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Development Agencies Hopeful Amid 'Solid' Leads
YOUNGSTOWN, Ohio -- For the first time in years, development agencies in the Mahoning Valley and western Pennsylvania are heartened by what they describe as a trend of reliable leads likely to translate into productive projects and hundreds of new jobs, principals say.
While many are accustomed to prospects kicking the tires with little or no commitment, there appears to be more substance in the number of inquiries coming across the desks of some development specialists here.
“We’re experiencing a significant increase in solid leads,” reports Sarah Boyarko, vice president of economic development, business retention and expansion at the Youngstown/Warren Regional Chamber. “They want to make deals and make a decision.”
Since January, Boyarko reports, the chamber has worked on five projects likely to bring in $30 million in investment and 80 jobs. In all, the chamber has $759 million worth of projects in the pipeline that could translate into the creation of 1,200 jobs in the next 12 to 18 months. “Out of these opportunities, three-fourths are in manufacturing, the rest are in services,” she says.
So far this year, the chamber has received 13 inquiries from companies outside of the state and given nine property tours, Boyarko says. “Those are good odds,” she remarks.
Word is circulating about the region’s potential for oil and gas exploration and the aggressive drilling activity in the Utica shale, Boyarko says. This word emphasizes projects such as V&M Star’s expansion and Exterran’s new plant in Youngstown.
“Suppliers have given us these opportunities. They’d like to see their vendors, customers and even their competitors come here,” Boyarko says.
“About half of the new projects in the pipeline are related to the oil and gas industry, Boyarko reports. The rest are involved in the aluminum, food manufacturing and distribution, and service-related industries. “All are at the point where they are moving toward making a decision.”
Development is also ramping up in Lawrence County, Pa., as preparations continue on what may be the largest single investment in the history of that county.
LS Power Development’s proposed $750 million natural-gas-powered electric plant, the Hickory Run Energy Station, is on track, reports Linda Nitch, executive director of Lawrence County Economic Development Corp. She says construction at the site could begin by next year. “That’s the target,” Nitch says. “The project will create 500 construction jobs and 25 permanent jobs.”
LCEDC helped the company in selecting a site off state Route 551, the former location of American Cyanamid, a company that manufactured explosives during the 1940s and 1950s. “They’re in the process of getting all their permits in place,” Nitch relates.
Natural gas drilled from the Marcellus shale beneath Pennsylvania would provide an ample supply of fuel for the new plant; it played a major factor in the company’s decision to locate in North Beaver Township.
Nitch says inquiries related to other brownfield sites across the county are on the rise. “There are a lot of developers looking at brownfields,” she says, most notably along the state Route 18 corridor.
The attraction of the shale gas market has lured one manufacturers to New Castle, Nitch reports. “The newest one is EnTech,” she says.
Minnesota-based EnTech Industries manufactures dust collectors for companies that paint bridges, but is now looking to move into the oil and gas market, Nitch says. The company operates a location in Allegheny County, but wanted to expand to New Castle.
“They purchased the former Elliot Bros. Steel plant,” Nitch reports. Elliot Bros. closed its doors in 2007 after 117 years in business, and EnTech has pledged to hire at least 25 employees.
New inquiries focus on redeveloping shuttered buildings in Youngstown, reports T. Sharon Woodberry, the city’s director of economic development.
“There’s an ongoing discussion with the Wean building,” she says. The Wean United plant, once earmarked for demolition because of its deteriorating condition, is being considered as a site by two manufacturers interested in establishing a presence in the Mahoning Valley.
“We’ve had some very solid interest,” Woodberry says. Any project there would require a sizeable investment to renovate the structure. One scenario calls for razing part of the Wean and rehabilitating another part, while another plan would renovate the complex.
But why the interest in such an old, dilapidated building?
“There are some significant and unique uses” that manufacturers like about the Wean, Woodberry says, including crane capacity and solid structural foundations. “It’s attractive to heavy manufacturers and the building offers advantages.”
Woodberry declines to identify the interested parties, but says these companies have the potential of moving into the oil and gas supply chain. A decision should be made by early June as to whether the projects could move forward, Woodberry reports.
The oil and gas industry has helped spur new business growth across the city, including expansions at Brilex Group of Companies, V&M Star, Exterran, and at Commercial Metal Forming Inc. on Logan Avenue.
