If you haven't seen Northwest Ohio in some time, take a second look. If you aren't aware of the new-age industries, the refreshed work force, the rejuvenated infrastructure, you may be missing one of the nation's most attractive plant location options.
by Linda Liston
| When North Star BHP Steel selected Northwest Ohio for a $425 million steel mini-mill, it cited location in the midst of raw materials and customers as a factor. |
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When Brush Wellman opted for a $110 million expansion in Northwest Ohio, it cited the value of its work force as a factor.
When magnetic shield maker Delafoil chose Northwest Ohio for a $46 million plant, it cited incentives as a factor.
And when Owens Corning built its new $100 million headquarters in Toledo, the company cited Northwest Ohio's global links as a factor.
The picture that emerges from those decisions makes two key points. First, it shows that this is a mighty manufacturing economy, supporting companies competing in the global market in an environment that fosters growth. Second, the levels of capital investment are an excellent indicator of the region's economic health. The region has forever put behind it the ravaging days of the "Rust Belt" era and is today the location of choice for a broad band of high performance, globally operating firms.
Northwest Ohio, encompassing 10 counties and a population of nearly one million, sits squarely in the center of the rejuvenated Great Lakes Region. If they were a separate nation, the Great Lakes states would rank as the fourth largest economy in the world. After running ragged in the Rust Belt era of the 1980s, the region now purrs like a well-tuned engine. Fueling the engine are exports and capital equipment purchases by modernizing manufacturers. Fine-tuning the engine are the new breed of companies that have adopted best manufacturing practices and progressive labor relations.
"Whether it's foreign investment or foreign trade, the Midwest leads the nation and Northwest Ohio leads the Midwest," says Kara Smith, 1997 president of Northwest Ohio Regional Economic Development (NORED), an alliance of 10 counties unified in its approach to work force, infrastructure and business climate issues.
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Experts argue that the true measure of economic health is capital investment, because this, more than anything else, signals confidence in and commitment to an area. In the last three years Northwest Ohio captured nearly US$2.4 billion in capital investment and over eight million sq. ft. of bricks and mortar. Those commitments make Northwest Ohio one of the fastest growing industrial regions in the nation.
Moreover, the success rate is accelerating. In 1994 the region logged 82 expansions and 16 new plants, but by 1996 industry upped the ante by committing to 95 expansions and 27 new facilities. In that three-year period Northwest Ohio business and industry created or retained over 24,000 jobs, well over half of them new. |
Topping the list of projects was the $425 million North Star BHP mini-mill, a joint venture of BHP Steel, Australia's largest public company, and North Star Steel Co., a subsidiary of Cargill. The site in Delta was selected, among other factors, because of its location in the heart of the Michigan/
Ohio/Indiana market for flat rolled steel and availability of scrap, the raw material for the mill. The mill has a current annual capacity of 1.5 million tons of hot rolled bands.
Showing the synergies of Northwest Ohio, Worthington Industries, a Fortune 500 company, selected an adjacent site for a $70 million facility for slitting, pickling and galvanizing, with employment of 150 to 190. The plant, connected to North Star by rail, buys a sizable portion of North Star's production.
Also significant were the $170 million GM invested in its Defiance County foundry; AlliedSignal's $12 million in laboratory, offices and training center; LOF/Pilkington's $100 million renewal of its century-old plant; and Alcoa's completion of a new $30 million plant to make aluminum structural assemblies for auto plants. Brush Wellman, faced with an expansion vs. new plant decision, weighed its options for two years. Ultimately, the company committed $110 million to an expansion at its Ottawa County mill.
To grasp the importance of those commitments consider this: Just 10 years ago industry in Northwest Ohio, like most of the Midwest, was ravaged by declining markets and outmoded production processes.
The economic about-face is in part due to Northwest Ohio's native locational advantages and infrastructure and in part to a concerted public/private commitment to rebuild the region, raise the quality of its work force and renew its industry. The companies profiled in this report show how Northwest Ohio achieved those goals.
