< Previous28 OHIO BUSINESS GROWTH GUIDE 2013. It now provides JobsOhio with around $300 million per year to fund economic development. The Intel project win is considered a game-changer for Ohio. Can you discuss its impact and what this means for the future of Ohio? NAUSEEF: There have been three significant impacts. First, the news that Intel had chosen Ohio for its first greenfield manufacturing facility in 40 years in the United States reached more than 6 billion people worldwide, putting Ohio on the map and in the consideration set for other semiconductor manufacturers as well as their supply chain partners. Second, this is the first major semiconductor manufacturer in Ohio, and it will lead to the addition of a whole new industry sector as those supply chain partners come alongside Intel in Ohio. Third, as part of the deal, Intel is catalyzing new workforce development pipelines to connect residents with good-paying jobs in the semiconductor industry by supporting various education initiatives. They include K-12 science, technology, education, arts, and math (STEAM) programs, collaborative research projects, and semiconductor- specific curricula for associate and undergraduate degree programs. Further, Intel has committed to invest $50 million over the next decade in partnership with Ohio universities, community colleges, and other higher education institutions. Ohio institutions will also be eligible for an additional $100 million in nationwide funding from a partnership between Intel and the U.S. National Science Foundation. For instance, the Intel Semiconductor Education and Research Program for Ohio (SERP) is funding over 60 post- secondary education institutions across the state, including community colleges and historically Black colleges and universities, to build a pipeline of manufacturing technicians. These talented individuals will benefit every manufacturer in the state. There are many more programs, and you can learn about them here: https://download. intel.com/newsroom/2023/corporate/OH- Workforce-fact-sheet.pdf. These programs alone mean that Ohio’s future workforce will be even better at building the things the world needs. In addition to the points above, Intel will add 3,000 direct jobs, support tens of thousands of supplier and support jobs, and has already increased their capital investment statement from $20 billion in 2022 when they announced to $28 billion as of 2024. Infrastructure investments are happening to support Intel and the resulting supply chain. Those investments go beyond just the manufacturing site. For instance, JobsOhio President and CEO J.P. Nauseef announces Joby Aviation’s investment in Dayton from the front lawn of Orville Wright’s home. Photo courtesy of JobsOhioOHIO BUSINESS GROWTH GUIDE 29 Intel, working with the Ohio Department of Transportation, spent 18 months identifying a new site and route to get massive manufacturing equipment from the Ohio River in Manchester, Ohio, to Central Ohio. These “super-loads” can be 900,000 pounds, 19 feet wide, 24 feet high, and 270 feet long, and it takes 8-15 days to travel approximately 140 miles from the dock in Adams County to the site in Licking County. The infrastructure improvements and route planning are already benefiting other manufacturers in the area as they are also utilizing these improvements for their shipments. How is the transition to electric vehicles changing Ohio’s automotive manufacturing sector and workforce? NAUSEEF: Ohio is focused on innovation and solving the problems that industry has before it in each of the sectors where we participate. Undoubtedly, the automotive industry has deep connections to Ohio, where the first gas engine and electric starter were invented. That same spirit is more alive today than ever before, and it’s on top of the third- largest automotive manufacturing workforce in the U.S. Ohio’s long history of expertise in propulsion technology in automobiles is the bedrock for us to continue to be at the forefront of that innovation. That’s why Ultium set up its first battery plant in Lordstown. Honda established its battery technology research center at Ohio State less than a year after it announced its 2030 vision of electrification, which started with a partnership with LG Energy Solution to build a massive battery factory in Jeffersonville, Ohio, and employ 2,200 Ohioans there. Additionally, Honda is retooling its operations in the state to prepare them for building EVs. All told, Honda and LG Energy are investing $4.2 billion in Ohio, the largest global company investment in Ohio history. Honda is far from alone; GM invested $760 million at its Toledo propulsion manufacturing plant to produce electric drive units and onshore their production to the U.S. for the first time. Ford is creating 2,000 new jobs at their Avon Lake Assembly Plant and investing $1.5 billion to expand production capabilities for a new commercial