YOUNGSTOWN, Ohio -- Through the first half of the year, the Mahoning Valley economy continued to improve, leaders of economic development agencies report.
Most of that growth has been in the manufacturing sector, highlighted by the announcements that Laird Technologies will relocate its entire operation in Sharpsville, Pa. to Warren and that VAM, a Vallourec subsidiary, will undertake an $82 million expansion projected to create some 80 jobs.
Development leaders, including T. Sharon Woodberry, director of economic development for the city of Youngstown, also say that the development of the oil and gas industry helped to spur the growth of companies.
“There are a lot of companies we’re talking to where gas and oil may not have been their market, but they see an opportunity. They’re trying to diversify and find ways their product or service can somehow fit into that industry,” Woodberry says.
Sarah Lown, senior manager of economic development at Western Reserve Port Authority, has seen more growth from local companies expanding than companies outside the area moving here.
“When you get the outside companies looking at us, they’re always looking at western Pennsylvania and we have to compete with them,” Lown says. “Outside companies, their decisions are often more complicated than the ones that are already here and looking to expand. It’s just [local companies] are more solid prospects.”
So far this year, six of the region’s economic development agencies report more than 25 new projects coming to the region with the combined total investment projected to surpass $200 million.
Youngstown/Warren Regional Chamber
The chamber has completed eight projects that total some $20 million in investments, reports Sarah Boyarko, its vice president for economic development.
The largest, Boyarko says, are the relocation of Laird Technologies to Warren and the consolidation of Hynes Industries to one site in Youngstown.
While there have been fewer projects this year, Boyarko says that inquiries the chamber has received have been more solid.
“Our organization is the single point of contact for the state of Ohio. Any state lead that a company might be coming to Youngstown or Warren, they come to the chamber and we manage the process,” she says. “It’s a little bit slower this year. We are getting good, solid inquiries but maybe the decision-making is taking a bit longer.”
As of June 19, companies outside the Valley had made 35 inquiries to the chamber, 19 leading requests to at least tour potential sites.
As with the rest of the Mahoning Valley, economic growth has been mainly in manufacturing, but the distribution and food industries are also seeing growth.
“We’ve always been a great location because of where we are for distribution into other markets,” Boyarko says. “We’re one day’s travel to New York and Chicago, which certainly opens up opportunities for companies that are already distributing on the West Coast to access the East Coast.”
In the food industry, Anderson-Dubose, the company providing food products to McDonald’s and Chipotle restaurants, consolidated its operations in Lordstown. That consolidation has boosted its growth, Boyarko relates.
She also notes that Summer Garden Food Manufacturing and Gia Russa are expanding their operations on McClurg Road in Boardman.
Should all prospects the chamber is dealing with choose the Youngstown-Warren area, total investment would be around $1 billion, Boyarko says, adding that she expects those projects to be closed within 12 to 24 months.
“That might be new construction. It could be an investment in an existing building, purchasing an existing building, renovating the property, purchasing equipment. That’s the total investment of each one of those companies considering a Mahoning Valley location,” she says.
Lawrence County Economic Development Corp.
Almost $103 million has been invested in eight projects, reports the Lawrence County Economic Development Corp., leading to 400 new jobs when the projects are complete. Most involve site construction or the purchase of new equipment.
“The largest being the Ellwood Group and their North American Forgemasters’ joint venture with Scot Forge, says LCEDC executive director Linda Nitch.
“They’re putting in an open die press here in New Castle across from the Ellwood Quality Steel facility. That’s phenomenal and it retains the 700 some jobs,” she adds.
“Another big one, Dairy Farmers of America, got underway with their renovation and improvement project in Wilmington Township, which will be done in stages.”
Most growth that Lawrence County is seeing has occurred along state Route 18 and U.S. Route 224 and, as in northeastern Ohio, most of that growth is in manufacturing.
“We manufacture things in Lawrence County. If we can send those goods out, we’re exporting products and we’re importing fresh dollars,” Nitch remarks.
