The globalisation of the economy and worldwide trade in goods require companies to be close to their customers in order to respond quickly and flexibly. For the German chemical industry, the US – as the world’s biggest internal market – offers interesting growth potential. Chemistry is booming there: sales have increased by 62 % in the past 15 years, more than double the rate in Germany. The net return on investment is also twice as high.
The Cincinnati region, where the states of Ohio, Kentucky and Indiana meet along the Ohio River with the city of Cincinnati as their metropolis, is a great industrial location for German companies. The almost 70 German businesses located there make up the second biggest group of foreign investors. Beiersdorf, Lanxess, Baerlocher, Girindus, Cognis and Ticona, a division of Celanese (Kronberg) are just a few big names. A representative survey conducted by the Cincinnati Post newspaper among entrepreneurs in the region revealed that in 2006 almost half of those interviewed were planning on expanding their facilities in the course of that year and 85% were intending to create new jobs. One year previously, Ticona concentrated its North American business in Cincinnati, where it invested 30 million dollars. And active pharmaceutical ingredients manufacturer Girindus from Bensberg established its own oligonucleotide production facility to complement its existing capabilities.
Growing competence
During the past few years, Cincinnati has increased its attractiveness as a location for the chemical industry and enhanced its image as a region for pharmacy and life sciences, automotives and machinery construction. Today, the area is one of the top biotech centres in the US. “The activities of the regional Chamber of Commerce are well received by the public”, says Neil Hensley, Senior Director Economic Development, Cincinnati USA Regional Chamber. “In 2006, our location once again ranked among the top 10 of the prestigious “Top Metropolitan Area Award“. This competition rates the establishment of new companies according to the amounts invested and new jobs created. “This is the fifth consecutive year we have earned a place in the Top Ten list”, Hensley continues. Being the 25th largest city in the US, Cincinnati is an energetic economic region that easily competes with larger metropolises such as Chicago or Houston. With 115 new projects in the year 2006, Cincinnati ranks 5th in a US-wide comparison, even ahead of New York. More than 370 out of the Fortune 500 companies are represented in the region, including nine which have their headquarters there, such as Procter & Gamble. 300 foreign firms reside in Cincinnati, most of them European. 1000 globally oriented enterprises are responsible for an export volume totalling a staggering 6.7 billion US$. According to a study conducted by Ernst & Young, Ohio attracted by far the highest number of foreign investments among all US states in 2004. 32% of the funds invested originated from foreign companies (in absolute figures only Texas, which is much bigger, slightly surpassed Ohio).
Near to customers and market
Cincinnati boasts a location quotient of 1.41 for the chemical industry. What does that mean? The significance of the industry is 41 % higher there than in the US overall. While an average value of 1.0 indicates that an economy is basically export-oriented, a figure of 1.41 clearly proves that the local chemical industry enjoys production benefits and that the economy has reached levels capable of serving external demands. “In the USA, the size of the country should never be underestimated. It is therefore vital to establish a presence near to your customers and the market”, Neil Hensley recommends. The major processing industries are located in the Midwest, such as plastics and rubber makers, automotive manufacturers and suppliers and machinery builders. It is thus possible to reach 43 % of all national production facilities in the USA as well as 44 % of all US consumers by truck from Cincinnati within one day. It is the number one region for the adhesives and sealants industry, and as many as 70 % of all US adhesives manufacturers are situated just a half-day trip away. Yet Cincinnati not only occupies a strong position in the chemical industry, it also has a diversified and therefore very stable economy, protecting the region against economic fluctuation. One important contact for medium-sized companies interested in the US market are the Chambers of Commerce. They provide assistance and pave the way for an investment’s success. In addition to marketing and sales activities, efficient customer care and a broad the customer base are essential along with an understanding of the tax system, social insurance, labour law and special cultural features. Neil Hensley: “In Cincinnati, for example, we put together individual packages for investing companies. 15 counties and three states offer numerous business promotion programmes and specific strategic concepts right down to the local level. They help companies set up or expand operations.”
Study program extended
Good personnel and good companies mutually attract as if by magic. About 1.5 million workers live in the Cincinnati region of the USA. Tens of thousands work as chemists, physicists, engineers, biomedical or environmental specialists, technicians and researchers. More than 250 colleges and universities within a 300-mile radius add more than 140,000 young professionals to the workforce each year. In 2005, the University of Cincinnati (UC) established the Institute for Nanoscale Science and Nanotechnology to facilitate advances in physics, chemistry, electronics, materials science and medicine and help educate the next generation of scientists and engineers. The Institute is the result of interdisciplinary cooperation. According to forecasts, more than two million people worldwide will be employed in nanotechnology in the next decade. Neil Hensley adds that “the University of Cincinnati ranks second in nanotechnology education in the US.” UC also offers undergraduate and graduate degree courses in chemistry, biochemistry, bio-organic chemistry, bio-pharmaceutics, pharmacology and other related specialities. Six universities within 200 miles offer 22 PhD grant programmes, including for subjects such as chemistry and biochemistry, molecular biology, pharmacology, process engineering and material sciences.
Tax benefits
To promote new investment, especially in the manufacturing industry, Ohio adopted a new tax law in 2005 which favours companies and taxpayers alike. The gross state product is expected to grow by 5.6 billion US$ as a result of this measure, which it is also hoped will create 78,500 new jobs. This is Ohio’s signal that it is open for business. The organisations that especially benefit from the tax changes are those shipping products outside Ohio’s borders as well as companies making large investments in machinery, equipment or inventory. Reduced rates will be charged for personal income tax and VAT, and corporate franchise tax is due to be abolished. Ohio’s status as a foreign trade zone enhances the attractiveness of the location for international commerce as it profits from low import duties and taxes.
For the manufacturing industry, good links to markets are important – not only by road and rail but also by air and waterways. Efficient transhipment terminals and interstate highways leading to all parts of the USA facilitate and speed up freight traffic. Bulk and heavy goods can sometimes be transported most economically by ship to the processing industries or sea ports.
An attractive place to work
In addition to the many business factors, the recreational value of a city also plays a role for those who work there. In the past few years, two new football and baseball stadiums have been built and the “National Underground Railroad Freedom Center” museum opened together with the renowned Rosenthal Museum of Contemporary Arts designed by internationally famous architect Zaha Hadid. These projects were completed as part of a ten billion dollar restructuring programme to improve the banks of the Ohio River. In the near future, shopping, business and residential projects will emerge between the two sports facilities, adding a new focus of attraction. In downtown Cincinnati, new restaurants and bars, recreational and shopping facilities are currently under construction. The presence of global headquarters for Procter & Gamble, the Kroger Company and Federated Department Stores have turned Cincinnati into the world capital of consumer products. Marketing and design know-how and an assortment of related services have sprung up in the metropolis to meet the demands of these key players. Procter & Gamble has been domiciled here since it was founded almost 170 years ago. In the words of A.G. Lafley, the company’s CEO: “Cincinnati is a great city to live and work.”
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Cincinnati USA
Cincinnati – Chamber of commerce
City of Cincinnati
University of Cincinnati
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