Wednesday, January 13, 2010

Youngstown Advantage Redux

Janko focused my attention on an article in today's Business Journal. Here's the passage that resonated with him:

“I think if we can continue to develop Lordstown’s reputation as the center of gravity for the auto industry,” Ryan said, “the Cruze can be just the beginning.“ Developing a cluster of auto and auto-related companies in the Mahoning Valley, especially those related to alternative and green energy, is possible.

“We have a great opportunity with the green revolution because we offer everything that they would need. If they need business software development, we’ve got the Youngstown business incubator,” he elaborated. “If they need energy product development, we’ve got the Warren incubator. If they need research, we’ve got Youngstown State University. If they need job training we’ve got the community college -- we’ve got everything infrastructure-wise in place. Now it’s about going out and pitching the deal.”

Financial incentives are still important in luring business to the Valley, but they aren’t as important as they once were, Ryan said.

Today, knowing that there are opportunities to partner with YSU, the business incubator and other entities that can help businesses succeed long term are more important than incentives, he observed. Those possibilities along with the Valley’s skilled workforce, low cost of living and vision “are all in our favor,” Ryan said. “Youngstown State having the first STEM college in the state of Ohio sends a signal that we know where the future is.” He added, “I believe our area is leading the country out of the recession.”

In bold is the part of Congressman Tim Ryan's comments that jumped out at me. I'm not a big fan of financial incentives. I'm in good company:

While states battle to outdo each other with bigger incentives, there are smarter ways to attract or bolster companies, the nonprofit research center Good Jobs First of Washington, D.C., suggests in its [report] released today.

For instance: Concentrate efforts around occupations that already are strong in a specific region, rather than creating packages for specific companies. Nuclear, civil and other types of engineering along with biomedical fields are strong in Pittsburgh, so training and job growth efforts could be focused there, Good Jobs First said. ...

... The research center contends Pennsylvania's tax structure isn't significantly different from those in most other nearby states — in fact, it's in the middle of the pack — so the state should "do no more harm to the tax code."

Instead, Pennsylvania should hone its attention on workforce development and other issues such as growing its own employers rather than recruiting from outside, and pushing for better federal trade policies.

Especially in manufacturing, "The number of jobs lost offshore is dozens of times greater than the number lost to other states," Good Jobs First said.

For more, see the Wall Street Journal.

I'm not crazy about the proposed federal trade policy angle, either. But I appreciate the stated course for localities and states to follow instead of lavishing companies with all kinds of money. Even if the incentives do work, the gains are ephemeral. There is always another place that can afford to offer a better deal. Frankly, it is extortion and a lot like the leveraging of brain drain hysteria to get voters (or politicians) to support some boondoggle.

I look around the Rust Belt and I see many regions with the same assets. What sets apart one shrinking city from the rest? Not to scratch the scab off of a recent wound, Sean Safford's research comparing and contrasting Youngstown with Allentown offers possible comparative advantage. I believe that the Mahoning Valley civic infrastructure could be the envy former manufacturing centers across the country. However, Pittsburgh probably holds that distinction thanks to some remarkable partnerships and economic vision that started, in some cases, 50-years ago.

The current civic infrastructure bodes well for the future. It's a big change from the Youngstown Safford saw. The legacy of the James Traficant era won't disappear overnight and the ravaged economic landscape will continue to dominate the headlines. Pittsburgh is just beginning to shake the rust off of its national image, a process that has taken decades and at least two major urban reinventions that served as a model for many US cities such as Minneapolis. This hard-won transformation isn't easy to replicate, unlike generous tax incentives or even substantial tax reform.

The task before us now is to get the good word out and help the ambitious to understand the unique value proposition. This result still eludes Pittsburgh, as the Power of 32 fiasco indicates. Let's hope that the TechBelt Initiative is better up to the task. This should be an open and inclusive process, not business as usual.

Tuesday, January 12, 2010

Return to Youngstown? Jobs Available

There's a TechBelt emerging in downtown Youngstown. With the Youngstown Business Incubator (YBI) serving as anchor, the knowledge economy is booming along Federal Street:

Revere Data is the first outside company attracted to the Tech Block, which is being developed downtown by the incubator and the Youngstown Central Area Community Improvement Corp.

Lih-Hann Chiu, Revere’s product manager for federal programs, said Youngstown was selected after a nationwide search because of its low cost of operations and abundance of talent.

He said Revere learned in its research that the area has a good number of college graduates but a lack of jobs for them.

“We found that it is an extremely undertapped area, and one that’s very ripe,” he said.

The company is looking for graduates who have degrees in business, economics, information technology, life sciences or engineering.

