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SECTION H
<br />HOW THE OLD HEAT PROJECT WILL ASSIST LOCAL
<br />ECONOMIC DIVERSIFICATION EFFORTS
<br />The diversification strategy described in this section directly advances Old
<br />Heat's four core objectives: creating high-wage employment, commercializing
<br />and diffusing technology statewide, reusing state assets efficiently, and
<br />modeling a replicable Eastern-Western Washington economic alignment, Each
<br />diversification pathway that follows illustrates how these objectives translate into
<br />measurable local and statewide economic outcomes.
<br />The Old Heat project is designed to reshape the structural trajectory of the
<br />Kittitas County economy. lnstead of relying on incremental changes within
<br />existing low-wage, low-growth industries, it introduces a catalytic platform that
<br />shifts the region toward innovation-intensive, higher-value industries, lts purpose
<br />is twofold: to serve as an on-ramp for existing businesses to integrate advanced
<br />technologies and become more competitive, and as a launch pad for new
<br />enterprises that build directly into state and national industry clusters. ln this way,
<br />Old Heat strengthens diversification not simply by adding more sectors, but by
<br />embedding industries with the highest potential for wage growth, resilience, and
<br />long{erm economic impact.
<br />CURRENT ECONOMIC STRUCTURE AND RISKS
<br />As of 2023, Kittitas County employed 25,377 individuals across 207 industries.
<br />0n the surface, the Normalized Shannon-Weaver lndex for the county is
<br />0.83, suggesting a relatively even distribution of employment across sectors.
<br />However, this masks a deeper structural issue: Kittitas County's employment is
<br />evenly distributed across a narrow set of lower-value industries, These include
<br />education, public sector employment, hospitality, and retail. These sectors
<br />service the local economy but generate little outside revenue, which leaves the
<br />region highly vulnerable to labor shifts, automation, and fluctuations in consumer
<br />spending.
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<br />By contrast, Washington State employed more than 4.8 million people across
<br />492 industries in 2023. lts normalized Shannon-Weaver lndex was slightly lower
<br />at 0.78, reflecting concentration in high-value industries such as aerospace,
<br />software, logistics, and life sciences. These concentrations are features of a
<br />high-performing economy, not vulnerabilities, because they are tied to innovation-
<br />intensive clusters with spillover effects and global market reach.
<br />The Herfindahl-Hirschman lndex (HHl), a commonly used measure of market
<br />concentration, underscores this point. The HHI is used to study competition,
<br />pricing power, and market efficiency, Kittitas County's HHI is 0.020, significantly
<br />higher than the state average of 0.01 2 - a 67o/o greater concentration. This
<br />strongly suggests that Kittitas County's economy is over-reliant on a few low-
<br />wage industries and underexposed to the types of high-value clusters that
<br />generate economic resilience.
<br />Kittitas County's 2023 median wage was $65,208, while Washington State's
<br />was $89,1 38. The low wages of the primary industries of the county combined
<br />with the increasing costs of living make outmigration of highly skilled workers
<br />a significant challenge for the communities in the county, Table (1) shows
<br />select industries of the county (food manufacturing, brewing, restaurants, arts,
<br />entertainment, and recreation), none of which provide salaries that support a
<br />median-priced home in the region. This compares to the median wages of the
<br />focal industries of the Old Heat project (aerospace, communication technology,
<br />agricultural machinery), all of which provide salaries that make median house
<br />price purchases within reach of workers in the county.
<br />OLD HEAT AS A DIVERSIFICATION CATALYST
<br />Rather than trying to incrementally improve the economic ecosystem with its
<br />limited scope of lower-wage industries that are artificially suppressed by the
<br />absence of the high-wage industries prevalent in the larger Washington State
<br />region, the Old Heat project creates a structural inflection point. lt will diversifo
<br />the economy by introducing advanced industries into the regional ecosystem,
<br />embedding them within CWU-linked infrastructure, and building feedback
<br />loops between business, workforce development, and applied research. This
<br />d iversification occurs throug h fou r interconnected mechanisms:
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