Important now: Industries are transforming quickly with impacts on companies all down the line. It’s critical to constantly engage with them to understand their needs now and into the future.
Generating economic growth across an entire region during a historic pandemic may seem like an impossible task. But if cultivating and growing economies is your calling—and has consumed your career for over 20 years—then it is second nature to navigate through tough times.
That’s a current priority for Kenny McDonald, president and chief economic officer for One Columbus, who has seen the impacts of COVID devastate some companies yet push others to shift, rethink and rally.
Helping to support companies dealing with pandemic-specific damage has been a challenging diversion, but McDonald and his group are still on track with their ultimate plan to help make the Columbus, OH region “the most prosperous region in the United States.” Since becoming CEO ten years ago, McDonald and his team have been accelerating the growth of the region’s economy both nationally and internationally, the main goal of the economic development organization.
Now the 11-county region is first among similar sized Midwest metros for population and job growth, is home to 17 Fortune 1000 companies, 5 Fortune 500 companies, 302 foreign-owned establishments and ranks among the highest for its pro-business climate.
Upbeat achievements for sure but McDonald doesn’t underplay the numerous geographic and inherent advantages the region offers to companies who locate there.
“Where a company is located makes a difference in its profitability and success. They don’t locate in tax jurisdictions, they locate in markets,” says McDonald. “For example, being located next to Ohio State University gives you a convenient way to hire engineers and other talented people who are studying here from all over the world.”
More than 20 economic development experts power One Columbus’ growth strategy which includes providing comprehensive services to foster existing companies, attract new ones—including globally—and fuel the entrepreneurial sector. Importantly, especially under current conditions, the group is in constant communication with company leaders to understand the essence and needs of their businesses now and in the future.
“You also have to have scale to make a difference. No one does this alone, it requires the entire market working together, including our transportation, environmental, and education systems,” notes McDonald.
In the following interview McDonald talks about how the pandemic has affected industries in the region and the implications therein, why there will be a greater focus on minority wealth creation and what makes the Columbus region so attractive as a place to do business.
What changes are occurring at the industry level and how do you plan to address the aftermath?
It all starts with understanding what our businesses are doing right now. So many of them have changed substantially through this pandemic. They have pivoted to new business or even accelerated a future investment that is now front and center. There is not an industry we’re in that isn’t changing rapidly and more so than it was four months ago.
For example, in the automotive industry plans have moved up substantially especially for electric vehicles. Not just for automobile manufacturers, but across most OEMs [original equipment manufacturers]. It’s one of the largest industries in the world and has a big impact on our region and the entire country.
With traffic down across the country, gas taxes are down and so is our ability to build roads and bridges. You can begin to see a future when people aren’t gassing up as much, leading to the question of how we are going to fund our infrastructure.
Just like our industries are transforming, our communities have to be prepared to transform too and understand the language of business. We are one of largest automotive investment regions in the country. We have Honda’s headquarters, engine plant and R&D operations here and as they move toward an electric feature, that has implications for their supply chain. Some suppliers are located in small towns and while they aren’t taken for granted as an employer, it is assumed they will be down the street and employ several hundred people every day.
As we move from one automotive fuel platform to another over next decade, maybe sooner, some of those companies are not going to be a part of the electric supply chain and we need to communicate that to those communities. Some companies will become a different type of supplier and their investment may be retained or maybe it won’t. So, we need to diversify and get them ready for that day, so we avoid surprises.
I know you have many retailers headquartered in your region. How do you counter the disruptions that are happening to companies in the retail sector?
The growth of e-commerce has been changing those businesses. It isn’t just moving from delivering through logistics centers directly to consumers. It’s also a matter of how we produce talent out of the dozens of universities here that will feed those companies’ headquarters. Their technology operations are here and the people driving e-commerce from a platform standpoint are here.
Keeping the Columbus Region’s position as the national retail industry leader requires some real thought because it’s a core industry with real implications all up and down our economic system.
We’re well positioned because we have access to the insights of industry leaders here. They tell us, “This is where we are going, and this is what we’re going to need; this is the talent we need; the infrastructure we need; this is where we are going to make investments in physical spaces and places.” That is why outreach is so critical.
With what we learn, we build a network of people that can respond to the need. If it’s a talent need, we will be pulling in from our workforce partners, our community colleges and universities. If it’s a physical issue, we might be talking to our planning committee, our transportation departments at the state and local levels, and talking to the economic development teams at the local level.
How does One Columbus stay on top of industry shifts and the consequent effects now and in the future?
We might have an industrial park we had planned 20 years ago that will play out differently now. Their physical needs are changed; they might need more water now. Advanced computing is a good example. We are one of largest centers in the country for AWS [Amazon Web Services]. Google and Facebook are here too because we have a number of advantages for that industry: low chance of a natural disaster, lots of water, and a confluence of power, including renewal energy resources.
