Private business investment in Ohio has nearly doubled during the past three years, and the automotive industry — fueled in part by a massive federal bailout and cost restructuring — is sizzling.
To the east of Interstate 71, the development of shale gas could add by some estimates nearly $5 billion to the state’s gross domestic product by 2014, prompting one economist to call it “a real game-changer for Ohio.’’
And for the first time in a decade, the state’s unemployment rate during the past year has been consistently below the national average, in part because the state economy has diversified.
Manufacturing is still key to the Ohio economy, and a robust recovery won’t take place without job growth on the shop floor. But the jobs landscape, particularly where those jobs come from, has changed dramatically in Ohio. As recently as 2001, General Motors was Ohio’s largest employer with 26,000 jobs; today it does not rank among the top 20, and no manufacturer is in the top 10. Meanwhile, Ohio has 32 companies, universities and foundations with more than 9,000 workers.
“It may be easy to overstate it, but the point is we are no longer the Rust Belt,” said George Mokrzan, director of economics at Huntington National Bank in Columbus.
Jim Glassman, an economist at JP Morgan Chase in New York, said the recovery is “not an aberration” in states like Ohio that “have gone through the ringer.”
“There is something big going on here,” he said. “We’ve got sleeping giants.’’
Skeptics warn it is far too soon to declare an end to the Rust Belt. They argue that Ohio’s unemployment rate has fallen because the labor market is smaller. The state’s 5.1 million jobs compare to 5.6 million in 2000, and 300,000 manufacturing jobs have vanished.
Walmart is now the state’s largest employer and its workers do not receive anywhere near the wages and benefits that industrial giants offered. Housing starts are dramatically lower since 2002, office occupancy rate could be higher and more than two million people are on Medicaid, which provides health coverage for the poor.
But while the state still has plenty of problems, for the first time since the recession politicians on both sides of the aisle are regularly using Ohio and recovery in the same sentence.
Democratic Vice President Joe Biden went to Toledo on Thursday to highlight the success of the automotive bailout, telling auto workers, “We bet on you and we won.’’
Sen. Sherrod Brown, D-Ohio, said, “If we had them go into bankruptcy and waited for private financing, nobody would have bought a GM or a Chrysler. I think manufacturing is helping lead the recovery.’’
Gov. John Kasich doesn’t give credit to the auto bailout, but he has been saying positive things for some time now about the auto industry, new jobs coming back into Ohio and the potential for a boom in oil and gas production.
“People have a sense that things are getting better,’’ Kasich said in Dayton Thursday, a day before Moody’s Investor Service upgraded Ohio’s outlook from negative to stable.
In Toledo, Biden said jobs are coming to Ohio because of the productivity of its workers, a sentiment echoed by Eric Burkland, president of the Ohio Manufacturers Association.
The Ohio manufacturers who survived three decades of turmoil have emerged as more efficient, said Burkland, saying that “the number that is off the charts is productivity increases,’’ which means companies produce more goods were fewer workers.
“The banks go through stress testing, but the manufacturers have had their own stress tests,’’ said Robert J. Morgan, a senior consultant for Austin Associates, a financial advising firm in Toledo. “And the stress test is called survival. They survived the last 25 years.
“The new jobs being created in the Midwest are not the old, low-tech assembly line jobs. The jobs being created are for people who have the ability to run robotics. A manufacturing facility is not the old, dusty, dirty oily place to work. It’s a much different environment.’’
Only California and Texas manufacture more products than Ohio. The state produces 20 percent of the cars and trucks built in the United States and its top exports are machinery, computers, vehicles, aircraft, electrical machinery and plastics.
“Manufacturing has gotten techier, smarter and less labor intensive,’’ said Glassman of Chase. “Manufacturing is still a large footprint in Ohio, but it’s also true that Ohio has diversified.’’
In his December report on Ohio, Glassman projected that the state’s unemployment rate will decline to below 5 percent by 2018, and that this year the state economy will grow at 3.9 percent compared to 3.1 percent for the rest of the country.
According to the Ohio Department of Development, 29 companies invested more than $50 million apiece last year. And while General Motors, Ford, Chrysler and Honda invested substantial sums, companies such as Johnson Controls, Diebold, Fed Ex, Nestle, Target and EDP Renewables were engaged in capital spending.
But one thing is clear: The rise in productivity by Ohio manufacturers means fewer jobs in manufacturing. And those jobs will require far more education and training.
“If you are a young person today, stay in school,’’ said Jim Meil, chief economist for Eaton Corp. in Cleveland. “Manufacturing does offer a future, but you had better be highly skilled and technically adept. You cannot walk out of a classroom today like you could in 1968 and get a manufacturing job.’’
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