PLUS REVIEW FEBRUARY 2018Quarterly Economic Indicators 18 Counties of Northeast Ohio

NORTHEAST OHIO MANUFACTURING RECOVERING FROM GREAT RECESSION

NEO OVERCOMES a 23% dip to approach pre-recession output

NEO manufacturing

EMPLOYMENT

GROWS IN:Petroleum & Coal Products Beverage & Tobacco ProductsFood Sector

NEO OUTPACES U.S. IN PRODUCTIVITY WITH 16% GAIN

When recession struck the United States in 2007, manufacturing employment, output and productivity began declining across the nation, including in Northeast Ohio, a region built on a rich history of manufacturing. But today, with the recession nearly nine years behind us, Northeast Ohio is rebounding – outpacing the U.S. in manufacturing productivity and nearly matching its pace in output. NEO manufacturing employment has rebounded as well, although it will likely never reach pre-recession levels. This report illustrates the pace of recovery for Northeast Ohio and the nation as a whole.

As regions across the U.S. strive to recover from the negative economic impacts of the 2007-2009 U.S. recession, Northeast Ohio is making strides toward restoring its manufacturing momentum. With 16% growth in productivity, and output nearly matching pre-recession levels, the region continues to demonstrate that manufacturing remains an essential component of the economy.

MANUFACTURING EMPLOYMENT REGAINS SOME MOMENTUM Although U.S. manufacturing employment numbers have been slowly rising since hitting a low of 11.5 million in 2010, they have not yet fully recovered from the recession. National manufacturing employment in 2017 was 12.5 million – 10% lower than in 2007. Employment has not rebounded to pre- recession levels in Northeast Ohio, either, with 2017 employment at about 265,000 – 15% lower than in 2007.

EMPLOYMENT GROWS IN SEVERAL KEY SECTORS While the U.S. overall shows post-recession manufacturing employment growth in only two sectors – beverage and tobacco products, and food – NEO has outpaced that growth and increased employment in four additional sectors: petroleum and coal products (due in large part to Utica Shale activity), leather and allied products, apparel, and wood products.

Post-Recession Manufacturing Employment Change by Sector: NEO vs. U.S. 2007 - 2017

U.S. 2007-2017 NEO 2007-2017

-60% -40% -20% 0% 20% 40% 60% 80%

Miscellaneous Furniture & Related Products Transportation Equipment Electrical Equipment, Appliances & Components Computer & Electronic Products Machinery Fabricated Metal Products Primary Metals Nonmetallic Mineral Products Plastics & Rubber Products Chemicals Petroleum & Coal Products Printing & Related Support Activities Paper Wood Products Leather & Allied Products Apparel Textile Product Mills Textile Mills Beverage & Tobacco Products Food

Change in Post-Recession Manufacturing Employment:2007 - 2017

U.S. Manufacturing Employment NEO Manufacturing Employment

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

+5%

1.00

-5%

-10%

-15%

-20%

1.0 = 2007 employment

Change in Post-Recession Manufacturing Output:2007 - 2017

U.S. Manufacturing Output NEO Manufacturing Output

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

+5%

1.00

-5%

-10%

-15%

-20%

-25%

-30%

NEO OUTPUT BACK ON TRACK FOLLOWING 23% PLUNGE The U.S. and NEO have both resumed nearly pre-recession output levels. However, NEO was tasked with overcoming a larger deficit: In 2009, NEO output plunged to a low of 77% of its pre-recession level. The U.S. low, also in 2009, was 89% of its 2007 level.

NEO POST-RECESSION OUTPUT OUTPACES U.S. IN FIVE SECTORS In Northeast Ohio, post-recession manufacturing output exceeds pre-recession output in seven sectors: computer and electronic products, primary metals, nonmetallic mineral products, petroleum and coal products (due in large part to Utica Shale activity), leather and allied products, beverage and tobacco products, and food. Nationwide, the following seven sectors have experienced growth: transportation equipment, computer and electronic products, primary metals, plastics and rubber products, petroleum and coal products, leather and allied products, and beverage and tobacco products.

