Quarterly Economic Review JUNE 2019

Quarterly Economic Indicators 18 Counties of Northeast Ohio

Food manufacturing is a thriving cluster in Northeast Ohio, with more than 370 food processing and manufacturing establishments – including big names like H.J. Heinz, Nestlé USA, J.M. Smucker and Pillsbury, as well as many smaller firms – supplying food and beverage products to consumers worldwide. This report will explore employment growth, gross regional product (GRP) and productivity over the past decade, and share employment projections for the next five years.

ACROSS NORTHEAST OHIO:

23,000+ Workers in 2018

370+ Food Processing &

Manufacturing Operations

in 2018

Food and Beverage Manufacturing:

GRP GREW 85% from 2007–2018

$3.02 Billion Industry in 2018

Access Drives Success in the Food Industry

A trained talent pool of more than 23,000 food manufacturing

and production workers, easy access to raw materials and suppliers,

and an abundant supply of fresh water from Lake Erie make

Northeast Ohio an idea location for food processing businesses.

The region gains additional strength from resources

across Ohio, which is home to the complete food

value chain, including industry-leading research

and development, essential inputs, processing

and manufacturing, warehousing,

distribution and transportation.

With partners throughout the state,

Northeast Ohio is able to bring food

and beverage products to market

efficiently and cost-effectively.

These factors continue to attract food

and beverage manufacturers to this

region. Even as the industry has faced

challenging times nationwide,

Northeast Ohio has been able to

add net new jobs consistently.

Source: JobsOhio

Ohio is One of the Top Agribusiness States in the Nation

Contributes $124 Billion to the State’s Economy

Nearly $16.4 Billion in GSP

is from Food Manufacturing

#1 State

in Swiss Cheese

Production

#2 State

in Egg Production

#3 State

for Tomato

Processing

14 Million Acres

of Farmland

NEO Outpaces U.S. in Employment Growth

From 2007 to 2018, food and

beverage manufacturing

employment grew 29%,

adding more than 5,000 jobs

to reach 23,300. For this same

time period, U.S. food and

beverage manufacturing

employment grew 12%.

Further, employment is

projected to grow another 6%

from 2018 to 2023, compared

with U.S. growth of 5%.Source: Economic Modeling Specialists International (EMSI)

Dairy and Beverage Sectors Among Those Poised for Employment Growth

Several sectors of the food industry are projected to increase their employment from 2018 to 2023. Notably, the beverage sector is projected to grow by 16%, with employment nearing 3,000 – understandable given the momentum of companies such as Fat Head’s Brewery in the region. In addition, the dairy product sector is projected to grow 12%, with companies such as Daisy Brand growing in the region.

Source: EMSI

2018 2023

01,000

2,0003,000

4,0005,000

Food & Beverage Manufacturing Subsector Employment: 2018 & 2023

Animal Food

Grain & Oilseed Milling

Sugar & Confectionery Product

Dairy Product

Beverage

Fruit & Vegetable Preserving & Specialty

Food

Bakeries & Tortilla

Other Food

Animal Processing

+6%

+5%

+4%

+3%

+2%

+1%

1.00

- 1%

20182019

20202021

20232022

Food & Beverage Manufacturing Employment: Projected 2018 - 2023

NEO U.S. 1.0 = 2018 average

+30%

+25%

+20%

+15%

+10%

+5%

1.0

-5%

-10%

20072008

20092010

20112013

20142015

20162017

20182012

Food & Beverage Manufacturing Employment: 2007 - 2018

NEO U.S. 1.0 = 2007 average

NEO Food and Beverage Manufacturing GRP Grows 85%

Food and beverage manufacturing maintained a strong upward trajectory in Northeast Ohio from 2007 to 2018, as GRP grew 85% – to $3.02 billion. The U.S. as a whole saw GDP increase 46% for this same time period.

Source: EMSI

Technology Powers Productivity

The impact of technological advances, including the internet of things (IoT), which is a major economic driver in Northeast Ohio, will continue to help increase manufacturing productivity across industries, including in the food and beverage industry. Technology is already playing a role in productivity’s upward momentum, as indicated by Northeast Ohio’s 34% increase from 2007 to 2018. This compares to a nationwide increase of only 2% for this same time period.

