< Previous198 MAY 2019 SI T E S E L E C T IO NLabs, Fuyao Glass America), life sciences (Cambridge Isotope Laboratories, Cresco Labs, Radmedix), plastics and chemicals (Alpha Holding, Kuhns Mold & Tool), warehousing and distribution (Walmart, Chewy, Purina Mills), research and development (Lucid Energy Group, Martrix Research), plus of ce and headquarters (Kettering Health Network, Coldwater Machine, Tyler Technologies).According to DDC data, 2018 witnessed total capital investment of $855 million in the Coalition’s 12-county region. The 3,880 newly created jobs represented a year-over-year increase of nearly 80 percent with more than $200 million in added annual payroll, up $86 million from 2017.For business attraction, Dayton enjoys an auspicious location at the junction of Interstates 70 and 75, which puts it within one day’s drive of 60% of the U.S. and Canadian populations.Hoagland also cities a low cost of doing business and availability of skilled workers supported by the University of Dayton (UD), Wright State University, Ohio State and the Universities of Cincinnati and Miami. Dayton’s most visible asset, however, is the sprawling Wright-Patterson Air Force Base, the city’s largest employer by far with 27,500 highly skilled employees and an annual payroll of $2.23 billion. Hoagland refers to “Wright-Patt,” home of Air Force Research Laboratories (AFRL) and the National Air and Space Intelligence Center (NASIC), as “the intellectual capital of the USAF.” A hub for military research and development, Wright-Patt has served as a magnet for luring defense industry giants such as GE Aerospace, Northrop Grumman, Orbital ATK, Boeing and Lockheed Martin, all of which have operations in Dayton. In addition, partnerships with UD have delivered two research centers — General Electric EPISCenter and Emerson’s Helix Innovation Center.“We’ve had an R&D explosion over the last ve years,” says Hoagland. “We’ve got companies doing hundreds of millions of dollars with the AFRL alone. These are the drivers of our economy.”And it’s only getting bigger. NASIC has been approved by Congress for a $182 million expansion to accommodate its growth to more than 3,000 workers, including the addition of new computer labs and equipment. In December, the Air Force selected Wright-Patt as the preferred location for the F-35 Lightning II Hybrid Product Support Integrator organization (HPSI), currently headquartered in Crystal City, Virginia. HPSI is considered to be an integral part of maintaining and prolonging operations of the global F-35 ghter eet. “Wright-Patterson Air Force Base has the trained acquisition professionals with the right ghter aircraft experience to run this operation,” said Heather Wilson, then Secretary of the Air Force. Last year was probably the best year we’ve had in close to 20 years.” −Jeff Hoagland, President and CEO, Dayton Development Coalition200 MAY 2019 SI T E S E L E C T IO NHoagland says acquisition of HPSI will create some 440 new jobs, “project managers, attorneys, logisticians, accountants, highly-paid professionals. The multiplier we’ll see will probably be three-to-five X.”In all, federal installations within the Dayton region — also including Springfield Air National Guard Base and Dayton Veterans Affairs Medical Center — account for more than 88,000 jobs with $5.87 billion in annual payroll, while generating more than $16.68 billion in annual economic activity, according to a study by the Perduco Group for DDC. Government work accounts for 15% of the Dayton region’s employment, second only to manufacturing (22%), and just ahead of health care (9%).A 2018 study by the Brookings Institution identified Dayton as one of only 11 metro areas in the country to have achieved “inclusive growth,” defined as economic growth distributed fairly across society that creates opportunity for all. As such, Dayton, according to Brookings, demonstrated a “high-road economic development strategy that prioritizes both high-skilled, innovative sectors like technology and middle-skill traded sectors like manufacturing and logistics.”Says Hoagland: “We continue to see strong growth in manufacturing, particularly advanced manufacturing. The bioscience sector is very strong. Logistics is strong because of the I-70/75 corridor. And, of course, aerospace and defense.“I’m a baseball fan,” he says. “I always say, ‘We’re gonna double you to death.’ We’re gonna hit a lot of doubles, and the next thing you know it’s eight to nothing.” Economic Impact of Federal Installations On DaytonSource: The Perduco Group202 MAY 2019 SI T E S E L E C T IO N“Ohio suffered the most from the retaliatory tariffs put in place by Canada,” says Hill, professor of economic development at OSU and a member of the Ohio Manufacturing Institute. “Iron and steel are paying the largest share of these. To date, that is $1.1 billion.”Ohio Relies on Canadian ConsumersWhy is Ohio paying the price? “Distribution centers in Ohio distribute products into the Canadian retail system,” Hill says. “Cleaning supplies paid the second-biggest trade tariff tax. The prepared-foods sector paid a high price as well. So did appliances and water heaters.”Retaliatory tariffs were placed on all agricultural products and manufactured products. As a result, manufacturing states were hit the hardest, says Hill. “Michigan, Ohio, Indiana, Tennessee and Kentucky bore the brunt of this,” he notes.A separate study conducted by Oxford Economics concluded that South Carolina, Louisiana, Indiana, Michigan, Oregon, Wisconsin, Kentucky, Minnesota, Ohio and Tennessee were the states that were most negatively affected.Moody’s, meanwhile, noted that Michigan, Ohio and Tennessee were hit hard by the farm tariffs, while Washington and Kansas suffered the effects of the retaliatory tariffs on aerospace. Brookings analysis placed Ohio No. 6 in export-supported jobs, but a more sanguine 25th in terms of share of export-supported jobs exposed to tariff effects.“The European Union targeted whiskey for tariffs to smack Senator Mitch McConnell of Kentucky,” notes Hill. “Some whiskey makers had to curtail their exports to Europe because of the tariffs.”Hill cited studies showing that U.S. consumers are absorbing the costs of the tariffs. “The London Center for Policy Research found that exporting countries are not paying the tariffs, consumers are,” he says. “Supply chains are shifting out of Canada and into Vietnam and other places in Southeast Asia. Consumers are picking up the tariff differential. Markets work.”Studies by the New York Fed and San Francisco Fed found that the Trump trade tariffs raised inflation by 0.1 percent to 0.33 percent, while another study, according to Hill, showed that tariffs reduced business investment in the U.S. by 1.2 percent or $32.5 billion.“Overall, the tariffs reduced incomes in the U.S. by nearly $7 billion, and the tariffs were costing U.S. consumers nearly $4.5 billion a month,” adds Hill. “Our study showed that the stimulus caused by the tax cut prevented a recession from occurring. A trade imbalance with a stimulus works, but the stimulus will be cut in half this year.”Why a Broader Economic Decline Could OccurWhy did business investment not take place from the tax cuts? “Most of the money saved went into stock buybacks,” Hill says. “Secondly, it was due to uncertainty around the trade war.”Moving forward, the OSU study offers “cautions about the continuation or expansion of the trade actions, as there are signs that metal-users are beginning to make adjustments in their supply chains and where they source metal-intense products.”The study adds that “economic decline will likely occur if the sanctions on China are ratcheted up and the U.S. imposes a new global duty against automobile imports and parts.”More ominous clouds may be brewing, however.“Anecdotal data coming from corporate earnings reports, comments recorded in the Federal Reserve’s Beige Book, and answers to the Ohio Manufacturers Survey all point to accumulating damage,” notes Hill. “The current trade skirmish is not enough to trigger a recession on its own. However, growing trade tensions between the U.S. and China, threats of additional actions against Europe, and continued actions against Canada and Mexico, coupled with signs of a softening domestic economy, may provide enough kindling to stoke the fires of recession — either regional or national.”To read a copy of the full OSU study, go to http://glenn.osu.edu/trade-skirmish/. (Continued from p. 194)204 MAY 2019 SI T E S E L E C T IO NINVESTMENT PROFILE:HOOSIER ENERGYHow Hoosier Energy built a network of FDI projects in 2 statesby RON S TARNERron.s tarner @site selection.comAround the World in 59 CountiesWhen NTN Driveshaft announced a $-million investment creating up to new jobs in Columbus, Indiana in October of , the news confi rmed what Hoosier Energy leaders had already known for a long time: e world is coming to the Midwest. More specifi cally, companies from Japan and China are fl ocking in record numbers to Hoosier Energy’s service territory, which is stretched across