electric vehicle. This vehicle is being built alongside their existing commercial combustion vehicles. Those vehicles aren’t going away any time soon; that’s why Ford is still building their medium and super-duty pickups at Avon Lake as they double down on the location for EVs. Ohio is the center of the auto ecosystem — central to supplying parts to original equipment manufacturers — which helps producers shorten delivery and hold times. Similarly, suppliers for EVs are located in close proximity to the electric vehicle supply chain. However, Ohio has a bigger vision of moving people and products. As a state, our imagination goes beyond cars and trucks on roadways and includes advanced mobility. We are being purposeful about readying the state for the next generation of mobility, which we believe will be connected vehicle systems like the US 33 Smart Corridor and flying cars. Ohio is home to the National Advanced Air Mobility Center of Excellence, where companies from around the world are accelerating research and development. That’s one reason Ohio landed Joby Aviation in Dayton to build its scaled manufacturing facility capable of producing up to 500 air taxis per year and employing 2,000 Ohioans. Ohio’s focus on innovation in this space makes it the only state in the U.S. with an intentional statewide strategy to support the research and development, manufacturing, and commercial use of Advanced Air Mobility. What role do colleges and universities play in economic development in Ohio? NAUSEEF: More than 200 colleges and universities in Ohio play a critical role in “ We don’t just see company growth as a metric — we want Ohio to be their competitive advantage. And we’re willing to work as hard as it takes to make it happen. ” — J.P. Nauseef, President and CEO, JobsOhio30 OHIO BUSINESS GROWTH GUIDE economic development by creating a robust pipeline of skilled talent for JobsOhio’s 10 focus sectors. In 2022, 157 Ohio colleges and universities offered programs related to JobsOhio priority occupations. Many of these occupations include STEM-related careers, which are highly sought-after positions by some of Ohio’s most successful employers. Some notable highlights of how colleges and universities are increasing the talent pipeline include: 1)Ohio is No. 5 in the nation in chemical engineering bachelor’s degree graduates in 2022. 2)An 18% increase in annual degrees granted for Supply Chain Management (2010-2022). 3)A total of 1,311 Transportation and Materials Moving completions annually (2022), a 49% increase since 2010. 4)A 16% increase in annual graduates in Math and Statistics (2017-2022). 5)There was a 17% growth in the annual number of computer engineering degree graduates in Ohio from 2017 to 2022. 6)Ohio schools granted 23% more annual degrees for chemistry, petroleum engineering, chemical engineering, and similar programs from 2012-2022, the highest among regional competitors. 7)From 2017-2022, Ohio grew 57% in completions of Computer and Information Sciences and Support Services education programs. 8)With 13 institutions at either an R1 (5 institutions) or R2 (8 institutions) Carnegie Status, Ohio ranks fourth in the number of institutions with these statuses. The Carnegie Classification of Institutions of Higher Education is the nation’s leading framework for categorizing diverse U.S. higher education institutions. 9)Ohio saw 183,021 higher education program completions in 2022 in programs ranging from agriculture to engineering. 10)In 2022, Ohio had more than 3,500 associate’s degree completions, more than 18,000 bachelor’s degree completions, and more than 5,500 master’s and doctoral/professional degree completions in programs related to JobsOhio priority occupations. That pendulum swings the other way, too. Ohio is currently a net importer of college students. The economic development projects won by JobsOhio and its partners — including Intel, Honda/LG Energy Solution, and others — create opportunities and incentives for students to grow their careers and establish their lives in Ohio. How does Ohio support innovation and entrepreneurship? NAUSEEF: Part of JobsOhio’s five-year strategic plan was to invest in innovation. JobsOhio built out three primary programs to build a flywheel of innovation and support efforts from the state to invest in discovery. First, JobsOhio invested $300 million in Innovation Districts in Cincinnati, Cleveland, and Columbus, which has catalyzed $3 billion in commitments from anchor tenants and the State of Ohio. These Innovation Districts are where people, ideas and the future grow together. World-class medical and research facilities, leading academic institutions and private companies anchor the Innovation Districts and gain a competitive advantage through collaboration and physical environments. Over 10 years, Ohio’s Innovation Districts are expected to inspire 47,000 new STEM graduates and “ More than 