But we have to keep pushing the envelope as they change. Let’s say there is a new need because of a renewable power change, we have to be talking to the state legislature about what that will require. We are constantly circling back and thinking about what’s next.
We embrace being client focused. We study, read, do analyses and attend conferences, but it still comes back to talking to the businesses not only about the short term but to talk about things from a long-term perspective, which is difficult especially in times of crisis. They’re looking to get through the next quarter and we’re asking them to think five to ten years out about what they will need to make them most competitive. But we get great response when we ask.
How has social unrest throughout the country in recent months changed your organization’s strategy for inclusion?
The disparities in our region were laid bare by the pandemic. It’s a terrible way to achieve enlightenment, but inequity was made more apparent to everyone. We were doing some things here and there to address these issues, but there are a number of things we need to move up the queue. Closing inequity gaps is a priority for a lot of metropolitan areas everywhere, and if it’s not, it should be. As I look at the data, some may have done a decent job of one of a hundred aspects of the problem, but nobody has done a good comprehensive job of addressing it overall.
When we launched our new regional growth strategy in the beginning of last year, it was all about continuing to grow at a very aggressive pace while also closing some of the gaps we have. We grew a lot of growth numbers over the past decade but not many specifically in terms of African American unemployment or minority wealth creation.
We need every ounce of our capacity to get to where we want to go. If we leave people on the sidelines then we are leaving a lot on the table and that hurts our growth. It’s a priority for us to call that out and make sure it is in everyone’s thoughts, and in their strategies. That is how we will achieve true prosperity and how we really move forward.
Where we can make the most advancement is not in constantly drawing up plans, but to change mindsets. Addressing inequity is often viewed as a social development, not an economic one. We can go a long way by making sure that people understand very clearly that those two things are intertwined and are not two separate competing entities.
I know your global outreach effort is an important piece of your growth strategy (see related story on Columbus’ Global Connect program in the upcoming edition of CityRevive). Can you summarize other key components of your growth strategy?
First, the fastest way for us to build a great economy is through our existing companies, and that includes our foreign-owned businesses. Many companies with operations here are not headquartered here, so we might be calling their HQs in Japan or Belgium to seek a deep understanding of what their path is while we also work with local operation leaders.
Attracting new businesses is right behind that. We constantly have to be diversifying our economy with new employers, which we often uncover through referrals, value chains, relationships locally or through our universities. Foreign direct investment is a big part of that as well. We want to do outreach to the best companies in the world, which doesn’t always mean the biggest, and deliver our value proposition.
Third is to be constantly fueling the entrepreneurial sector. That used to come by supporting local organizations and ecosystems. Now it’s about supporting our VCs [venture capitalists]; many of them are headquartered here and they bring a lot of value. We want to help them support their companies.
No industry represents more than 18% of employment in your region. Why is diversification so important?
The pandemic was a good reminder of how important diversification is; we went through the ultimate stress test. As a region we are economically diversified, with a variety of job types, industries and skill sets within the workforce. But we also have some communities that are heavily reliant on just a few employers or a few tax streams.
Every state has a different taxing system. Cities in Ohio are very personal income tax oriented. You pay taxes in the city in which you work. If we have a mix of people working from home in the future, say, from their suburban homes for a company located in downtown Columbus, local tax implications will become a challenge. We have been monitoring those potential impacts very carefully.
What have you learned through the pandemic and what will the business scenario look like as your region emerges from this difficult period?
The destruction has been in hospitality. Restaurants, infrastructure around convention centers, attractions and the like. At the same time, as we talk to our economic base, I am astonished at how well they have done. If we talked to ten companies, five of them would be having record years. At first, I thought it would be service providers to the healthcare system, and that’s true. But other companies are doing really well because the need for what they do is so pronounced during this pandemic.
For example, Bath and Body Works, maker of the popular soaps and hand sanitizers, is one of the highest performing retail companies in the world right now [headquartered in Reynoldsburg, OH, a suburb of Columbus].
There are other anomalies like lipstick covers or anodized fashion caps; everybody is wearing masks and not a lot of women wearing lipstick, so the lipstick market is down 80%. The business who supply those parts are located in this region.
On the whole, our economic base is strong; they are better companies now than they were in April. They have tightened things up, they have more savings, they understand what they can do now in short order. If we can get our hospitality sector moving forward, get free flowing streets back, and people experiencing Columbus, we will recover quickly.
The data now is unclear, but I am quite confident that in six months we will see data that will show certain things are healthy, and we’ll see where the destruction really was. The most vulnerable people in our communities were hurt the most. And the most vulnerable businesses in our communities were hurt the most. But we don’t quite know what that means, and how much was lost in education and other areas. I don’t think we will know for a while, but I am very confident about our ability to build a base that is stronger than the powerful one we already had in the beginning of 2020.
For more information contact Amy Harman at: email@example.com