Local communities are tailoring their development efforts to lure technology and green companies. Early results have been promising.
The tech companies are coming, the tech companies are coming. In fact, many of them are already here.
Economic development types say that's a good thing, because local communities' efforts to recruit technology and "green" companies are at the heart of the region's-and Ohio's-future.
A long-term economic resurgence depends on the state's ability to mobilize a new, technology-driven game plan. Central Ohio, with its government, education and research-based roots, is riding point on the effort. Jobs are at stake.
Meanwhile, the green arena provides collateral opportunities for these companies, from designing more efficient buildings to adopting a full-fledged focus on renewable industries such as sunlight, wind and rain that represent another wave of the future.
In the tech world, companies-and workers-beget more companies. Like the numerous insurers and banks that call the Columbus area home, tech decision-makers prefer to locate in clusters. It's why Silicon Valley is Silicon Valley, and why Boston took root as a tech center in the East. Austin, Texas, gained momentum in the South. Locally, Dublin and New Albany offer technology zones, and other communities are reaching out to lure more jobs from the industry as well.
Bill LaFayette, vice president of economic analysis for the Columbus Chamber, says the region is very much in the national picture when it comes to competing for
tech companies. "Our concentration of people in specific computer-related occupations, computer workers regardless of the industry they work in, is 64 percent greater than the national average," he says. "We've got almost 43,000 people in these occupations."
Thanks to state government, Ohio State University, Chemical Abstracts Service, OCLC, Battelle, banks, insurance companies, business service firms and a growing logistics industry, Columbus has a strong concentration of tech workers, LaFayette says. "They are voracious users of IT workers because they need the wherewithal to analyze all kinds of data," he says.
"Two sectors which have done better than average are business and professional services, which include IT, and health services, which is more than 90 percent health care," LaFayette says.
Columbus Deputy Development Director Mike Stevens says the city is an active pursuer of the tech industry, undertaking its own efforts and partnering with the chamber, TechColumbus and BioOhio to market the area. "We've got a pretty aggressive economic development program," Stevens says. "We're trying to track jobs and investment in Columbus."
Tech jobs are an important part of that, Stevens says, because they pay more. "And they're a good match for the skill sets coming out of the universities," he says. "We've got more than 110,000 students with the different colleges."
That healthy chunk of young workers is a huge recruiting tool, Stevens says: "It's what tech companies are looking for."
Where's the Growth?
Many might question the potential for short-term tech industry growth after such a long recession. But Dana McDaniel, Dublin's deputy city manager and economic development director, says the future appears bright, based on a Mid-America Economic Development Council Competitiveness Conference he attended in early December.
Convention speakers said growth is happening around sustainable initiatives-including renewable energies such as solar, wind and geothermal-in the form of green companies, McDaniel says. "Prospects are good, according to them, for future business expansion," he says.
"The key thing is new businesses grow around these new technologies," McDaniel says. "There are a lot of implications nationwide for new jobs."
For example, any components that go into a company's solar panels could be manufactured nearby, just as Honda of America Manufacturing's presence in Marysville spawned numerous related automotive suppliers. "Ohio is well-positioned in the supply chain to support these kinds of initiatives," McDaniel says.
"A lot of engineering, architectural and consulting firms are trying to help these companies to get supply chains together to support manufacturing and distribution," he says. "It's a growing effort."
Part of the key to Central Ohio's success in this area, McDaniel says, will be how early it gets into the game. "What's important to us is how we diversify our local econo-mies," he says.
While the recession has made its mark, LaFayette says Central Ohio largely fared better than elsewhere. "Business services has done much better than average," he says. "Financial services has done better than average, though not a lot. But we have 1,100 JPMorgan Chase jobs moving here."
The recession put a big dent in many cities' revenues, McDaniel says. "Access to money is the issue. Getting money to start new companies and expand is tough," he says. "You see a lot more activity in small- and medium-size companies on a national level."
Site consultants see commercial development transactions picking up, but most aren't expected to come to fruition until late 2010 or 2011, McDaniel says.
