Economic Analysis for Southern Appalachian Ohio: Regional Industrial Targeting
Stryker, Micah B.
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Appalachian Ohio covers 32 counties in southern and eastern Ohio. It is an area that has long been plagued by a poor economy and the many social problems that accompany such conditions. Appalachian Ohio had a poverty rate of 13%, higher than both State and National levels. Currently, unemployment rates sit at or above 10% in 27 of the 32 Appalachian counties. Southern Appalachian Ohio is comprised of 11 counties in the southern and southwest part of the State and is the focus of this report. The Appalachian Regional Commission has classified the economies of two counties, Vinton and Pike, as “Distressed.” Five counties, Adams, Scioto, Jackson, Lawrence, and Gallia, were classified as “At Risk.” Three counties, Brown, Highland, and Ross, managed to be classified as “Transitional.” Only Clermont, a suburban Cincinnati county, had an economy labeled as “Competitive.” The economic status of this area signifies a need to be proactive in identifying the industrial strengths of the region to guide possible economic development agendas. This report used both shift share and location quotient analysis techniques to identify strong industries in the region that should be targeted by local and regional economic development agents. It also combined the results of these two analyses with other employment data to group industries in Key, Growth, and Dormant categories. The results of these analyses were combined with research on local economic developments and conditions through news articles, government websites, and local chambers of commerce to determine development priorities for each county. An effort was made to establish regional and industrial linkages that would allow for collaboration among economic development authorities. Shift share analysis identified eleven industries that had a positive median local share. Four of those industries were growing at the national level as well. Those four industries were Ambulatory Health Care Services 621, Accommodation 721, Justice, Public Order, and Safety Activities 922, and Private Households 814. Private Households had the largest local share percentage by far at 84%, but its small location quotients and informal nature of much of the work in the industry severely hurts its targeting potential. Location quotient results were disappointing as only Ambulatory Health Care Services 621 had more than one county report a location quotient over 1. To move past this, the results of those analyses moved into an industry classification analysis that would better capture the strength and growth of important industries in each county. County classifications were defined as: 1) Key Industry: These are industries that have positive changes in employment, LQ, and positive local share. For this analysis they will also have 250 or more employees. 2) Growth Industry: These industries also have positive changes in LQ and positive local share. They also have experienced job growth of 20 % or greater. However, they have less than 250 employees. 3) Dormant Industry: A dormant industry has significant employment that is decreasing while its location quotient is increasing over time. Employment of 200 is used for this analysis. This analysis identified many more strengths and opportunities for industrial targeting and economic development. Key and growth provide excellent targeting opportunities while dormant industries identify areas to focus on retention and support for existing businesses. Counties with shared or related industries also provide an opportunity for regional cooperation and collaboration in economic development initiatives. Several of the strongest opportunities include: Wood Products Manufacturing: Natural resources have long been an asset for Appalachian areas. Brown, Clermont, Scioto, and Pike all indicated this as an important industry. This industry was also the largest employer in Vinton County. Most other counties also have a significant presence of employers who use the ample wood resources in the region. This represents a great opportunity to regionally target industries that use wood, focusing mainly on higher level, value added industries. This strategy would also allow local entrepreneurial development and distribution that could mirror the success of Amish craftsmen. Ambulatory Health Care Services: Health care represents an important industry for rural areas. Besides the obvious services and jobs it supplies to the area, it also provides a way for local economies to capture Federal and State monies through Medicare and Medicaid payments. Prospects for developing the health care industry were greatest in Adams and Lawrence County, while Gallia had prospects for catering medical services to older populations. Cooperation in this area could help provide stronger economies to many areas and better services to the region as a whole. Tourism: Heritage tourism and natural amenities have allowed many rural areas to experience economic growth. The Accommodation industry was one of the few industries in the region that had positive local share and positive national share. It was listed as Growth in neighboring Pike and Scioto Counties, providing an excellent opportunity to join together to develop and promote tourism. A joint convention center could provide an excellent opportunity to attract conferences and visitors to the area to help support the local economy. The proximity from many larger metropolitan areas provides a great opportunity cater to day and weekend travelers throughout the region. Retail: Retail sectors were identified in several counties as Key and Growth. Clermont had the broadest retail opportunity, but Lawrence and Highland also showed opportunity to develop retail in growing markets. General Merchandise and Building Materials and Garden Equipment and Supplies stores were the strongest retail sectors in the region. Construction: Two construction industries were identified as strong in several counties, Construction of Buildings 236 and Specialty Trade Contractors 238. Lawrence, Scioto, and Pike identified both as Key while Gallia reported Construction of Buildings as Key with one of the highest location quotients for any reported industry. While this industry is strong in the region, it does represent some challenges. The Great Recession and housing crisis have severely hurt the industry, making competition for projects even more competitive. The strength in the region indicates that it would be a worthwhile economic venture to target and support this industry. Many other industries and opportunities were identified through the analysis. Some provided the opportunity for regional cooperation while others were excellent targets for individual counties. This analysis represents one tool that can be used to help guide economic development opportunities in the region as part of a broader development strategy. Combined with other tools and support, this type of analysis can help guide Appalachian Ohio down a path to a brighter economic future.