By Jennifer Jett Prezkop
In December 2018, Governor Jim Justice appointed Ed Gaunch as secretary of the West Virginia Department of Commerce. A native of Boone County, Gaunch graduated from West Virginia State University with degrees in economics and political science. After retiring from a career in the insurance industry, he ran for and won a seat in the West Virginia Senate in 2014. With a résumé boasting a strong foundation in economics, business and state government, Gaunch proudly began his term as commerce secretary in January.
After six months with the commerce department, West Virginia Executive magazine sat down with Gaunch to discuss the state’s economy and his plans for taking advantage of available opportunities, attracting new businesses to the Mountain State and developing an economic plan that takes into consideration the unique characteristics of the state’s many regions.
WVE: Tell us a little bit about your background and work experience.
EG: I began working in the insurance industry in 1967. I worked for an insurance company for four years before going into the brokerage business, where I spent 34 years. I retired and became the primary caregiver for my mother who had Alzheimer’s, which was the hardest job I’ve ever had. After that, I got bored with being retired and ran for the West Virginia Senate, where I held office for four years.
WVE: What inspired you to accept the position of commerce secretary?
EG: This position is right in my wheelhouse. It was kind of what I was prepared for educationally, and with my business and Senate background, I feel like I am a good fit for the job. I was honored when the governor called me and offered me the position. The first thing I thought about was that Michael Graney had been recently appointed as the executive director of the development office, which was a real positive for me because Mike and I have been friends for 30 years. I didn’t give a lot of consideration to the challenges or problems that had been associated with the commerce department in the past. I just thought about whether or not I could add value to the process, and I decided that I could.
WVE: Tell us about your responsibilities as the commerce secretary.
EG: My job is to cast the vision, and because we have nine individual agencies under commerce, that is a huge responsibility. Commerce is a very diverse organization. The West Virginia Development Office, which is one of its nine agencies, oversees the Business and Industrial Development division, International Development division, Small Business Development Center, Community Advancement and Development division, Office of Energy and Broadband Enhancement Council. The other eight agencies are the Division of Forestry; West Virginia Geological and Economic Survey; Division of Labor; Office of Miners’ Health, Safety and Training; West Virginia Division of Natural Resources; Division of Rehabilitation Services; West Virginia Tourism Office; and WorkForce West Virginia. There are approximately 2,500 employees that report to these nine agencies. I try to make sure all of these agencies are working collaboratively and toward fulfilling commerce’s mission, which is to promote and preserve the well-being of the citizens of West Virginia through diverse economic development, appropriate use of the state’s abundant natural resources and active promotion of West Virginia as a world-class tourism destination.
WVE: Give us your perspective on the current state of the economy in West Virginia.
EG: We are an improving economic environment, and we see improving economic indicators. The unemployment rate, GDP and workforce participation are all moving in the right direction, and we are seeing strong revenue growth in our state. I believe we are also in an improving business climate based on some of the actions the Legislature has taken over the last several years. Our legal environment is better, so the business climate in general is better. The state’s strategic location to major markets is a real strength, and we need to capitalize on that more. The natural beauty of our state is another strength, as well as the proliferation of natural resources, particularly coal and natural gas.
In terms of our challenges and weaknesses, none are insurmountable. The first challenge is workforce availability. Every day we go out looking for new businesses to bring to West Virginia, but if we don’t have a viable workforce for them, then we are going to have a difficult job recruiting those companies. Closely associated with that challenge is the workforce participation rate. Historically we have had a low workforce participation rate. I don’t know the cause of that, but it is something we have to address, and we are trying to do that. The next challenge is that our education outcomes are not what they need to be. I’m not casting blame on any part of that system. I’m just saying that the results are what they are, and we have to improve those outcomes. Population loss is another negative factor, and I would be remiss if I didn’t mention the lack of available flat industrial sites, which is not insurmountable. The last challenge is infrastructure needs, including roads, bridges, sewer, water and broadband. We are improving our roads, thanks to the governor’s Roads to Prosperity Highway Program. We are also making headway in broadband and in the utility construction area, but we still have a way to go.
WVE: Based on these observations, what goals have you set for the commerce department?
EG: I want to make sure all nine commerce agencies are singularly focused, working in concert toward the goal of making West Virginia a good place to live, work and play. That sounds very idealistic, but we have specific goals to guide us to that point. I would like to see our development office—and we are seeing it every day under the direction of Michael Graney—become more proactive as opposed to reactive, and by that I mean we need to become a sales force that is out making calls proactively on industries we have selected that we want to grow within our state. Our tourism commissioner, Chelsea Ruby, is doing a wonderful job in making tourism blossom in West Virginia, but I think we can do better there also, so we are working on that proactively. Our Division of Natural Resources, under the leadership of Stephen McDaniel, is also doing a good job. We have wonderful state parks and forests, and I want to make sure we promote those to the best of our ability. The diversification of our economy is a huge goal, and each of the commerce agencies has a role in that transformation. We have been dependent on the extraction industries for nearly 100 years, particularly coal and now natural gas. We have to make sure we diversify our economy so that a downturn in either one of those is not crippling to our economy.