That sentiment is echoed by Kathryn Meyer, New Albany's deputy director of community development. "I think that it has provided some opportunities to work with companies that are looking to construct or locate once the recession lightens," she says. "Now is the time when those companies are doing their work to build after the economy improves."
Model Tech Parks
Dublin and New Albany's tech recruitment efforts are more fully realized than most Ohio cities. Dublin has identified 25 new companies related to renewable industries, which use only naturally replenishable resources, McDaniel says. In addition, he anticipates six more such tenants locating at the Dublin Entrepreneurial Center in the city's 1,300-acre Innovation Park.
New Albany implemented a green philosophy about 15 years ago, when the village decided that a viable business park should complement residential development, and officials would protect the quality of life and green corridors, Meyer says.
Like Columbus, Dublin and other Central Ohio communities, New Albany uses financial tools to compete for development. Incentives including tax credits, a green building incentive program, and fee reductions for meeting goals such as LEED (Leadership in Energy and Environmental Design) construction standards are key, Meyer says.
So, too, is investing in technology. New Albany has allocated $5 million to install fiber-optic communication lines and is working with American Electric Power to provide businesses with "redundant power" for important back-up systems, Meyer says.
Both those investments were attractive to Motorists Mutual Insurance Group, which is building a green data center in the village. "New Albany had the best infrastructure in place," says Chuck Wickert, Motorists' senior vice president of Life Operations & Corporate Services. "Power and fiber optics were the two main things we looked at. Also, we considered accessibility, employees and community services. New Albany does a wonderful job in support of construction."
Even if a municipality doesn't have a specific tech zone, clustering happens. For Conrad Phillips Vutech, part of the allure of locating in Grandview Heights was proximity to Downtown and freeways, says Jim Vutech, one of the design and marketing firm's owners.
Tax incentives and parking were added perks. But being part of a tech community also factored in. "We sort of had a vision this could become a creative service hub," Vutech says.
Neighbors include Salvato Coe + Gabor, a strategic design and branding firm; Integrate, a marketing and communications firm; and the Edge Group, the landscape design firm that includes former Heisman Trophy winner Eddie George among its owners.
"There is a concentration of design and marketing communication firms gathered together here with tech capabilities," Vutech says. "There's a pretty healthy, growing creative services community in Central Ohio."
Kent Knaebel, president of Adsorption Research Inc. (ARI), says his company has been in Dublin since its 1992 inception and is likely to stay, though he expects it to outgrow its current location this year.
"In my time [in Central Ohio], I've grown to appreciate the other suburbs and Columbus more and more, but Dublin seems like a vibrant suburb, so we're primarily looking to expand in Dublin," he says. "We're looking at the Innovation Center."
ARI, which works with gases and liquids to improve their use as renewable fuels, has seven employees, Knaebel says. It is "not in a critical mass environment" with other tech companies, he says, but a move to the center could solve that.
Live, Play and Work
Just because a community sets aside an area for tech companies and rolls out the welcome mat doesn't mean they'll come, of course. Other factors also play a role in business attraction.
"One of the biggest decisions a company makes is about quality of life," Meyer says. New Albany is quick to tout its 24 miles of trails for walking, biking or rollerblading that connect neighborhoods to the town center and the business park.
Other local communities have similar attributes. "I think people recognize Columbus as the type of city where they want to locate and grow their businesses," Stevens says. "I think the assets Columbus has throughout the area, a lot of these companies could land anywhere in Central Ohio and really succeed."
The chamber's LaFayette takes a practical view of success breeding success. "It's the same kind of phenomenon that happened with very strong finance and insurance sectors," he says. "When you start having firms that grow up here, those firms attract a workforce, which is the single most important factor in the success of a business, and in turn draws more employers. ... It becomes a virtuous cycle."
Motorists' Wickert says his company liked New Albany's employee population when deciding to build its data center there. "We'd have stayed anywhere in Central Ohio," he adds.