“Commercial’s business is picking up,” Woodberry says. The company, which manufactures steel tank heads, recently invested $4.5 million in its operations, retaining 130 jobs and plans to add another 20. “They think there’s some opportunity for them in oil and gas, and we’ve talked about future investment at the site,” she reports.
Another driving force for economic development in the city is renewed activity in the central business district. “We get a lot of calls about properties – there’s been a lot of investment,” Woodberry says.
Much of that investment has come in the form of a new residential market, such as developer Dominic Marchionda’s conversion of the Erie Terminal building into apartments and commercial space on the ground floor.
A similar transition occurred with the Federal Building, which was renovated into apartments by the Gatta Co. of Niles and includes the V2 bar and restaurant on the ground floor.
Woodberry projects more attention will be given fledgling companies at the Youngstown Business Incubator and the National Additive Manufacturing Innovation Institute, helped in part by President Barack Obama’s reference during this year’s State of the Union address.
“They’re having meetings with very notable names,” Woodberry says. “Big things are starting to happen there.”
While tax incentives can play an important role in luring new projects, relates Mark Zigmont, a planner for the Trumbull County Planning Commission, it often boils down to whether the site or location meets the needs of a company.
There’s no better example than the recent announcement that Ohio Star Forge would invest $20 million into an expansion of its plant on Mahoning Avenue in Champion, Zigmont says.
Tax incentives offered through the county helped, but the company ultimately elected to expand in the Mahoning Valley because of a solid business case.
The Planning Commission administers Trumbull County’s enterprise zone program, which offers tax incentives to companies looking to expand or relocate. In the case of Ohio Star Forge, that meant tax abatements of 60% on new real property,.
After the company officially announced its plans April 1, Ohio Star Forge President and CEO Bill Orbach told reporters his company recently negotiated a land deal and an energy supply contract that enabled expansion at the site.
Zigmont says about $3 million will be spent on construction of a 33,000-square-foot addition to the plant, but the bulk of the project entails the purchase of new equipment.
Still, many challenges confront economic growth in the region. Critical to the stability and ultimate expansion of the manufacturing sector, especially smaller companies, is developing and retaining a skilled workforce, says Judith Crocker, workforce and talent director at the Manufacturing Advocacy and Growth Network, or Magnet.
“These are the issues keeping them up at night,” she says. “We help them to think more strategically.”
Often, small businesses lack the resources to train employees for specific positions, Crocker notes. And, as major companies associated with oil and gas development move in, they tend to lure more experienced employees from these smaller businesses.
Magnet works with “hundreds of companies each year,” Crocker notes, providing them with assistance and access to resources that will help fine-tune existing workers and draw new talent.
A large number of the industrial workforce in northeastern Ohio is preparing for retirement, and many companies are unsure on how to go about replacing this talent when the time comes.
“The purpose of workshops that we’re doing is to help these companies focus internally to develop a talent plan, while at the same time implementing a strategic growth plan,” Crocker says. “Most companies don’t deal with this until it’s right under their noses and then they find themselves scrambling.”
Meantime, commercial lending is on the increase, and the credit market has loosened so that small businesses can tap into the market for startups and expansions, reports Michael Conway, executive director of the Mahoning Valley Economic Development Corp., or MVEDC.
“It was slow in the fourth quarter of 2012,” Conway says. “But it’s picked up during the first quarter and local banks are seeing more activity.”
MVEDC administers the U.S. Small Business Administration 504 Loan program, which partially guarantees loans secured from private lending sources.
Much of the lending activity during the first quarter was directed to real estate or asset acquisition and not new construction, Conway reports. “It’s mostly machinery and equipment, working capital and real estate,” he says.
MVEDC owns two industrial parks – the Youngstown Commerce Park in North Jackson and the Warren Commerce Park in Warren. Recently, two new companies, Bob Sumerel Tire Co. and North Coast Grinding, signed deals at the park, Conway says.
Business along MVEDC’s two railroads is on the increase as well, the executive director reports. The organization owns the Youngstown & Austintown and the Warren & Trumbull short line railroads, while the Ohio Central Railroad System, a subsidiary of the Genesee and Wyoming Co., operates both railroads.
“Rail activity almost doubled last year,” Conway says, compared with the previous year.
Moreover, economic development activity appears spread evenly throughout the local economy, not concentrated to a specific industry.
“It’s across the board for us,” Conway says. “It seems like there’s activity everywhere, not favoring any sector of the economy.”
Copyright 2013 The Business Journal, Youngstown, Ohio.
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