Diverging views
Donald Chappel, executive director of the Greene County Industrial Development Corp., is shown during an interview at the Observer-Reporter in Washington on Thursday, July 30, 2015
Pat McCune
Robbie Matesic
John LaCarte
Dan Reitz
Barry Crumrine
Jeff Kotula
With 2015 ending with a downturn in energy, both in the area’s coal and natural gas extraction activities, the Observer-Reporter asked local executives who keep a pulse on the economy in Washington and Greene counties to provide their outlooks for 2016. While some remain optimistic, others plan to spend the new year working on changes to some longtime, traditional expectations.
President,
Washington County Chamber of Commerce and Washington County Tourism Promotion Agency
“For over 10 years, Washington County has experienced tremendous economic and job growth with the development of the natural gas industry.
“However, the natural gas industry, like other industries such as manufacturing or real estate, is cyclical and will experience market fluctuations. That is what we are seeing currently, but our county is well positioned, probably better than any other county in the commonwealth, to maintain our positive growth due to two factors.
“First, our county economy is diverse with a strong presence of not only energy, but manufacturing, higher education, financial institutions and health care, especially with our two independent hospitals – Washington Health Systems and Monongahela Valley Hospital.
“Secondly, our nation’s and the world’s demand for clean, reliable energy will only continue to increase. According to a recent Energy Information Agency report, the domestic demand for natural gas is expected to increase by 45 percent over the next 10 years. These factors, if viewed in the long term, will certainly prove positive for Washington County.”
Kotula added he sees “tremendous tourism opportunities in the revitalization of our downtowns,” especially in Washington, Charleroi and Monongahela.
He noted 2016 will see the opening of the enclosed Main Street Farmers Market in Washington, while Charleroi and Monongahela are experiencing a renewed concentration on the development of their riverfronts.
“All of these offer great opportunities to rebuild their downtowns by attracting new customers and visitors to the area.”
Dan Reitz,
Executive Director,
Washington County Council on Economic Development
“The council is currently in various stages of negotiations on sales agreements with four manufacturing companies looking to locate in Starpointe. We expect to know what will happen with these sales agreements by the end of the second quarter,” he said, adding that some companies in the park are considering building/employee expansions in the coming year.
While acknowledging the slowdown in the oil and gas industry, Reitz noted that several related companies in Starpointe also offer related services to other industry sectors.
He said WCCED has one signed sales agreement it hopes to close by the end of February with an oil- and gas-related developer.
“They are also amenable to exploring other opportunities for the site with unrelated companies, such as plastics, which will be growing here over the next several years.”
While Starpointe is WCCED’s premier project, Reitz noted that the council remains busy financing start-up and existing businesses in its service area, which includes six counties in Southwestern Pennsylvania and 21 in West Virginia.
While the council’s Small Business Administration loan product demand slowed briefly in early summer, applications increased and remained steady through the end of 2015. Start-up clients included restaurants, convenience stores, antique shops, florists, bakeries, transportation-related companies and medical providers.
“What is interesting, in the past few months, we have approved larger loans for manufacturing entities, both start-up and existing (expansion).
“Oil and gas will rebound, because the region is still in the infancy stages of figuring out how to use/export/make products/exploit this commodity,” he said, noting that the prospect of cracker plants “up and down the Ohio River” has caused that market to develop and grow exploration.
“With Utica Shale just beginning, we see an ever-growing number of mid-stream companies that like Starpointe’s location between the Marcellus and Utica plays. Being close to Pittsburgh International Airport (12 minutes and one traffic light from the terminal) is also cause for long-term optimism,” he said, adding that WCCED is in the process of raising money for the third phase of Starpointe.
“We want to be pad-ready with land inventory for the next few years. We feel that it is going to continue to pick up for a while.”
Robbie Matesic
Executive Director of
Economic Development for
Greene County
In 2015, Matesic and Don Chappel, executive director of Greene County Industrial Developments Inc., began working on a long-term plan to help displaced coal miners make a transition to training for jobs in the region’s metalworking industry.
They embarked on the idea after talking with Petra Mitchell, CEO of Pittsburgh-based Catalyst Connection, which works with small- and mid-sized manufacturers in the region. Mitchell was instrumental in getting the U.S. Department of Commerce to designate a 20-county region, including Washington and Greene, as a “Metals Manufacturing Community” with a projection of thousands of new jobs being created.
The Greene County plan, which was submitted in November, seeks $250,000 in matching funds from the federal Economic Development Administration for a POWER grant to develop a strategy to expand opportunities in metals and materials manufacturing.
“We need to determine who in the (coal) supply chain is open to assistance to reach other markets domestically and internationally,” Matesic said.
The other side of the strategy, which has already been ramped up, has included numerous discussions with area educators and training providers.
“We’re trying to get more training into Greene County,” she said, adding that the other aspect of the initiative that needs to be updated is developing social media and other approaches to reach those who need training.