Source: EMSI

+90%

NEO

NEO

U.S.

U.S.

+80%

+70%

+60%

+50%

+50%

+40%

+40%

+30%

+30%

+20%

+20%

+10%

+10%

1.00

1.00

-10%

-10%

2007

2007

2008

2008

2009

2009

2010

2010

2011

2011

2013

2013

2014

2014

2015

2015

2016

2016

2017

2017

2018

2018

2012

2012

% Change in Food & Beverage Manufacturing Gross Product: 2007 - 2018

Food & Beverage Manufacturing Productivity: 2007 - 2018

1.0 = 2007 average

1.0 = 2007 average

Over the past five years, Northeast Ohio has seen 31 food-related company expansions. Below is a sampling of development projects across the region in this industry.

DEVELOPMENT ACTIVITY

NORTHEAST OHIO FOOD-RELATED WINS 2014 THROUGH Q1 2019

GREAT LAKES CHEESE TO BUILD NEW CORPORATE HEADQUARTERS IN NORTHEAST OHIO

Earlier this year, Great Lakes Cheese, an award-winning, premier manufacturer and packer of natural and processed bulk, shredded and sliced cheeses, announced plans to expand existing manufacturing operations and build a new corporate headquarters in Geauga County. The plant expansion will include an additional 290,000 square feet of manufacturing and warehouse space. The company currently employs more than 650 employees in Ohio and expects to hire an additional 400 over the coming years as a direct result of these projects.

SHEARER’S CONTINUES TO EXPAND IN NORTHEAST OHIO

Shearer’s, an award-winning snack food manufacturer and distributor, has called Northeast Ohio home since the family launched their business in 1979. They continue to grow at their Massillon headquarters, most recently committing to a project that includes the construction of a new 750,000-square-foot distribution center. The company now employs more than 1,000 people in the region.

INTERNATIONAL PRODUCE COMPANY SELECTS NORTHEAST OHIO FOR U.S. OPERATIONS

Mucci Farms, an international produce company specializing in hydroponic vegetable production and sales, invested more than $65 million and created 200 new jobs in Huron after deciding it would be the ideal site for their expansion into the U.S. market. Looking to build 30 acres of year-round greenhouses, the company acquired 150 acres of land to implement the first phase of this project.

NESTLÉ GROWS – AGAIN – IN SOLON

With a portfolio that covers almost every food and beverage category for all stages of life, Nestlé continues to consolidate and transform its U.S. operations. The company has undertaken a number of expansions over the past few years, including the move of its technical and production organization to its Solon campus. Most recently, with the objective of consolidating 115 supply chain customer service positions outside Ohio, company decision-makers considered several of its existing facilities. They sought to identify a single location that could offer an optimized cost structure and improved operational efficiency while maintaining the high level of talent and expertise. They chose to continue growing Solon as a Center of Excellence, adding the 115 employees to Nestlé’s Northeast Ohio headquarters.

