Coming out of the recession, more and more manufacturers are either breaking ground or expanding. Time was when much of that growth would happen in Ohio’s big urban centers – Cleveland, Columbus and Cincinnati. But these days it’s the smaller cities, suburbs, and even rural areas that have become locations of choice for manufacturing. The trend suggests companies are trying to cut costs by tapping into readily available resources and cheaper real estate. Ideastream’s Brian Bull reports:
At AmbaFlex’s production facility in Canton, plant manager David Spencer walks by welders assembling what looks like several towering corkscrews. They’re spiral conveyors…devices used to move materials from one floor to the next, like you might find in a beer bottling plant or package delivery service. Spencer says until the conveyors get shipped out to clients, space is going to be tight.
“We use these three bays as our warehouse," says Spencer, walking through a storage area filled with conveyors. "We actually in the past year, have gotten two more warehouses to use, we ran out of space.”
AmbaFlex is based in Holland, and Canton is its sole manufacturing plant in North America. It opened in October 2010, with just three employees. Now it’s at seventeen, set up in an old brick factory. But Spencer says Canton officials are helping them find new space, as well as connecting them with local vendors who do painting and sandblasting.
“I don’t know if we’d have that same amount of support from a bigger city," says Spencer. "In return we’re starting to give jobs back to the city, and not only with our workforce but with other workforces. And it keeps these local businesses, gives them more work and it helps out the overall economy in the area, so win-win.”
Spencer says it’s that special attention that helped persuade AmbaFlex to settle in the Canton area. He says setting up in a bigger city would’ve made them just another face in the crowd, and accessing suppliers would’ve probably been harder because of distance and traffic.
The Ohio Department of Development notes that since 2009, nearly 20 manufacturers have started up in Stark County, where Canton is located. Steven Katz, Senior Vice-President of Canton’s Regional Chamber of Commerce, says there’s a lot here to entice manufacturers, such as the lower expenses compared to urban areas.
“If you look at the costs of real estate, the taxes...some of the utility costs here, and wages as well…the area is very competitive, in terms of cost of living.”
The Ohio Department of Development’s report shows on average, 93 percent of manufacturing projects in 2011 and 2010 were launched outside Cleveland, Columbus, and Cincinnati…and in many cases, outside those cities’ counties.
“One of the advantages for companies that are locating in rural or suburban areas, is you have planned growth in those areas," says Kristi Tanner, Managing Director for Manufacturing for JobsOhio. "Where they’ve identified industrial parks and areas that are designated specifically for manufacturing, so that you have a large enough buffer between the residential communities and the retail areas versus where a community wants to grow their manufacturing base.”
Tanner says automotive companies are especially driving new manufacturing in Ohio. Two just opened this year: MITEC in the Hancock County city of Findlay, and Rochling Automotive that’s set up just outside Akron, in Summit County.
Rochling Automotive’s plant manager, Robert Roach, walks across a pristinely clean factory floor, past bulky mold-injection machines and robotic arms. The smell of warm plastic fills the air. Roach points out several freshly-cast parts that are for GM’s Chevy Cruze.
“The eco-version gets an underbody panel system," explains Roach. "This reduces sound inside the cabin, and increases air dynamics under the car."
Roach says there were many incentives to break ground in Summit County, most notably its proximity to many car factories and vendors.
“We’re supplying GM in Lordstown, we’re shipping parts to a few different companies that supply GM, and also we’ll be supplying parts to Ford," says Roach. "So I think we’re centrally located, and business is picking up, car sales are picking up, and we’re seeing a direct effect here.”
Right now the economics favor setting up shop in smaller communities, where land is readily available for new facilities, environmental cleanup is largely unnecessary, and taxes are low compared to the big cities. Many would agree that’s all good for companies, and for those communities. But not everyone agrees it’s a good for industry as a whole. Bill Bowen is director of Cleveland State’s PhD program in Urban Studies and Public Affairs. He argues manufacturing operates best when it’s concentrated.
“The reason we have urban areas to begin with, is that it’s productive for firms to locate in close geographical proximity to other firms," says Bowen. "There’s economies of scale that can be gained, and economics of scope. So if we want to maximize the productivity of the economy in the state, we need to concentrate on making sure that our urban areas are the ones that are really doing well.”
Cleveland’s Chief of Regional Development Chris Warren agrees. Warren says existing roads, public transit, skills training, and a higher number of prospective workers are valuable assets that can be an advantage to companies.
“The further concentrated economic activity is located away from the historic infrastructure, that we as citizens have already invested in, we essentially rob Peter to pay Paul,” he says.
But for now, it looks like many new manufacturers are setting up shop away from Cleveland, Columbus, and Cincinatti. Rochling and Ambaflex are both expanding their workforce and facilities…and many counties are simply anxious to see manufacturing take off as a way to keep their local economies thriving.