Along Route 18, Neshannock Township is seeing a boom, with the construction of new credit union buildings and a 500,000-square-foot industrial structure, expected to cost between $2 billion and $3 billion.
In the oil and gas industry, Portersville Valve announced it would relocate to a new, 60,000-square-foot building on Route 224 in Shenango Township. This move is expected to create 25 jobs in Lawrence County.
Nitch says that economic development has surrounded New Castle in recent years, but within city limits, she describes development as “mostly cosmetic.”
“The city itself, the core is getting stronger with North American Forgemasters, from an industrial standpoint. From a commercial standpoint, the city of New Castle hasn’t seen any new investment per se in building. There have been some exchanges of existing buildings here, which is a good sign,” Nitch says.
The second half of 2014 looks to be as solid as the first half, Nitch says, with LS Power planning to break ground on a $750 million natural gas power plant and a racino awaiting final approval.
“[Growth] has been very positive and very good this year compared to the last three years,” Nitch says.
Youngstown Office of Economic Development
In Youngstown, the income tax revenues from companies are lower than were expected, but that doesn’t mean activity has slowed down, says Woodberry, the city economic development director.
“It could be that companies are finding leaner ways of being profitable. As long as the companies are strong and able to maintain employees, that’s our No. 1 objective at this point. You always want to encourage growth,” Woodberry says.
Most of the recent growth within the city has come from advanced manufacturing, with companies taking America Makes’ lead and shifting to additive manufacturing, and in technological development, with the Youngstown Business Incubator setting the pace.
“What we’re finding is it’s linked to advanced manufacturing because some of those companies are looking to IT and software development as a significant component of what they do,” Woodberry says.
She points to Vallourec subsidiary VAM as the major accomplishment this year.
“They’ve made their announcement to invest $82 million in their signature plant, which is going to include the acquisition of an existing facility, expansion onto their site, and there will be 80 well-paid jobs as a result,” she says.
Small manufacturers in Youngstown are seeing a shift toward products aimed at the oil and gas industries as well.
“Just recently, through our small-business lending program, there was an existing company that is creating a division specifically manufacturing parts or components that are specific to gas and oil. That’s not what they used to do, but now there’s an opportunity for growth,” she says.
The oil and gas industry is providing other opportunities for Youngstown as the economic impact of recent years spreads to other businesses.
“We saw a lot of initial interest and investment. Now it’s building upon that growth … We’ll see that trickle-down effect in the area. Even with the unions, construction of the pipelines that’s tied to drilling, they’ve all seen a surge in their activity,” Woodberry says.
Companies from outside the Mahoning Valley are taking notice of what the area has to offer, Woodberry says, referring to Site Selection magazine’s listing of the Youngstown-Warren metro area ranking eighth in development projects in 2013. The area tied with Lexington-Lafayette, Ky., and Madison, Wis., with 22 new economic development projects last year.
Mahoning Valley Economic Development Corp.
Mike Conway, executive director of MVEDC, says while the first-half numbers are lower than first-half 2013 numbers, he still expects to finish the year on pace with 2013.
“We never count the loans until they’re closed and disbursed. We’re expecting that number to be much more in line with what it was last year,” Conway says.
In 2013, MVEDC helped to provide $5.26 million in loans to 31 companies.
This year, most of the work has been with sectors MVEDC has worked with the past couple of years, Conway says.
“We’re seeing growth in all areas that we’ve seen growth in the last two or three years, primarily manufacturing, commercial activity in the service as well as retail sectors. And we’re still seeing interest in the second- and third-tier suppliers to the shale activity,” Conway says, in addition to development in logistics and transportation.
The only area that has receded is the use of MVEDC railroads to transport goods. Such use is down 65% from last year, he says, but most of that loss came from one company MVEDC serves that cut back on rail shipments.
If it goes through, the biggest loan MVEDC will make this year is $2 million to help fund construction of a hotel.
Because it’s so early, Conway explains, he can’t provide specifics other than it “is in the area,” is associated with a chain and will cost $8 million to build.
