A few decades ago, Jim Booth sensed he might need to think about business beyond his two eastern-Kentucky coal mines, so he started a building-supply company, invested in real estate and began purchasing retail outlets. Over the past five years, his privately held coal conglomerate, Booth Energy, went from producing 8 million to 5 million tons of coal a year, and its workforce shrank by almost a third. But Booth says he was able to offset losses thanks to his varied companies, including a chain of Fast Lane convenience stores, which employs 800 people. "Coal has been our backbone," he says. "But during the lean times, we've been able to fall back on retail."
For any business--or region, for that matter--dependent on a single and potentially unreliable revenue stream, diversification might sound like common sense. But it's much easier said than done. Consider single-industry towns Flint, Mich. (cars), and Elkhart, Ind. (recreational vehicles), or Alaska, where oil production on average has sunk to a 25-year low. With regional energy discoveries creating new boomtowns around the country--think shale gas in North Dakota--long-term planning for the inevitable fizzle is becoming vital. That's why moves being advocated by Booth and a coalition of business leaders, nonprofits and government agencies are worth watching. If eastern Kentucky can turn itself around, it can become a model for other parts of the country.
It won't be easy: Kentucky is in particularly bad shape. Statewide, coal jobs are at their lowest level since 1927. About 5,700 eastern-Kentucky miners have lost their jobs in the past two years. Several factors have accelerated losses, including federal rules limiting carbon and mercury emissions, low-sulfur coal's falling out of favor and record-low natural gas prices resulting from increased fracking.
Examples of similarly challenged mining regions that have successfully diversified their local economies, meanwhile, are few and far between. Some are studying efforts made in the 1980s by Wales, in the U.K., which lost more than 85,000 coal jobs but reclaimed many of its former mining valleys, turning them into mountain-bike parks and mining museums. And northern Minnesota shifted from mining iron ore to taconite in the 1960s and '70s while setting aside funds to reclaim old mining properties, which have been developed into campgrounds, parks and lakes.
Last month, the Kentucky chamber of commerce released a study calling for the east to become a regional tourist destination, suggesting it could develop its own "modern, well-planned Gatlinburg," a reference to Tennessee's sprawling tourist stop. Right now, the area accounts for just 9% of Kentucky's $7.8 billion in tourism spending. "Tourism has never been a focus. Private investment was always oriented toward coal," explains Dave Adkisson, the chamber's president and CEO, adding that the state could partly privatize underutilized parks and develop high-end hotels and resorts.