Change in Post-Recession Manufacturing Output by Sector: 2007 - 2017

U.S. 2007-2017 NEO 2007-2017

-60% -40% -20% 0% 20% 40% 60% 80%

Miscellaneous Furniture & Related Products Transportation Equipment Electrical Equipment, Appliances & Components Computer & Electronic Products Machinery Fabricated Metal Products Primary Metals Nonmetallic Mineral Products Plastics & Rubber Products Chemicals Petroleum & Coal Products Printing & Related Support Activities Paper Wood Products

Leather & Allied Products Apparel Textile Product Mills Textile Mills Beverage & Tobacco Products Food

1.0 = 2007 output

Change in Post-Recession Manufacturing Productivity:2007 - 2017

U.S. Manufacturing Productivity NEO Manufacturing Productivity

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Projected Change in Manufacturing Output by Sector: NEO vs. U.S. 2017 - 2022

U.S. 2017-2022 NEO 2017-2022

-20% -10% 0% 10% 20% 30% 40%

Miscellaneous Furniture & Related Products Transportation Equipment Electrical Equipment, Appliances & Components Computer & Electronic Products Machinery Fabricated Metal Products Primary Metals Nonmetallic Mineral Products Plastics & Rubber Products Chemicals Petroleum & Coal Products Printing & Related Support Activities Paper Wood Products Leather & Allied Products Apparel Textile Product Mills Textile Mills Beverage & Tobacco Products Food

NEO PRODUCTIVITY MOMENTUM BUILDS Northeast Ohio is outpacing the nation in productivity. Since 2007, NEO productivity has increased 16% while U.S. productivity has risen 12%. Productivity remains an essential contributor to overall economic growth, so this is an encouraging trend for the future of manufacturing in the region.

TECHNOLOGY ADVANCES FUEL FUTURE GROWTH POTENTIAL Manufacturing diversification is projected in the next five years with growth in high-technology sectors. The computer and electronic products sector is projected to grow for both NEO, at 41%, and the U.S., at 33%. In addition, transportation equipment is projected to grow at a rate of 20% for NEO and 17% for the U.S. due to demand in the aerospace industry.

+20%

+15%-

+10%-

+5%

1.00

-5%

-10%

1.0 = 2007 productivity

DEVELOPMENT ACTIVITY

Below is a sampling of recent development projects in Northeast Ohio, in the manufacturing industry:

CHARTER MANUFACTURING INVESTS $80 MILLION IN NEW FACILITYWith the objective of expanding its customer base, North America’s leading producer of carbon and alloy steel wire rod, Charter Manufacturing Company, decided to add a new rolling mill facility to fulfill the needs of additional markets. After evaluating their Wisconsin headquarters and their Cuyahoga Heights, Ohio, coil mill and steelmaking operations, business leaders selected Cuyahoga Heights for the $80 million investment, citing the strong workforce and Ohio’s positive business climate as key reasons for the decision. The new mill will be adjacent to Charter’s current operations and will create 25 new jobs while retaining 385.

NEXT GENERATION FILMS INVESTS $31.5 MILLION IN NORTHEAST OHIONext Generation Films, a leading manufacturer of plastic film and bags in the flexible packaging industry, has invested $31.5 million in the construction of a 79,000-square-foot production plant on an 80-acre lot to expand its presence in Lexington, Ohio. The company, known for producing specialty products including breathable packaging and barrier films, will add 78 new positions and retain 473.

NEW HORIZONS BAKING COMPANY EXPANDS New Horizons Baking Company, supplier of buns, bagels and bread products to national and regional wholesale and retail grocery stores, foodservice businesses and quick-service restaurants, has invested $4 million in its Norwalk headquarter operations to accommodate a customer need. The customer required a new process for freezing fresh product, which necessitated the addition of a new freezer and conveyor system, along with associated employee training. New Horizons chose to make this investment at its Norwalk facility rather than its Indiana facility, thus retaining more than 200 Northeast Ohio jobs.

