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FRENCH-AMERICAN CHAMBER OF COMMERCE
OF GREATER CINCINNATI

Le Figaro, October 22, 2003

Cincinnati fights to attract more investments

Cincinnati (Ohio): from our special correspondent Stéphane Marchand

As a good Republican, Bob Taft will make everything possible so that Ohio votes for Bush next year, but it is not a done deal. The economy is not ready yet. Standing on the upper deck of General Jackson, a paddle steamer which descends the Ohio River, starting from the port of Cincinnati, the governor of the state entrusts: “The recession struck us hard. The car industry, in particular the American brands, lost many jobs." Ohio, an industrial state which has undergone painful reorganizations since the end of the Seventies, has seen, for example, the Delphi automotive supplier, dragged into the stagnation of Ford, cutting 8,500 jobs last year, which, by the way, provides an advantage to its competitor, Valeo.

However, Governor Taft is optimistic: “the erosion of employment was stopped, and we are very close to a rebound.” In the streets of Cincinnati the “Help wanted” signs flourish. These small jobs, generally temporary, are not taken into account when calculating the official figures, but according to national statistics, one can hope that much of them will turn into permanent positions. In September, for the first time since months, American companies announced a growth of employment.

Michael Daly, vice-president of West Shell Commercial Inc, a company specializing in logistics, observed tangible advanced signs of the recovery: “After September 11, for 18 months, the sector of packaging has plunged. Recently, the companies started selling more and therefore stared to require more of this industry. The crates and pallets manufacturers have their book of order full for nine to twelve months.” He also noted a revival in industrial real estate: “Factories that have not been utilized for two years are now being visited again by business owners who seek to increase their production capacity.” In addition, the prices of steel, of which Ohio is a large producer, are stabilizing: the increases in requests are due to the revival of the construction industry, not only here but also in China.

That being said, everyone here remembers the false recovery of 2002, which finished in relapse. Procter and Gamble, the world giant of detergents, thus remain circumspect. Corinne Reich, associated director, explains: “Even if the American market, as a whole, has not yet started to grow, our national market shares have increased and we started hiring again. On the other hand, almost nobody leaves the company. Confidence has not returned yet.” Prudence remains of rigor. Only the essential expenditures are approved. James Rice, general manager for the United States branch of GSF, a French company dedicated to industrial cleaning, suffers from it as well: “the companies now use our services twice per week instead of five and they are very eager to empty their dustbins themselves.” Harvey Cohen, lawyer with Dinsmore & Sholl, does not believe in it yet completely: “I do not note any true investment yet. The companies continue to reduce the costs.”

As everywhere in the United States, the employees are stressed out by whether or not this economic recovery will be followed by any improvement in employment, or if it will be strong enough to compensate the exodus of jobs towards Asia. Bob Taft recently wrote to John Snow, the Secretary of Treasury, urging him to work toward persuading China to revalue his currency: “the Chinese do not play a fair game. With an underestimated currency of 40%, they suck out our jobs without offering us any compensation.” The Chinese syndrome is frequent in the American political dialogue, all parties together, when it is a matter of explaining the massive disappearance of industrial employment.

Bob Taft knows that the phase of current relocation is not temporary, but structural, and that the patching up will not be enough if Ohio wants to absorb the shock of the change in progress: “We are investing 1,6 billion dollars to modernize industry and to train the workforce to more sophisticated jobs.” Here, the technological race against the clock is taken very seriously. Fifteen years ago, only coarse manufactured products were moved abroad. In 2003, the most powerful machine tools are manufactured in Mexico or elsewhere. Michael Daly confirms: “the quality of what the Chinese do increases unceasingly. We must climb the technological ladder at least as quickly as them if we want to remain ahead.”

So as not to be pulled down by the industrial decline from which Ohio suffers, Cincinnati seeks to react accordingly. After twenty years, during which both the Carolinas and Alabama have made their way from the underdevelopment of the South by welcoming large foreign companies such as BMW, Ohio has convinced the Honda Corporation to settle. Cincinnati has learned the art of seduction: it praises its cheap real estate, its symphony orchestra and its opera. Competition between the large cities in the region is intense and each one promotes its strategic position.

As a marketing pioneer, Indianapolis has managed to sell itself to large American distributors. By emphasizing its position at the crossroads of the two large highways, I-70, which connects the two coasts, and I-65, a North-South axis which connects trucks between Canada and Florida. Moreover, Indianapolis has increased its attractiveness by becoming a kind of American capital of the amateur sports. With also two million inhabitants, Cincinnati is located 100 miles south-east of Indianapolis, at the border of three states, Indiana, Ohio and Kentucky. Cincinnati has decided to play another card. Neil Hensley, international marketing director for the Chamber of Commerce, takes advantage of what happened in the past: “the cities progressed when they controlled the means of transportation of the moment. At the beginning of the XIXE century, the ports like Cincinnati, Saint Louis and Pittsburgh, benefited enormously from the water ways. In 1830, Cincinnati was larger than Chicago. Things have changed overtime. Chicago, like Kansas City, have massively invested in railroads. Later, the highways indeed made fortune. Today, to be a city of the future, a large airport is a must.”

Located in northern Kentucky, the international airport of Cincinnati is disproportionate when compared to the size of the city. With almost seven hundred flights per day, it accommodates the headquarters of DHL, the number one firm in the world for international airfreight and mail. Delta Airlines has set up its second most important American “hub” and even if 70% of the traffic is transit only, the city presents itself as a world trade center. It already houses the headquarters of General Electric, Procter & Gamble, and Kroger (a tenor in mass distribution). However, to attract executives and their employers, it is necessary to establish an international school. This could happen by 2005.

The lifting of the city is on its way. Cincinnati, as well as Pittsburgh, Baltimore or Denver, have started to rehabilitate downtown areas which have been deserted for more than thirty years, after people moved out to the suburbs. By increasing the sales tax, it succeeded to raise 3,5 billion dollars to enhance the banks of Ohio river, formerly a no man' s land crossed by enormous highways. The levees are now quickly transforming into a green park, sheltering a museum, residential dwellings, and two stadiums, one for baseball, and one for American football.

To keep up, a large American city must host a leading sports team; the taxpayers are supportive of such strategic investments. Barry Larkin, of the Cincinnati Reds, is not ungrateful. This baseball star bought one of the best penthouses in Cincinnati for three million dollars.