Economic recovery in Ohio to take years, demand action by politicians, OSU report says

December 4, 12:32 PMColumbus Government ExaminerJohn Michael Spinelli

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COLUMBUS, Ohio -- Recessions from a generation ago are very different from today's Great Recession, so say a trio of researchers from The Ohio State University, who opined in their report on growth and change in Ohio that inaction by state leaders like Gov. Ted Strickland and lawmakers will only prolong what they predict is already shaping up to be a long jobless recovery.

Ohio families and communities will be further strained as the state tries to recover some of its manufacturing might lost since the 1970s, which has resulted in whole industries either never returning to their original levels of employment activity or being permanently destroyed.

If the recent past is our guide, Mark Partridge, Swank Professor of Rural-Urban Policy in the Department of Agricultural, Environmental, and Development Economics, who led the study with his two other co-authors, Xuetao Huang and Tripti Uprety, said the future economic recovery will be quite feeble, with very slow job creation. Partridge and company concluded that "this drawn out 'jobless' recovery will strain Ohioans and the communities they live in."

Previous job losses could cushion more job losses

The trio said it took 46 months for the nation to recovery from the last recession in 2001 but said Ohio's total employment never did recover. They said the damage to Ohio's manufacturing sector and the families and communities that once relied so heavily on it will have less adverse impacts now because, since 1970, the sector has been in serious decline.

Ironically, they say Ohio is much better placed to prosper in the long-run if it is able to make fundamental changes to enhance its economic potential. They warn, however, that wholesale change will require that the state let go of its traditional litany of excuses for its relative poor economic performance. Contrary to some who argue that the decline of the Detroit Three auto producers has particularly hurt Ohio over the last 40 years, the researchers show that Ohio’s so-called exposure to the auto sector is "simply not large enough to explain its poor performance."

Their research showed that Ohio’s recovery pattern tends to be more severe in downturn, and job growth tends to lag the nation in recovery. They caution that while Ohio’s job declines are still less than that in 1981-82, the labor market may need longer than 1981-82 to recover. The implications for Ohio’s businesses and governments is that it "may take many years for tax revenue to recover and for businesses to regain a good footing. "Many families will face prolonged challenges, which will spread to our broader communities," they wrote, adding, "Clearly, in going forward, Ohioans should plan on continued belt tightening."

The good, bad and ugly of "creative destruction"

The good news about the bad news about the painful loss of manufacturing jobs is that it's almost over because Ohio has lost so many manufacturing jobs that there really are not that many more to lose. "Even if Ohio were to lose every remaining manufacturing job (which it will not), there will be fewer lost jobs in manufacturing than what has occurred since the early 1970s. The upside of losing so many jobs manufacturing jobs previously is that Ohio "will be less sensitive to economic downturns than in the past due to the cyclical nature of manufacturing."

They say “creative destruction,” where the loss of declining industries frees up resources (labor and capital alike) to be employed in expanding and emerging industries by shifting resources to producing products that have higher returns increases living standards, is alive and well in Ohio.

Based on their results showing many lost jobs in Ohio will not return, their painful but sobering conclusion is that it may take many years for the "economy to return to something resembling widespread prosperity." For Ohio this means families and communities will continue to face numerous challenges for many years into the future.

As for government, they predict all levels of Ohio government "will have difficult times in balancing their budget, with resulting implications for important social services, education, and infrastructure provision." Moreover, continued shortfalls in education and infrastructure provision could "further impair future economic growth."

With manufacturing being one-third of what it was in the early 1970s, the bitter good news for Ohio is that the state may be breaking out of a pattern where its downturns are more severe than the country as a whole and its recoveries are sluggish.

Two cups of hope

The authors offer up one more cup of hope and caution for residents and political leaders. They opine that Ohio employers likely overreacted during the peak of the crisis during the winter of 2009 by laying off too many workers. Due to this overreaction, they say employers may have to re-hire workers faster to meet growing demand. But if recent trends continue, they warn again, Ohio’s labor market will be very sluggish for many years in the future.

For political leaders, they say it would be "an even bigger shame if the economic downturn further distracts Ohio’s politicians and leaders from making favorable structural changes that could avert many of these problems in the future."

The cost of inaction is that this long painful process will be followed by more painful restructuring. Happy holidays!

Follow me on Twitter @ohionewsbureau. Read more stories of Ohio people, politics and government here.

Ohio Debt Rating Decline Linked to Stimulus Bucks, Loss of Manufacturing Jobs

Ohio Debt Rating Decline Linked to Stimulus Bucks, Loss of Manufacturing Jobs

Buckeye State Leader in Loss of Manufacturing Jobs

Y-2-Y Revenues Off by 11%

by John Michael Spinelli

August 31, 2009

COLUMBUS, OHIO: The same effect experienced by a borrower whose credit card score is negatively affected by undisciplined borrowing and the borrowers diminished ability to pay off their balance in full in a reasonable time is having a similar affect on on Ohio.

