Rust Belt resurgence

Fixing an ailing business culture has helped Youngstown

2011-03-13T00:00:00Z 2012-07-16T17:51:11Z Fixing an ailing business culture has helped YoungstownBy Bowdeya Tweh, (219) 933-3316

YOUNGSTOWN, Ohio | Convincing people this city is open for business has been a battle during the last several decades.

The economic effect of the decline in manufacturing jobs since the 1970s has rolled through the area, accelerating a decline in industry-dependent businesses and those relying on workers' incomes.

Investing in declining urban areas can be a tough sell, despite a glut of available real estate and a labor pool clamoring for opportunities. 

But in the last few years, the city and region have been able to secure major job commitments from a steel company, a call center operator, a software developer and other employers.

Walter Good, of the Youngstown/Warren Regional Chamber of Commerce, said the upswing in prospects began with the realization the area had to be less reliant on steel as the breadwinner. It didn't mean the city had to abandon its iron-forged roots. But business leaders had to look forward and see that Youngstown needed to be better positioned for success, Good said.

"We never want to be in the position again of relying on one industry or a couple industries like we were," said Good, vice president of economic development, retention and expansion for the chamber.

Elected Youngstown's mayor in 2005 and re-elected in 2009, Jay Williams said the city had to create a hospitable environment to attract the private sector. Williams, who previously worked in banking and later in community development, said strategies included reconciling wide gaps between the public and private sectors and reducing government bureaucracy.

Resolving these issues has spurred economic development in the region, helping the Youngstown area secure deals and gain attention in the state and nationally, Good said.

Rankings from national publications can be a double-edged sword. Late last year, Forbes ranked Youngstown No. 4 on best places to find a job this winter. However, earlier this year, the city landed at No. 18 among 200 of America's Most Miserable Cities. 

Another statistic that rankles officials is Youngstown's 12.5 percent unemployment rate in January compared to the 10.1 percent Ohio average.

Tweaking the approach

Hunter Morrison, director of community planning and strategic partnerships for Youngstown State University, said cities often can go wrong in thinking a large industry can be replaced in one fell swoop. Youngstown had to learn the hard way there are no magic elixirs for losing your largest employers in several decades.

"The silver bullets don't work," Morrison said. "You cannot replace the big box that was the steel mills with another big box that's a convention center, a casino, whatever ... and expect that that's going to restart your economy.

"And it's very tempting, particularly for public officials desperate to make some statement or some progress, to fall in love with these big-box ideas -- most of which don't work or when they do get built, they're very expensive and they have limited impact on the rest of your economy."

However, the chamber's Good said the announcements by firms such as V&M Star LP, which will employ 350 at a new seamless pipe-rolling mill in Youngstown, have helped the city retain its presence in the metals industry. The city also may have opportunities to market the area to businesses seeking to capitalize on investments in nearby natural gas exploration efforts.

"We all know that Job One today is job creation," Good said. "And the team is in place ... that we can mobilize very, very quickly to attract and support a project."

Good said Youngstown markets itself as being strategically located less than a two-hour drive from Cleveland and Pittsburgh, but also only eight hours away by car from Chicago and New York. As a result, the chamber representing Mahoning and Trumbull counties is focused on attracting distribution and logistics and advanced manufacturing firms, he said. Mayor Williams said Mahoning Valley's decision to stop competing directly with larger nearby metropolitan markets spurred progress.

"Several years ago, we realized it's useless to compete head to head with Pittsburgh and Cleveland," Williams said. "It's not going to happen."

The Mahoning Valley had to find its niche. Williams said Youngstown can offer a high quality of life, a lower cost for businesses, less bureaucracy compared to the larger areas and less traffic congestion. And instead of competing directly with "iconic American cities," Williams said people started thinking about how to market the combined strengths of the northeast Ohio region and western Pennsylvania.

Good said Youngstown is part of "Team NEO," a concept developed in 2002 to develop an economic development agenda for northeast Ohio's 16 counties that are home to Cleveland, Akron and Canton.