Grandview City Administrator and Economic Development Director Patrik Bowman cites the circular relationship between a region's lifestyle offerings, its workforce and economic recruitment. While companies will continue to go where labor is cheapest, he says, "The idea end can be done almost anywhere. Some of the trends in economic development are to find out what these creative people want and merge lifestyles with passions, create a certain synergy."
That combination stokes the workforce, and companies locate where the talent is. "Columbus has been after that for some time," Bowman says. "Could we even come close to Silicon Valley? Boston is that way to some degree. Austin, Texas, boy, it's probably over the last 10 to 15 years done what Columbus is pursuing now: fun, amenities, lifestyles.
"Firms are going to come where the labor is," he says. "We have some of that now with the universities and the young marrieds. ... We just have to be up to speed with what creative job producers want. They'll come seek employees."
As baby boomers retire, their children's place in workforce demographics grows substantially, but then tapers off, Bowman says. "We've got to be ready to have sufficient critical mass of both lifestyles and firms to attract younger-generation workers and businesses," he says.
Still, Bowman cautions against focusing too much on the youngest members of the workforce. Instead, he says, young married couples are the ideal top recruits. "They've established roots in the community," he says. "They're having kids."
The latest tech push has been in motion for at least 10 years, though its origins stretch back much further, LaFayette says. "If you go back in time, industries have been big here for decades," he says. "It's just that the definition of information technology was really different in the '40s than it is now."
Local green initiatives, meanwhile, date back to the creation of the Solid Waste Authority of Central Ohio in 1989, McDaniel says. Since that time, environmental initiatives have shifted from recycling to preserving landfill space to redeveloping waste into new products and reducing the need for other raw materials. "It's a renewable effort in and of itself," McDaniel says.
The green movement has gotten a push, too, from the recession. "The last 18 months to two years of heightened fuel prices gave it new life," McDaniel says. "People are more conscientious."
So are companies, he says, citing green building efforts recently undertaken by Cardinal Health, IGS Energy and Delta Energy, among others.
Bowman sees a California catalyst. "I think it's kind of always been there," he says, adding the creative tag took hold with Silicon Valley in the '80s. "That's when the world really sped up in technology and Web systems and the transfer of information."
It was an industrial revolution in its own right, he says. "Take Google," Bowman says. "They don't produce a damn thing other than information. So when did it transfer from GM, Ford and Dow Chemical, who really produced something, to ideas?"
What the Future Holds
ARI's Knaebel says the outlook is bright for tech and green companies in Central Ohio, where government officials on all levels have a "let's do this" attitude.
"It makes sense," Knaebel says of tech and green growth. "It benefits society in general and Ohio in particular."
Manufacturing jobs lost over the years can be replaced, and the state can be a center for tech and green jobs, he predicts. And tech growth will spawn related manufacturing jobs. "Plus for every welding and fabrication job, there will be one higher tech support-engineer type job to make sure units operate at peak performance," Knaebel says. "It takes highly trained engineers to keep that equipment running at peak performance."
It's that type of synergy that propels economic growth, jobs and manufacturing, development officials say. Ohio's colleges and universities have 13 departments of chemistry, whose graduates typically leave the state to find jobs, Knaebel says. Tech growth could keep many at home.
Grandview's Bowman sees the tech/ green movement as a slam dunk. "Obviously, it's clearly the wave of the future for economic development of the United States in general, given the decline of manufacturing and other specific outputs," he says. "Workers are going to be higher-order."
The tech industry won't be focused on assembly and implementation because those jobs will go elsewhere, Bowman says. "But ideas and creativity are really the wave of the United States in the future," he says, citing author Thomas Friedman's work. "Essentially what's happening is manufacturing jobs are going where resources and labor are cheaper, but the United States is still paramount in ideas. ... Young people are trained to use ideas in their work."
Martin Rozenman is a freelance writer.
Reprinted from the February 2010 issue of Columbus C.E.O. Copyright © Columbus C.E.O.