200 colleges and universities in Ohio play a critical role in economic development by creating a robust pipeline of skilled talent for JobsOhio’s 10 focus sectors. ” — J.P. Nauseef, President and CEO, JobsOhioOHIO BUSINESS GROWTH GUIDE 31 fuel an estimated 60,000 new jobs. This was built to help you scale translational research, leading to faster discovery, the commercialization of ideas, and dynamic growth. In 2023, Ohio’s research universities secured a record $1 billion in National Institutes of Health funding. Second, JobsOhio’s strategy funds private company research and development center investments. These R&D Centers will support developing and commercializing emerging technologies and products that align with one or more of JobsOhio’s targeted industries. For example, Honda recently announced a new battery cell research and development center at The Ohio State University. Slated to open in April 2025, the lab will accelerate the domestic development of battery cell materials and manufacturing technologies while providing an experiential learning setting for workforce development. It will also create a hub for academic and industry connections across engineering, chemical and physical sciences, business, and policy. Once completed, the project will create a strong pipeline of industry talent while also attracting electric vehicle battery manufacturing and supply chain businesses to help support the evolving vision for the industry. Third, JobsOhio’s Growth Capital Fund is a co-investment fund that invests in early- stage companies that are Ohio-based or planning to locate a significant presence in Ohio. These companies are hand-picked for the groundbreaking nature of their business offering and are nationally recognized for the advancements they are making in their industries. The strong caliber of funds that are investing alongside JobsOhio is a signal to companies that building their presence in Ohio can be a strategy for solid investment and swift momentum. Finally, the State of Ohio has committed $125 million to fund Innovation Hubs. The program will capitalize on communities’ existing industry and research strengths to build sustainable talent pipelines and commercialize new products and technologies. Like Innovation Districts, Innovation Hubs are industry-focused ecosystems of researchers, entrepreneurs, and public and private partners working together to create and develop innovative solutions and products. Innovation Hubs are aimed at small and medium-sized Ohio cities, and the hubs will create jobs, increase STEM talent and attract research funding and outside capital investment. People are well aware of the Big Three C’s — Cincinnati, Cleveland, and Columbus — but what about the rest of Ohio? How strong and competitive are Ohio’s second- and third-tier cities and small towns? NAUSEEF: Ohio is unique in that we have so many options for living. You mentioned the 3 C’s, but then there are multiple medium-sized cities like Dayton, Toledo, Youngstown, Akron and Canton. The truly unique part of Ohio is that we mix all of that with dozens of storybook towns with populations that have less than 50,000 people, some of the lowest cost of living in the country, but all of the amenities of larger cities and usually a very short drive to these larger cities. These smaller towns support small and large businesses alike due to focused investment in infrastructure and rehabilitation of buildings through programs like the Ohio Historic Preservation Tax Credit and the JobsOhio Vibrant Communities Grant that attracts $7 of private investment to rebuild downtowns for every $1 of JobsOhio funding. Site Selection Magazine ranks these under 50,000 in populations, called micropolitans, on the number of economic development projects that are completed each year, and Ohio’s towns have an outsized advantage, placing five of the top 10 micropolitans in 2023, including Findlay as the No. 1 micropolitan for the last 10 years. They are competitive and consistently produce a competitive advantage for the companies who decide to locate there. One of the reasons they do so well is our Team Ohio approach, led by the DeWine and Husted administration; and Team Ohio brings public and private economic developers, elected officials and regional, county, and local partners together to create a vision of growth with an aim to have each partner building together toward the same goal. 32 OHIO BUSINESS GROWTH GUIDE Top 20 Projects of 2023 by Investment Projects by TypeProjects by Sector STATISTICAL PROFILE OHIO by the numbers COMPANIES CITY SECTOR CATEGORY INV(US$M) JOBS QUALITY TECH. SERVICES (MILLER ROAD) NEW ALBANY IT & COMM. NEW 1,900 5 QUALITY TECH. SERVICES (BEECH ROAD) NEW ALBANY IT & COMM. NEW 1,500 QUALITY TECH. SERVICES (BABBITT ROAD) NEW ALBANY IT & COMM. NEW 1,000 5 DMAX / GENERAL MOTORS CO. BROOKVILLE AUTOMOTIVE EXP. 920 720 VALENCIA PROJECT SALEM TOWNSHIP CONSUMER