Becoming a hub for innovation

Youngstown Business Incubator CEO Jim Cossler adopted the moniker "chief evangelist" for promoting the innovation of incubator businesses and developments in the city.

Cossler said he faces some detractors who think the incubator hasn't been effective at launching software companies, for instance, because it has created only 320 jobs downtown in 11 years. But he expects incubator employment will double by mid-2012 because of the solid foundation built for operations and continued improvement in the companies' performance.

When the incubator opened in 1995, officials at the time weren't concerned with the type of businesses wanting to locate at the facility, said Cossler, who joined the organization in 1997. But Cossler said the one-size-fits-all approach didn't work, and the group was in jeopardy of losing its state funding.

Through a state initiative adopted about 10 years ago, the incubator was required to focus on working with companies developing proprietary technology and that have a likelihood of producing a significant amount of new jobs. As a result, the incubator's strategy is to grow software firms that develop applications or technology to sell to other businesses.

"Software companies are manufacturers," Cossler said, affirming these firms can succeed in an area built by manufacturing. "They're taking raw materials, bits of code, combining it together – lines of code – and pushing out the door a value-added product. There's not a lot of difference between the steelmaking process and software-creation process."

He declined to reveal specific sales and revenue figures for incubator businesses but said eight software companies with physical offices at the incubator did $65 million in global software sales in 2010.

'Turning' the tide

Mike Broderick, CEO and co-founder of Youngstown-based Turning Technologies, has been with the incubator for its entire 10 years of operation. Broderick said his firm received a chilly reception from entities outside the incubator, as they doubted a software firm could become viable. 

Now many business leaders mention Broderick's company among the city's gems. In the atrium of an incubator building occupied by Turning Technologies, standing shelves are decorated with awards touting achievements from regional business groups and Inc. magazine. 

"Ten years ago, there was still a lot of gloom and doom and negative outlook in the area," Broderick said. "There's still some today, but an awful lot less than 10 years ago."

Turning Technologies produces software and hand-held devices used in school classrooms and business boardrooms in testing or audience engagement. Without revealing revenue figures, Broderick said the company is profitable and has sold its products and services in more than 90 countries.

"Turning (Technologies) as a company isn't going to save Youngstown, Ohio, that's for sure, from the economic condition of the past," Broderick said. "However, if we've done anything, we've shown, yes, it can be done. And the hope for Youngstown and for the further development of downtown and the rest of the area is the multiplication of what we've done."

Being born in the 1980s, Youngstown resident Jacob Harver missed the days of a bustling central business district.

Harver, 28, said he's nostalgic for the stories he has heard and was motivated to open a business that reflects the character of the community. Harver opened the Lemon Grove cafe in August 2009, a swanky venue with an eclectic mix of art from college students on the walls and energetic bands playing music during lunch or for evening concerts.

Harver said his 30-employee small business produces value that can't be tracked in data.

"It's more than just a business, it's a community movement of sorts," Harver said. "... Our goal was to show you can not only have a business in downtown Youngstown, but you can build up the community."

Connecting the dots

Cossler, the business incubator CEO, said he was part of an effort to reach out to the city's diaspora to help bring people back to the area. He said the Youngstown Business Incubator has been able to develop a network of people who can vet companies in their early stages and determine whether a firm is commercially viable.

Making connections is what helped bring software company employee John Slanina to Youngstown in 2010.

While living in the Netherlands, Slanina created his "I Will Shout Youngstown" blog in 2006 to spread positive messages about his hometown and connect with other Youngstown natives abroad.

"You can't operate as an island in a global environment," said Slanina, 33. "Companies don't know when they've tripped from Gary into another community. As much as we think that sometimes this is a small place, Youngstown has a global brand."

Turning Technologies' Broderick said Youngstown's evolution has resulted in a more business-friendly environment than in the past.

"If I need something, I know I can pick up the phone, and our mayor is going to answer and take my call and do anything he can to help facilitate," Broderick said. "I can say the same thing for our congressman and local politicians."

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