manufacturing shift helps 'cleveland plus' region emerge from rough economic waters
Like most of the country, Northeast Ohio was slammed hard by the tidal wave of the most recent recession. Thanks to an increasingly diversified economic strategy, the region is emerging from those damaging waters stronger than it has in the past, say area advocates.
Proof of that can be found in Northeast Ohio's 7.4 percent unemployment rate, which is significantly lower than the national average of 8.5 percent. Compare this to the state's jobless rate in the early 1980s -- which hovered around 14 percent -- and the financial forecast appears even brighter.
Through the PRISM
While the region is not as dependent on manufacturing as it once was, a steady transition from traditional manufacturing (steel, tires) that sustained the region for years, to modern forms of manufacturing (healthcare equipment, polymers) that play off the region's newer strengths, is a big reason why unemployment is at its lowest ebb in three years, says Brad Whitehead, president of the Fund for Our Economic Future
, a Cleveland-area nonprofit created in 2004 with an eye toward grant-making, research and civic engagement.
An industry "left for dead" in the 18-county "Cleveland Plus
" region has found new life in commodity markets, notes Whitehead. Examples include ABSMaterials, a maker of water treatment systems, and ViewRay, a privately held medical device company developing advanced radiation therapy technology for the treatment of cancer.
"Manufacturing is in our genes, but now we're taking our skills and knowledge and transferring them into areas with growth potential," explains Whitehead.
In the case of Jacksonville, Florida-based ViewRay, the company recognized Northeast Ohio's strengths in the medical industry and subsequently moved part of its operations to Oakwood Village, the fund president points out.
The region's capabilities have been coming together through the Partnership for Regional Innovation Services to Manufacturers (PRISM) initiative. The goal of PRISM is to help small and midsize manufacturers reinvent their products and thrive in hot markets like bioscience, health care and clean energy. The program is spearheaded by the Manufacturing Advocacy and Growth Network (MAGNET
), an advocate for the manufacturing sector.
PRISM connects higher education institutions and regional economic development organizations. These entities then provide market research and business consulting services, increase a company's access to capital and talent, and foster stronger relationships within growing industry clusters. If a firm doesn't have access to marketing or an R&D department, for example, the PRISM program will help manufacturers identify and access those resources.
Early results have shown promise, says Whitehead. Vadxx Energy, a company that recycles plastics into oil, opened offices throughout the region through PRISM and with help from the Cleveland nonprofit, NorTech
Groups like BioEnterprise
and NorTech are continuously trying to push an economic modernization strategy. "In the '80s, there wasn't the entrepreneurial dynamism there is now," Whitehead says. "We've been working on getting into new markets for some time. We're now seeing the fruits of that effort."
Diversity = stability
It would be a mistake to think that the region has not been preparing for the economic tsunami of the last several years, says Tom Waltermire, Team NEO
CEO. "We're not so much changing the products of Northeast Ohio, but selling what we already have," he says.
Team NEO acts as a resource for companies considering a move into the area. As of year-end 2011, the organization reported 52 new companies setting up operations in the Cleveland Plus region, totaling 4,900 new jobs and more than $189 million in annual payroll.
The companies Team NEO attracted to the region run the gamut in diversity: About half are in the manufacturing realm, mostly creating medical devices and other healthcare-related equipment. Aerospace, polymers and plastics have a home here, too. There also are customer service centers, an oil/gas production facility (Exterran), and a company that makes organic snack food (Blue Tractor).
While not related to Team NEO's activities, the shale boom in the eastern part of the state recently led to the Youngstown expansion of Michigan-headquartered mechanical contracting company, DE-CAL, Inc.
Team NEO's final 2011 quarterly report shows how important the food industry alone has been to Northeast Ohio. The area supplies a broad range of products and services -- dairy items, pretzels and chips, jellies and jams, meat processing and more. All that good eating added up to $2.6 billion in the last year alone.
Waltermire grew up in the Akron area, and he remembers how much the city suffered from being solely dependent on the tire industry. "When an industry goes away, then you have an epidemic," he says. "The more diversified we are, the more stable we are."
State officials understand the need for change. Ohio has invested significantly in the Third Frontier
economic development program, with those innovation efforts continuing on the local level. Waltermire points to Team NEO's press for Exterran to build its manufacturing arm in Youngstown.
"Our job was to show them how easily they could operate here," he says. "We had to prove they would be comfortable [in Northeast Ohio] instead of making an investment" in a more traditional oil and gas hotbed like Texas.
Last year, Team NEO was named one of the state's six JobsOhio
regional partners and was awarded a one-year, $4.1 million grant in support of its efforts by Third Frontier. Waltermire is excited for the chance to create even more local jobs while also increasing capital investment.
"We'll continue to push the sophisticated scale of business we have here," Waltermire says.
Meanwhile, the Fund's Whitehead believes that if Northeast Ohio continues to build things people want, businesses will continue to come to the region.
"A decade ago, people were ready to give up on manufacturing and move into other areas," Whitehead says. "This is a renaissance of manufacturing. Far from being our past, it's an important part of our future."
- Image 1: Cleveland HeartLab a BioEnterprise Company - Photo Bob Perkoski
- Image 2: Brad Whitehead, president of the Fund for Our Economic Future
- Images 3 & 4: Nortech success story, Tremont Electric. Aaron LeMieux, CEO & Founder - Photo Bob Perkoski
- Image 5: MAGNET - Photo Bob Perkoski
- Image 6: Tom Waltermire, Team NEO CEO
- Image 7: Vadxx, transforming plastic into fuel