Building a new future

It's an industry that could bring new jobs to replace traditional manufacturing jobs that slowly, but steadily, disappeared from the
Janet
May 24, 2010

It's an industry that could bring new jobs to replace traditional manufacturing jobs that slowly, but steadily, disappeared from the region during the last decade.

Ohio's Third Frontier project, initiated in 2002, is a $1.6 billion commitment by the state to advanced manufacturing designed to entice existing companies to locate in the state and nurture new firms here. Including projected federal assistance programs and private investment, the total commitment could top $6 billion.

Late last year, the Erie County EconomicDevelopment Corp. (formerly Greater Erie Marketing), received the results of a study that shows the county has many of the assets identified as a good fit for the advanced manufacturing industry, including a skilled labor force, a competitive labor market and a transportation infrastructure ideally suited to industry needs.

The only drawback, according to the study, are rates Ohio Edison charges for electricity supplied to industry, which are markedly higher than rates in other Ohio counties and industrial rates in other states.

The Erie County study identified advanced manufacturing as a target industry despite the higher energy costs and the request before the Public Utilities Commission of Ohio to increase those rates.

Communities in other parts of Ohio and regions of the country have embraced new industries and succeeded, and Erie County officials hope it's our turn.

Out with the old...

Traditional manufacturing drove Ohio's economy for generations, providing good jobs, pay and benefits. But the projected future of the automotive industry and related traditional manufacturing calls for continued layoffs and negative growth.

Advanced manufacturing could be the answer. It includes industries that produce pharmaceuticals; agriculture, construction and mining machinery; industrial machinery; aerospace products; medical equipment; and navigation, aeronautical and nautical instruments.

While there has been a steady loss of traditional manufacturing nationwide, advanced manufacturing employment has increased since 2002. Increased productivity also resulted in increased wages. Since 1995, average wages in advanced manufacturing have risen by 55 percent.

Nationally, the average annual wage is $68,272. The average state annual wage is about $61,000, said John Griffin, director of the Ohio Department of Development's technology division.

The Erie County study found the average wage of a manufacturing worker here to be about $55,000.

"We believe advanced manufacturing has a very important role in the future of Ohio's economy," Griffin said. "By modernizing the production technology and helping (existing or start-up firms) come up with new technology-based products, we can be stronger than we have been in the past."

Griffin said one of the beauties of advanced manufacturing is the companies can be very profitable with smaller product runs.

"(These companies) can produce products that are very high quality and not in the millions of units," he said. "They have the ability to be flexible."

Here's what we have ...

Griffin said the No. 1 draw for any advanced manufacturing company is a skilled workforce.

The other assets companies look for include access to suppliers via adequate transportation systems, business climate and assured supplies of energy, assets area officials say are readily available in Erie County.

"Our area is in a pretty good position because we have good resources and assets," said Mark Litten, executive director of ECEDC.

Skilled workers who worked for Delphi and Automotive Components Holdings, the former New Departure and Ford Motor Co. plants, still live in the area, Litten said. Labor costs in the county are about 20 percent below the national private sector average and 10 percent below the state average.

"We have a labor pool that's here," he said. "We have to take advantage and market it that way."

The county's location between several metropolitan areas including Cleveland, Columbus, Pittsburgh and Detroit, make it one of the county's core strengths. The county's proximity to larger markets is a key characteristic to attract companies dependent on market access.

Build it here ...

Making biomedical instruments and other medical products used in surgery, patient care and laboratories requires advanced techniques. Employment in Ohio in this field increased from 2002 to 2005. In 2006, the nationwide average annual wage in the medical equipment sector was about $54,000, while in Ohio it was $43,000.

Erie County's position as a traditional manufacturing center and an emerging health care location make it a logical choice to capture a share of the national industry growth, according to the study.

It's one of the fastest growing areas, with larger firms producing the world's highest-powered MRI (magnetic resonance imaging) machines to smaller firms developing new technologies and instruments.

The aerospace industry's employment numbers declined during the late 1990s and continued to suffer in recent years because of falling orders for new aircraft. Growth in this sector returned in 2005, however, and that is expected to continue.

In Ohio, the aerospace industry began to rebound in 2003, adding nearly 1,700 jobs in three years with average annual wages increasing from $69,000 in 2002 to $78,000 in 2006. Sales in the aerospace industry experienced growth -- a 9 percent jump in 2005 to close the year at $170 billion. Local officials look to NASA Plum Brook Station as a potential job engine.

Although the demand for civil aircraft has rebounded since post-Sept. 11, military aircraft remains the most consistent segment in terms of growing sales.

About 90 percent of engines are produced through GE Aviation, headquartered in Cincinnati, Griffin said.

"(Erie County) has a ton of potential. I'm not sure it's realized ... but there's potential," Litten said. "We can be the greatest place in the whole world, but if no one knows that, nobody's going to come here. We got to get on their radar."

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