One-on-One: Shaping our Appalachian Region: Connectivity … then progress

By Mark Green

Jared-Arnett
Jared Arnett, a native of Eastern Kentucky, became the founding executive director of Shaping Our Appalachian Region Inc. on Nov. 3, 2014.

Editor’s note: This is a longer version of the interview that appeared in The Lane Report’s July 2016 issue.

Mark Green: Give us a brief description of what SOAR is and where it came from.

Jared Arnett: SOAR was an initiative to address the longstanding challenges of Appalachian Kentucky and to create a united space, an inclusive space for everyone in the region who wants to be a part of the process to have input on the plan and then be part of the work to move our region into a new economic future. Former Gov. Steve Beshear and Congressman Hal Rogers got together in Hazard and announced it in fall 2013. The first summit on Dec. 9, 2013, had close to 1,500 people together in Pikeville. An Executive Board organized around it in and created a 501(c)(3) nonprofit in the summer of 2014.

Originally there were 10 working groups built around specific issues such as infrastructure; business incubation, which is entrepreneurship; industry recruitment; community health; along those lines. Those working groups each had 10 to 12 members. They did five to six listening sessions each throughout the region with over 1,000 people and together wrote the first report and a plan, which was about 300 pages, in the fall of 2014. After that, we combined the chairs of each working group and created the SOAR Advisory Council. We try to meet quarterly, discuss emerging issues and opportunities; we also try to connect workforce, economic development, education and community health. We try to tear down barriers between different sectors and geographies. The SOAR Advisory Council hosts an annual roundtable so we can continue to get public input on the different issues and update that original plan.

We have a few action teams on specific issues we want to address. One was tech hires; we’re trying to connect our region, both through infrastructure but also by creating a sector of the economy built around technology. And then a fiber-to-the-premises group, where we’re trying to get fiber distributed throughout the region for internet connectivity. We’ve got four or five action teams.

MG: What is SOAR’s annual budget, and what paid permanent staff is there?

JA: Our budget is at $1 million. Roughly 60 percent is from our private corporate partners, roughly 20 percent from the state of Kentucky, and 20 percent from the Appalachian Regional Commission, a federal agency. We have four paid staff members. Four others work out of our office: Two are with the CDC; they work on public health issues within the region. We have two AmeriCorps VISTAs, essentially volunteers with one-year commitments, who work out of our office.

MG: The health element has a high profile. Why is that?

JA: Congressman Rogers has been interested in substance abuse issues in the region and was integral in creating Operation UNITE. Also, his relationship with Dr. Thomas Frieden, director of the Centers for Disease Control, brought Dr. Frieden into the region nearly two years ago for several different listening sessions and visits. There are a lot of health disparities in Appalachian Kentucky: cancer rates, obesity, substance abuse. He promised to put some emphasis on this from the CDC’s perspective, to assign a person to our office to help look at the issues and provide some solutions and be a connector within the region to begin to address them. So that’s where that came from. We’ve also got a public health advisor in our office and an intern-type position called a public health associate.

MG: What unique characteristics and history have shaped the Kentucky Appalachian economy previous to the last decade or so, which finally sparked this activity?

JA: Geography is the obvious one. There are communities that are very remote. There are places in Pike County that are an hour’s drive to get to Pikeville where we are now. Some communities are becoming of regional hubs now, but, from the perspective of the infrastructure in place 40 years ago, we were very remote from a highway transportation perspective. The region did have some rail early on, originally for the forestry and timber industry, which drove the Appalachian economy at the beginning, and then for the coal industry. Having a region that had such a vast natural resources in it was an economic asset, but it also prevented our communities from thinking outside the box and beginning to plan for the day that that industry was not going to provide the jobs it did in the past. Because it created such great-paying jobs, it created a false sense of security. Natural resources and geography and placement are definitely what got us here.

MG: What is the unemployment rate in Appalachian?

JA: Traditionally it’s 2 to 3 percent higher than the rest of the state. The most recent numbers for the region I could find are 2014 when Appalachian Kentucky was about 8.5 percent and the rest of the state was 6.5 percent. County data, which is as recent as the first quarter of this year, showed when you look farthest east, we still have several counties way over 10 percent. Probably the highest is Magoffin County; it’s over 15 percent unemployment.