Noting decisions to delay $736 million in debt payments by relying on one-time federal economic stimulus funding and on estimated revenue from expanding gambling, a controversial initiative that could further be compromised if legal challenges filed against it gain traction, Moody's Investor Services said its decision last week to reduce its rating of Ohio borrowing from the second-highest to the third-highest was a reflection of its concern that Ohio's budget could experience even rougher seas in the future when federal funds evaporate and gamblers don't lose as much as projected.

While Moody's is concerned about the future, its rating decision also reflected its concern for the past, as reflected in the tremendous number of manufacturing jobs lost in Ohio over time and in just the last twelve months.

For that story, data released by the US Bureau of Labor Statistics and published in the Atlanta Business Chronicle show Ohio led all other states in the loss of manufacturing jobs over a period of one year. For Ohio, its loss of 127,000 manufacturing jobs topped all other states. Its closest rivals in loss were California (123,400) and Michigan (108,900).

Ohio clearly has fewer resources at its disposal to maintain superior borrowing rates. Once an industrial titan of the Midwest whose once well-developed industrial might was the envy of other states and nations, Ohio has lost many battles over the years as its manufacturing base continues to tumble in size from its salad days of being a leader in labor-intensive industries like steel, rubber and glass that among other important industries made Ohio a good place to raise a family and locate a business.

Ohio communities could once count on manufacturing jobs as the bread and butter of their livelihood. Ohio's state budget was similarly blessed by revenue from these and other industries and the workers who pushed them forward that could be transformed into good roads, strong bridges, institutions of education and infrastructure that attracted families and businesses alike.

But with the state budget under attack from cliff-diving revenues exacerbated by business leaving the state and workers looking elsewhere for greener pastures, Ohio seems hard pressed to turn the tide by reclaiming a future that reflects its prosperous past. Even though its two-year state budget of $50.5 billion is still considerable when compared to budgets from other states, the across-the-board pain it delivered to individuals and agencies was considerable.

If the prospect of 30-40,000 more Ohioans losing their jobs due to state budget cuts becomes reality, the added grief that will be visited on Ohio families will be like rubbing salt into an already open wound of a bleeding budget waiting for a transfusion that may not arrive for years.

Response to such news by the Governor's office say the state's rating "continues to be solid despite the national economic downturn" and note as proof of that that "the latest outlook change did not affect the cost of issuing coal-development bonds recently."

"The long-running structural changes affecting Ohio's economy indicate that the state may have difficulty recovering jobs in tandem with national trends as the recession ends," the report said, according to the AP article.

According to the August 11th Monthly Report on Ohio's Economy and State Finances, "Ohio’s economy has begun to see signals of the beginning of a weak recovery from the deepest downturn experienced in the past 50 years." The report stated that as the national recession eases a bit, a weaker than average recovery is expected to begin as early as the end of this summer. "The pace of economic recovery in Ohio will depend heavily on the fate of the motor vehicle industry," a reference to the fates of General Motors and Chrysler, two Detroit-based firms with large numbers of workers in Ohio, who went into and emerged from federal bankruptcy court.

The unemployment rate in June for Ohio was 11.1 percent, the report noted, a figure it said would continue to "show a downward trend throughout July." Consumer confidence also decreased somewhat in July, but the trend still appears to be improving relative to the extreme lows registered in February, it said. Also, for the first time in nine months, Ohio’s total tax receipts exceeded estimates. However, the real news is that "year-over-year performance is still 11 percent below the July 2008 levels."

John Michael Spinelli is a Certified Economic Development Financing Professional, business and travel writer and former credentialed Ohio Statehouse political reporter. He is registered to lobby in Ohio and is the Director of Ohio Operations for Tubular Rail Inc. Spinelli on Assignment is syndicated by Newstex.com and is available for subscription (99 cents/month) to Kindle owners. His tweets on Twitter can be followed @OhioNewsBureau. To send a news tip or to make a comment, email him at: ohionewsbureau@gmail.com

Brown's IMPACT Act Included in Climate Change Bill Passed by US House

Brown's IMPACT Act Included in Climate Change Bill Passed by US House

Loan Fund for Transition to Clean Energy R&D

by John Michael Spinelli

June 26, 2009

COLUMBUS, OHIO: Ohio's junior Sen. Sherrod Brown had something to crow about Friday, when the US House of Representatives included his bill to establish a $30 billion loan fund to help manufacturers transition to a clean energy economy in a climate change bill that squeaked to passage with only 7 votes.

