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On July 10, in a room overlooking the beautifully refurbished state capitol complex in downtown Columbus, a select group of Ohio corporate real estate executives, service providers and economic development officials convened to paint a realistic landscape of corporate real estate in the Buckeye State. The discussion was moderated by Site Selection Managing Editor Adam Bruns.
Site Selection: Let's start with the corporate real estate folks who are here today. What were some of the practical considerations that made your locations in Ohio ideal for your company's strategy?
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Maske: I agree with that from a recruiting point of view. As a rapidly growing technology company, we have to recruit from all areas of the country, particularly from both coasts. We've been very successful, and the cost of living is certainly a huge attraction.
SS: What are the state's strongest business clusters right now, and where do you see gaps in cluster development?
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We have another one that emerged called NEOMOP: Northeast Ohio Microelectronics, Optics and Photonics, which was another group where we didn't know who these guys were. They do chips on boards, have all these kinds of exotic materials, they sell to each other, and they're a pretty active, networking-type group. They even had an interest, unlike some clusters, in building capacity and attracting more competitors to Northeast Ohio so they have the ability to recruit people and have a base of companies that would allow a candidate to say, "If I come in and this company I'm with is in early stage, I join them and the company blows up, do I have alternatives, or do I have to relocate my family again?" Life sciences, NEOMOP and some of these other clusters don't view a competitor as someone they want to avoid or don't want to attract because of competition for labor. They view it ss a way of growing the labor force.
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Kroeger: We view clusters like managing a stock portfolio. It's a business retention tool, and just like your portfolio has certain companies that are real blue-chippers and are not going to grow real fast in terms of appreciation of their value, they're still good cash cows. For us, there are about five of our seven provisional clusters in that category, automotive, metalworking and others, that aren't going to grow exponentially, but they're still major employers and have a major impact on the regional economy. Then we've got a couple that are a little higher-risk, higher-reward type things down the road, like life sciences, the ICE cluster and some of the others.
Smith: Some of the things that central Ohio is known for, like logistics, have corporate headquarters here. Financial services. Three-quarters of the fast food in America started here. Insurance. And obviously automotive is a tremendous force in the state. You have Honda, you have suppliers galore. The whole chain just permeates the state, and it's not just the metro areas, it's small towns too. It's hard to find a viable small town that doesn't have some kind of automotive supplier manufacturing theme.
SS: I guess the happiest town in that category this morning is Anna, with the announced Honda expansion. And according to the papers, they didn't even ask for any incentives, they just went and did it.
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SS: In regards to the biotech cluster, a recent Brookings Institution report basically said, "Get real, people, you're not all going to get biotech ..."
Johnson: Who wants to volunteer to be the one that doesn't?
(laughter)
SS: How do you view the potential for biotech in Cleveland and in other spots around the state?
Maske: I echo Jim's comments in that in the life sciences industry, we welcome cluster development. We don't see it as competitors as other companies come in. Matter of fact, we as a young growing company in the Cleveland area work very diligently with a lot of development agencies in the area to try and bring additional companies into the area. We view that as a good thing: opportunities for collaboration, opportunities to share resources, opportunities to provide that safety net for employees who are moving into the area. People relocating from outside the region want to know that if the particular company doesn't work out for them, there are other opportunities out there.
There are other factors that foster that kind of development. There are top-notch institutions in all of Ohio, and then in Northeast Ohio, hospitals and universities that have tremendous biotechnology infrastructure and science and technology that enable partnerships to be done. So Cleveland is a viable place for that, and I think that's the case for other regions as well.
Lapp: I'd like to look at it from a core industrial manufacturing base, which is really, as we see it, the foundation on which Ohio is supported, long and short. I think it's a tribute to the fact that there is a lot of research going on, and had been going on for a lot of years, in order to make Ohio's industrial base still competitive today. Tens of dozens of years later, we're just as competitive in Ohio, despite the fact that you've got the Chinese, the Japanese, the Indians and all these various other countries playing in the global market, playing with lower labor costs and lower benefit costs. So, in order for us to be competitive, we've got to be doing some things right. And one of the things we're doing right is the focus on technology and R&D. I think there's a sound base. It doesn't necessarily always come to the surface, a la North Carolina's Research Triangle, but you can't step back and look at Ohio's productivity rates and Ohio's manufacturing successes without taking into recognition that there is a lot of R&D going on and being applied in the manufacturing sector.