“We’re clearly seeing some kind of transition in coal,” Matesic said, adding that the manufacturing industry is seen as a bridge to natural gas utilization in the region.
“This gets us prepared for changes being seen in the Appalachian Basin,” she said, noting that she and Chappel attended a November announcement in Morgantown, W.Va., from the governors of Pennsylvania, West Virginia and Ohio, that the states will work as a region to market the basin’s vast natural gas resources to attract industries here to make use of the gas. She echoed Reitz’s comments about the possibility of one or more ethane crackers coming to the region and supplying ethylene – the building block of plastics – to create numerous plastics manufacturing opportunities.
Don Chappel
Executive Director,
Greene County Industrial Developments Inc.
Chappel, whose organization markets properties in Greene County’s EverGreene Technology Park and its Paisley Industrial Park, said in late December he was seeing a slight uptick in interest after losing two property deals earlier in the year with clients who cited low energy prices as reasons for backing out.
“There’s been a slight tick up in the business here as I received a couple of property inquires recently for next year,” he said. “One of the companies actually came and looked at our EverGreene Park property, which had not been the norm the previous six to eight months.
“There are plenty of water trucks still on the roads here locally, so I think the energy business is still moving – but, needless to say, at a much slower snail’s pace.”
Despite the slowdown, Chappel said he expects Royal Flush, a water company, to occupy its new building in Paisley Industrial Park by the end of the first quarter of 2016.
“I also anticipate the construction of a warehouse/office-type building in Paisley Park to begin in the summer,” said Chappel, who said he is working with Matesic to find an occupant for the building.
“In EverGreene Technology Park, there likely will be three new buildings under construction in 2016, with one for sure being the Greene County Memorial Hospital Foundation Recreation Center.”
He also predicted that the Route 21 east corridor to the county airport, from the intersection of Routes 19 and 21, should see some new construction in 2016 on the north and south sides of the road.
“I believe the new year will start out slow to moderate, but by late third quarter, local development projects should accelerate the local economy here.
“With the slowing of the coal industry, Greene County will be looking to change its industrial culture,” said Chappel, who is working with Matesic on the recently filed POWER training grant to the US EDA for financial assistance to retrain the county’s laid-off coal miners and utility workers. (See Matesic’s comments above.)
John LaCarte
President, Model Cleaners
President, Middle Monongahela Industrial Development Association
“Our sense is the country’s economy is still struggling, and it’s still the case locally. Gas and oil prices are down. A barrel of oil is less than $40, and forecasters see that continuing.
“I see that continuing to be a challenge, for our business and the local economy.”
Referring to Alta Vista business park, located in Fallowfield Township and marketed by MIDA, LaCarte said: “I’ve not seen a lot of activity, of people coming into the park to see whether they might build and locate a business there. Energy companies had been looking for sites. This year, I’ve not seen it.
“They’re still constructing hotels (in the region). Two are under construction in Rostraver and one opened in California. We’ve seen some growth in that area. But if the downturn continues in gas and oil, will that affect hotels and banks financing these concerns?
“But I think this is a short-term situation and we have to work our way through it. Well-run, diversified companies can exploit opportunities and navigate waters like this. They’re not dependent on one particular industry. Diversified companies will survive and maybe do better.
“Everything goes in cycles. The history of energy, in general, is cyclical. Given history, we have to think things will change.”
Barry Crumrine
Realtor, Re/Max
President, Washington-Greene Association of Realtors
“For a lot of Realtors, 2015 was a banner year,” Crumrine said. “Jamie (Nicholls, his Re/Max teammate) and I just closed on our 100th transaction (this year). I’d say we’ve seen an upswing for the last three years.
“But we are starting to see a trend where a lot of people in oil and gas are picking up and moving, going back to Texas and Oklahoma. We have two homes listed in Waynesburg where people went back to Texas.
“But I’m very optimistic, and other Realtors are upbeat. I still think this will be a good market. The six-county area of Southwestern Pennsylvania has a housing shortage inventory-wise.”
Pat McCune
President, CEO
Community Bank
“I think things will be pretty much neutral,” McCune said. “By that, I mean there will be improvement in the national economy and strength of the Pittsburgh area will continue, but that will be neutralized by shale gas activity locally. That means slow growth.
“I think the local economy has been resilient, given the struggles of the coal industry and the softening of the shale gas. The coal industry is undergoing a huge downturn, and it may be permanent. That the economy has done as well as it has is a testament to the strength of area.
“The lack of ability to deliver gas to certain markets, the warm winter and political uncertainty with regard to oil are big factors in that industry. We still expect some activity, but it will be muted compared with historical activity.
“The banking industry depends heavily on the local economy. I think banks will do about as well they have been doing. (The Federal Reserve raised its key interest rate Dec. 16 and) when rates change, affected banks have to adjust. It’s not necessarily a bad thing, but it presents risks. Some banks will do better than others.”