Even though the battle to address issues related to global warming claimed 44 Democratic defectors, Brown rallied around the work of two Ohio congressmen, who he said fought to include his bill designed to help small and medium-sized manufacturers across the nation adapt to the clean energy economy by providing them with much-needed access to credit.

But another Ohio congressman, John Boehner, the Minority Leader, used his privilege as a party leader to stall the vote, according to one published report that said he consumed just over an hour by reading from a 300-page amendment added in the early hours of Friday.

Boehner and other Republicans have framed the bill as a "tax" that would lead to more job losses and to problems in the voting booth for those members who voted for it. Only eight Republicans crossed over to vote for it.

The goal of this bill is to reduce greenhouse gases in the United States to 17 percent below 2005 levels by 2020, and 83 percent by midcentury.

All Ohio's Democratic Congressmen, with the exception of Dennis Kucinich of Cleveland and Charlie Wilson from the southeast, voted for it, while Ohio Republicans voted against it as a block. Ohio currently has 18 Congressional districts, although speculation has it that the next Census will reduce this number by 2 seats.

"Our nation's traditional manufacturing industry, which helped build our nation's middle class and is critical to national security, currently faces significant challenges," Brown said in a prepared statement.

Elected in 2006 when Democrats reclaimed many offices formerly long-held by Republicans, Brown, whose gravely voice and perennially musted-up hair contribute to his trademark style, applauded Ohio Congressmen John A. Boccieri (OH-16) and Zack Space (OH-18), both Democrats, for working to include his IMPACT Act [Investments for Manufacturing Progress and Clean Technology] in the American Clean Energy and Security Act of 2009.

The bill, the heart of which is about a "cap-and-trade" system some say will lead to big changes, both positive and negative, in sectors like election power generation, agriculture, manufacturing and construction. legislation, offers opportunities to use energy better or retool for a new era of jobs realted to clean energy.

Motivated in great measure by the loss of hundreds of thousands of manufacturing jobs in Ohio, where the demise of the US auto industry as tracked by Chrysler and General Motors going in and out of bankruptcy court where they will be reshaped and reformed, Brown hopes his loan fund will help domestic manufacturers recover from the 30 percent slide since 1987 their sector has had on the nation's gross domestic product or GDP.

The manufacturing sector, which according to Brown is responsible for America's great middle class and that accounts for 12 percent or $1.6 trillion of GDP and nearly three-fourths of the nation's research and development, needs access to credit so they can become a part of and not a victim to the rise of clean energy jobs. The National Association of Manufacturers opposed the bill.

He noted that passage of the climate change bill confirms that clean energy legislation is an opportunity for Ohio manufacturing. "By creating a funding source to help Ohio manufacturers retool, we can revive Ohio manufacturing through investments in clean energy," a move he said will "go a long way toward making Ohio the Silicon Valley of clean energy manufacturing.”

Boccieri, a veteran of the war in Iraq who was elected last year, said, “This legislation represents the next step toward freeing our nation from its dependence on foreign resources and it will help fuel our economic recovery.” He said the bill is about "creating jobs right here at home that cannot be outsourced, protecting our national security, and helping our manufacturers retool to thrive in a new green economy."

The impact of IMPACT is that it will allow small and medium-sized manufacturers to improve energy efficiency, retool for the clean energy industry, and expand the nation’s clean energy manufacturing operations.

In his release today, Brown said the current economic crisis has exacerbated existing problems within the U.S. manufacturing industry, and taht manufacturers continue to face a reduction in demand and a lack of capital.

He cited a survey done in May that found that more than 70 percent of manufacturers anticipate difficulties securing credit to purchase raw material and rehire workers as business conditions improve. For the past 16 consecutive months, U.S. manufacturing has contracted. Moreover, Brown noted, according to the Federal Reserve Board, manufacturing output fell 2.7 percent in January 2009 to a level 13.1 percent below that of only 12 months earlier. And just last month, nearly half of the nation’s job losses were tied to manufacturing.

John Michael Spinelli is a Certified Economic Development Financing Professional, business and travel writer and former credentialed Ohio Statehouse political reporter. He is registered to lobby in Ohio and is the Director of Ohio Operations for Tubular Rail Inc. Spinelli on Assignment is syndicated by Newstex.com, can be followed on Twitter @OhioNewsBureau and available for subscription to Kindle owners. To send a news tip or make comment, email ohionewsbureau@gmail.com

The Impact of IMPACT

The Impact of IMPACT

Brown Bill to Help Manufacturers Retool for Energy Industry

Brown More Open Minded Now about Nuclear Power

by John Michael Spinelli

June 16, 2009

COLUMBUS, OHIO: Junior Ohio Senator Sherrod Brown announced Wednesday that he and Sen. Debbie Stabenow, (D-Michigan) will introduce a bill to help auto suppliers and other manufactures retool for the arrival of the energy industry, as prospects dim for Ohio manufacturers in response to the shifting sands of the U.S. auto industry.