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Kroeger: We did a study in Cleveland that showed there were 75,000 high-tech workers, by whatever definition, and three-fourths of them were inside traditional companies. They were difficult to find -- they're not that visible. So you're not going to see a plethora of dotcom companies in Cleveland or anywhere else in Ohio, but you're going to see traditional companies that have clearly adopted technology and invested in technology, both for efficiency and for product improvement.
SS: So you don't necessarily need to assemble companies on a campus or in a business park.
Johnson: Well, I don't want to criticize the campus idea at all. But where they're really effective is where they're incorporated into the process. So Ohio has a larger number than our fair share of high-tech firms, but probably a little bit low in terms of researchers in comparison to the national average. So we have more engineering technicians and more engineers by far per capita than the national average, which means people doing the work at a lot of these companies that might not be viewed as high tech companies or part of a high-tech cluster of some sort. But nevertheless they're working at GE Aircraft Engines or another company in very large numbers and creating more opportunities for a broad base of what are usually advanced manufacturing types of facilities. We think, like Bob said a few minutes ago, it's a great base to build upon, and we're going to continue to build upon it and not run away from our strengths. That's not the state's strategy. We agree that probably advanced manufacturing and perhaps manufacturing overall will grow more slowly than perhaps some of the biotech-type of industries, so we need to be focused on high-growth industries as well. But that's our base, and we think it's a very profitable base.
SS: According to the Cleveland Plain Dealer's survey of CEOs, in terms of the business climate in Ohio, they said they would be aided most by business tax relief and more training assistance. How do you view those two issues or any others where you see the business climate needs the greatest boost?
Kroeger: On the tax issue, coincidentally, a couple weeks ago the Plain Dealer published an article that said Ohio is pretty much in the middle of the pack as far as total tax burden, and that's pretty much where we've been for the last 10 or 15 years. From our standpoint as a Chamber lobbying for improvements in our tax environment, it's been mostly in the area of what I would term "nuisance taxes." The inventory tax has been one that we've steadily improved on over the years and one which our members would like to see eliminated. Then on the wealth creation and maintenance side, you've got the estate tax. You have a lot of wealthy Ohioans who, when they get to retirement age, move to Florida or other places that don't have such a tax, and that's a concern in terms of maintaining potential investors in the state and having a first look at companies in Ohio. If they're a thousand miles away, that makes it tough to do.
Piker: Businesses benefit directly from tax incentives because they affect the bottom line. I think communities benefit more from training, because if something happens to that company that received tax incentives, they're around to work at other places. They're interrelated.
Kroeger: The state's training program goes back 30 years or more. It was really one of the pioneers in customized training. You have states in the Southeast where the approach was to bring a trailer out to the plant site, and you really had to do remedial training to get the work force to a level of just basic understanding of the skills that were required. And then they had to customize beyond that. Ohio always had a reasonably educated work force, and then the state training program was designed to really start at that back end and customize the training for the needs of that particular company. For just about any manufacturing project, and even some service projects anymore, that has always been an integral part of the package we offer.
Smith: I deal a lot with early-stage companies, and their uniform number one complaint is the difficulty of getting early-stage risk capital. That's the overwhelming issue.
SS: Any signs of improvement?
Smith: Oh yeah, there are. The state's stepped up and is doing a lot of things through the Technology Action Fund and some other elements of the Third Frontier program. We're starting to see some more indigenous venture capital growth here in Columbus, in Cincinnati and in Cleveland. So it's coming along. It's sure better than it was when I came here four years ago.
