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Published: Wednesday, 9/29/2010

SHUT DOWN & SHIPPED OUT

Strickland, Fisher say Ohio erred in saving jobs

BY JOE VARDON
BLADE PROJECTS EDITOR
Ohio Governor Ted Strickland said the state Department of Development should move faster to keep factories from closing. Ohio Governor Ted Strickland said the state Department of Development should move faster to keep factories from closing.
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Ohio's governor and lieutenant governor both said Tuesday that the state Department of Development should move faster to keep factories from closing and relocating to other states.

But Gov. Ted Strickland told The Blade that if keeping a factory from shutting its doors and shifting to Indiana, Tennessee, or elsewhere means outbidding those states with financial incentives, Ohio should engage in that bidding war only if it “is in the long-term interests of the state.”

Yesterday the Blade concluded its three-day investigative series, Shut Down & Shipped Out, which revealed that about 140 factories with 20 or more employees have closed in northwest Ohio dating back to 2000, totaling about 18,000 lost jobs. At least 52 companies relocated work elsewhere within the United States, and 37 shifted work to another country.

In the last two years, with the country in the grip of a deep national recession, northwest Ohio lost at least 15 factories with 2,200 employees to other states — including four factories to Indiana. At least 32 factories closed overall during that time frame, totaling about 3,700 lost jobs, in the 18-county region around Toledo.

John Kasich, the Republican gubernatorial challenger in Ohio who currently leads Governor Strickland in the polls, said The Blade's findings illustrate the chief problem facing the state.

“We're too slow, we're not ahead of the game, and we're losing jobs to other states that are,” Mr. Kasich said. “People try to blame this all on the national economy. Some states are winning; we are losing.”

Much of the argument in Ohio's highest-profile political races this fall, between

Governor Strickland and Mr. Kasich and the U.S. Senate race between Republican Rob Portman and Democratic Lt. Gov. Lee Fisher, is over how Ohio conducts economic development.

Mr. Kasich has said he would replace the Ohio Department of Development, which has 408 employees and a $1.15 billion budget, with a private, nonprofit corporation governed by a 12-member board — a move Mr. Strickland said would be dangerous and irresponsible.

The department was accused by some northwest Ohio mayors of being nonresponsive or too slow to piece together incentives packages to keep factories from moving across state lines.

Mitch Roob, Indiana's secretary of commerce, who oversees the state's 65-employee, $37 million economic development operation, said he has won business from Ohio by the speed with which he can construct an incentives package for a factory considering a move.

Governor Strickland said the state's development department should be “faster and more efficient,” but the governor also said it is necessary for Ohio officials to use caution before approving incentives for companies.

“If we were able or willing to give whatever resources were necessary to compete, we would never lose a competition,” Mr. Strickland said.

“But we've got a responsibility to the citizens of our state and to our state. And I think we do really well.”

Governor Strickland and Mr. Fisher, who ran the Ohio Department of Development from 2007 to February, 2009, both said the state had acted quickly and used incentives to attract and retain jobs on numerous occasions — including some in northwest Ohio.

On Sunday The Blade reported that since 2007, Ohio development officials played a role in the retention of Cooper Tire & Rubber in Findlay, Schindler Elevator in suburban Toledo, Chase Brass and Copper in Williams County, and the recruitment of a Whirlpool Corp. plant to Ottawa, Ohio — saving about 1,500 jobs.

“I want every mayor in the state to know that we've always had an open-door policy where a mayor can call me or the governor directly if it's necessary to intercede,” said Mr. Fisher, who according to polling trails Mr. Portman in the race to succeed Republican U.S. Sen. George Voinovich. “Any time the governor or I become aware [of a potential business leaving Ohio], we intercede immediately.”

But Mr. Fisher also distanced himself from the development department he used to run, saying Ohio should lean more toward speed than caution when offering companies incentives packages.

In three recent cases of plants closing or massively downsizing in northwest Ohio and shifting work to Indiana, those companies were offered about $4 million in incentives to relocate. Ohio did not make a counteroffer in any of those cases.

Ohio was criticized by mayors whose cities lost those factories for having a complicated, drawn-out process for approving incentives in which outside boards and commissions must study incentive applications before giving the go-ahead.

“A state that responds fast but throws money at the problem may be fast, but is irresponsible with the spending of the taxpayers' money,” Mr. Fisher said. “We believe you have to have a healthy balance between speed and making sure it's the best use of the taxpayers' dollar.”

Still, Mr. Fisher said he would like Ohio to speed up its approval process. When asked why the state's process isn't fast enough for him, given that he was in charge of the development department for two years, Mr. Fisher said: “There are still many people who believe the most important thing is to protect the expenditure of taxpayers' money and that we always have to err on the side of caution to make sure that we're not throwing money at a company unnecessarily.”

Mr. Portman, Mr. Fisher's opponent, did not respond directly to The Blade. But Portman campaign spokesman Jessica Towhey said “manufacturers and other businesses clearly feel that the state is making it harder, not easier, for them to grow and create jobs here in Ohio.”

Although some economic and business-cost factors seem to favor Indiana, there are others that suggest Ohio is competitive with its neighbor.

Indiana's unemployment rate in August was a hair higher than Ohio's (10.2 percent in Indiana compared to Ohio's 10.1 percent), but Indiana gained about 40,000 jobs since August, 2009. Ohio gained about 7,300 jobs since August, 2009, according to the U.S. Bureau of Labor Statistics.

The average salary for manufacturing employees in Ohio was less than in Indiana in 2009 ($43,011 in Ohio, $45,643 in Indiana), but electricity costs (6.19 cents per kilowatt hour for industrial users in Ohio versus 5.71 cents in Indiana) and average worker compensation rates ($3.37 per $100 of payroll in Ohio and $2.22 in Indiana) favor Indiana.

Mr. Fisher and Mr. Strickland both said investments made by the Strickland administration in alternative energy research, development, and manufacturing will foster an economic rebirth in Ohio. They said those investments — including millions of dollars poured into Toledo for solar panels — would have made more of an impact already if not for the near collapse of the U.S. economy at the end of 2008.

“I don't pretend to have solved all the problems,” Governor Strickland said. “But I do think that even in the most difficult economic circumstances, challenges unlike anything we've experienced in many, many decades, my administration has worked to lay a solid foundation for future growth going forward.”

Contact Joe Vardon at:jvardon@theblade.comor 419-724-6559.



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