It’s complicated. An unemployment rate can be somewhat misleading. Appalachia has issues regarding the civilian labor force; unemployment only measures people who are actively searching for a job, but we’ve got the reality of generations of poverty where people are not actively looking for a job. The challenges go much deeper than an unemployment rate. Magoffin County historically had a lot of people who worked as pipefitters and drove to Georgetown or Ashland to work jobs that are on three months and off two months and you get called back. It would be interesting to dive into that.

MG: As Appalachia relied on natural resource use and extraction to generate jobs and income and wealth, some people think much of that wealth left the region when it was being created. Is that true?

JA: Like most things, it’s not true or false; there’s partial truth to it. At one time in this region the coal operations were, by large proportions, local operators such as when booms would happen. In the ’80s, there were dozens, probably hundreds, of individual, independent operators who became millionaires overnight, and a lot of that wealth still resides within the region. I don’t want to address just Pikeville, because SOAR works in nearly half the state, but Pikeville at one time had per capita the most millionaires in the country. In a state with a pretty strong financial sector, you have Pikeville being the number three community, with Community Trust Bank being headquartered here. It is definitely true now that a lot of larger coal operations, Alpha and others, have come in and bought up a lot of the independent operations. But you still have mineral labs, coal truck companies, service agencies that are locally owned, independent entrepreneurs. Those generate a significant amount of wealth in the region.

MG: What are the employment, income and population trends here in Eastern Kentucky?

JA: SOAR works in the 54 Appalachian counties of Kentucky. Of those, roughly 25 are considered coal-producing counties. Some very distressed counties have never been coal-producing and face challenges. But in the past decade, and the reason SOAR was created, is that we’ve lost 11,000 coal mining jobs. If you watched the data, and if you would assume things are going to continue that direction, it does not paint a pretty picture. People are moving out, schools are losing students, people are losing their jobs and making tough family decisions. That’s the trend, especially in the coal-producing counties. That’s definitely not a pretty picture the last 10 years, but I come to work every day believing in the next 10 years.

MG: If 11,000 jobs paying $70,000-80,000 a year have disappeared, that’s $700-$800 million a year in income not going into people’s houses.

JA: Yes, and there’s pretty good consensus that each of those coal miner jobs support two other jobs, so anywhere from 20,000 to 30,000 jobs is a safe estimate of what we’ve lost. This is such a major issue. There is the argument that coal mining has been declining for the last 70 years, but we had almost 20 years of consistent employment of about 15,000 coal miners in this region. And then within just a few years beginning in 2009 we saw it go from 15,000 to 4,000. That’s a pretty dramatic drop.

MG: Regional economies don’t connect in straight lines, but how does job creation and income growth in Eastern Kentucky benefit residents in other parts of the state?

JA: Well, you’ve got to decide, do you want nearly half your state to be a region you have to subsidize? The state’s going to invest here one way or another: If people do not have jobs, they’re going to have to be supported through social programs, or we can invest in programs that hopefully generate a return and create a half of the state that can contribute revenue. In the big picture, that’s the way we look at it: Create a region that is a driving economic force for the state rather than a portion of the state people have to subsidize.

MG: What are the primary goals of SOAR? Is there a mission statement that drives the activity?

JA: It’s to create a new economic future in Eastern Kentucky and Southern Kentucky. Our vision is a connected Appalachia. I mean that in two ways: One is through the internet as physical infrastructure, connectivity. But also we have worked in silos for so long – geographic silos, political silos, sectorial silos. SOAR has created a space where all these people get together and all of a sudden become one group. We’ve seen so many partnerships grow out of that, from community colleges to private sector, local foods to school systems, and community health. It’s incredible when you get people out of their silos and put them in a room together and look at solutions as Appalachians and not as a health worker or as an economic developer, and then find what can we bring to the table, each one of us.