counties in Indiana and Illinois. Whether it’s Honda Manufacturing of Indiana, LLC investing $. million to bolster production at its Greensburg, Indiana, assembly plant, or ATTC Manufacturing investing $. million in a foundry operation in Tell City, Indiana, foreign direct investment deals are popping up all over the electric utility’s region. It’s not happening by accident either. Hoosier Energy works closely with state and local partners to arrange personal visits to CEOs and other business leaders in foreign countries, selling them on the advantages of choosing a Hoosier Energy location in the Midwest. Indiana Gov. Eric Holcomb led such economic development trips to India and Japan in , while Indiana Commerce Secretary Jim Schellinger led a delegation to China in .“In Indiana, we’re proud to be home to a global economy that now supports more than foreign-owned business establishments that provide , jobs for Hoosiers. at’s up from , just three years ago,” said Schellinger. “Under the leadership of Governor Holcomb, we’re working to take Indiana to the world and bring the world back to Indiana. Our international eff orts are strongly evident in communities like Columbus and Bartholomew County, which have worked hand-in-hand with us to cultivate these partnerships, supporting Japanese companies Honda plant in Greensburg, IndianaPhoto courtesy of Honda Manufacturing of Indiana LLCThis Investment Profile was prepared under the auspices of Hoosier Energy. For more information, visit www.hoosiersites.com or contact Harold Gutzwiller at 812-876-0294. S I T E S E L E C T I O N MAY 2019 205like NTN Driveshaft, Toyota Material Handling & Toyota Industrial Equipment Manufacturing, OSR and Daiei, as well as now India-based Axiscades.”Jim Turner, general manager and CEO of the Bartholomew County REMC, notes that “the offi cials from Columbus have forged strong relationships over the years, leading several Japanese companies to move to our town. ey don’t want to come and simply do business here. ey want to become part of the community. Japanese companies’ long-term commitment to Columbus, Indiana — as seen in their steady employment growth at their manufacturing operations — is truly remarkable. I am confi dent that Columbus and Japan will continue to build upon their strong, mutually benefi cial ties.”Jason Hester, president of the Greater Columbus Indiana EDC, agrees. “Our organization was formed in to diversify the economy, and our fi rst foray into FDI came in ,” he says. “We have been pursuing FDI for more than years now.”By the s, Columbus began seeing a steady infl ux of Japanese investors, culminating in Japanese fi rms employing more than , workers in the community today. Most are in the automotive sector, but other industries are showing signs of FDI growth as well.“It started with Japan, but FDI interest in our region spread quickly to Germany and France,” Hester adds. “Faurecia, a global automotive company based in France, does its R&D and production for emissions control technologies here. One out of every four cars produced in the world has Faurecia components and technology.”Hester notes that Columbus has been sending delegations to Japan annually for more than years and to China for more than a decade. “ ree companies from China have come here in the distribution sector,” he says. “From India, we have welcomed two fi rms in engineering services. One of them, KPIT, employs people here. e newest one is Axiscades, and they have been here for about a year. ey employ fi ve people now but plan to grow substantially in Columbus in coming years.” is growth is happening, he notes, because Columbus has one of the highest concentrations of engineering talent in the U.S., with a strong concentration in mechanical engineering. “About percent of all jobs in Columbus are in manufacturing, which puts us in the top % of all counties in the country,” says Hester. “ e regional campus of Indiana University-Purdue University of Columbus confers degrees in mechanical engineering, while the regional campus of Purdue Polytechnic off ers degrees in industrial engineering and related programs.”Purdue and Rose-Hulman Institute of Technology are two well-known engineering schools that keep the region stocked with a pipeline of talent, which acts as a magnet for FDI. “We have averaged new international residents each year for the past three years,” Hester says. “A lot of them are engineers. Others are in headquarters positions in manufacturing. Our largest employer is Cummins Inc., a Fortune fi rm in diesel engines and power systems. eir global headquarters is here. ey employ , people in Southern Indiana, mostly in Columbus.”He adds that “Hoosier Energy has been a great partner. ey have helped us with dedicated funding for our international recruitment eff orts. Hoosier Energy has also helped in site readiness and with their tax abatement calculator. at is a great tool that is made available to all Indiana economic developers.” We have been pursuing FDI for more than 40 yearsnow. — Jason Hester, President, Columbus Indiana EDCAround the World in 59 Countiesthe community today. Most are in the automotive sector, but other industries are showing signs of FDI growth as well.