What color Ohio's economy?

Rust Belt state well-positioned, experts say, but some wonder whether it will take full advantage of the ‘green’ wave

By The Columbus Dispatch  • 

[Story published May 16, 2010]

The stench instantly assaulted the senses, almost compelling a visitor to bolt from the bio-energy research lab.

"If it smells funny here, it's because we're turning poop into energy," said Mauricio Espinoza, spokesman for the Ohio Agricultural Research and Development Center in Wooster.

In Akron, a Bridgestone executive envisioned the day when tires would be made from a new crop grown by Ohio farmers - Russian dandelions. "The 'green' technology you start to see in tires is a big part of our future," said Bob Handlos, vice president of product development, as he led a tour of the tiremaker's research center.

And in an old building on an Athens side street, Gov. Ted Strickland hoisted a shiny metal cylinder that can provide electrical power for a space satellite for a decade. Over the next four years, Sunpower will build 25 of the Stirling converters for NASA, said Mark Schweizer, the company's chief executive officer.

Handing the cylinder back to Schweizer, Strickland asked how much one costs.

"On the order of $1 million each," Schweizer replied.

"Really!" Strickland said. "Can I hold it again?"

From the largest corporate and government research labs to neighborhood factories and mom-and-pop garages across Ohio, inventors are discovering, developing and selling whiz-bang technology to power the state toward a new economic future.

Today, and for the next two days, T he Dispatch presents a close look at the ever-growing "green economy," traveling the state to meet entrepreneurs, researchers, workers and skeptics.

Advancements in alternative energy sources, such as solar, wind and bio-fuels, foreshadow a day when Ohioans might power their cars with fuel derived from algae instead of gasoline from imported oil or use electricity generated from manure and crop waste instead of coal.

With Ohio's once-mighty manufacturing economy continuing a three-decade free-fall, politicians of all stripes are proffering the green economy as the job-producer of the future.

"There will come a day when Ohio will be the undisputed home of advanced energy," the governor said in January. "A day when we will have cast off those two tired little words that have been used to put us down - Rust Belt - because that's not who we are. A day when the iconic image of the Texas oil rig will be eclipsed by the Ohio-made wind turbine and solar panel."

With such aspirations also come unsettling questions: Can the reality of this new economy ever live up to the hype? Can these technologies catch on in the market, based on their own merits, or will they forever be dependent on government aid? And, is Ohio well-positioned to compete with other states and countries for the jobs that everyone seems to want?

Dollars and jobs

From the politicians' rhetoric flows public policy and, ultimately, tax dollars. From the beginning of 2007 to 2010, the state poured more than $2.6 billion into nearly 700 advanced-energy projects, including $1.8 billion toward finding ways to burn Ohio's abundance of electricity-producing coal in a way that doesn't spoil the environment.

The spending is necessary, the policymakers say, to spawn tomorrow's jobs, including thousands for the non-degreed Ohio workers among the 433,800 since 1990 who lost manufacturing jobs. Instead of making bolts for car engines, Ohio workers will manufacture them for wind turbines. Instead of making glass for car windows, they will fit it into solar panels.

Farmers will produce food, electricity and fuel, building power-generating anaerobic digesters and biomass refineries next to grain elevators. In short, workers in the green economy will do many of the same jobs they did in the old economy with the added bonus, some say, of helping to save the planet.

"Green-collar jobs, really, are just blue-collar jobs being called something different," said Eric Burkland, president of the Ohio Manufacturers Association.

But there are some other significant differences, starting with pay. Most start-up ventures are small, with wages that don't come close to the pay and benefits of Ohio's vanishing jobs. Few industries pay at that level anymore.

This provides a grim realization for some of the prospective students Donald Ball counsels at Stark State College in North Canton, where he is director of apprenticeship and industrial training. He is the one who tells laid-off auto workers that they might need several years of training to qualify for jobs that pay less than half of their former union wages.

"To have high wages, you need to have high skills," he said.

That's some of the bad news. The good news is that the state has advantages in attracting new jobs.

Ohio has some of the nation's most ambitious renewable-energy standards, requiring that 25 percent of electricity come from alternative sources by 2025. This law, passed in 2008, includes annual benchmarks designed to encourage the development of solar and wind power in the state.

The utilities now need to meet the standards, which will not be easy. The companies fell short of the 2009 benchmark for solar power, which has caused consternation in the industry.

"There's this chicken-and-egg problem going on," said Terrence O'Donnell, a Columbus lawyer who represents renewable-energy companies. In this case, utilities say there isn't enough solar-energy production, while solar companies say there hasn't been enough investment from utilities to enable production.

Tax policy also plays a role. Lobbyists for the wind industry are asking the Ohio General Assembly to revise a property tax on utilities, which industry leaders say is an obstacle to renewable-energy projects.

Ready to work


Ohio's energy standard, if the goals are met, would guarantee local demand for new energy technology. About 10 states have similar standards, and 29 states plus the District of Columbia have at least some standard.

Manufacturers who set up shop in Ohio to meet this demand find that the state has a vast but underused supply of manufacturing workers and buildings.

"Ohio has great manufacturing capability," said U.S. Energy Secretary Steven Chu. "There are a lot of factories that have been closed down, but you have a trained work force, you have real estate and buildings that can be reprogrammed to do other things. So, the capability is there."