Maske: For early-stage companies, particularly technology companies that may have a fairly long cycle of development before they have marketable products, tax incentives don't really help, because you don't have any revenue. So the training is definitely a help, because there are always things your employees can be learning and doing as you grow and expand into new areas. But I agree: access to capital for early-stage companies is the issue.
Lapp: I think you're seeing over the last 20 years a change in even the older companies who have been in the state for a while, who used to do all their training in-house. They don't do that anymore. That training is looked upon at the tech schools and training centers, because we want to use the money we have in-house for new investment, new development and R&D. So training dollars have become very precious commodities, and those are the kinds of things I think companies are looking for very actively.
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SS: How would you assess the union climate in the state today, compared to 10 years ago or 20 years ago?
Lapp: We've been here longer than most of the others here, and we've had union operations for most of those years. Now, it's interesting that my company has both union and non-union operations in the state of Ohio, and they've been successful in both places. I will tell you that in the last 10 years, our union experience has been less contentious. I think we've seen, at least in the northeastern part of the state, a reduction in union jobs, as a result of the problems with LTV, Republic Technologies and a few others. So I think there are fewer union members than there were 10 years ago and they're less contentious. The other thing, which I think is an evolution, or a swinging of the pendulum, is that some of the younger individuals we're hiring for our plant operations don't have the same commitment of wanting to give up a lot of the paycheck in the way of union dues. I think you're seeing a gradual change in that mindset, and it's starting to become noticeable. Maybe that's part of the reason for the less contentious situations. I think it's moving in a more positive direction for us in the last 10 years.
Kroeger: The percentage of the manufacturing work force that's unionized, when I started in economic development 27 years ago, was probably 40 percent in the state of Ohio. Now it's probably less than 20 percent. That's a remarkable change in itself. Over that time, there have been a number of labor-management cooperatives put together, and unions are more understanding of a company's competitive position. I know in the case of Ford in Ohio, their union has gone to Washington with company management to lobby on CAFE issues and others. So it's more of a partnership with those companies that are unionized. If a company wants to operate non-union, we are not a right-to-work state. Companies like Lincoln Electric for decades have had profit-sharing plans and have operated non-union. Honda is a typical example as well in central Ohio.
Johnson: The growth of the labor unions in Ohio has been in the public sector. In the private sector, the percentage has been decreasing. Obviously, we think companies can work effectively either way. I don't think there's anything about Ohio's environment that says if you're going to manufacture something in the state, you have to be concerned about labor unions. I think both the union companies and those not organized in that manner have proven to be competitive over time.
Kroeger: And in some of the high job-producing industries like customer service operations and financial services, unions are non-existent.
SS: That leads to a question that ties into higher education. How do those people who used to be part of a massive industrial work force get re-oriented in the work force through educational and training programs, and in a more general sense, could you talk about partnerships between business and higher education around the state?
Lapp: I would say that education and training is the core of providing the new skill base for employees who have been laid off or lost their jobs. I think Ohio does a great job. At my company, we have formed partnerships with a lot of schools for training purposes, to provide new marketable skills. We had a situation with a plant in Columbus that was just outdated: we were packaged in a property where we couldn't grow and we ended up closing it just two years ago. We worked with the local educational community to retrain and offer opportunities for those displaced employees, and I believe 100 percent of them who chose to find further work found it through new training. So the skill force and the opportunities are there. I think businesses have to provide a little more of the push and incentive to get them into those programs, but once they're there, they're extremely effective and efficient. That's the kind of thing that helps smooth out some of the blips you often see in difficult economic times.
Kroeger: Community colleges too have been very adept at partnering up with business organizations. At the metropolitan chamber we have a representative at the VP level of our community college in our office. She works in a development function, and does business calls with us. That gives that institution an opportunity to hear firsthand about company training needs and requirements and then to respond directly.
