Four-County Region Earns B+ Grade for Logistics
BOARDMAN, Ohio – The four-county region that includes the Mahoning Valley earns a B+ for logistics, a grade that could be brought up by addressing certain workforce issues, a consultant says.
SF Global Insights, New Albany, conducted the survey of companies in Ashtabula, Mahoning, Trumbull and Columbiana counties on behalf of the Youngstown/Warren Regional Chamber. The survey was designed to learn what local businesses perceive as the strengths of shipping and logistics in the region, as well as identifying potential opportunities and threats. The results of the study were outlined Wednesday at a meeting of chamber officials, study participants and other guests.
Among the key findings of the Lake to Locks Logistics Needs Assessment, strengths of the region were identified as access to ports and markets, availability of transportation assets, and workforce.
“There are a lot of inherent strengths in the region, particularly its location and access to markets,” said Bob Fredman, SF Global Insights principal, who worked with the chamber and the Salem Area Chamber of Commerce, Northeast Ohio Trade & Economic Consortium and Columbiana County Port Authority on the study.
The four-county region is “rich in multimodal resources” and freight assets, including the Conneaut and Ashtabula ports, as well as the highway system, Fredman said. A 500-mile service area that extends to New York to the east, Chicago to the west, into Canada to the north and south to Atlanta, covers about half the population of the United States and Canada as well as up to 60% of the two countries’ manufacturing base.
A few of the companies surveyed said they were able to reach 90% of their market the next day, suggesting the ability to support “strong just-in-time supply chains,” Fredman said. “Workforce is very strong here, as well as access to transportation resources.”
Labor costs are “very competitive,” he added, allowing firms in logistics activities to compete “very favorably” with other firms in those sectors, he added.
Access to markets was identified as the top strength in a ranking among survey respondents, followed by access to the Interstate network, carrier availability, workforce availability and work ethic.
Rail was not viewed as a major strength for the region, according to the survey. Respondents were satisfied with the rail service, giving it a grade of “B,” but only graded it “C” for cost. Fredman noted that the region is served by three Class 1 railroads and five short lines. “There’s a lot of availability of rail for people that are choosing to take advantage of that,” he said.
Among trends, nearly a quarter of the respondents – 24% -- identified trucking capacity and driver capacity as “critically important,” and an equal percentage identified them as “important” in the survey.
“There is an increasing issue with shortage of truck drivers around the national for a variety of factors,” Fredman said. Some companies are already feeling the effects of that shortage. The pool of available, qualified drivers is shrinking in part because younger people don’t see trucking as an “attractive, worthwhile profession” due to new safety requirements mandated by the federal government and insurance companies.
There is also demand for drivers to haul water to and from oil and gas wells, which provides an opportunity for truckers that may be preferable to them to being away from home for three or four days each week. Due to increasing demand, trucking capacity and driver availability is “a critically important issue” for the region to address, Fredman emphasized.
“Truck drivers are going to be scarce resources,” he remarked. “Companies are going to move where the resources are available.”
With no major road projects identified in the survey, Fredman said addressing the availability of truck drivers and other workforce issues would improve the region’s overall grade to an “A-.” Other workforce issues include an inability cited by many firms to identify qualified candidates that are able to pass a drug test.
He pointed out that the oil and gas industry impact was “not really a focus of our study,” which he said purposely looked at broader industry needs across sectors.
“We’re pleased with the results of the study,” observed Sarah Boyarko, the chamber’s vice president for economic development, business retention and expansion. “We know there are some significant strengths and some challenges or things that could affect the logistics and transportation efforts in the Valley in the future.” The results will be used along with a study being conducted for northeastern Ohio chambers of commerce of logistics providers to see “how they can go together and how they play off of each other for next steps,” she said.
Those attending Wednesday morning’s briefing, held at the Holiday Inn Boardman, also heard from Eric Willems, senior manager for supply chain solutions, for the Holland International Distribution Council, a nonprofit organization that assists international companies with their supply chain design in Europe.
“Even though we have emerging markets like Brazil, Russia, India [and] China coming up as huge consumer markets, Europe today is still the largest consumer market that we have on Earth,” Willems said.
U.S. companies entering the European Union market require “a different strategy,” he advised. They need to understand the market and the regulatory environment, and set a “clear E.U. business strategy,” he said.
One of the advantages the Netherlands offers is deferral of the value-added tax, or VAT, upon entry, he noted. Other advantages include a central location within the European market, “excellent” sea and airport facilities, extensive infrastructure and a developed logistics industry.
The Holland International Distribution Council worked with Youngstown’s Turning Technologies Inc. to establish its presence in the Netherlands. Major American companies including Starbucks, Cisco Systems and Nike all use the Netherlands as their gateway to the European market, Willems said.
Copyright 2013 The Business Journal, Youngstown, Ohio.
CLICK HERE to subscribe to our free daily email headlines and to our twice-monthly print edition.