Old Dominion University President Emeritus Dr. James Koch released his in-depth analysis of Hampton Roads’ economy recently at an event hosted by LEAD Hampton Roads, the region’s oldest and largest leadership initiative. The annual address and report stimulate productive discussions about the future. This event now draws more than 750 regional leaders annually, up from humble beginnings ten years ago with only 50 in attendance. Some highlights by chapter:
The Regional Economy Contracts:
- Defense spending continues to cushion our economic downturn, now almost 45% of our economy, up from only 28% just 15 years ago.
- Two other major drivers, the port (cargo tonnage fell by almost 25%) and tourism (hotel revenue dropped by 4.5% as compared to the nation at 11.6%), have contracted.
- Stress tests for major regional banks were also performed, demonstrating that the examined banks are healthy.
- This recession will be our worst in 40 years; we’ve not had an annual gross output decline since 1975.
- Looking down the road, defense spending in Hampton Roads may stagnate with the threatened loss of an aircraft carrier task force (reducing GRP by almost .1% or $900 Million annually) and/or Naval Air Station Oceana, and the Department of Defense’s (DoD) increased emphasis on fewer ships and more “boots on the ground” (ground forces).
- Job losses in 2008 were concentrated in construction and retail. Employment in ship and boat building remained relatively stable.
The Hotel Industry:
- Stagnant or declining patronage and excess capacity have made this a very challenging time for an industry that is vital to our future.
- The industry is getting larger, increasing the number of hotel rooms by 25.4% between 1988 and 2007, growing another 1,000 in 2008 to a total of 38,000. And, the industry is much larger than any other Atlantic Coast metro area, 52% greater than our next closest competitor, Jacksonville.
- The Historic Triangle has taken the biggest hit in the region.
The “Silver Tsunami”:
- In recognition of our aging population (in 2011, the oldest baby boomers turn 65), extensive data and ratings concerning 57 nursing home facilities, 104 assisted living facilities and eight continuing care facilities in Hampton Roads are included.
- Virginia’s senior population is expected to double between 2007 and 2030, and the number of those 85 and older will increase by 114%.
Gasoline Prices, Carbon Emissions and Other Unpleasant Subjects:
- Regional carbon emissions are included and how we might deal with them is explored (including higher prices).
- Because of its proximity to the ocean and ocean winds, Hampton Roads has lower levels of air pollution than other similarly sizes metro areas. We are more vulnerable, however, during peak tourism months, during military traffic peaks and when tunnels and bridges are congested.
- The region has a much smaller carbon footprint than Richmond (which ranks at the bottom one-quarter of the 100 largest MSAs) according to the Brookings analysis, despite the Port and heavy truck traffic.
- Our region appears to be less vulnerable to energy price spikes than many other regions, primarily due to our coastal location
Climate Change, Global Warming and Ocean Levels:
- To the extent that global warming occurs, it will bring with it rising sea levels, which, in the absence of new dikes and levees, will cover vast areas of the Peninsula and Norfolk, Chesapeake and the Virginia Beach oceanfront.
- According to a study endorsed by the Organization for Economic Co-operation and Development, Hampton Roads is the 10th largest coastal metro are in the world in terms of total assets exposed to increasing flooding from rising sea levels.
- Other resources include Gov. Kaine’s Commission on Climate Change and the Transportation Research Board’s “Potential Impacts of Climate Change on U.S. Transportation” report.
Traffic Congestion: Identifying and Measuring Our Bottlenecks:
- National analysis of traffic congestion identifies the 15 worst choke points in Hampton Roads; ost of them are connected to our tunnels.
- According to the 2008 National Traffic Scorecard, traffic congestion in Hampton Roads and throughout the U.S. has decreased by nearly one-third between 2007 and 2008. However, Hampton Roads is still in the top third of the most congested metro areas.
The Tunnels That Connect Hampton Roads: Wonderful Assets or Potential Achilles’ Heels?
- The prosperity of our region depends upon five major bridge/tunnel installations, all of which potentially can be closed either by accidents or terrorism.
- As we recently have discovered, they are vulnerable to a variety of possible threats.
The Chrysler Museum in 2009:
- The Chrysler Museum of Art is one of the foremost cultural jewels of our region, a repository of acclaimed masterworks in all genres and periods that has become an educational and aesthetic hub on the Atlantic Coast.
- It now faces challenges that stem both from significant economic constraints and internal reorganizations.
- It acts as a magnet for corporations that value cultural amenity, residents that wish to return to the excitement of a revitalized central downtown, and national and international attention that fuels tourism.
Dr. Koch’s overarching theme: Hampton Roads is still doing better than the rest of the nation. During the Q&A portion of the event, Dr. Koch emphasized a few items:
- Dealing with healthcare is a moral obligation;
- Over 50% of our national debt is owned by foreign holders, predominantly China;
- Raising gas taxes is good for our future, serving as a short-term revenue-raising benefit and a long-term benefit to “wean ourselves off foreign oil,” promote alternative energy development and use, and encourage alternative transportation methods;
- There’s “no way to escape the bullet” as cities will continue to experience revenue declines, demand for services will increase, and the state will transfer more financial responsibility to cities;
- There is much more regional cooperation, thinking and talking regionally, now than 20 years ago when Dr. Koch arrived in Hampton Roads; more is needed, especially consider combined services such as water, libraries, law enforcement and public safety, starting with one service at a time;
- What to do about DoD spending declines? Fight for DoD dollars and leverage other federal resources such as Jefferson Lab and NASA, spinning off related development;
- M&S growth is an important key to Hampton Roads’ future;
- The Port should continue to be dredged to be ready for the larger draft ships soon coming through the Panama Canal; and
- Diversifying the economy is more important now than ever.
Download the complete 2009 State of the Region Report HERE.