Smith: Ohio State works with a lot of businesses. The oldest part of it is probably the extension service: there's an office in every county in the state. That started as an agricultural extension, but the University is now moving to broaden the kinds of services and support it offers throughout Ohio through the extension service. The idea is to try to become the next generation of a land grant university. Also, Ohio State's the sixth-largest recipient of industrially funded R&D in the country. A lot of industrially funded research goes on at this university and at others in the state. As part of that, on the research campus that SciTech runs, we've started housing units of companies. We have a Honda R&D lab there, we have a spin-out from Cabot. The reason those guys are there is access to university know-how.
Pickett: Ohio State University has played a big part in Columbus's growth and evolution, helping to attract companies such as Nationwide.
Maske: We talked earlier about the development of a biotech or life sciences cluster, and that's largely related to the universities and their research and work. We have collaborations with Case [Western] and others, and a lot of our technology came from essentially a spin-out of Case. So the abilities for collaboration in our sector are extremely high.
Johnson: Case, Ohio State and the University of Cincinnati are the three institutions in the state that have over $100 million a year in federal research dollars, and significant money from private participation, and that's what I look for: to what extent are the businesses in the state utilizing the state's research assets, and to what benefit? Obviously businesses don't usually part with their dollars without some benefit expected. So we view that as the healthiest sign. That's part of the reason for the Governor's Third Frontier, to further utilize those assets, both at research institutions and university campuses and at private sector and non-profit research institutions, making sure that the full body of Ohio's economic base has the opportunity to access it. And they're doing it extensively. This relationship has changed dramatically in the last 20 years, and because of the Governor's initiative, I think it will change much more quickly over the next 20 years.
Piker: From UC's standpoint, especially from the hospital and biotechnology area, it has been significant, and will continue to be funded very strongly in an effort that's ongoing. I brought somebody in from the University of North Carolina about a month ago who was very interested in the funding that's gone on. The Research Triangle is what everybody kind of strives for in the biotech area.
Johnson: One of my perspectives on this whole idea is that as a strategy you have to create a sizzle about your environment. One of the things about Ohio is that we have a very large number of medium-sized markets. We don't have a Chicago or a New York, so we end up with a lot of pretty good institutions. We just had about the third reference in this conversation to the Research Triangle. I would argue that if you take the assets in Ohio and compare them to the assets in North Carolina, it's a slam-dunk for Ohio. Because of the way that it's been marketed effectively, the geographic location and relative density, there have been some marketing realities that come to the Research Triangle. Go anywhere in the country and talk about university relationships and building the economy, and somebody will say the Research Triangle, but in terms of sheer production, we think what's going on in Ohio is more impressive.
Maske: That's an interesting point. When you look at a lot of different things in medium-sized states around the nation, many have one metropolitan area that is the one where they're focusing their development. Think of Minneapolis-St. Paul. And with Ohio having three major metropolitan areas, it tends to spread everything out. When people talk about Ohio, it's one or the other, and then there are Dayton, Akron and the rest.
Johnson: And that's not a criticism. But it doesn't create a single source of pop or marketing pizzazz. The Governor would be cautious not to say something about the Cleveland Clinic to the exclusion of something good going on in another part of the state. So I think there's just more resistance to marketing our excellence here from a statewide perspective. It ends up falling on the regions, and is perhaps done less effectively because of it, but I think the assets, when taken in combination, are truly extraordinary.
SS: That brings us back to the facilities themselves. What's happening with the facilities that are already there, and what is being asked for by companies looking in your areas in terms of specs or extras?
Smith: In our little sector, we have virtually no vacancies right now, and we're basically filling up stuff as fast as we can afford to build it. We're "niche-y," and specialize in very high-tech things, so what we find is that people want a lot of service and a lot of sophisticated facilities. But that is the market we play to. We just did a build-to-suit that had 20,000 sq. ft. of lab space that included 7,500 sq. ft. of Class 100 clean room, so that's not exactly the suburban shopping mall kind of development. We also did a very sophisticated build-to-suit chemical laboratory for Honda, and we have more of that coming. It's difficult from the developer's standpoint, because at the same time you see this pressure on services and complex build-to-suit, you also see people wanting to cut as sharp a deal as they can. You don't get a blank check when you do these kinds of things, and it makes for an interesting management exercise.