Chiu's comments highlight a few things. First, the local talent market has substantial leakage. Qualified graduates from Youngstown State University might stick around if there were jobs that would make use of the expertise. It also indicates that many smart people are now members of the expatriate community we call the Mahoning Valley Diaspora. As our research graphically reveals, you folks haven't fallen too far from the tree. Revere Data has a large talent shed from which to find good employees.

The second point is the low cost of doing this kind of business. The USA Today article detailing the cheap real estate opportunities in the area provides a compelling example. Most Rust Belt cities offer a similar value proposition, but few combine it with a revitalizing downtown and an ample supply of talent. Add to that the dynamic political leadership that might be the envy of all shrinking cities and you can see why Revere Data would open an office in Youngstown.

While the 10 openings are entry level, this is your chance to move back and join the Defend Youngstown cause. The Tech Block is the center of the Mahoning Valley renaissance. Here's 411 printed in the Business Journal:

Revere Data LLC, which is opening a research office in the Youngstown Business Incubator’s Semple Building, is seeking 10 full-time research associates to conduct research on publicly traded U.S. companies.

In August, Jim Cossler, YBI’s executive director, announced that the San Francisco business research and intelligence company would relocate its research and development operations to Youngstown. The nine-year-old company specializes in business intelligence and mapping.

Applicants for the positions should have an undergraduate degree in business. economics, information technology, life sciences or engineering, zero to two years of work experience, strong research and Internet search skills, and a demonstrated interest in business, finance and global affairs.

Candidates are invited to send a resume to Cossler specifically referencing the Revere Data openings.

Email Jim Cossler at jcossler@ybi.org if you are interested in the position.

Monday, January 11, 2010

Greater Youngstown Green Manufacturing

What will the new economy look like? Congressman Tim Ryan and US Senator Sherrod Brown proposed a vision that makes the TechBelt an American center for green innovation. An article in today's Akron Beacon Journal about the wind power industry provides a glimpse of the emerging geography:

Green Energy Technologies LLC is not producing utility-size wind turbines but smaller units aimed at commercial and industrial customers.

The privately held firm based in Bath Township is selling what it calls the WindCube, a wind turbine that will produce power on site, not just electricity to be added to a grid like the large twirling turbines. ...

... The WindCube — with its 61 components — will be built by Roth Bros. Inc., a Youngstown energy-management company that has invested $2 million in what Cironi is doing. Parker-Hannifin Corp. in Cleveland will produce the generator and electrical system.

From Cleveland to Morgantown (West Virginia), your alternative energy idea can be manufactured in the Mahoning Valley. That's not to say innovation can't happen in Youngstown, but that industrial know-how is already clustered in the area. This is an example of how regional approaches to economic development can benefit all member communities.

The kind of talent needed to produce these goods is already in short supply. Research and development is geographically mobile, but ample supplies of manufacturing expertise (along with the necessary infrastructure) are not. I think this is a harbinger of more geographically concentrated global supply chains providing the TechBelt with a comparative advantage. Also, it doesn't hurt that Ryan and Brown are funneling substantial public investment in clean technology back home.

Friday, January 8, 2010

Thoughts on ITC Ruling Press Conference in Warren

I was tempted to address the criticism of the Mahoning Valley trade mission to Israel, but the objections are ridiculous. Those community leaders got the 15-minutes they were seeking. I found the following comment about the benefits of the import duties illuminating:

The congressman emphasized that the U.S. is on the verge of a “green revolution” in which companies such as Wheatland Tube and V&M Star would be called on to produce the components needed to power America’s future through alternative energy sources such as wind turbines.

“There is a revolution coming in green technology,” Ryan said. “If we let the Chinese continue to dump their products on our country, then we’ll see another revolution in America that we’ll miss.”

Today's news cycle is still spitting out stories about the Green Revolution (great one here). Reads like a media blitz trumpeting Obama's preferred economic strategy, a manufacturing manifesto. Whether or not it is a good idea, the money is coming.

That pipeline is pointed right at Greater Youngstown. Again, I'll stress the connectivity opportunities. Israel is certainly one of them, but so is Pittsburgh (via the TechBelt Initiative) and the Front Range of Colorado. The regional diaspora in the Greater Denver area could prove to be very useful, particularly concerning alternative energy projects back home.

Thursday, January 7, 2010

Blog Release: ITC Ruling Press Conference in Warren

Congressman Tim Ryan joins Senator Sherrod Brown and ODOD Director Lisa Patt-McDaniel at Local Steel Manufacturer to Discuss Recent ITC Ruling on Chinese Steel Imports

(Warren, OH) This afternoon, Congressman Tim Ryan, Senator Sherrod Brown, and Ohio Department of Development Director Lisa Patt-McDaniel will discuss the impact of the International Trade Commission’s recent ruling regarding Oil Country Tubular Goods imported from China. William Kerins, President of Wheatland Tube Co., and Roger Lindgren, President and COO of V&M Star Steel, will join the legislators to address the potential positive effects of this ruling on their local operations.