“It started with Japan, but FDI interest in our region spread quickly to Germany and France,” Hester adds. “Faurecia, a global automotive company based in engineering and related programs.”Purdue and Rose-Hulman Institute of Technology are two well-known engineering schools that keep the region stocked with a pipeline of talent, which acts as a magnet for FDI. “We have averaged France, does its R&D and production for emissions control technologies here. One out of every four cars produced in the world has Faurecia components and Hester notes that Columbus has been sending delegations to Japan annually for more than years and to China for more than a decade. “ ree new international residents each new international residents each year for the past three years,” Hester year for the past three years,” Hester says. “A lot of them are engineers. says. “A lot of them are engineers. Others are in headquarters positions in Others are in headquarters positions in manufacturing. Our largest employer is manufacturing. Our largest employer is Cummins Inc., a Fortune fi rm in Cummins Inc., a Fortune fi rm in diesel engines and power systems. eir diesel engines and power systems. eir global headquarters is here. ey employ global headquarters is here. ey employ , people in Southern Indiana, , people in Southern Indiana, mostly in Columbus.”CountiesCountiesHoosier Energy has also helped in site readiness and with their tax abatement calculator. at is a great tool that is made available to all Indiana economic We have We have been pursuing pursuing FDI for FDI for more than more than 40 years40 years— Jason Hester, President, Columbus Indiana EDC”Forging a New EconomyPrimary metal plant investments are reshaping Kentucky’s future.Since assuming office on Dec. 8, 2015, Kentucky Gov. Matt Bevin has pursued two goals with a single-minded purpose: overhauling the state’s business climate and turning Kentucky into an engineering and manufacturing hub of excellence.On March 27 of this year, he secured a win that confirmed progress on both fronts. Nucor Corp., the largest steel producer in America, announced that it would invest $1.35 billion to construct a new steel mill in Brandenburg in Meade County and create 400 jobs over 15 years.The 1.5-million-sq.-ft. plant will be built along the Ohio River southwest of Louisville on land that currently hosts a grain shipping port. The average annual wage at the new plant will be $72,000.“Nucor is a proven, longtime corporate citizen in Kentucky and a key partner in our world-class primary metals industry,” Bevin said. “This massive project will transform the region’s economy and provide high-quality jobs to Kentuckians for generations to come. Thanks to Nucor’s strong commitment to the commonwealth, we are taking another momentous step toward solidifying our reputation as America’s engineering and manufacturing center of excellence.”The announcement came just six months after Nucor announced a $650 million, 70-job expansion at Nucor Steel Gallatin, a mill producing flat-rolled coils in Ghent. That project promises to nearly double the mill’s annual capacity to about 3 million tons. An earlier expansion project, announced in May 2017, involves $176 million in capital investment and creates another 75 full-time jobs.Nucor executives said on March 27 that construction on the new mill in Brandenburg should begin by year-end with the facility opening by 2022. The project could create as many as 2,000 construction jobs.“The new plate mill will grow our company’s already significant presence in Kentucky,” said John Ferriola, chairman, CEO and president of Charlotte-based Nucor. “Nucor is currently investing more than $2 billion in our Kentucky operations.”by RON S TARNERr on. s t ar ner @ site s ele c tion.c omST A TE SPO TLIGHTKentucky206 MAY 2019 SI T E S E L E C T IO NPhoto: Getty ImagesNext >