We’ve got four real strategies. One is to infuse a broadband perspective into everything. We’ve got specific action items and goals. For five years I’ve been working in this region in different capacities trying to solve this problem, and I’m convinced the future of the region hinges on our ability to become engaged in the digital economy. And we only can do that through technology. Otherwise, we’re having the same conversations we were having 60 years ago at the East Kentucky Regional Planning Commission. The difference maker is that now an entrepreneur in Harlan County can sell to the world; they can be connected to a global market. A clinic in Leslie County can connect to a specialist in Lexington and do live telehealth medicine. A student in Pond Creek can take classes and become whatever at the community college or pursue a four-year degree.

It completely changes every element of every sector. We don’t believe that it’s just about a tech sector – we believe technology is the economy. In every sector it plays a role and makes us more competitive. We want to continue to tell that story, to infuse that perspective in every educator and every entrepreneur and every health professional – to think about their own business and operation, and how does that change the way I approach my business?

Second is to be a champion for Appalachia and the opportunity here. Our story’s been told for decades by other people. We hope to be a strong voice in telling the positive opportunities that are here, the positive things going on, elevating the great work that’s happening.

The third is to grow the team and have a firm network of people who are a part of SOAR and working throughout the region to get the work done.

And then fourth to partner with local communities to help implement this regional strategy because you can have a big vision, but it really gets done at the local level. We’re trying to be a partner to counties and cities and chambers and work with them as they try to create plans with their local community.

MG: The current economic status developed over a long period. What are reasonable expectations about the time it will take to see results the region can notice and feel?

JA: We’re a relatively young organization, really a startup business, an independent organization that happens to have a board of directors co-chaired by the governor and congressman. At this year’s Innovation Summit, which we just held (June 6), we began to see some of the fruits of our labor, small things that are just the tip of an iceberg as we work to transform and reimagine what Appalachian Kentucky is. If we become connected through infrastructure and internet and broadband like I believe we’re going to, I think we’ll see some impressive results within five years. We’ve got an opportunity to have a good portion of this work done and this ship turned around in 10-15 years.

We see people beginning to reimagine themselves. A pilot program at Big Sandy Community and Technical College will train 50 people to do technology-style work for a company in Louisville. It’s a 20-week program, but if they complete the program then they’re immediately hired and work for that company remotely from here. We’ve seen overwhelming interest. It’s in a community college system that can easily spread it. We’re beginning to train people and rethink that jobs don’t have to be in our community in the 21st century; you don’t have to create jobs here. Jobs exist that you can work remotely, very well-paying jobs. We’re beginning to place people into those types of careers.

MG: Have jobs already been created as a result of SOAR’s efforts?

JA: So many partners are creating jobs and recruiting companies and starting small businesses, but it’s really hard to put your finger on it exactly and say this is what SOAR does. One partner, EKCEP (Eastern Kentucky Concentrated Employment Program), created the Teleworks program (to provide customer service job training) several years ago. In Jackson County, they put over 200 people to work in a year working for companies remotely. It’s customer service, it’s account management, because they’re connected. They’re working for U-Haul, Apple, companies that are outside the region, in jobs that did not exist in Jackson County. It’s over $1 million of economic impact. We’re identifying funding to start more Teleworks hubs throughout the region. We’ve seen Rajant, a wireless communications and technology company, locate in Morehead and partner with Morehead State University to their aerospace initiative. We’ve realized SOAR is not a thing that’s going to create jobs; we’re a space for all the people who are working in Appalachia to be together.

MG: Is the new Craft Academy for high-achieving high school juniors and seniors at Morehead State University connected to SOAR?

JA: This is a question we get all the time and not just about the Craft Academy. It depends on what you believe SOAR is. Did we create the Craft Academy? No. Were we involved in planning for it? No. Did we create a space and a momentum and an attitude that we are going to do things in Eastern Kentucky that inspired several partners to step up and say they want to be a part of that? I think we did. We’ve done that and a lot of things – absolutely that is a part of SOAR. It’s a part of people who are Shaping Our Appalachian Region. It’s people who have stepped up and made a difference. They’ve committed funding. They’ve created opportunities. And it’s a project that we want to elevate awareness of, to show process and positive movement in Appalachian Kentucky.