1 Hillcrest Egg & Cheese Co. Cleveland

2 Shearer’s Foods, LLC Massillon

3 Sirna & Sons, Inc. Ravenna

4 Saucy Brew Works LLC Cleveland

5 Superior Dairy, Inc. Canton

6 The Sanson Company Cleveland

7 Fat Head’s Brewing, L.P. Middleburg Heights

8 Daisy Brand, LLC Wooster

9 Nestle USA, Inc. Solon

10 Tenk Center, LLC Cleveland

11 Gorbett Enterprises of Solon, Inc. Solon

12 New Horizons Baking Company, Inc. Norwalk

13 MIMI Farms Inc Huron

14 Anderson and DuBose, Inc. Warren

15 Feed Fat Company, LLC Ashland

16 New Horizons Baking Company, Inc. Norwalk

17 Nestle USA, Inc. Solon

18 Aldi Inc. (Ohio) Hinckley

19 Kurtz Bros., Inc. Garfield Heights

20 Great Lakes Cheese Co., Inc. Hiram

21 Shearer’s Foods, LLC Massillon

22 Boom Nutrition, Inc. Middleburg Heights

23 The J M Smucker Company Orrville

24 The Great Lakes Brewing Co Cleveland

25 Star of the West Milling Co Willard

26 Aloterra Packaging LLC Andover

27 Fresh Mark, Inc. Canton

28 Main Street Gourmet, LLC Akron

29 Johnvince Foods Lordstown

30 Big Heart Pet Brands Orrville

31 Gorbett Enterprises of Solon, Inc. Solon

StarkWayne

Huron

Lorain Trumbull

Ashtabula

Portage

Erie

Medina

Richland

Summit

Geauga

Ashland

Lake

Tuscarawas

Cuyahoga

Columbiana

Mahoning

15

25

16

20

410 6 1

24

7

22

91931

8

2 527

32818 14

29

36

13

26

Access the Right Site for your Food and Beverage Manufacturing Company

Address: 2299 Colorado Ave., Lorain, Lorain County

Size: 100,000 sf - 411,880 sf or BTS

Address: 500 Enterprise Drive, Newcomerstown, Tuscarawas County

Size: 103,838 sf (plus land to expand)

Clear Height: 48’ max or BTS

For Lease: Depends on the BTS options

Clear Height: 24’ – 29’

For Sale: $5,100,000

Type: Build-To-Suit. Food Warehousing, Distribution, Production, Cold Storage, Freezer Space.

Incentives: Opportunity Zone

Type: Food Grade Warehousing and Distribution Center, Cold Storage with Multi-temperature and Humidity-controlled Warehouse

Riverbend Commerce Park - Refrigerated Processing & Distribution

Former Fresh Produce Warehouse/Distribution Center

Finding the right site is vital to your operation’s success. Northeast Ohio boasts a variety of sites ideal for food/beverage manufacturing or processing. And because many of these sites are former production facilities, you could have your business up and running quickly.

Here is a sampling of available sites. To view more options, or for more information, visit rightsites.teamneo.org

Rethinking Economic Vibrancy

As discussed in previous economic review reports, viewing manufacturing solely through the lens of traditional economic measures like employment and output is no longer enough. To fully appreciate what characterizes a thriving manufacturing sector, we must also consider the growth of subsectors within manufacturing — food and beverage, for example — that, in addition to being highly productive and growing, continue to add net new jobs t o the overall economy.

Additionally, we must take into account the support system backing Northeast Ohio’s competitive advantages. Our region possesses tremendous geographic, talent and supply-chain advantages. From our agricultural assets and robust transportation and logistics networks to skilled-labor access, a strong consumer base and enviable market proximity, it is easy to see why food and beverage production has emerged as one of the most powerful subsectors of manufacturing — one that is projected to continue growing into the future.

Address: 340 Victoria, Austintown, Mahoning County

Size: 67,000 sf

Address: 6575 Davis Industrial Parkway, Solon, Cuyahoga County

Clear Height: 32'

For Sale: $3,800,000

For Lease: $2.25/sf NNN

Size: 54,000 sf (currently under expansion to 100,000 sf – to be completed late 2019)

Clear Height: 24'

Type: Food Grade Warehousing and Distribution Facility with Cold Storage and Freezer Space

For Lease: $5.50/sf

Type: Food Grade Warehousing, Cold Storage and Freezer Space

Austintown Acme

Solon-6575 Davis Industrial Parkway

In an effort to showcase our most competitive properties, we are launching NEO Right Sites. These properties have been thoroughly vetted to mitigate risk and increase your speed to market.

US

OHIO

NEO

TOTAL EMPLOYMENT GROWS YEAR-OVER-YEAR

Total employment averaged 1.950 million in Q3 2018, an increase of more than 12,600 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.

ALL SECTORS SEE YEAR-OVER-YEAR GROWTH

Manufacturing employment was up 5,600 jobs year-over-year in Q3 2018. The service sector added 4,700 workers, and construction grew by nearly 2,200 jobs.