PRODUCTS NEW 541 114 JOBY AVIATION DAYTON AEROSPACE NEW 500 2,000 LOUIS DREYFUS HOLDING B.V. UPPER SANDUSKY FOOD & BEVERAGE NEW 500 100 BARCEL USA ZANESVILLE FOOD & BEVERAGE NEW 261 320 METALX DEFIANCE CONSUMER PRODUCTS NEW 253 180 BRODERICK DBT-DATA DRIVE NEW ALBANY IT & COMM. NEW 250 5 EDGED ENERGY / EDGED COLUMBUS NEW ALBANY IT & COMM. NEW 250 SCHAEFFLER DOVER AUTOMOTIVE NEW 230 450 GOOGLE NEW ALBANY IT & COMM. EXP. 230 50 MEDPACE CINCINNATI LIFE SCIENCES EXP. 230 1,500 NATIONAL RESILIENCE WEST CHESTER TOWNSHIP LIFE SCIENCES EXP. 229 274 INVENERGY / ILLUMINATE USA PATASKALA ELECTRONICS NEW 220 850 GOOGLE (5266 BABBITT ROAD) NEW ALBANY IT & COMM. EXP. 205 50 ALIGNED DATA CENTERS (NEO) PROPCO SANDUSKY IT & COMM. NEW 202 18 MARS PETCARE US COLUMBUS FOOD & BEVERAGE EXP. 200 125 VIEGA SHALERSVILLE TOWNSHIP METALS NEW 200 68 SECTOR PROJECTS MACHINERY, EQUIP. & CONST. 90 FOOD & BEVERAGE 64 TRANSPORT & LOGISTICS 45 METALS 41 CHEMICALS & PLASTICS 37 BUSINESS & FINANCIAL SERVICES 34 IT & COMM. 30 AUTOMOTIVE 29 CONSUMER PRODUCTS 29 LIFE SCIENCES 22 PAPER, PRINTING & PACKAGING 18 ELECTRONICS 17 OTHER 26 SECTOR PROJECTS MANUFACTURING 258 DISTRIBUTION WAREHOUSE 142 OFFICE 77 HEADQUARTERS 48 DATA CENTER 16 RESEARCH AND DEVELOPMENT 13 MACH. 19% MFG. 46% DIST. 26% OFFICE 14% FOOD 13% TRANS. 9%11.8M Population 0% State tax on corporate income 63% increase in new businesses over the last decade 60% Ohio is one day’s drive from 60% of U.S. and Canadian populations. 4th Largest interstate highway system in the nation: nearly 7,000 lane miles on 8 major routes 5,388 Miles of active freight rail $629B in GDP in 2021 (U.S. Bureau of Economic Analysis) No.1 2023 Global Groundwork Index (Site Selection Magazine) No.5 Top State for Doing Business (2023) (Area Development) No.6 Best State to Start a Business in 2024 (Forbes Advisor) No.3 In the U.S. for Auto Manufacturing (Business Facilities) 600+ INTERNATIONAL CORPORATE PROJECTS INVOLVING $18B IN CAPITAL INVESTMENT & OVER 45,000 JOBS No.1 Micropolitan , Findlay (Site Selection Magazine) 15,000+ MFG. COMPANIES OHIO BUSINESS GROWTH GUIDE 3334 OHIO BUSINESS GROWTH GUIDE ECONOMIC OVERVIEW by NED HILL, PROFESSOR OF ECONOMIC DEVELOPMENT, THE OHIO STATE UNIVERSITY hio’s recent economic development news has been dominated by groundbreaking ceremonies. Intel and Amgen blaze a new technology-driven industrial corridor northeast of Columbus. Two electric mobility startups moved into the state: Joby Aviation’s electric air taxi will be Dayton-made, while Hyperion Motors purchased an abandoned newspaper printing plant to fabricate hydrogen fuel cell stacks in Columbus once the market develops. Electric batteries are made in Northeast Ohio’s LG-GM Ultium factory, while Honda’s EV battery plant is under construction in downstate Fayette. Honda is also investing in its mid-Ohio assembly, transmission and engine plants to meet a hybrid future. Metropolitan Toledo is home to First Solar and startup Toledo Solar. The south-central portion of the state has seen a lot of growth in warehousing and logistics, along with notable manufacturing investments by Sofidel and American Nitrile. While Ohioans wait for these projects to develop, what is happening now? Cost-of-living-adjusted per capita income in Ohio is, and has been, above the national average, while growth in GDP moved in concert with the national average. However, an average gap of -1.2 percentage points in the GDP growth rate has persisted since 2021. (See Figure 1) O LOWER COST OF LIVING MEANS MORE PROSPERITYOHIO BUSINESS GROWTH GUIDE 35 Annual growth in real GDP in Ohio (red line) tracked growth in the U.S. (black line) economy from 2019 through the recovery from COVID-19. Ohio’s real GDP growth rate began to lag the national average in the summer of 2021. The question is: Why has the growth rate trailed the national average? The short-run answers are in the labor market. First, I compare Ohio’s Unemployment Rate (UR) to the national average, followed by the Labor Force Participation Rate (LFPR). No statistical difference exists between the national and Ohio unemployment rates (Figure 2). However, this measure of unemployment is restricted to those who are not working and actively seeking work. It omits those who are not seeking work for whatever reason. A different measure of labor market activity — the Labor Force Participation Rate — indicates that there is either a discouraged worker challenge or employers are attracting potential workers to specific types of jobs (Figure 3). Figure 2 Unemployment Rate (UR) The monthly unemployment rate for the U.S. and Ohio from January 2019 to March 2024 for Ohio and April 2024 for the U.S. Figure 3 Labor Force Participation Rate (LFPR) The monthly Civilian Labor Force Participation Rate for Ohio and the U.S. from January 2019 to March 2024 for Ohio and April 2024 for the U.S. Figure 1 Gross Domestic Product (GDP) Quarterly 12-month Growth