Development Visions: Treece — Attitude adjustment needed for Toledo to capitalize on assetsWritten by Dock David Treece | | email@example.com
Given this week’s edition focuses on the business and economic outlook for the Toledo region over this coming year, I thought I’d weigh in with my objective opinion of that state in which we find Toledo presently, and what I see coming in the area’s future, both short-term and further down the road.
First, let me say that in the long term we are extremely bullish for the Toledo region. Many of the sectors that originally drove the development of this region are now poised for major resurgence and renewed growth. The automotive sector, which has suffered over recent years, seems to be shifting back into high gear, and Toledo should benefit from increased production.
Even more significant have been the recent discoveries of oil and natural gas deposits, which have caused several economic booms in this part of the Midwest during the past century. Given all the newly discovered reserves of natural gas, the price of that commodity should remain stable for the next 50 years or more, providing a cheap source of energy for years to come. But it takes the right attitude — good energy policy — for that to come to fruition.
The question of attitude is why I am, unfortunately, fairly negative on this region in the short term. The state of Toledo today is the result of 30-plus years of long-term trends that have left this region in sad shape.
Today we find ourselves with a serious lack of private-sector leadership. The people with answers to problems facing the area aren’t in positions to effect necessary change, while the people who are in those spaces fail to think far enough outside the box.
Business within this region is no different than business in any given sector — it’s competitive. Just as businesses within a sector compete against each other, regions also have to compete for business. Unfortunately, over the years leading up to today, other areas of Ohio have used and are using their more business-friendly focus to their advantage — to take business away from Toledo.
For example, Honda recently announced it is opening a new, state-of-the-art facility in Ohio. This is no surprise; I knew it was coming and said so months ago. I also said Toledo should be competing for that business. The simple fact is we aren’t competing. Instead of opening its new facility near Toledo, Honda’s plant will be near its current operations in Marysville and East Liberty.
The bottom line is that sending envoys to China to develop relationships doesn’t make us more competitive on paper. This region has all the resources it needs to be a great business center. A better transportation hub is difficult to find. Not only do roughly two-thirds of the American population and half the Canadian population live within 600 miles of the I-80/I-75 intersection, Toledo is also home to arguably the best freshwater port in North America.
Aside from Chicago, Toledo is perhaps the largest railway hub in the Midwest. We also have pipelines leading to every major junction in North America. An example: The fastest route for shipping liquefied natural gas from Europe to the center of the United States (not that they need to, now that we found our own) would be via cargo ship through the St. Lawrence Seaway, down through the Great Lakes, into the Port of Toledo, then via pipeline to Colorado.
The problem is not that Toledo isn’t strategically located, or that it lacks resources, but that it doesn’t have the friendly business climate necessary to take advantage of our many assets.
In the same way that Toledo falls short of other areas in Ohio, Ohio itself is not the best state for business — far from it. What that means is that companies that don’t have to stay here won’t. A number of businesses in the past decade have already been lost to more friendly — and less unionized — states like Tennessee, Texas, and the Carolinas.
Getting back to my long-term optimism, the good news is that all the bad news that has plagued this region is encouraging change. Necessity breeds innovation. People and businesses are becoming increasingly aware of the problems facing Ohio, and the Toledo region particularly, and are demanding more of this region’s leadership.
The good news — and it is good news — is that this region doesn’t lack assets. It has plenty of competitive advantages. What it needs is simply a change of attitude that will allow it to reap the benefits. The same way a change of attitude toward energy policy in Washington would take the price of oil down to $60 to $70 per barrel, the right policies in the Toledo region could make this area one of the best places to do business, not just in Ohio, but in the entire Midwest.
Dock David Treece is a discretionary money manager with Treece Investment Advisory Corp (www.TreeceInvestments.com) and is licensed with FINRA through Treece Financial Services Corp. He has appeared on numerous television radio programs including CNBC’s The Kudlow Report, and also writes for several financial news websites including MarketWatch (www.MarketWatch.com) and Green Faucet (www.GreenFaucet.com), where he previously served as an editor. The above information is the express opinion of Dock David Treece and should not be construed as investment advice or used without outside verification.