GRADY MCCAULEY CHOOSES NEO FOR EXPANSION Workforce quality and availability spurred indoor, outdoor and landscape lighting fixture manufacturer Grady McCauley to choose North Canton over Houston for its recent expansion. This investment will add 95 new jobs and retain 87 workers.

A resource for the manufacturing industry, MAGNET, The Manufacturing Advocacy and Growth Network, is dedicated to helping manufacturers grow and compete in Northeast Ohio. As part of the Ohio Manufacturing Extension Partnership (MEP), they also support, educate, and champion Northeast Ohio manufacturing with the goal of transforming the region economy into a powerful, global player.

NEO STRATEGIC UPDATE:

Employment, Gross Product, Per Capita Income, Productivity

Northeast Ohio is Outperforming the U.S. in Productivity GrowthIn 2013, the philanthropic and business leadership in the

region undertook a strategic planning process to understand

Northeast Ohio’s competitiveness with the overall U.S. economy

as it relates to four important measures, labeled aspirational

metrics: Employment, Gross Product, Per Capita Income and Productivity.

Depending on which factor is being considered, Northeast Ohio’s performance

relative to the U.S. has varied a great deal over the past several decades.

Using this Economic Review as a mechanism to continue to track our progress against

the regional strategy, we will feature one of these four metrics each quarter. For this

edition, we are looking at productivity, an area of the economy where Northeast Ohio’s

relative performance has been strong. Looking back to 2013, the beginning point of the

strategy, Northeast Ohio has more than doubled the U.S. rate of productivity growth.

Productivity is an important driver of economic growth, particularly given the region’s

continued reliance on manufacturing, a sector that has seen significant declines in

manufacturing employment. As former Fed Chair Janet Yellen recently noted, “Americans’

standard of living depends on productivity growth.” While in the short term productivity

growth can be painful, in the long term it is an essential and defining component

of competitive, growing economies, and an area that provides a strong sign of

encouragement for the region as it moves forward.

Change in Productivity: NEO vs U.S., 2013 - 2017

U.S. Productivity NEO Productivity

2013 2014 2015 2016 2017

+5%

+4%

+3%

+2%

+1%

1.00

-1%

-2%

-3%

Northeast Ohio has more than doubled the U.S. rate of

PRODUCTIVITY GROWTH

NEO

TOTAL EMPLOYMENT GROWS YEAR-OVER-YEARTotal employment averaged 1.937 million workers in Q2 2017, up almost 5,000 jobs year-over-year.

Source: Quarterly Census of Employment and Wages (QCEW). This is the most current reliable data available for total jobs in Northeast Ohio.

CONSTRUCTION AND SERVICES SECTORS SEE YEAR-OVER-YEAR GROWTHThe construction sector added nearly 3,000 jobs year-over-year in Q1 to reach more than 75,000 workers. The services sector added nearly 4,000 jobs year-over year, while manufacturing saw a decline of 2,800 workers, with employment at 264,000.

Source: Quarterly Census of Employment and Wages (QCEW). This is the most current, reliable data available for total jobs in Northeast Ohio.

