Ohio’s 3rd Frontier Program (part 1) – products

Bond issue up for vote again

In recent days, the Ohio General Assembly voted overwhelmingly to place on the May 4 ballot a $700-million bond issue to extend the life of Ohio’s signature economic development effort — the Ohio Third Frontier — through 2016. Proponents, who include numerous business groups, say approval is critical to continued creation of high-tech jobs.

I support the issue and will explore why in this series of posts on the initiative.

What is it?

From the OBDC: “While some have disputed how much money should be spent to continue the initiative, few have argued about the success of the Ohio Third Frontier and two other linchpins of the state’s economic development efforts: the Ohio Capital Fund, which acts as a “fund of funds” to support tech-related venture capital deals, and the Ohio Technology Investment Tax Credit, which further incents investors to put money into Ohio tech companies.

The Ohio Third Frontier is Ohio’s largest-ever commitment to high-tech job creation and economic progress. Established in 2002, the 10-year, $1.6 billion initiative fosters the creation of high-paying jobs through innovation, research and development and the commercialization of next-generation products designed to improve the lives of Ohioans and people around the world.

The Ohio Third Frontier promotes economic growth by expanding the availability of investment capital needed to form new companies, supporting product innovation in established companies, facilitating commercialization of new products, funding collaborative projects between private companies and Ohio colleges and universities and nurturing Ohio’s increasingly experienced pool of entrepreneurial management.”

It’s about more about products than jobs

Dr. Ned Hill, economist, author and Dean of the Maxine Goodman Levin College of Urban Affairs at Cleveland State University, says that it’s products that should be a focus of economic development efforts.  Jobs are a byproduct of products.  He maintains that “the region’s economic health depends on corporate strategies and the portfolio age of the region’s products.”  There are five types of companies:

  1. “Product innovators – Grow the top line of their income statement without blowing up their cost structure.  Can manage continuous product innovation and own intellectual property or have proprietary knowledge.
  2. Process innovators and global competitors – Manage the middle of their cash statements and ride their product catalogs.  Have deployed IT to tighten supply and customer chains.
  3. Lifestyle firms – Goal is not growth but owner’s control and earning target income.  Are not profit maximizers.  Frequently have no intellectual property or proprietary advantage.
  4. One trick ponies – Commodity business dependent on a single business or production relationship.
  5. Dead and dying companies – Job shops in auction markets.”

I would argue the Third Frontier is all about creating more product innovating companies in Ohio.  It’s not just about the number of jobs; it’s about the quality of the technology and products that create those jobs – and how those products play into the long-term security or future of those jobs and that company.

>> Ohio Third Frontier website

>> Ned Hill’s presentations on ED (products) – to OEDA and to Greater Springfield Chamber

>> Cincinnati Enquirer article (pros and cons) – March 29, 2010

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