Piker: Flexibility is the key in talking to any clients we have, whether it's flexibility to expand or contract, or cancellation options on leases. Companies are looking to reduce portfolios and regionalize now, that's the reality of today. We've all got good stories about that and we've got stories that aren't so good. We win in some cases and lose in others. Kroger in Cincinnati has done a lot of regionalization that has helped the Cincinnati region maybe to the detriment of others because they've closed down facilities. Procter & Gamble, Kraft, Sara Lee in Cincinnati have done some regional concentration.
Pickett: Columbus has one of the largest office vacancy rates in the country, and has maybe a year and a half of product sitting there vacant that needs to be absorbed by growth. So I think we'll see a lot less spec development going on and a lot more specific build-to-suit development.
Johnson: It's an interesting development in Columbus, probably because it was perceived as a very hot market and there was a lot of investment. I don't think the growth kept pace with the level of enthusiasm to build the facilities.
Piker: Everybody's building a better mousetrap at the same time.
Johnson: Well, you get this reputation that's hot, a couple people came in and made some pretty major investments, and all of a sudden you have all these vacancies.
Kroeger: I think it's caused us to redefine the package we offer companies to either retain or attract them. Twenty years ago, the gold standard for business retention was for companies to own their own building, have a lot of heavy equipment that was difficult to move. In the economic developer's mind, that was the easiest kind of company to hang onto. Today, because of that need for flexibility and people wanting [assets] off the balance sheet, it's a whole package of things you have to offer as a community. It's work force, it's technology transfer, it's quality of life, it's a flexible incentive package. To use the buzzwords, the value proposition is not just the building.
Lapp: As an older company, we're always looking at sites for expansion or relocations of different types of things, whether to be competitive or for new processes. We look at a basket of things, one of which is energy. There is a quadrant of the state that may be a little high-priced than the rest, but Ohio is pretty much blessed with low-cost, very reasonably priced energy. We're the third-largest energy-consuming state in the country after California and Texas, so the energy is part of the lifeblood of what we do in the manufacturing sector. The other part of that is water. I don't think you'll find any companies with problems or concerns on water resources. When it comes to the manufacturing sector, these are things that become very critical to your long-term success. You don't want to have hiccups or problems three or five years down the road. We're blessed with these kinds of resources, and that's important for your automotive, construction type of businesses, which we are pretty blessed with throughout the state. Those are different parts of the package we look at besides the tax incentives. One of the things I think Ohio also does well is the low-interest financing opportunities, and clearly, for most businesses, they're looking at how much lower they can take that investment dollar, because they can grow it and expand it and maximize the return on it. It's probably one of the real values the state has brought to the table.
SS: What kinds of things do you see being done or do you think could be done in underdeveloped parts of the state like Southeastern Ohio to attract businesses, in both rural and urban areas?
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But I think all of that's changing. The discussions have turned in the last couple of years from "What about coal and timber?" to talking with software and life sciences companies, newer economy sorts of opportunities. If you ask the same question all the time, you get the same answer, so we're asking some different questions, and we're getting some different work down there. A significant part of our livelihood, and the fact that we even exist, we owe to Ohio University. They were one of our leading investors, and we have a multi-pronged relationship with them. We're working with the Edison Technology Center there, the Voinovich Center for Leadership and Public Affairs is another part of the university that's a significant partner of ours. They've created a technical assistance arm to provide professional advice and services to high-growth companies. And we've been working with the airport, which has expanded, and may have some commercial airline opportunities in the near future. So that relationship has been critical to getting started down there. We're not the Research Triangle of North Carolina yet, but we had a Chicago Tribune reporter in a few weeks ago, and on leaving, he said, "This is really beginning to remind me of the Research Triangle," with the university town and the fact we have some venture capital in the area. I think once you spend time down there, it surprises many, and on top of all that, it's a beautiful area.