Slightly off topic for today's agenda, Brown responded to a reporter's question about his position on nuclear power, with the announcement to day by Gov. Ted Strickland that a new nuclear power plant will be built in southern Ohio at the former nuclear material processing facility in Piketon, south of Columbus, the capital.

Brown said he has come a long way from how he thought of nuclear plants decades ago, and says he is now open minded about it. Supporters of the nuclear power plant, the first to be developed since the near meltdown at Three Mile Island in Pennsylvania, say its power, because it doesn't release emissions long attributed to causing global warming, is in today's parlance, "Green."

What Brown didn't say but what this reporter thinks will bode more confidence in everyone that it will be built correctly, was the announcement that one parter in the project will be Areva, a French energy company. Franc's nuclear energy industry is state owned and standardized and has a long history of producing save, reliable and affordable energy for the nation.

What does IMPACT, or Investment for Manufacturing Progress in Clean Technology Act, mean to Brown, who has added today's announcement to a list of others on energy he has made recently that include the announced release of $3.2 million to support clean energy research and development projects in Akron and Canton, a visit to a solid waste authority in Central Ohio as a backdrop to discuss his proposal to expand the use of municipal solid waste as a source of clean energy and his role in the release of a Pew Charitable Trust report on "repowering jobs, businesses and investment across America," a study he referenced again today.

Speaking on a conference call with reporters, Brown said he expects his bill to be included in congressional legislation on climate change, and that enabling small- to medium-sized manufacturers to transition to become more energy efficient or retool to manufacture parts for wind, solar or bio-fuels or for other industries is also a good public policy goal.

He noted that manufacturing auto components is the largest single category of manufacturers in the nation, employing over 680,000 workers, so any help that can be directed toward this sector to keep them going, if not in the same line of work but in a different one like energy, is good.

Wendy Patton of Policy Matters Ohio joined Brown by supplying research information her non-profit, non-partisan group compiles, showing on a county-by-county basis the possible potential of Ohio businesses that would be eligible to participate in a program to be administered and run by states that meet certain national criteria, including having produced their own plans for addressing high-unemployment areas and assistance directed at building manufacturing supply chains.

Patton said PMO's report identified 3,000 Ohio manufacturers, employing 250,000 workers, that could benefit from Brown's proposed federal initiative.

In prepared remarks, Brown said the backdrop to his initiative is that as Congress is weighing sweeping energy and climate change legislation, but the more immediate immediate challenges faced by auto suppliers and the manufacturing industry, which means federal help is needed to support the development of domestic clean energy manufacturing and production.

Supported by leaders in the business, environmental, and labor communities, Brown said his bill, capitalized by $30 billion in treasury funds, would convert to a revolving loan fund after two years. If passed, the bill will become a new funding source designed to help auto suppliers and other manufacturers retool for the clean energy industry. Over time, Brown said his initiative would lead to the creation of 180,000 direct jobs and three-times as many in indirect jobs.

To accomplish these goals, Brown's bill would improve manufacturers’ access to capital and invest in energy-efficient technologies, which he said would create new jobs and increase the competitiveness of domestic manufacturing.

In questions from reporters, Brown said that not only would wind, solar and other energy-related sectors be welcome, but he said any transportation technology that is clean and energy-efficient would also be a good fit for his bill.

For states, who Brown said will process applications, they will need to show proof of their plans for high-unemployment areas, the development of manufacturing supply chains and increasing steel production, which has plummeted of late, among other national criteria his bill sets out.

Brown is right to be energized to by stopping the abuse the country's economic woes have visited on manufacturers, Buckeye or otherwise. The state's largest paper by circulation, the Cleveland Plain Dealer, ran a story of two reports out today [MSNBC and Brookings] that showed Ohio will again lag behind other states in recovering from the Great Recession, which next to Pennsylvania has hurt Ohio the most.

John Michael Spinelli is a Certified Economic Development Financing Professional, business and travel writer and former credentialed Ohio Statehouse political reporter. He is registered to lobby in Ohio and is the Director of Ohio Operations for Tubular Rail Inc. Spinelli on Assignment is syndicated by Newstex.com, can be followed on Twitter at OhioNewsBureau and available for subscription to Kindle owners. To send a news tip or make comment, email ohionewsbureau@gmail.com
The Impact of IMPACT