Regarding the decision, Congressman Ryan stated that, “For years, our manufacturers have been fighting a flood of inferior Chinese products in the American market. The recent ITC decision regarding the placement of tariffs on steel pipe and its previous decision regarding rubber tires move us in the right direction toward leveling the playing field for local businesses including V&M Star and Wheatland Tube. Senator Brown and I will continue to work with the ITC and the Obama Administration to seek tariffs for other Chinese products that threaten to undermine the economic health of this nation.”

Senator Brown added that, “Trade enforcement means jobs. For too long, domestic manufacturers like Wheatland Tube and V&M Star faced an inexcusable flood of Chinese products made with unfair subsidies. By enforcing trade law, we will ensure a fair playing field and save jobs.”

WHO: Congressman Tim Ryan (OH-17), Senator Sherrod Brown (D-OH), and Ohio Department of Development Director Lisa Patt-McDaniel

WHAT: Press conference regarding recent International Trade Commission ruling re: tariffs on Oil Country Tubular Goods imported from China

WHEN: THURSDAY, JANUARY 7, 2010 at 1:30 PM

WHERE: Wheatland Tube Co.
901 Dietz Road NE
Warren, Ohio 44483

# # #

Clean Tech Market Watch

I look at economic development through the lens of migration and workforce development. Does the Mahoning Valley have the talent it needs to be a leader in the Green Revolution? If not, where will this skilled labor come from? Retraining via federal government grants would appear to be the preferred answer to the above questions:

“The most exciting part of what’s happening here is that these programs are aligning with what Ohio communities and universities are doing to tap into the green economy and the green revolution,” said U.S. Rep. Tim Ryan, D-17 Ohio, who with U.S. Sen. Sherrod Brown, D-Ohio, joined Solis on a conference call to announce the grants. “Our manufacturing base isn’t just our past now, it’s our future.”

Ohio, Brown said, already has a skilled work force and “a rich manufacturing heritage. These funds are targeted for communities that have been hit hardest by job loss in the auto industry,” he continued. “They will lead to good-paying jobs and will help Ohio become the Silicon Valley of clean energy manufacturing.”

Greater Youngstown is betting a lot of resources on clean tech manufacturing and innovation. That's why I follow this storyline so closely. If you want to move back, then you best keep that in mind. Follow the money trail.


In a flurry of deal making bolstered by government subsidies for renewable energy, venture capitalists invested $5.6 billion in green technology companies worldwide in 2009, according to a preliminary report released Wednesday by the Cleantech Group and Deloitte. ...

... “In 2009, clean-tech went from a niche category to become the dominant category in venture capital investing,” said Dallas Kachan, managing director of the Cleantech Group, a San Francisco market research and consulting firm. “Clean-tech continued to outpace software and biotech.”

I emphasized the caveat in what looks to be good news for the clean tech sector. There's a debate about whether or not public investment in green jobs is sustainable. A good example is the natural gas market. Currently, there is a global supply glut. As a result, gas is a very cheap source of energy. Can clean tech compete?

The Mahoning Valley already has a substantial stake in the development of cheap natural gas, as represented by the proposed $1 billion expansion of V&M Star in Youngstown. That, too, is a big bet. You might see that as a good thing. The region is diversifying its economic portfolio within the energy sector. Looking at Pittsburgh, that strikes me as a good idea.

Wednesday, January 6, 2010

Mahoning Valley Goes to Israel

The Regional Chamber is leading another international trip, this time to Israel. A large contingency representing a variety of interests will be making the journey. Just because I've read a lot about clean tech innovation in Israel, I'm interested in that angle:

The trip will include site visits and one-on-one meetings with Israel’s vast array of business incubators, including visits by Mayor O’Brien and members of the Warren Cleantech incubator steering committee -- Scott, Osterloh, Smith and Garvey -- to Cleantech incubators in Israel.

Israel is an entrepreneurship dynamo. Warren stands to gain a lot by going and learning from a global leader in clean tech R&D. I think this bodes well for the future of the incubator in that neck of the Mahoning Valley.

I recommend a close inspection of the economic geography of the Israeli incubators. There are likely a few aspects that can't be replicated, but the general clustering and proximity should be telling. Also, how do the incubators serve as economic drivers for the host communities? Warren has the opportunity to do something unique in the TechBelt and Israel is an excellent guide.