Source: Quarterly Census of Employment and Wages (QCEW). This is the most currentreliable 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

2018

Q2

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Q3

2015

2016

2014

2007

2008

2009

2010

2011

2012

2013

-40%

-30%

-20%

-10%

1.00

+10%

+20%

MANUFACTURING CONSTRUCTION SERVICES

CHANGE IN EMPLOYMENT BY SECTOR THROUGH JUNE 2018

NORTHEAST OHIO UNEMPLOYMENT RATES THROUGH JUNE 2018

2008

2007

2009

2010

2011

2012

2013

2014

2015

2017

2016

1.00 = 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

MANUFACTURING

SERVICES

CONSTRUCTION

Q2

16Q

3 16

Q4

16Q

1 17

Q3

17Q

2 17

Q4

17Q

1 18

Q2

18Q

3 18

Q1

09

NEO OHIO US

12%

11%

10%

9%

8%

6%

4%

3%

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

Q4

17Q

1 18

Q2

18Q

3 18

Q3

17

NEO YEAR-OVER-YEAR UNEMPLOYMENT RATE SEES DECREASE

The unemployment rate for Northeast Ohio averaged 4.9% in Q3 2018, down from 5.6% for the same quarter in 2017. The state of Ohio averaged 4.4% while the U.S. averaged 3.9%.

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

NORTHEAST OHIO TOTAL EMPLOYMENT (NOT SEASONALLY ADJUSTED)

2017

2018

OHIO UTICA WELL ACTIVITY (NONCUMULATIVE)

GRP PROJECTED TO REACH $238.5 BILLION

Moody’s Economy.com is projecting Northeast Ohio’s GRP to grow 2.3% in 2018 to reach $238.5 billion. Projections are continuously updated and subject to change for up to 18 months.

Source: Moody’s Economy.com

INDUSTRIAL AND OFFICE VACANCY AT LOWEST RATES SINCE Q1 2008

In Q4 2018, the vacancy rate for industrial space is at 3.5%, while the vacancy rate for office space is at 6.9% – both at their lowest rates since Team NEO began tracking in Q1 2008.

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, 2,883 total permits have been issued, of which 1,954 have been drilled. Of those drilled, 1,037 are currently in production in the state.

Source: Ohio Department of Natural Resources

OFFICE INDUSTRIAL

9%

10%

8%

7%

6%

VAC

AN

CY

RA

TE

5%

4%

3%

Q1

08

Q2

16Q

3 16

Q4

16Q

1 17

Q2

17Q

3 17

Q4

17Q

1 18

Q2

18

Q2

08Q

3 08

Q4

08Q

1 09

Q2

09Q

3 09

Q4

09Q

1 10

Q2

10Q

3 10

Q4

10Q

1 11

Q2

11Q

3 11

Q4

11Q

1 12

Q2

12Q

3 12

Q4

12Q

1 13

Q2

13Q

3 13

Q4

13

Q3

14

Q1

14

Q4

14Q

1 15

Q2

15Q

3 15

Q4

15Q

1 16

Q2

14

NEO

REA

L G

RP

IN B

ILLI

ON

S

AVERAGE ANNUAL GROWTH = 1%REAL GRP

$150

$170

$190

$210

$230

$250

$130

1994

1995

1996

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

201

8

2005

-1.5%

3.0%

1.4% 0.7% 0.4%2.8% 0.2% 1.3%

2008

3.3%

2.3%

0

DRILLEDPERMITTED PRODUCING WELLS

250 1200

0

200

150

100

50

PER

MIT

TED

/DR

ILLE

D W

ELLS

(N

ON

-CU

MU

LATI

VE)

PRO

DU

CIN

G W

ELLS

(C

UM

ULA

TIV

E)

800

1000

600

400

200

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

Q41

7

Q1

18

NORTHEAST OHIO INDUSTRIAL AND OFFICE VACANCY

NEO REAL GROSS REGIONAL PRODUCT (GRP) IN BILLIONS

Q2

18

Q3

18

Q4

18

Q1

19

3.0%

-5.3%

3.3%

Q3

18Q

4 18

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 INVESTORS

DATA SOURCES ECONOMIC DEVELOPMENT PARTNERS ACROSS 18 COUNTIES OF NORTHEAST OHIO

Ashland Area Economic Development

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 Economic Development 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 a business 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.

Team NEO is part of the Northeast Ohio Economic Development network, providing business decision-makers with access to customized solutions that accelerate growth, foster innovation and mitigate risk through a connected and collaborative ecosystem.

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