Lastly, a goal I have personally is to spend more time celebrating the existing industries we already have in this state. We spend a lot of time trying to attract new industry, and sometimes I’m afraid we overlook those businesses that are already here that have made investments. In June I embarked on a statewide listening tour designed to find out what we can do to assist existing businesses in continuing to grow and prosper.
WVE: What do you see as the most successful or fastest rising industries in the state right now?
EG: The automotive industry is one, and many of those are Japanese companies. We now have 21 Japanese companies doing business in West Virginia with a total investment of about $2.7 billion, employing more than 4,000 West Virginia workers. We are also seeing growth in the technology industry. We have recently announced that Infor and Intuit are coming to West Virginia. Both of those are large, world-renowned companies in the tech field. And, of course, there is the energy sector. We are seeing some growth in the coal business, especially in metallurgical coal. We have potential there to expand that and have coal-to-liquids operations. Then, of course, there is the petrochemical industry that’s a natural follower of the abundance of wet natural gas we have here. Failure in that regard is not an option. We have to get this right, and I believe we are on the verge of a renaissance in the petrochemical industry in the Kanawha River and Ohio River valleys.
WVE: How do you plan to accomplish the goal of diversifying our economy?
EG: We are being intentional in our recruitment efforts. Some of the specific industries we are targeting where we want to see growth and development are automotive, aerospace, knowledge and technology, tourism and leisure activities, biomedical, agriculture and the energy and petrochemical sectors. Those last two almost go without saying, but we are still an energy state and will probably always be an energy state. We just need to make sure those industries are all they can be, especially when it comes to the midstream and downstream possibilities. We are also forging strong relationships with our higher education institutions—particularly West Virginia University and Marshall University, as well as our community and technical colleges—to help us in those efforts.
WVE: Because West Virginia’s regions all have unique challenges and opportunities, there is no one-size-fits-all economic solution. Given that, tell us about the struggle you face in developing and enforcing a statewide economic plan.
EG: This issue is front and center for me. We cannot have the same strategy for the coal counties that we have for the Eastern Panhandle or the high-tech corridor or the Huntington area or the natural gas-producing areas of our state. The challenges are different for all those areas, so our strategy has to be regional, no question about it. I will tell you that we are not there yet, but we are working on it. A lot of the information we need for this will come from the statewide tour I began in June. Once we have the strengths, challenges, opportunities and needs of those regional areas, we will put each one of those together and then try to wrap them into a statewide plan. That will take us a few months to accomplish, but that is one of the things that desperately needs to happen.
WVE: What can we do to be more competitive with surrounding states?
EG: That varies by industry or segment. For example, in the tourism and leisure industry, we are actually very competitive, and we have not been selling that. We have the best incentives of any of the surrounding states and, frankly, better than most states in the U.S., so we need to sell that better. So, I would say we are ahead in that sector. In the technology sector, we are woefully behind because we haven’t updated our incentive packages. For that reason, Michael Graney has assembled a team that includes members of the development office and tax and revenue office and a few legislative leaders. They plan to have a package of new incentives ready to be offered during the next legislative session. We need to work on our tax structure and regulatory climate. Is the government too intrusive? Do we have too many obstacles? We are looking at all of those every day. And once again, we need a workforce. We are collaborating with our education partners to make sure we have skilled workers available.
WVE: With regard to the business climate and economy, what do you think needs to be addressed in the next legislative session?
EG: In terms of the tax structure, the inventory tax West Virginia imposes is the most onerous tax on the books. The problem is how to eliminate it because it generates about $140 million in revenue, all of which goes to the counties, local governments and schools. I think we could transition out of that tax by eliminating it over a seven-year period, but we need to make sure the counties and local governments are made whole. I think we can do it. It’s easy to do when we have a rising revenue environment, but the moment that stops or plateaus, it becomes a problem. In order to be competitive with surrounding states, this tax must be eliminated, so we must figure out how to do it.
In terms of regulations, at one point I was told West Virginia has more than 200 boards and commissions regulating literally everything that moves. We need a strong review to eliminate those that can be eliminated and combine others that share a similar mission with the goal of allowing government to assist where it can and then get out of the way so businesses can be businesses. I believe the cooperation we have had with the department of education, the community and technical colleges and higher education will lead to initiatives that will change the business climate in this state dramatically and improve the workforce.
We also need to address the legal environment. There have already been some substantial changes made there, but we need to continue to monitor that for any other changes that need to be made.
WVE: Is there anything else you would like to add?
EG: One thing that hasn’t been mentioned is the perception of West Virginia as a place to live, play and do business. I think that perception needs to change. We need to start being more positive in portraying what West Virginia is and accentuate the positives. I guess if there is one thing I would love to do, it would be to somehow produce hope among the people of West Virginia. I want the commerce department to be the catalyst so our children and grandchildren can have a future here. That sounds simplistic, but that’s what it is all about, and we can do that.