Manufacturing Melting Pot |
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In the heart of the industrial Midwest, Northwest Ohio has a solid base of glass, plastic, metal and machine makers, as well as automotive assembly and parts production. Forty three percent of the U.S. industrial market and 47 percent of the Canadian market lie within 500 miles of Northwest Ohio. "People are going to come here to do business because this is where the business is," says Nathan Weaks of Automatic Feed Co.
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In this global industrial village, plants fly the flags of many nations, signaling the region's appeal for global players like Toyota, Freudenberg/NOK, BASF and Pilkington.
More than any other industry, automotive commands the region, providing employment for 81,000 people. Within 100 miles of Northwest Ohio are 793 auto parts manufacturers. Chrysler's Toledo plant makes its worldwide production of the popular Jeep Cherokee and Wrangler models. The plant, employing over 5,500, produces 1,200 vehicles a day, a third of which are destined for exports. The auto industry charges the economy of each county. GM's largest foundry plant, in Defiance County, employs 4,500. Ford and GM's Delphi Chassis Systems each employ 1,800 in Erie County. Brush Wellman, which is expanding its beryllium alloy capacity to meet automotive demand, employs 650 in Ottawa County. Sandusky County hosts Lear Automotive, with its 425 employees. AlliedSignal's work force in Seneca County numbers over 1,100, and Chrysler has a second plant, with 1,700 workers, in Wood County. Throughout Northwest Ohio hundreds of other plants feed the automotive industry. Numerous automotive OEMs headquarter in the region: Dana Corp., Libbey-Owens-Ford, Doehler-Jarvis, TRINOVA, and Champion Spark Plug. Those companies and others center their R&D activities in Northwest Ohio as well. |
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Woven throughout the manufacturing base is a web of suppliers and support services -- the tool and die shops, the mold makers, the engineering centers. In fact, the concentration of more than 100 tool and die makers in the region was a factor in the decision to establish the National Center for Tooling and Precision Components in Northwest Ohio.
A Wasteful Decision |
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A location at the center of the nation's heaviest congregation of industry means Northwest Ohio is also in the middle of the Cleveland to Chicago waste stream -- industrial detritus that clever minds are recycling into new goods. In the case of North Star BHP, the raw material for the steel mill is not iron ore but scrap -- derelict automobiles and girders from demolished buildings and bridges. The scrap is melted, and additives transform it into quality steel.
Just as the grist for North Star BHP's mill is metal, so too other industries find treasure in the region's trash. Paper processors find they can reduce their imports of pulp from Canada -- the region supplies all the waste paper they need. Plastics companies in the region often use regrind as a raw material. |
Worldwide Connections |
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In a shipper's perfect world, a company would have four modes of transportation on its doorstep -- air for high-value, time-sensitive items; water for low-cost options; rail for bulk goods; and truck for speed to market.
Of course, the world is not perfect, but Northwest Ohio comes close. Shippers can access one of the most active rail hubs in the country; a regional airport that rivals Chicago's O'Hare for air freight volume; a well-equipped deep water port, second busiest on the Great Lakes; and access to U.S. and Canadian markets over two key highways. To those multimodal transportation assets Northwest Ohio adds the fact that costs of doing business are substantially lower than the coastal regions of the U.S.
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Northwest Ohio sits at the intersection of the nation's two longest and most heavily traveled highways -- the coast-to-coast I-80/90 and the Canada to Florida I-75. Those highways are one reason Roadway has one of its largest truck terminals and United Parcel Service a three-state hub in the region.