Piker: A couple of issues you have to deal with are obviously infrastructure issues, broadband communications, and work force, which are pretty critical to taking some of the non-core areas. Most of us are from metropolitan areas, but it seems that that is what you need to do in Athens or other parts of the state. You need that kind of infrastructure to support growth in those markets.
Johnson: I think our state is well-positioned for new manufacturing investment. Most of the investments that are occurring are not in the major metropolitan areas. They're usually close enough to access a substantial part of the work force but far enough away to not be burdened by traffic and all the rest. When you talk to a major investor in industrial development, they're usually looking at rural communities, but rural in the sense that there's still some density to the population. That kind of describes Ohio: it has a pretty large land mass, and a pretty large population, which is spread out, but dense enough that within a 45-minute to 1-hour drive, you can get a very significant work force. So all along the interstates, and with a very highly developed rail transportation network, we have a lot of potential for major investment. It's going to occur more likely outside the urban areas than inside.
SS: A few infrastructure points have been raised, from highways to energy, but always at the top of people's transportation list is air travel and air cargo. What kinds of expansion activity and planning are going on at the air facilities?
Kroeger: I think most areas of the state have an air service committee or some sort of business interface on air service. We have hub carriers in the northern and southern parts of the state with Continental and Delta. The state has done a good job in supporting air cargo operations -- there are four major ones here. And some of the smaller airports, like Akron-Canton Airport, have identified a niche market either through a low-cost carrier or specific routes that will serve that sub-market and relieve the larger airfield in proximity. In terms of both availability and cost, we're in pretty good shape, particularly in Cleveland, where our hub carrier has maybe 60 percent of the market. Some in places like Atlanta have 85 percent or more and you can get clobbered on fares. So I think all of those things together have given us a pretty good level of service.
Pickett: That could be evidenced by the growth here in Columbus at Rickenbacker and our free trade zone, which has just been explosive in the past 15 years with the amount of new growth and development that's occurred there.
Piker: Delta has its number two hub in Cincinnati, and DHL is now doing a new major hub. Delta has about 600 flights daily out of Greater Cincinnati Airport, and there's Comair too, so it's obviously a major component for southwestern Ohio.
Kroeger: Cleveland is Continental's midwest hub, and we have about 400 daily flights. That's a lot of availability in those two hubs.
Johnson: Dayton [Emery Worldwide hub] has a very significant facility, and Toledo [BAX Global hub] and Akron. It's not hard to be accessible to an airport in Ohio.
SS: Are most of these airport expansions incorporating some kind of intermodal component?
Johnson: Not a lot, in terms of development. There has been a lot more talk about it at Rickenbacker. It's over 12,000 feet long and is an alternative site for landing the space shuttle. It is a retired Air Force base and has a lot of infrastructure and thickness of pavement that allow anything that's flown today to be out there. So on top of Rickenbacker you have Airborne down in Wilmington, which operates its own private airport as an air cargo hub.
Kroeger: Most of the intermodal facilities have been in rail-truck interface.
Smith: And if you think the military is part of the economy, we have Wright-Pat [Wright-Patterson Air Force Base]. Wright-Pat used to move an amazing amount of stuff in and out of there.
Johnson: Wright-Pat is an incredible engine. People who have grown up around it kind of get used to it being there. Dayton has more engineers per capita than anyplace in the United States, because of Wright-Patterson Air Force Base. Huge numbers of dollars have been driven through there and landed lot of other places. We'd like to see more of it land in Ohio, but it really is a driver of the regional economy, as well as the automobile industry.
Tapp: Bruce makes a good point. A lot of times people look at Ohio as being an auto/auto parts/steel state, but there is a tremendous amount of aerospace manufacturing done in this state. Aerospace has grown over time to be a major component of the economic base.
Smith: GE makes half the world's aircraft engines.
Johnson: And when I was in Europe on a trade mission and met with their major competitor, and they're in an alliance, so I don't know that GE really has any competitors ... they do, but they end up working it out. It's a company with a bright future, and we hope a lot of it continues to occur in Ohio. That's a real struggle for us, because the major manufacturers are actually located in other places on the coasts.