TOTA

L EM

PLO

YM

ENT

IN M

ILLI

ON

S

1.90

1.95

2.00

2.05

1.85

1.80

1.75

1.70

1.65

Q1 Q4

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Q2

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Q3

2015

2016

2014

2007

2008

2009

2010

2011

2012

2013

-40%

-30%

-20%

-10%

0

+10%

MANUFACTURING SERVICES CONSTRUCTION

CHANGE IN EMPLOYMENT BY SECTOR THROUGH JUNE 2017

NORTHEAST OHIO UNEMPLOYMENT RATES THROUGH JUNE 2017

2008

2007

2009

2010

2011

2012

2013

2014

2015

2016

0 = 2007 AVERAGE

Q1

07Q

2 07

Q3

07Q

4 07

Q1

08Q

2 08

Q3

08Q

4 08

Q1

09Q

2 09

Q3

09Q

4 09

Q1

10Q

2 10

Q3

10Q

4 10

Q1

11

Q1

12Q

2 12

Q2

11Q

3 11

Q4

11

Q3

12Q

4 12

Q1

13Q

2 13

Q3

13Q

4 13

Q1

14

Q1

15Q

2 15

Q3

15Q

4 15

Q1

16

Q2

14Q

3 14

Q4

14

SERVICES

CONSTRUCTION

MANUFACTURING

Q2

16Q

3 16

Q4

16Q

1 17

Q2

17

Q1

09

NEO OHIO US

12%

11%

10%

9%

8%

6%

4%

Q1

07Q

2 07

Q3

07Q

4 07

Q1

08Q

2 08

Q3

08Q

4 08

Q2

09Q

3 09

Q4

09Q

1 10

Q2

10Q

3 10

Q4

10Q

1 11

Q1

12Q

2 12

Q2

11Q

3 11

Q4

11

Q3

12Q

4 12

Q1

13Q

2 13

Q3

13Q

4 13

Q1

14Q

2 14

Q3

14Q

4 14

7%

5%

Q1

15Q

2 15

Q3

15Q

4 15

Q1

16Q

2 16

Q4

16Q

3 16

Q1

17Q

2 17

US

OHIO

NEO YEAR-OVER-YEAR UNEMPLOYMENT RATE SEES SLIGHT INCREASEThe unemployment rate for Northeast Ohio averaged 5.5% in Q1 2017, up from 5.2% for the same quarter in 2016. The state of Ohio averaged 4.8% while the U.S. averaged 4.2%.

Source: Current Population Survey (CPS), a survey of 60,000 households nationwide.

NORTHEAST OHIO TOTAL EMPLOYMENT (NOT SEASONALLY ADJUSTED)

0

DRILLEDPERMITTED PRODUCING WELLS

250 1200

0

200

150

100

50

NEO

REA

L G

RP

IN B

ILLI

ON

SPE

RM

ITTE

D/D

RIL

LED

WEL

LS (

NO

N-C

UM

ULA

TIV

E)

PRO

DU

CIN

G W

ELLS

(C

UM

ULA

TIV

E)

AVERAGE ANNUAL GROWTH = 1%REAL GRP

$150

$170

$190

$210

$230

$250

$130

NEO REAL GROSS REGIONAL PRODUCT (GRP) IN BILLIONS

NORTHEAST OHIO INDUSTRIAL AND OFFICE VACANCY

OHIO UTICA WELL ACTIVITY (NON-CUMULATIVE)

GRP PROJECTED TO REACH $236 BILLIONMoody’s Economy.com is projecting Northeast Ohio’s GRP to grow 2.7% in 2017. This projection represents the greatest percentage of growth since 2011.

Source: Moody’s Economy.com

INDUSTRIAL AND OFFICE VACANCY AT LOWEST RATES SINCE Q1 2008In Q2 2017, the vacancy rate for industrial space is at 4.5%, while the vacancy rate for office space is at 10.2% – both at their lowest rates since Team NEO began tracking in Q1 2008. More than 559,000 million square feet of industrial space and more than 153,500 million square feet of office space is available.

Source: CoStar

OHIO UTICA WELL ACTIVITY (NONCUMULATIVE)This graph shows the status of Utica shale wells originally permitted, drilled and in production for each quarter. Since Q4 2012, when tracking began, 2,435 total permits have been issued, of which 1,637 have been drilled. Of those drilled, 1,024 are currently in production in the state.

