High on Ohio
Ohio's central location makes it a natural as a logistics hub, but there's more to the Buckeye State's success than just geography.
One of the promotional slogans the state of Ohio has used over the years is "Ohio, the heart of it all." Although it might not be quite what the sloganeers had in mind, the motto seems particularly apt from a logistics perspective. Centrally located in the nation's heartland, Ohio offers easy access to virtually all major markets on the eastern half of the continent.
"From a supply chain perspective, Ohio is ideally situated to reach the majority of the U.S. population and its businesses," says Art van Bodegraven, president of the Columbus-area supply chain consulting firm Van Bodegraven Associates. "Ohio also has a very business-friendly government structure," he adds.
Ohio's government has become more business-friendly than ever over the past six years. During his 2007-2011 term in office, former Gov. Ted Strickland eliminated over 250 state business regulations and revised another 1,800 in a bid to attract industry. He also streamlined business taxes, eliminating the corporate franchise and inventory taxes. On top of that, the governor used $100 million in federal stimulus money to invest in infrastructure, including a new intermodal hub in North Baltimore, Ohio, to handle goods moving via rail to and from Mid-Atlantic ports. The initiative is expected to save Ohio $70 million in highway maintenance and reduce logistics costs for Ohio companies by $350 million.
Under Strickland's leadership, Ohio's business climate jumped in the rankings from 38th in the nation to number 11. Those efforts have continued under Gov. John Kasich, who was sworn into office last year.
Ohio's efforts to attract business have gone beyond regulatory and tax reform. The state has also made job creation a priority. To that end, it established JobsOhio early last year. (JobsOhio was privatized as a nonprofit entity in July of that year.) The agency has been given power by the state to negotiate incentives, grants, and other enticements to lure new business and to encourage growth in existing operations.
Significantly for the transportation and supply chain community, one area of focus is logistics. "The state government identified nine industry clusters that it felt was important to growth, and logistics is one of the nine," says Mark Patton, general manager of bio/health, information services, and logistics at JobsOhio. He says that manufacturing and logistics are tightly coupled in Ohio, and many companies are moving their operations back from China to Ohio as automation has reduced China's labor cost advantage. "They are finding it is more expensive to move products a long distance than to manufacture it here," Patton explains.
To meet expected growth in manufacturing, transportation, and distribution, the state has committed to supporting logistics infrastructure in several key areas. One of those areas is its extensive interstate highway system, which allows easy reach to both U.S. and Canadian commercial and population centers. Some 60 percent of U.S. citizens and 50 percent of Canadians live within a 600-mile radius of the state.
Ohio also offers easy rail access. Containers arriving at the Port of Norfolk (Virginia) can reach Ohio within a day by rail. The state also boasts 13 intermodal terminals. That compares favorably with California, which has 10 intermodal terminals in a much larger geographic region. In addition to rail, shippers of bulk products have the option of moving goods via Lake Erie to the north and along the Ohio River, which makes up the state's southern border.
As for air service, cargo handling facilities are available at the state's commercial airports as well as the Rickenbacker Inland Port in Columbus, a freight-only airpark. And the field is about to get bigger: The former DHL hub in Wilmington, Ohio, is now being redeveloped as a logistics air hub. After DHL pulled out in January 2009, the company donated the airport and adjacent buildings to the Clinton County Port Authority. Last year, the county hired real estate services firm Jones Lang LaSalle to develop a master plan for its use.
"The plan calls for the airpark to become a multi-use, aviation-based business park. Among the uses is as an international air freight center," says David Lotterer, a senior associate with Jones Lang LaSalle. "If you're going to bring in products by air and then distribute by land, it is an excellent site."
Just as Ohio is a convenient location for logistics and distribution, it is well situated for businesses that serve the supply chain community. For example, Intelligrated, one of the world's largest automated material handling systems manufacturers, is located in Mason, Ohio, just a stone's throw from Cincinnati. Company officials say the Midwest location makes it easy to ship products to the majority of its customers as well as to visit their sites.
"Clearly, having many of our customers nearby is a great advantage," says Chris Cole, Intelligrated's CEO. Key Intelligrated customers in Ohio include Anheuser-Busch, Big Lots, Cardinal Health, Georgia Pacific, Kraft, PepsiCo, Procter & Gamble, and Staples, to name just a few.
In 2009, Intelligrated partnered with the Ohio Department of Development and JobsOhio, receiving a $24 million incentive package to help the company expand. In return, Intelligrated promised to increase its workforce from 537 to 804 by the end of 2012. The company actually surpassed that goal in 2011, and it continues to open new slots, many of which are high-paying engineering and technical positions.
This past January, Intelligrated broke ground on a new 108,000-square-foot facility at its Mason headquarters to accommodate its engineering, customer service, research and development, and testing facilities - in all, 450 workers will be housed there.
"The state has been great to work with, including the various port authorities. And the city of Mason has also been a tremendous partner in helping our company to grow," says Cole. "We have seen that in an era when many have doubted America's manufacturing abilities, we have proven that a quality product can be made right here at home."
Among the reasons why companies like Intelligrated choose to locate or expand in Ohio is the region's talent pool.
"We have a very well-educated workforce with a strong work ethic," says Van Bodegraven. "Ohio is good at developing job skills. People can start learning about logistics in high school and end up with a Ph.D. in logistics at Ohio State."
John Ness, president of ODW Logistics, concurs. "People here have a Midwestern work ethic that is to 'promise your best, and deliver [on] your promise,'" he says.
ODW, a Columbus-based third-party logistics service provider, operates from 16 locations in nine states, with half of its operations in Ohio. Ness cites Ohio's labor pool, available and affordable real estate, low labor costs, freight access, and favorable business climate as major reasons why logistics has a strong foothold in the state.
In addition to his duties at ODW, Ness serves as co-chair of the Columbus Regional Logistics Council, a group formed to promote growth in the region's logistics capabilities. Recently, the council has been working with Columbus State Community College to retrain dislocated workers for jobs in logistics. Administered through the Central Ohio Workforce Commission, the training program has utilized a federal grant of $4.6 million to graduate over 600 logistics students over the past two years. It also has a 74-percent job placement rate for its grads.
DEEP ROOTS IN THE BUCKEYE STATE
Another material handling equipment maker with deep roots in the Buckeye State is Crown Equipment Corp. Since 1956, Crown has shipped lift trucks made at its facilities in New Bremen, north of Dayton, to customers worldwide.
Like Intelligrated, Crown has partnered with the state on a number of initiatives. Jim Mozer, Crown's senior vice president, points to fuel cell development as an example. Ohio has awarded Crown Equipment two $1 million grants for the development and testing of fuel cell-powered forklifts, he says. With these funds, Crown has built more than 500 new fuel cell forklifts and reconfigured many of its existing vehicles to operate with fuel cells.
During the past three years, Crown has also received more than $250,000 in training grants from the state. In return, Crown has purchased and revitalized empty facilities within Ohio. Last year, it acquired a vacant 75,000-square-foot facility in Minster to house its wire harness assembly operations. Crown also revitalized the former Huffy bicycle manufacturing site in Celina, turning it into a vibrant 850,000-square-foot manufacturing facility for lift truck products.
"Ohio has been a key part of Crown's growth as a global material handling company, and I hope that state officials would say the same thing about Crown's role in Ohio's emergence as an international logistics hub," says Mozer. "The supply chain and logistics community in the state has provided a valuable ecosystem of resources for our customers. We've found that Ohio is an excellent place for us to do business."More articles by David Maloney
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