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Ohio: Stimulus Funding Supports Transition to Knowledge-Based Economy

Susan Avery (Aug/Sep 09)
Ohio was hit hard by the recession. It saw its unemployment rate rise steadily from 5.7 percent in January 2008 to 11.1 percent in June 2009. The U.S. Bureau of Labor Statistics recorded nearly 1,800 mass layoff events involving 224,445 initial claimants during that 18-month period. Manufacturing employment, which declined 18 percent from June 2008 through June 2009, was already in the midst of a downturn. Less than a decade ago, it exceeded 1 million and now it is only slightly over 600,000.

"Ohio's current difficulties started long before the current recession," says Keith Ewald, Ph.D., chief of the state's Bureau of Labor Market Information. Indeed, the bureau's 2009 Economic Analysis report says employment growth in Ohio began to fall below the national average in the mid-1990s, and the state never fully recovered from the 2001 recession. While the global financial crisis clearly made the situation worse, layoffs and other events associated with the downturn "are occurring within the context of other, more systemic trends that have been with us for a while," says Ewald.

Key to these trends is the shift toward a knowledge-based economy. While manufacturing remains critical as a value-added component and economic driver, it is no longer the mainstay of Ohio's middle class. Next-generation manufacturing - incorporating such concepts as customer-focused innovation, continuous improvement, advanced talent management, global involvement, and, of course, the latest technology - requires higher levels of education and training.

Fortunately, the Buckeye State is rising to this challenge and working to prepare its ample work force for the job requirements of the new economy. A $1.57 billion state-level stimulus program enacted in 2008 included $250 million for a higher education work force initiative intended to keep college-educated Ohioans in the state, linking them to good jobs and internships while they earn their degrees. And earlier this year, the state legislature passed a balanced two-year budget that, according to Governor Ted Strickland, makes education the state's "first priority."

Of the $5.3 billion in federal stimulus funds made available so far for Ohio through the American Recovery and Reinvestment Act, more than $2 billion has been allocated for education. Strickland acknowledged when he signed the state budget that "much of what we have been able to accomplish in this budget would not have been possible" without that federal stimulus.

Last year's state-level stimulus program also included $920 million for infrastructure improvements, including brownfield redevelopment, plus $400 million to be invested in industry clusters including advanced energy, bioproducts, biomedical, and logistics. The bioproducts and biomedical portions of this funding have been tied up in a legal battle over use of tobacco settlement funds, but both the advanced energy and the logistics and distribution programs have moved forward with a large number of grants and loans already awarded for a variety of projects.

Meanwhile, the Ohio Tax Credit Authority has been busy approving Job Creation Tax Credit incentives for companies throughout the state. In late July it announced approval of tax credits for 13 businesses involved in location or expansion projects expected to create 1,341 positions and retain 5,971 jobs. These included Greenfield Solar Corp., expected to create 200 positions in Oberlin and North Ridgeville in the manufacturing of concentrating photovoltaic systems; and GE Aviation for a $161 million capital upgrade project at its manufacturing campus in Evendale, which will retain 5,000 jobs for a minimum of 18 years.

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