Source: Ohio Department of Natural Resources

800

1000

600

400

200

1994

1995

1996

3.0%

1997

4.4%

4.0%1.6% 1.3%

-2.0%1.4%

2.1%

2.4% 0.6% -0.8%-0.4%

1998

1999

2000

2002

2003

2004

2010

2011

2001

2006

201

2

2007

2009

201

3

201

4

201

5

201

6

201

7

2005

-1.5%

3.0%

3.3% 1.4% 0.7% 2.2% 0.5%0.9%

2008

3.3%

-5.3%

OFFICE INDUSTRIAL

12%

13%

10%

11%

9%

8%

7%

VAC

AN

CY

RA

TE

6%

5%

4%

2.7%

Q1

08

Q2

16

Q3

16

Q4

16

Q1

17

Q2

17

Q2

08

Q3

08

Q4

08

Q1

09

Q2

09

Q3

09

Q4

09

Q1

10

Q2

10

Q3

10

Q4

10

Q1

11

Q2

11

Q3

11

Q4

11

Q1

12

Q2

12

Q3

12

Q4

12

Q1

13

Q2

13

Q3

13

Q4

13

Q3

14

Q1

14

Q4

14

Q1

15

Q2

15

Q3

15

Q4

15

Q1

16

Q2

14

Q4

12

Q1

13

Q2

13

Q3

13

Q4

13

Q1

14

Q2

14

Q3

14

Q4

14

Q1

15

Q2

15

Q3

15

Q4

15

Q1

16

Q2

16

Q3

16

Q4

16

Q1

17

Q2

17

Q3

17

Team Northeast Ohio uses a number of data sources for the Regional Economic Review. One of the primary sources is Moody’s Economy.com (economy.com) data for Northeast Ohio.

Moody’s Economy.com county-level output, employment and payroll historical data are estimated from several publicly available sources and are summarized into the Team NEO regional footprint. It is important to understand data provided by Economy.com are estimates of economic activity.

Team NEO also uses data from federal and state sources as part of this report. We rely heavily on data from the U.S. Bureau of Labor Statistics (bls.gov) and Ohio’s Labor Market Information (lmi.state.oh.us) for information on wages, unemployment and both general and industry-specific employment.

Industrial and office real estate data for this edition were derived from the CoStar Group. Due to market limits within the CoStar database, historic trend data for the Team NEO region are reflective of 14 of the 18 counties forming the regional footprint. These counties include: Ashtabula, Cuyahoga, Erie, Geauga, Huron, Lake, Lorain, Mahoning, Medina, Portage, Richland, Stark, Summit and Trumbull.

SPECIAL THANKS FROM TEAM NEO TO OUR FUNDERS

DATA SOURCES ECONOMIC DEVELOPMENT PARTNERS ACROSS 18 COUNTIES OF NORTHEAST OHIO

Ashland Area Economic Development, Inc.

Columbiana County Port Authority

Erie County Economic Development Corporation

Geauga Growth Partnership, Inc.

Greater Akron Chamber

Greater Cleveland Partnership

Growth Partnership for Ashtabula County

Huron County Development Council

Lake County Ohio Port & Economic Development Authority

Medina County Economic Development Corporation

Portage Development Board

Richland Community Development Group

Stark Economic Development Board, Inc.

Tuscarawas County Community Improvement Corporation

Youngstown/Warren Regional Chamber

Wayne Economic Development Council

For a complete list of funders, visit clevelandplus.com/teamneo/invest-in-us/funders.

Team NEO is an economic development organization focused on creating jobs for Northeast Ohio’s residents. In collaboration with our partners, it leads the region’s business attraction efforts, supports business retention and expansion work as Northeast Ohio’s JobsOhio affiliate, accelerates the impact of innovation in the region, and aligns strategies and resources within the economic development network to maximize its impact. In addition, Team NEO provides tools to assist employers in attracting talent to the region. It promotes the region under the Cleveland Plus brand. For more information, visit www.clevelandplus.com.

ABOUT TEAM NEO AND THE CLEVELAND PLUS 18-COUNTY REGION CONNECT WITH US

AshtabulaLake

Geauga

Portage

Stark

Wayne

SummitMedina

Cuyahoga

Lorain

Ashland

AKRON

CANTON

YOUNGSTOWN

Richland

Huron

Erie

Tuscarawas

Trumbull

Mahoning

Columbiana

CLEVELANDLORAIN

MANSFIELD

Economic Development Board

1111 Superior Avenue, Suite 1600, Cleveland, OH 44114 • 888.NEO.1411 • clevelandplus.com