"From a business standpoint, the best thing about Northwest Ohio is our central location," says Nathan Weaks, secretary/ treasurer of Automatic Feed Co. "We can drive to almost all of our major customers, have a four or five-hour meeting and drive back in the same day. You can drive to and from almost half of the top 50 cities in the U.S. and Canada." Northwest Ohio industry benefits from several new interchanges on the Ohio Turnpike (I-80/90). Driving distance between interchanges has been cut in half in the last six years. That is significant because it offers smaller communities the opportunity to participate in economic development projects. The new interchange at State Route 109 and I-80/90, for example, was probably the deciding factor in the North Star BHP mini-mill site selection decision. Northwest Ohio is the third largest railroad center in the nation, with service by Conrail, CSX, Norfolk Southern and GTW. Conrail operates a new truck/train intermodal terminal in Toledo, set up recently to handle accelerating auto exports. In addition, Conrail provides piggyback terminal facilities in the area at a new $18 million intermodal hub. The new capacity doubled Conrail's capacity, providing room for 500 more semi-truck trailers. Conrail's Stanley Yard in Wood County continues to be the railroad's primary facility for sorting freight car traffic to and from the region's industries. CSX ships to major north-south markets and Atlantic and Gulf Coast ports. Norfolk Southern offers service to Midwest centers and to East Coast ports. CN North America (GTW) serves Michigan and Canada, plus points south to the Ohio River. The easy-to-access Toledo Express Airport is home of Burlington Air Express' heavy air cargo hub. Burlington's 900 employees marshal shipments of two million pounds of cargo a day to 112 countries. A Foreign Trade Zone at the airport allows shippers to save on import duties. While Toledo Express is central to the region, business travelers may opt for Detroit Metro, an international airport just 50 minutes' drive from Toledo. The busy Port of Toledo links Northwest Ohio to world markets via Lake Erie and the St. Lawrence Seaway. The deep water port handles more international tonnage than any other port in Ohio. Its 150-acre domestic and international general cargo shipping center includes a Foreign Trade Zone. |
Abundant Power |
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Other infrastructure serves industry well. Northwest Ohio has abundant power, natural gas and fresh water resources. Toledo Edison, Ohio Edison, American Electric Power and American Municipal Power serve the region. In addition, several cities operate their own electric power systems. These companies offer incentive rates for economic development-related expansions and relocations.
A Synergistic Alliance |
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Natural locational assets may sell the region, but dynamic leadership assures it. Setting aside political boundaries and territorial jealousies, the 10 counties pioneered a highly successful regional approach to economic rebirth -- Northwest Ohio Regional Economic Development (NORED). Each county, though a distinct political unit, plays a role in provision of labor, land and amenities. The alliance works as a true team, providing quick response to requests for site location assistance, training, financing and incentives and international trade services.
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"We have been working together as a united region of economic development professionals for almost a decade," says Kara Smith, director of economic development in Ottawa County and NORED board member. "We have been so successful that our approach served as a model for Gov. George Voinovich to encourage creation of regional economic development units in other parts of Ohio."
A continuous dialogue with the Ohio Dept. of Development and a direct link to the governor's office assures that the region's needs are addressed promptly. The Governor's Regional Representative, Wes Fahrbach, helps NORED members identify ways the state can assist companies and paves the way for connections to state agencies. It was that close cooperation among NORED officials, the governor's office and state agencies that got the $46 million Delafoil facility up and operating in record time. And it was Ohio's array of incentives that proved the practicality of a Northwest Ohio location to Delafoil and the feasibility of a Northwest Ohio expansion to Brush Wellman. They are just two of many companies to benefit from the state's business-friendly environment. A series of incentives, put forth by Gov. Voinovich, did much to improve the business climate. "We stack up well with any state," says Wes Fahrbach, Gov. Voinovich's Regional Representative. "In most cases, our across-the-board package is more competitive than any state." |
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In addition to state incentives, Northwest Ohio's counties add their own incentives, including revolving loan funds, property tax abatements and economic development bond financing for land, buildings, machinery and equipment.
Lessons Learned |
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One of the lessons learned by Midwest manufacturers over the last two decades was that the technology train was leaving the station. To survive, they had to be on it. Those that missed the train went out of business or found themselves bested in a fiercely competitive global business war.