Piker: Bob, I don't know about Timken, but we do a lot of work with Milacron in Cincinnati, and their rail is down. They're using trucks a lot more than they ever did, and in Ohio, our highway infrastructure is phenomenal both east-west and north-south.
Tapp: Rail traffic is not as dense and usable as it once was for us. We still bring in some materials and do some shipping using rail, but your point is a good one, and this ties into the question about airports and intermodal aspects. Most of the airports were built, and highways then put around the airport system, not the rail system. I think over time, as you're going to see more emphasis on on-time delivery and industrial shipments via air, you're going to see more rail connections moving back towards the airports that aren't there today. There hasn't been that urgency or demand, and that's not unique to Ohio, that's pretty universal across the country. But I think they'll all come back together again as demand grows for it.
Johnson: We brag about our rail infrastructure, which is a very valuable resource. For long-hauls, that's the way to go. Just-in-time has created an advantage for the trucking industry.
SS: And then there's always the river.
Johnson: Well, transportation has always run economic development. There's a question about whether or not we're still there, but the river and the lake are the reasons why Cincinnati and Cleveland got to be the major metropolitan areas they are.
Piker: Cincinnati is the fifth-largest inland river port in the country.
Kroeger: Cleveland is the third-largest on the Great Lakes.
SS: Looking at things regionally, by definition, goes across jurisdictions. Talk about some examples of successful cross-border collaboration.
Piker: Cincinnati is 11 different counties that have really formed a pretty good partnership, taking in Northern Kentucky, Southwest Ohio and Southeast Indiana. Which is kind of unusual. I don't know many communities that have to deal with those kinds of issues. For a long time, everybody did compete pretty strongly, but there is a very strong collaboration in the Cincinnati region now. Probably a good example is Grindus AG, a German company which had first contacted TriEd in Northern Kentucky about facilities. They gave the lead back into the region, and the company located in a facility in Reading, Ohio. So I think there are some real good examples that say, "You have to work together for the region." If you lose them altogether, what benefit is there? Nobody really raids so much. If somebody comes to talk to you, you're obviously going to listen to them, but I don't think there's a lot of raiding going on in our region.
Johnson: It's an interesting game. I think the regions have done a better job of figuring out cooperation than the state has, even though we preach it a lot. We preach it in the sense that you have to get through your regional cooperation issue like water and sewer development. Mostly because when businesses look to buy into a region, they're not necessarily looking to buy into any kind of political structure. They're buying into a labor market. Cincinnati's labor market is the easiest to identify as being much larger than any political boundary. So they overlap and have to work through those issues more often. We're not willing to try and subsidize the job development in Northern Kentucky, but at the same time, we realize that the first thing we have to do is be a resource for the business that is looking for a location. If we can meet their needs inside the boundaries of our state, we'd like to do that, and if we can't, we can explore possibilities for cooperation.
One thing we have just begun to explore is that we think the Great Lakes area has a common concern and incentive around the development of the hydrogen economy. Twenty-five or 30 years from now, most people think that the hydrogen economy will dominate powered propulsion in the country. We have an enormous stake in what's there now, with the combustion engine and everything around traditional transmissions and the automobile industry. But this new industry is going to be enormous, and we think the Great Lakes region ought to capture it, much like we captured our unfair share of the combustion engine component. It's so huge that our little $100-million focus is insignificant. But it is a starting point, and if we can combine that with what Michigan and Indiana and Illinois might be doing, we think there is an opportunity for cross-border cooperation in capturing an industry. I don't think any one state can make that happen. Public policy makers can't make that happen. But the United States of America ought to be interested in it, because it's coming.