Not surprisingly, several other states will make the same claim, most notably Michigan. The regional tug-of-war involves a long list of factors, such as taxes, location and the availability of government aid. On all of those counts, Ohio leaders say, they like their chances.

"We're a manufacturing state, and that's why we're well-placed to supply and manufacture those parts that go toward making wind turbines, making solar panels, making fuel cells; and if you go to others states, I'm not sure if they're thinking that way," said Lisa Patt-McDaniel, director of the state development department.

The sentiment is shared by outside observers, including Joan Fitzgerald, an urban-studies professor at Northeastern University in Boston and author of Emerald Cities: Urban Sustainability and Economic Development.

On her book tour, she often asks audiences which city has the largest thin-film solar manufacturing plant in the country. The frequent guesses include San Francisco, Phoenix and Austin.

Nobody guesses Toledo, which is the correct answer.

"The manufacturing infrastructure of Ohio positions it well for, in the case of Toledo, the transition from auto glass to solar," she said.

At the same time, Fitzgerald thinks competition among states obscures a more important issue: The United States is losing ground to other countries in the push for clean-energy jobs.

"States need to be supported by national policies," she said. So far, she is disappointed to see that European and Asian countries are much more proactive.

Sen. Sherrod Brown, D-Ohio, says the state has the potential to be the "Silicon Valley for green energy" and, after mostly picking up the crumbs of the high-tech era, Ohio appears ahead of most states in the development and deployment of alternative-energy technology, particularly solar power and biomass fuel research and production.

A report last year by the Pew Charitable Trusts said Ohio ranked among the top five states with the most jobs in clean energy, energy efficiency and environmentally friendly production in 2007. Adjusting for population, Ohio ranked 12th in the nation.

The key element to growing new industries here is likely beyond the reach of policymakers. It depends on the state's entrepreneurs catching on in the market. And it will take time.

"You don't create an industry in five years," said Bill Dawson, president of Nextech Materials in Lewis Center, a fuel-cell maker who hopes eventually to employ many more than his current 35 workers. "Silicon Valley didn't happen overnight."

For all of Ohio's assets, it has some drawbacks as a site for wind farms and solar arrays. The state has about 75 sunny and clear days per year, and it lacks the high sustained winds of the Great Plains states.

When it comes to sun and wind, the state is a series of small islands. The sun shines brightest in southwestern Ohio, according to the federal National Renewable Energy Lab. The wind blows strongest along Lake Erie in the Toledo area and in isolated parts of the northwestern and north-central parts of the state, the agency says.

That said, advocates for the solar- and wind-power industries argue that improvements in technology already have helped expand the menu of suitable locations. Like so many aspects of the green economy, the point is debatable.

Defining success

The hope for green jobs must be tempered: The likelihood of one-for-one replacement of the thousands of lost manufacturing jobs is slim. An additional 173,100 of them vanished just since 2007. And there is no guarantee that green jobs won't eventually move offshore.

Also, to fulfill the politicians' prophesies and justify the public dollars they invest, there will be a tendency to over-classify new jobs, and even some old ones, as green jobs.

"Everyone agrees that the notion here is important," said Ned Hill, dean of urban affairs at Cleveland State University. "But if you take a carpenter who's building steps one day, and the next day that same carpenter is installing solar cells, they suddenly go through a green conversion."

That conversion led to no net increase in jobs.

But these questions of accounting ultimately will be less important than questions about economics, said Ken Mayland, president of ClearView Economics in the Cleveland area.

He argues that the green economy won't take off unless the energy it produces is competitive with oil, natural gas and coal. Right now, that's a long way off.

"If it ain't competitive, somebody is going to take a bath," he said. "And the way green energy is going, it may be the taxpayer."

This kind of skepticism underlies a report issued last year by the office of Sen. Kit Bond of Missouri, the top Republican on the subcommittee that oversees spending for green initiatives.

"Massive new government spending on green-jobs programs is leading to mixed results, with heavy subsidies required to spur low numbers of job creation, sub-par wages and the threat of lost jobs in traditional manufacturing sectors," the report said.

Among the examples cited is Solaicx, a maker of solar-power components in Portland, Ore., which stands to get $21.5 million in taxpayer money for a total of 66 new jobs, or $325,758 per job.

Two Ohio companies are among the 28 listed, Xunlight in Toledo and First Solar in Perrysburg, which received government aid equivalent to $93,125 and $25,132 per job, respectively.

Ohio leaders say that such figures don't communicate the benefits of getting a foothold to develop an entire industry in the state. Those same leaders describe Xunlight and First Solar as linchpins of the solar industry.

In the new global economic order, politicians such as Strickland must put their faith in the green economy, because yesterday's manufacturing jobs that made Ohio the nation's economic engine aren't coming back, said Ray Leach, chief executive officer of Jump Start, a Cleveland nonprofit agency supported by the state and private sector to help green-energy firms get started.

"What other alternative does (Strickland) have?" Leach said. "It's the only segment of the national economy that's growing blue-collar jobs. Period. ... There's really nothing else for him to hang his hat on. In the absence of green tech or clean tech, there's no hope in the immediate term."

So it comes down to hope. The green economy gives entrepreneurs a chance to alter Ohio's trajectory. After decades of decline, state leaders will take that chance.