Rate in Real Gross Domestic Product for the U.S. and Ohio from 2019(1) to 2024(1) in 2017 dollars36 OHIO BUSINESS GROWTH GUIDE Ohio’s Labor Force Participation Rate (LFPR) was either above or roughly even with the national average from January 2019 through March 2020; Ohio’s average LFPR was 63.1%. This relationship changed with the recovery from the March 2020 COVID-19 shock. In February 2021, Ohio’s LFPR was 0.1 percentage points, or 10 basis points, lower than the nation’s. In finance, a hundredth of a percent (0.01%) is called a basis point, 0.1% is 10 basis points, and 100 basis points constitute 1%. In labor economics and demographics, where meaningful differences in unemployment rates, labor force participation rates, and population growth rates are frequently less than 1%, discussing differences in terms of basis points prevents confusion. The gap between the LFPRs in Ohio and the nation slowly and steadily grew from 10 basis points in February 2021 to 90 basis points in August 2022. Since that date, the gap has hovered between 70 and 90 basis points. This means that the share of Ohio’s adult population (age 20 and older) working or looking for work is below the national average. Looking at national LFPRs by demographic groups provides some hypotheses about why the gap occurred (these data are unavailable for states). Comparing the national LFPRs from March 2020 to January 2024: •While the LFPRs for men are higher than for women, the LFPRs for men have not recovered to their pre-pandemic levels. In contrast, while proportionately more women left the labor force during the pandemic, the LFPRs for women had nearly recovered. •The two age groups with the lowest recovery rates pre- to post-COVID were those with the highest LFPRs — the heart of the labor market. In January 2024, the LFPR of those aged 20 to 24 was 250 basis points below their March 2020 level. Those aged 25 to 54 had an LFPR of 200 basis points below March 2020. •LFPRs increase with educational attainment. In January 2024, high school non-completers had LFPR of 47%, terminal high school graduates 57%, some higher education or associate degrees 63%, and bachelor’s degree holders and above 73%. There are two more pieces to the puzzle about Ohio’s economic performance: real per capita income and real per capita income adjusted for the cost of living — which is where the surprise exists. Change in real per capita income is a good indicator of overall economic progress. I first plotted per capita income in Ohio (red line) and the U.S. (black line) in Figure 4, followed by the annual percent change in per capita real per capita incomes from 2009 to 2022 in Figure 5. The nation and Ohio have had real average incomes increase throughout, except during the Great Recession and between 2021 and 2022. However, the average income in Ohio was lower throughout the period covered in Figure 4, and the gap between state and nation began to widen in 2018. Figure 5 plots the annual difference in real per capita income in the U.S. and Ohio; the Figure 4 Real Per Capita Income Annual Real Per Capita Income for the U.S. and Ohio from 2008 to 2022 for Ohio and the U.S.calculation subtracts the U.S. average from the Ohio average. The percentage difference between the two is plotted in red on the lefthand vertical axis, and the dollar difference is in blue and plotted against the vertical axis on the right. The average difference in the annual growth rates was 2.4%; however, there was a change between 2017 and 2019 when the difference between the US and Ohio jumped from $727 to $2,389. These data are accurate, but they do not account for differences in the cost of living in Ohio and its regional labor market areas. This is done in Figure 6. Adjusting Real Per Capita Incomes for Regional Variation in the Cost of Living Here is the surprise: the relationship between Ohio and the U.S. changes after adjusting real per capita income for regional differences in cost of living. I used the regional price parities for states and regions produced by the U.S. Bureau of Economic Analysis to account for cost-of- living differentials. The index is constructed so that the U.S. average is 100.0, and each state and metropolitan area has a price parity that is an index number interpreted as a percentage of the U.S. average. The parity indexes for Ohio and its metropolitan areas are lower than 100.0. OHIO BUSINESS GROWTH GUIDE 37 Figure 5 Annual Difference in Real Per Capita Income Differences in the Real Annual Percentage Change in Per Capita Income (left-axis) and The Real Dollar Change in Per Capita Income (right- axis) between Ohio and the United States (Ohio-U.S.) from 2008 and 2022 Figure 6 Real Per Capita Incomes Adjusted for Cost-of-Living Cost-of-living adjusted Real Per Capita Incomes in Ohio and the Cincinnati, Cleveland, Columbus, and Toledo Metropolitan Areas are above the National Average Per Capita Income.Next >