This is the third in a series about how Intel’s new superconductor site in Licking County will affect Knox County decisions. Part 1 is here and Part 2 is here.
MOUNT VERNON — With the steady advance of progress at the Intel site in Licking County, local officials are pondering their response to the anticipated growth.
They have four options: do nothing or opt for moderate, strong, or aggressive growth.
Even if they do nothing, the new semiconductor facility located between New Albany and Johnstown will change the flavor of Knox County and impact local industries.
According to OHM’s Knox County Growth Strategy report, the top three impacted industries in the do-nothing scenario will be:
•Owner-occupied dwellings to accommodate the population growth (76% growth)
•Hospitals to handle the anticipated additional patients coming into the marketplace (71% growth)
•Banks to handle the increased corporate banking transactions from businesses, speculative real estate, and new employees and residents opening up savings and checking accounts (52% growth)
Other impacted industries include nursing and community care facilities, restaurants, religious organizations, dental offices, and automotive repair and maintenance.
As local officials develop their strategies and potentially begin recruiting businesses, they need to evaluate what is already here and what the market can support. The growth report looks at the county’s business inventory, unmet demand, and import-export imbalance to accomplish this.
Business inventory
The county’s 2,432 businesses include a diverse range of services and occupations. The top five are:
•Healthcare and social services 23.15%
•Other services (repair, personal care, laundry, religious) 11.8%
•Construction 7.36%
•Professional, scientific, and technical services 6.58%
•Retail (home, food, automobiles, personal care) 6.37%
Manufacturing jumps to the top as the largest sector in terms of employees:
•Manufacturing 22.9%
•Healthcare and social assistance 18.2%
•Educational services 12.9%
•Retail trade 9.9%
•Accommodation and food services 7.8%
•Construction 6.4%
Area Development Foundation President Jeff Gottke was not surprised by the results.
“It’s what we knew Knox County’s business climate and employment situation was like,” he said. “Manufacturing is the largest economic base sector. The manufacturing base is what keeps injecting dollars into the local economy.”
Gottke said that, to an extent, education injects new dollars through out-of-county students spending money locally. In contrast, having strong retail recycles dollars rather than injecting new money.
Leakage and unmet demand
As strong as manufacturing is, however, numbers show there is an unmet demand of over $1.5 billion in the county’s manufacturing sector.
Unmet demand represents in dollars the demand for products or services that local businesses cannot supply. It is often referred to as “leakage” because it means these dollars are going to, or leaking into, other counties.
Polaris and Easton rank high on the list of locations where Knox County’s leakage goes.
According to the growth report, Knox County has $3.6 billion worth of unmet demand.
As noted, the largest unmet demand is in manufacturing. This is followed by commercial services ($487 million), finance and insurance ($265 million), and entertainment ($88.7 million).
Other sectors lacking in local supply include:
•Retail $62.9 million
•Broadband $50.1 million
•Restaurants $28.7 million
Related to unmet demand are imports and exports.
Data shows Knox County imports $1.2 billion more than it exports. This imbalance also indicates that local supply does not satisfy local demand.
The unmet demand/leakage and the import-export imbalance help local officials decide what companies and sectors to target when trying to attract new business.
Recruiting businesses that satisfy demand captures dollars going elsewhere. Attracting companies that raise exports not only helps satisfy local demand but also means Knox County is satisfying other counties’ leakage.
Lost opportunities
The unmet demand and import imbalance represent lost opportunities for Knox County. How can the county capture these lost opportunities?
ADF’s Gottke said it is industry-dependent. Population, income, square footage, and location all play a role when recruiting business.
“The first thing is to ask can the local customer shed support this particular business through people and spending,” he said. “The second thing is location.”
Citing a large grocery or department store as an example, Gottke said it would not be located on Coshocton Avenue because there is nothing available for an 80,000- to 100,000-square-foot anchor store.
Similarly, national chains want to be near other national chains. Referencing restaurants, Gottke said the vacant Friendly’s and Long John Silver’s buildings might get some reuse, but there are few buildable lots on Coshocton.
“So the city might have to think about a second national chain commercial area,” he said.
Incentives can be helpful recruiting tools. While most people think of incentives in the context of tax abatements, Gottke said other incentives are available, including state-level grants and the Knox County Revolving Loan Fund.
“The secret to incentives is that the company is held accountable to the potential loss of benefits if they don’t perform what they say they’re going to do,” Gottke said.
Effect of recruiting
Contacting businesses that will be successful here based on the data is one aspect of capturing lost opportunities. Another is having generic sites already available.
“Space wins the race. If you don’t have the space, you lose the race.”
ADF President Jeff Gottke
“The easiest property to attract business to is a property that is flat, near a state route, has utilities already on site, and is owned by the local community,” Gottke said. “I believe cities should be working toward that goal: identifying a site with utilities on site that is controlled by the community.”
He does not believe attracting companies that provide similar services will adversely affect existing businesses.
Citing Columbus’ Short North as an example, he pointed out the number of restaurants in a five-block area.
“There’s a lot of evidence to show more of one industry in an area doesn’t create competition; it creates cooperation,” he said. “It can create a destination that attracts people to them.
“Where it could create competition would be workforce. But everyone is competing for that right now. That’s the condition we’re in.”
However, Gottke said growth builds on itself.
“Theoretically the population of the area will grow, and there won’t be so much pressure on the workforce,” he said.
He also noted there could be some competition for space. He said ADF’s role is to “think about the types of businesses and incentives that we want to see.”