Gellermann: Adena Ventures is a living, breathing example of multi-state collaboration. We started and are headquartered in Ohio, but our leading investor is now the State of West Virginia. We have found when you forget about the state geopolitical borders, the four-state area we serve West Virginia, Western Maryland, Northeast Kentucky and Southeast Ohio is a nice contiguous region that has more in common as a region culturally, statistically, demographically and geographically than perhaps southeastern Ohio has with other parts of Ohio. We have both public and private investors and partners that operate in more than one of those states. A number of our investors came from Columbus, but they may operate in Charleston, West Virginia. Huntington Bancshares would be an example. So it's been a real nice fit, and people have not really focused on state borders. The companies we work with aren't interested in which side of the river they're on, they just want to have a chance to succeed and compete with others. Out of need more than anything, we had to pull together public and private sources from all four states to get it done. Hopefully it will benefit all.
Smith: In the technology company early-stage commercialization sector, there is a lot more statewide cooperation going on now. People need to draw on people and resources from around the state and outside the state. We have a bunch of organizations that are working statewide, like the IT alliance, which is doing its Edison program, and the Edison biotech center. We have new activity in polymer commercialization that is truly statewide. When I first came here, I started thinking of Ohio in terms of the "dis-united city-states of Ohio," because we had these very strong regions. But there is a lot of strength in that, and now there is a bit of overlay going on to try and hook the regions together better. I've seen a definite change in people's attitudes in the last couple years.
Kroeger: We have a statewide venture capital conference, Innovest, which is one of the largest in the Midwest and attracts investors from outside the state. Annually about 30 presenters appear, and it rotates around the state.
Smith: There's a lot of academic cooperation around the state too, because academics are not particularly loyal to anything except their own disciplines. So we see a lot of academic cooperation, formally and informally.
SS: Any closing comments?
Tapp: I wanted to go back to what differentiates Ohio from some other states. Since we've been a long-participating member in Ohio, the things I would tick off would be the trained, skilled work force, the transportation infrastructure -- the highway systems and airports are very strong -- very competitive energy and water resources brought to the table. And then the state's partnership when it comes to low-interest financing, and the access we have to insurance companies and the general make-up of what goes on behind the scenes when a business finally decide to form there when it comes to support and service. The service providers we have are very strong -- unlike a lot of the states where you have to go a fair distance to find them, they're all here. We have a good basket of those kinds of competitive markets to choose from.
Smith: I think the regulatory environment is good too. I've found you can work with the regulators here whether it's building permits, environmental issue, zoning issues, it's a lot better than some other places I've been.
Pickett: Let me just add that quality of life is a big issue in Ohio.
Johnson: Every week I get at least one phone call from somebody who used to live around here who's now someplace else and looking for an opportunity to come back. It's an amazing phenomenon. I don't know if you integrate the numbers across the whole state if it's significant or not, but I've never lived any other place where that happened.
Maske: The quality of life issue is a big seller. We talked earlier about recruiting into the area from the coasts essentially. We brought quite a large number of people from California, but also the Northeast, and typically when we first mention we're in Ohio and want you to come to Cleveland to somebody who's grown up in the Bay area, they ask, "Why would I want to move to Cleveland?" And almost universally, when they get here, they love it, they're happy to be here and they want to stay. From the cost of living, the culture, to the lack of congestion, people are just thrilled to have a 40-minute commute to work.
Piker: And they get to buy that estate with all the money they make.
Maske: We have had people who have done that. We had two scientists who had a very small bungalow in the Bay area, and they moved into a 7,000-sq.-ft. house in Shaker Heights. That's the difference.
Johnson: We're proud of where we are. The Governor's $1.6-billion Third Frontier initiative will propel Ohio in terms of research and development realization and job creation, out of research and development currently happening on university campuses and in private research parks, in 25 years people will be talking about something in Ohio as opposed to that research park in North Carolina. We're going to have to figure out a way to appropriately market all the great things that are happening, because it does tend to be dispersed. But we will be able to do more of what we've done with Adena Ventures in terms of creating more access to venture capital. We'll be able to do more in terms of creating really high quality research and incubator parks. I think you'll see a real synergy between all of that because of the state's focus on the knowledge economy.
SS: And that's "synergy" spelled with "s-y," not "c-i."