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That's why Northwest Ohio puts such strong emphasis on training. It has literally been a life saver for many companies, but particularly the heavy equipment makers.
National Machinery Co., a forging equipment maker in Tiffin, is a case in point. The company stared down bankruptcy by investing heavily in technology and training. "When we started the process of rebuilding our business 12 years ago, there were no CNC machining centers in the our company, and none of the employees even knew what they were," says Paul Aley, president. "Now, we continually invest in our human capital and our Tiffin plant, and that's one of the reasons why we're the most profitable machinery maker in the U.S. today." Helping develop the skills demanded by the region's high performance industry is a network of education, training and research resources. The network includes units like the Edison Industrial Systems Center, with its industrial CT scanner and machine vision expertise; the University of Toledo's Polymer Institute, one of Ohio's centers of excellence in plastics technology; and the Center for Quality, Measurement and Automation at Bowling Green State University. Northwest Ohio lays out an array of training options for industry. The region has one of the largest concentrations of education in the nation, with more than a dozen four-year colleges and community and technical colleges in the 10-county region. Within an hour's drive of any point in the region are 77 colleges and universities, including those in neighboring Michigan and Indiana. |
"The transition to new technologies is something Northwest Ohio is not just embracing -- we're encouraging it through our innovative work force development programs," says Kara Smith of NORED. "We're different from most areas in this regard. We go one step beyond by anticipating what the work force of the future needs to be. Why? Because we know that the manufacturing sector no longer measures output by number of man-hours per ton, or physical labor. Instead, companies know that success comes from knowledge-based workers whose performance is equal to or better than those anywhere in the world."
Wes Fahrbach, Governor Voinovich's representative for the region, agrees: "One of the things that has been critical to the success we've had here in Northwest Ohio is the role the three community colleges play in training. All have built new engineering technology centers on their campuses in the last few years and they are playing a much more significant role in educating labor as equipment becomes more sophisticated. These programs go well with the programs of the two four-year colleges we have in the region."
The region's community colleges -- Terra, Owens and Northwest -- know well the needs of manufacturing firms. Says Northwest State Community College President Larry McDougal, "In 1965, 20 percent of the jobs required a bachelor's degree, 60 percent a high school diploma and 20 percent something in between. Today, it's still 20 percent requiring a bachelor's degree, but in only 20 percent of the jobs is the high school diploma sufficient. Sixty percent of the jobs require more, and that's where the community colleges come in."
The colleges find that area industries -- though they are running full bore to meet production goals -- make time for continuing training. "They know they have to keep up with technology or they can't stay competitive," says Daniel H. Brown, president of the 12,000-student Owens Community College in Wood County.
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Northwest Ohio offers some programs not available anywhere else. For example, Terra Community College developed a strength in plastics, operating the nation's only color-matching program. "As the plastics industry grew up around us, we worked with the Society of Plastics Engineers to develop a program our industries could use," says Charlotte Lee, president. Terra's graduates are much in demand by plastics makers all around the country.
CEOs from the region's major industries help shape the course content at the three community colleges. Terra Community College, for example, built a Total Quality Management program to Whirlpool's specifications. |
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With 42 percent of the labor force working in manufacturing in the region (versus 22 percent statewide), the 2,100-student Northwest Community College in Archbold is closely tuned to industrial training needs. The college has a large apprenticeship training partnership with companies like GM, which operates the largest foundry in the U.S. in Defiance County. The college does a great deal of training for Campbell Soup in Napoleon -- which in addition to making soup with a work force of 2,100, operates the world's largest can manufacturing plant. Northwest also fields a program with the Private Industry Council for machinists and is one of the nation's few Novell network operating system training sites. The college played a role in setting up the Delta Learning Center for North Star BHP.