“If you look at our overall lending activity for the past 16 months, loans have averaged a little over $100,000 per project,” he says. “To see a $2 million or $3 million project is unusual for us.”
Penn-Northwest Development Corp.
Four companies have announced that they will invest $8 million in Mercer County and create about 50 jobs, says Penn-Northwest’s president and CEO, Randy Seitz.
Seitz declined to identify the companies other than to say they are a food company, an oil and gas company, a building materials company and a metals company that will build a 30,000-square-foot structure.
Over the course of the past year, Penn-Northwest’s advertising campaign “Make it in! Mercer County” has played a part in the growth of the Mercer County economy, he reports.
“If [General Electric] Transportation can produce huge locomotive engines in Mercer County and distribute them all over the world, if they can make it in Mercer County, then you can too,” Seitz says. “We created a very aggressive marketing campaign designed to fill the funnel with leads and that’s where our focus has been this year.”
The campaign created 760 leads, which resulted in tours and proposals that in turn resulted in four companies deciding to set up operations in Mercer County. This put Penn-Northwest on track to beat the goals it set for itself when the campaign was launched.
“Our goal of attracting new industry was 15% of all prospects to participate in a site tour and to persuade 14% of those tours to invest and create the opportunity for a total 500 new jobs in Mercer County,” Seitz says. “We met those goals.”
Of those four companies, Seitz says three chose Mercer County specifically for its central location that allows more efficient transportation.
Growth was good this year for three companies starting expansion projects that combined have committed $185 million in investment and creating or retaining “hundreds of jobs.”
Seitz expects the rest of the year to be “fantastic,” especially with the potential for a 75,000-square-foot plant built by an energy company looking to expand into North America.
That project is expected to bring in $16 billion annually and create more than 200 jobs should the company choose Mercer County.
Western Reserve Port Authority
The Western Reserve Port Authority is working on seven projects this year, six of which have involved local companies, including a $600,000 Clean Ohio grant from the Environmental Protection Agency for BRT Extrusions in Niles.
Most of that work is with energy reduction financing, says Sarah Lown, senior manager of economic development. Late last year, the port authority issued the Property Assessment Clean Energy bond in an effort to help businesses reduce their energy bills.
“If you get new roof, new windows, new HVAC, you can have this bond at a low interest rate and pay it back over time on your property tax duplicate. We’re working with a lot of companies on that,” Lown says.
“When we do the financing, we’re looking at bringing down the costs. Finding a way, sharpening the pencil and bringing down costs so companies can be more [profitable] in the long run.”
Companies are concerned about their energy bills and so have approached the port authority to intercede.
“Costs are going up, so the financing of any electric or energy upgrades is the most popular thing that we’ve been asked about,” she relates.
The port authority is also involved in redeveloping the sites of the former Girard Leather Works and Trumbull Bronze to remediate the properties.
Lown says the port authority is more active than it was last year, both in terms of the number of expansion projects and the number of companies approaching them.
She points to the success of community development efforts, singling out downtown Youngstown.
“When you look at downtown Youngstown, you’ve got some serious economic development going on and we’ve been involved in all of those in one way or another,” Lown says.
Lown sees expansion in North Jackson and Austintown, helped by “a big tax incentive looming for economic development.”
The biggest change the economy of the region has seen is the increased cooperation among its economic development entities. All have learned their counterparts’ strengths and weaknesses, which in turn has given the Mahoning Valley more opportunities to attract new businesses, Lown says.
“We’re working together much more tightly than we’ve ever worked before,” she observes. “Everyone has a role and an area of expertise, but I think we’ve finally found a way to complement each others’ roles and we recognize the bottom line is bringing down the cost of business.”
The bottom line for all agencies, she adds, is that the cost of doing business here must be kept low.
“We’re not Silicon Valley and we don’t have Stanford University in our backyard. We’ve got to bring down the cost of doing business and make sure that’s what we’re offering,” she says.
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Editor's Note: This story first appeared in the July edition of The Business Journal.
Copyright 2014 The Business Journal, Youngstown, Ohio.
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