week training program that doesn’t result in FAA degrees but certifies graduates to do entry-level work.

“We’ve got over 1,200 employees and over $1 billion worth of economic impact,” says Tracy Miller, the education center’s director. Lower-skilled jobs might start at $10-$14 an hour, but Tom Stose, the center’s senior professor, says a good technician with several years of experience could earn six figures with overtime. The ASTP job placement rate is 100%, and many students throughout MAAC’s educational programs land at the companies right down the hill. “The students I had 20 years ago are still working in these industries,” Stose says. “We tell everybody they’re training for a career, not a job.”

Laid-off coal miners, like Matt Payton, are gaining entry-level skills in aerospace manufacturing through an eight-week training program at the Robert C. Byrd National Aerospace Education Center.

Stose puts on the eight-week course as industry demand requires–basically, when manufacturers need a new infusion of talent–and that’s happening more and more lately. Local out-of-work miners are also finding their way to the program; their $4,500 to $5,000 tuition can be covered by U.S. Department of Labor grants through WorkForce West Virginia, a state agency for workforce development. Stose says some miners have that “deer in the headlights look” upon starting the program, but are soon going “full bore”: “You can’t get them to take lunch.”

The day we visited, one such program was in its final week. Its entire 12-student roster already had jobs waiting for them. Troy Anderson, 47, was there because he’d just been laid off from Murray Energy, which bills itself as the largest underground coal mining company in America. He’d been laid off in the industry before, almost 20 years ago, but he didn’t see a future this time. When he found out about this program through WorkForce West Virginia, he liked that it was something different. “There’s definitely a shift coming,” he says. “The economy in West Virginia’s gonna change. The tax money that the communities have been getting for coal mines for years is drying up. Same with the jobs. I felt fortunate to get into this one.”

Across the room, April Smith, 39, also felt the need for something different when she saw her work in a medical office slowing down. “Before this, I knew what a hammer and a Phillipps-head screwdriver was,” she says, laughing. Now, as West Virginia’s economy develops possibilities beyond the extraction of coal, she sees herself in the kind of sector that could make a difference: one with longevity and room for advancement.

“Just to think I’ll be working on airplanes and doing something completely different,” she says. “And I’m capable of learning. Everyone’s capable if they actually try.”

Next Stop: Charleston, West Virginia: How West Virginia’s Capital Is Boosting Local Business To Reinvent Itself As A Hip Urban Center

Courtney Balestier is a James Beard-nominated writer whose work has appeared in the New Yorker online, the New York Times, the Oxford American, and elsewhere. She writes often about Appalachia.

Elaine McMillion Sheldon is a Peabody award-winning documentary filmmaker and visual journalist. She’s currently in production on a feature-length documentary about the lives of several young men escaping the opioid epidemic in Appalachia.

Video

More Stories