Northwest's new engineering center enables distance learning. This is important for the rural communities of Northwest Ohio -- the average commute is 16 miles one way and some students travel 60 miles or more to attend classes. Distance learning can also be delivered to a plant site, a feature used by such companies as Automatic Feed in Henry County.
The colleges make the training as convenient as possible for industry. Fiber optics carry courses to plant sites in the distance learning program. Industry can send machinery and employees to the campuses to be trained while a plant is being built. Educators will set up training programs at the company's plant. Or, as in the case of the North Star BHP project, training and employee screening and testing can take place at a facility provided especially for the purpose by the local educators.
The presidents of all three colleges can make commitments for training in a short time frame. "One of the strengths of the community colleges is our ability to respond in a timely fashion," says Owens Community College President Dan Brown. "We can't take a year or two to study the possibilities of a new training program. Everybody wants our training programs yesterday."
At an even younger level, the Northwest Ohio educational system has major input into the quality of the future work force. Northwest Ohio is a school-to-work district, where all students can become acquainted with business and industry so they will have a better feel for future employment requirements.
A Motivated Work Force |
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One of the truisms about Northwest Ohio is the quality of its work force. In a region that supports the world's largest soup canning, ketchup making and sauerkraut cooking plants, agribusiness is big business. Farming is still a way of life for many in the region. Northwest Ohio is also heavily populated by people with a Germanic background. Mix farm-learned mechanical skills with German ability to engineer and you have the kind of labor force manufacturers seek.
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"It's almost as if someone picked up the Rhine River Valley and put it in the Maumee River Valley," observed one industry executive.
That German heritage displays well in companies like Sauder Woodworking, which produces ready-to-assemble furniture in two million sq. ft. of facilities with 3,500 employees. So important is the German connection to the company that it created Sauder Village as a tourist attraction, where craftsmen show off their wood and iron working skills. But for Northwest Ohio it's more than skills; it's also attitude and motivation. Says Rich Menzell, personnel manager at the North Star BHP mini-mill in rural Fulton County: "You can teach people how to make steel, but you can't teach one of the attributes of a rural environment, and that's work ethic. Northwest Ohio has a good work ethic. It's a matter of problem-solving capabilities and attitude." |
Sam Moyer of Brush Wellman in Ottawa County, confirms that opinion: "A lot of people in Northwest Ohio farm on a small scale, and they have business savvy because they're in their own profit and loss situation. When things break down they're Mr. Fix-its. They have a good sense of when a machine is not running right. And they come in every day ready to work."
Finding the Skills |
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A cursory scan of employment figures in Northwest Ohio suggests labor is in short supply. Unemployment rates hover around 4.5 to 5.5 percent in most counties. However, the official numbers are deceptive. The Ohio Bureau of Employment Services' Job Net database shows several hundred thousand people who are seeking new jobs to upgrade their present positions, or who are reentering the work force, or who have recently moved into the area. The database taps nationwide listings for hard-to-find specialists. Ohio Job Net dramatically changes the way applicants and industry find each other. Job Net uses skills checklists completed by prospective workers and checklists employers fill out when placing their job orders. Computers match job seekers with job openings. For example, if you need a machinist with several years of experience on tapping machines, jog borers and 3D pantograph, the database searches through its 750 different skills to find that person. The database also clues employers as to regional pay scales. Companies like North Star BHP and Burlington Air Express used the system in their site selection studies to discover what skills were available and at what rate. Other companies use the system to design training programs or for help writing position descriptions.
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The Ohio Bureau of Employment Services staffs three one-stop shops in the region, where applicants can be screened, interviewed and tested. The service is free to employers and workers.
| Ohio Main | ||
| Previous | North Star BHP Steel | Next |
| Automatic Feed Company | ||
| Owens Corning | ||
| Brush Wellman | ||
| Poly-Foam International | ||
| Quality Revolution | ||
| National Machinery | ||
| Delafoil | ||
| Resource Guide | ||
