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A Turning Point for Ohio Industry

M Shade by Michael Shade, IQS Editor

There’s a certain fatalism that pervades observations about the performance of America’s economy. Out of that fatalism was born the cynicism that generated the “Rust Belt” designation for parts of the American Midwest and Northeast whose industries were perceived to be in decline. They were decaying, people said. They were outmoded. Rusty. But consider, for example, the state of Ohio. Does Ohio really deserve to be placed on the Rust Belt shelf?

Flag of OhioFlag of Ohio

“Business is booming,” said Neil Gloger, CEO of InterGroup International in an interview with Crain’s Cleveland Business Magazine. “We’re going to triple this year. Our biggest challenge is finding more people.” Mr. Gloger’s company is involved in the reprocessing of used plastic materials, which can be pelletized and then sold to injection molders, extruders and a variety of other plastic forming companies. Mr. Gloger’s business is just one of many examples of operations that have learned to take advantage of the changing manufacturing landscape in the United States. As customers become more interested in recycling their used products and in purchasing products made from recycled materials, the need for operations like InterGroup is likely to continue growing. This innovative spirit is a likely contributor to the fact that Ohio ranked fourth in the country in terms of green economic growth during 2007.

Consider this fact: Ohio’s estimated 2009 GSP was $471.26 billion. That’s more than the gross domestic product of Belgium for the same year. What activity accounted for that figure? Much of it still comes from industry. As much as 17% of all steel produced in the United States comes from mills in Ohio. According to data collected by the Ohio Department of Development, in 2005 more than 13% of all American steel industry workers were employed in Ohio. The state is also one of America’s most prolific manufacturers of plastic and rubber products, and eight major rubber products companies, including Goodyear Tire & Rubber, Parker Hannifin and Cooper Tire, are headquartered in Ohio.

Ohio is also home to five of the top 115 American colleges, according to U.S. News and World Report. These colleges churn out thousands of graduates every year, many of whom can be inducted into Ohio’s blossoming research and development industry, which boasted a payroll of $9.8 billion in 2006. Ohio hosts scores of for-profit, non-profit and government-sponsored research and development efforts, some of which have contributed to the development of products like the copy machine, optical digital recorder and nuclear fuel rods. These and other products developed by the research industry in Ohio have become important parts of life in America.

People who sideline Ohio as a decaying relic of American industry’s boom days are ignoring reality. By the end of FY 2011, Ohio was fourth in the country in terms of job creation. And while diversification has played a role in the resurgence of Ohio’s economy, industry has still always been there. Almost every Honda Accord sold in America was made in Ohio. Three of Ohio’s cities are listed as being in the nationwide top 20 for manufacturing jobs. There are at least 21,250 manufacturing operations throughout the state of Ohio. In 2008, Ohio was third in the nation in manufacturing GDP, and this was after having lost more than 100,000 manufacturing jobs during the financial crisis.

There is no doubt that Ohio, like its neighbors and indeed the rest of the country, has struggled as an industrial presence. But a casual look at the reality of the strength of Ohio’s economy makes the Rust Belt distinction seem inappropriate and even perplexing. There’s still a lot of work to be done in the process of retooling industrial and commercial operations that are unprepared for doing business in the 21st century. But there are enough success stories that even the most pessimistic observers should be willing to change their outlook. The answer to the question of the future of the “Rust Belt” is obvious: investment. Look closely enough and you’ll see that Ohio and its neighbors haven’t rusted. On the contrary, Ohio sports a complex infrastructure of manufacturing might and a skilled labor force that is capable of significantly contributing to a new industrial revolution in the U.S. The right kind of eyes can look at Ohio and see that the future of industry in the Midwest is bright.