Ohio has traditionally been viewed as an industrial state with a strong manufacturing base. However, in recent years, Ohio has worked to diversify its economy through promoting growth in sectors like technology, healthcare, and financial services. As an investment destination, Ohio offers some unique advantages but also faces some structural challenges. With business-friendly policies, skilled workforce, and strategic location, Ohio provides good opportunities in industries like aerospace, automotive, polymers, and shale gas. However, issues like brain drain and transitioning from legacy industries remain hurdles for the state. This article reviews the investment landscape in Ohio, analyzing the strengths, weaknesses, opportunities and threats for investors.
Ohio’s business-friendly policies and incentives attract investments
Ohio provides a competitive business environment with low taxes and regulations to attract investments. The state has worked to simplify regulations and speed up permitting processes. Tax reforms have reduced corporate and personal income taxes in recent years. Ohio offers generous tax credits and incentives for job creation and capital investment. Sectors like manufacturing, R&D, logistics get additional benefits. The state runs targeted programs like the Job Creation Tax Credit, Research & Development Investment Tax Credit, InvestOhio to spur growth.
Skilled workforce and research institutes support high-tech industries
Ohio has abundant technical talent emerging from its universities and vocational institutes. With over 110 college campuses, Ohio produces a steady pipeline of skilled graduates. The state is focused on aligning education with demands of growing sectors. Leading research institutes like Ohio State University, Case Western Reserve provide support for innovation and R&D. Availability of engineering and technical workforce has attracted investments from high-tech companies.
Strategic location and infrastructure enable manufacturing and distribution
Ohio enjoys a strategic location at the crossroads of major transportation networks in the Midwest U.S. It has excellent connectivity via highways, railways, waterways and airports. With 50+ ports on Lake Erie and Ohio River, it is a major logistics hub. Low costs, infrastructure access and location make it ideal for distribution centers. This enables just-in-time manufacturing with suppliers. Investments continue to flow into warehousing, distribution, and manufacturing centers.
Shale gas and energy resources drive growth in polymers and chemicals
The Utica and Marcellus shale gas reserves have made Ohio a major producer of natural gas and natural gas liquids. This provides affordable feedstock for the plastics and chemicals industry. Polymer innovation hubs are driving R&D in this area. With abundant shale gas, Ohio has also attracted multi-billion dollar investments in gas power plants, pipelines and processing units. The energy resources offer a competitive advantage for energy-intensive manufacturing sectors.
Legacy industries in decline present risks of stranded assets and liabilities
Ohio has seen employment and output decline in legacy sectors like coal, steel, and consumer products. This has resulted in abandoned industrial sites and facilities. Investors face risks from environmental liabilities attached to brownfield properties. Stranded assets in declining sectors could face write-downs in valuations due to lower cash flows. The demise of traditional industries has also negatively impacted small towns and communities dependent on these companies.
Transitioning economy causes ‘brain drain’ of educated and young workers
The declining industries have led to loss of high-paying jobs, especially for blue-collar workers. This has spurred migration out of Ohio to seek opportunities elsewhere. There is also a ‘brain drain’ of educated, young workers due to limited job creation in high-growth sectors. Availability of skilled labor, particularly in technology and services, remains a constraint. Retaining talent and retraining workers are key challenges during the transition process.
Overall, Ohio provides good infrastructure, resources, and location advantages for manufacturing, distribution and energy-related investments. However, the state faces the headwinds of legacy industry declines and needs more rapid growth of emerging sectors. Successfully managing the economic transition and workforce realignment will determine Ohio’s future investment outlook.