MG: Higher education achievement equals higher income and lifetime earnings, but there is a perception that educational attainment is not as valued in Appalachia. Is there any truth to that?

JA: There’s elements of that, just like anything. We have made leaps and bounds improvements in graduation rates, but those are a little challenging still. Even when we graduate people, the smartest and brightest, as much of an education issue as we have we also have an opportunity issue for people to have something to do with an education. We’ve got to get engaged in the digital economy. No matter what kind of work you do, today you use the internet. When students don’t see that, they still see their option in our region as “I’m going to have to be a teacher or a nurse, and that’s all I can do here.” We’ve got to reimagine because the reality is you can do whatever you want here. I know guys who run video editing businesses out of their homes and computer coding companies and people who work sales jobs mostly from home and travel some. There are all kinds of opportunities here, but we’ve got to be a champion to tell that story. One of our partners, East Kentucky Power Cooperative, is leading an effort called SOAR-STEM, through which they’ve brought partners together, generated funding and gotten 64 teachers scholarships to get nationally board-certified through a teacher-leader program that emphasizes on STEM. Our graduation rates are good; we’ve just got to fix the perception of opportunity in the region to keep those people here.

MG: So there has been a brain drain from Eastern Kentucky?

JA: Absolutely. We’ve got several entrepreneurs who are in Lexington, CEOs of banks. The reality we face is that we do lose a lot of the next generation of potential leaders.

MG: What are some of the benefits that a Mountain Parkway fully four-laned to Pikeville is going to produce when completed?

JA: It begins to address where we started, the infrastructure and the limited access to our region. We have partners working in industrial development and recruitment. From a manufacturing standpoint that’s absolutely key; you’ve got to be able to get your goods in and out. That’s been a limiting factor to move anything east or west through our region or from our region. It’s also somewhat of a public works project that’s created some jobs through the construction process and is building an infrastructure that’s going to change our competitiveness economically. We don’t have an interstate in the heart of this region. Pikeville is two-and-a-half hours roughly from an interstate in any direction. There are good, four-lane highways through the region now; from Pikeville we have a four-lane highway to Charleston, W.Va., and a four-lane highway to Kingsport and Johnson City, Tenn. But to get to Lexington from a good portion of Eastern Kentucky we have 60 miles of two-lane. It’s going to help the rest of the state just like it’s going to help us.

MG: What is the timetable for completing KentuckyWired and going live first in Eastern Kentucky?

JA: The time track has shifted, like everything else, with the transition in the governor’s office and staff. There’s been a delay. Gov. Matt Bevin just committed at the Innovation summit that he’s still focused on getting it built out in Eastern Kentucky.

MG: How is SOAR undertaking to increase entrepreneurship among regional residents?

JA: One of the things that we’ve done is partnered with EKCEP, again, which is our workforce innovation board for a majority of our region, especially the coal-producing region that is all within EKCEP’s territory. We’ve started a pilot program to shift our mindset from just thinking that we need to infuse entrepreneurship to getting more specific and saying that we want to create and grow existing entrepreneurs – and we want to grow them through export or e-commerce. I’m a partner in a small business myself. There’s been a lot of work in the last 20-30 years to support entrepreneurship in the region, but it has not been focused. Now, we’ve lost these coal mining jobs that brought in money from outside the region, and that drove a lot of the local economies. If you’re a barbershop or a local restaurant, those things are important, but that’s not what our region needs right now. We need what they call traded sector companies that are selling products outside the community and region, bringing outside money in.

So we got a grant through the EDA, with EKCEP, and we’re doing a pilot program with 10 existing companies. We’re providing technical assistance and training, and we’re going to build websites for them to try to get them into e-commerce or help them export goods outside of the region. If it works, we’re also going to try to bring together all the different organizations in our region that are trying to support entrepreneurs, create a business services team and proactively go out and look for existing companies and to help them grow. That’s one element, and many of our partners are doing several different things as it relates to entrepreneurship. And really, SOAR itself is an entrepreneurial effort.

MG: Are there some business sectors that have been identified or targeted yet as being the most likely to create those good jobs the most quickly? Is there any low-hanging fruit that has been identified through the process yet?

JA: The first one is connecting people digitally to jobs that already exist. We’ve got a robust community college system here that can train people and respond to a demand in workforce, but we’re in a region where there’s very little demand for a workforce. We have had this idea that we can create a curriculum and connections to companies anywhere in the country, and create specific training programs for them rather than thinking we can only train for the company down the street. And we’re beginning to do that; that’s the pilot project at Big Sandy. For me, that’s the lowest-hanging fruit. Jobs exist; we’ve got the infrastructure to train people for them. Let’s do that. That’s not for everybody; I understand that. Not every seasoned coal miner is going to want to get into technology work, but it creates an opportunity for the next generation. Also, as we build out the fiber, we are retraining coal miners to do fiber splicing and implementation, and they’re going to be put to work as we build out this infrastructure.

When it comes to industrial development, a second area is forestry and timber products. We’ve got a vast resource here that we’re not using fully. The forest is growing back several times quicker than what we’re cutting down and using trees. One of the largest timber companies in the region exports about 70 percent of the raw materials it uses. We’re trying to leverage relationships and ask how can we add value, build furniture, build things here rather than send it out of the region. We did that in the past, but some of those companies shuttered through the housing downturn. That’s definitely an opportunity.

MG: When the KentuckyWired network is completed, the basic connectivity will be there. Will it then be up to Eastern Kentucky to be the first to solve the last-mile issue?

JA: I say all the time. This is going to lay opportunity in every county’s lap, but every county is going to have to decide what they’re going to do with it. KentuckyWired is essentially bringing a “middle mile” connection to the county seat of every county. From that point, local communities and counties have to be creative and innovative and work with local partners or existing technology companies and find a way to get it built out to the community. We’ve funded a couple of studies doing engineering and planning, and a consultant will make recommendations.

There’s really three different ways you can do it. One is a city can build out the infrastructure, own it and manage it themselves like they would water or sewer. Or they can build it out and then contract with a private company to manage it and do the billing and sales. Or they can just wait for the private sector to do it; unfortunately in our region, that’s the approach we’ve taken for years. When you have a very sparsely populated area, it doesn’t make sense on the private side to build out high-speed fiber to every home when you’re going to generate lower return and pick up a lower number of homes per mile.

MG: What is the role of the private sector?

JA: I always say, “Do what you do best: Create jobs.” That’s what we’ve got to do here. The way they’re going to have to do it is just thinking creatively about being connected to a larger market. Maybe a lady who makes candles and sells them at the local farmer’s market, help her think about what if I had a website? On Etsy, instead of selling 20 candles a month at the farmer’s market maybe I could sell them for twice as much to 1,000 people? This is inspiring an idea of entrepreneurship and innovation within the region to think bigger than we’ve ever thought. And for private sector outside the region, see Eastern Kentucky as an opportunity not as a challenge. Realize there’s workforce here if they’re thinking about expanding. Don’t give money to SOAR. I’m not saying we won’t take it, but the best thing they can do for this region is bring economic opportunity here. And we’re trying to facilitate that. We don’t believe we’re the only ones who can do it; we just believe we’re a connector of all the people who are working on that within the region.

MG: Any closing statement that you’d like to make?

JA: The reality that technology changes the opportunity for our region is the most critical thing we’ve got to get our arms around, and then do something with. It’s the quote I’ve lived by: The future of the region hinges on our ability to embrace technology and become engaged and participate in a digital economy. And it’s across every sector. If you look at the jobs we’ve lost – we said it was 20,000-30,000 – before we lost those jobs, 38 of our 54 counties were already distressed. So the reality is, if we created 30,000 jobs tomorrow, we’re back to where we were seven years ago and we still have 38 of our 54 counties distressed. That can keep you up at night. This is not: We need to create 500 jobs. It is: Transform an entire region. And anytime a company or an organization or a person is faced with that, technology has been the thing that can create an exponential return. ■

 

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