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PREPARED FOR COLUMBUS 2020AUGUST 30, 2018

Report 2:Competitive Forces Analysis - DRAFT

avalanche

Regional Economic Development Assessment

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Table of Contents

Competitive Forces Analysis

02 Introduction

05 Executive Summary

10 SWOT Analysis

17 Global Competitive Forces & Regional Impacts

43 Appendix: Regional Industry Cluster Analysis

Introduction 01

Competitive Forces Analysis 3

About the Project

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In May 2018, Columbus 2020 and its partners initiated a Regional Economic Development Assessment and Analysis to ensure that the region continues long intothe future to build upon the many successes achieved during the past decade. Avalanche Consulting, a national economic development consultancy, was chosento craft the assessment. The Columbus 2020 Regional Economic Development Assessment and Analysis will serve as a guide for future policies, services, andinvestments that promote sustained economic dynamism throughout the region in the years ahead. Once complete, the Assessment and Analysis will consist offour reports:

Report 1: Economic Assessment & Community Benchmarking

This first report included an in-depth exploration of the region’s current economic and demographic dynamics. The assessment included benchmarking withnearly three dozen US peer regions. The Economic Assessment & Community Benchmarking report also articulated emerging storylines about the Columbusregion’s current and past performance that have been further refined in subsequent reports.

Report 2: Competitive Forces Analysis

The second report involved an analysis of competitive forces posing threats and opportunities to the region’s economy, with an emphasis on how emergingtrends may potentially impact the Columbus region’s existing major employers as well as small and medium-sized businesses. The Competitive Forces Analysisprovided additional nuance to emerging themes regarding the Columbus region’s competitive position.

Report 3: The Ohio State University OSU Economic Development Asset Analysis

The Ohio State University OSU Assets Evaluation highlights existing assets and competencies at The Ohio State University that can potentially fuel regionaleconomic activity within Columbus. The report also compares degree production and research & development expenditures at The Ohio State University withfour selected benchmark universities.

Report 4: Competitive Positioning Recommendations

The Columbus 2020 Regional Economic Development Assessment and Analysis will conclude with a final summary of storylines based on the research collectedand examined during the previous three reports. The Competitive Positioning Recommendations will also include a statement of aspiration, strategic objectivesfor future economic development efforts within the Columbus region, and suggestions for a data dashboard to measure future progress.


About This Report

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This report, the second of four that will comprise the Columbus 2020 Regional EconomicDevelopment Assessment and Analysis, provides a comprehensive evaluation of how current andemerging competitive forces may shape the economy of the Columbus region in the comingdecades. The report has three sections and a data appendix:

Executive Summary – Summarizes this report’s findings and further refines storylines thatemerged from the Economic Assessment & Community Benchmarking report

SWOT Analysis – Examines the potential impact of global forces on the largest and mostconcentrated industries within the Columbus region—Automotive & Transportation, E-Commerce& Logistics, Finance & Insurance, Health Care, Manufacturing, and Retail

Global Competitive Forces & Regional Impacts – Explores the future implications of globaltechnological, economic, and demographic forces on the region’s economy, illustrating the needfor both established companies and upstarts to be agile

COLUMBUS, OHIO REGIONAL DEFINITIONS

Knox

Licking

MorrowUnion

Logan

Marion

Delaware

PickawayFairfield

Franklin

Madison

HockingPerry

Columbus 2020 11-County Region

Columbus Metropolitan Area

Appendix: Regional Industry Cluster Analysis – Compares the employment size, growth, and concentration of the Columbus region’s major industriesagainst 34 benchmark regions, and includes a brief examination of the region’s largest employers, its fastest-growing private companies, and firms thathave received significant venture capital in recent years

Executive Summary

The following pages include key takeaways from the SWOT assessment, global competitive forces evaluation, and regional industry cluster analysis.

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In the decade ahead, our world will be transformed by powerful economic, demographic, and technological forces. These developments will have a profoundimpact on the leading industries in the Columbus region, including Automotive & Transportation, E-Commerce & Logistics, Finance & Insurance, Health Care,Manufacturing and Retail. These industries encompass nearly all of the region’s largest companies and most of its fastest-growing private and venture-backed firms. They have also propelled a substantial proportion of regional job growth in recent years. The Columbus region’s economic momentum dependson how well hometown operations in these industries successfully navigate rapidly advancing technological, economic, and demographic realities.

! Automation could threaten tens of thousands of jobs in several of the Columbus region’s leading industries. Analysts anticipate that the mostimperiled occupations will include those in Automotive & Transportation and Manufacturing (Assemblers & Fabricators and Other Production Occupations),E-Commerce & Logistics (Motor Vehicle Operators and Material Moving Workers), and Finance & Insurance (Financial Clerks and Financial Specialists).These six occupations alone employ 87,500 workers in the Columbus region.

! The Mobility revolution will transform the Automotive & Transportation, Manufacturing, Finance & Insurance, and E-Commerce & Logistics industries.Electric and autonomous vehicles will disrupt automotive supply chains and major carmakers alike. Autonomous vehicles may eliminate a significantproportion of logistics jobs, one of the Columbus region’s fastest-growing industries. Despite numerous automotive research facilities in the region, as wellas the Smart Columbus initiative, the Columbus region’s Automotive industry remains overwhelmingly dependent on legacy operations.

! Widespread adoption of mobility-as-a-Service (MaaS) also threatens the Finance & Insurance industry, which is heavily concentrated in theColumbus region. While the emergence of new opportunities in areas such as cybersecurity and product liability may help companies diversify theirproduct offerings, the market for those less traditional insurance policies may not be sufficiently large enough to offset declines in areas such as personalautomobile insurance.

Executive Summary

GLOBAL FORCES

In the coming decades, regional prosperity will be largely determined by howwell communities respond to technological innovations in areas such asautomation and the mobility revolution, economic trends such as the growingclout of Asia and the rise of e-commerce, and demographic dynamics such asgrowing diversity and the aging of the country’s population.

Regional Economy DEMOGRAPHIC

TECHNOLOGICAL

ECONOMIC

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Executive Summary

E-Commerce & Logistics

Finance & Insurance

Retail

Automotive & Transportation

Manufacturing

Health Care

! As everything from cars to smart city infrastructure becomes part of the internet of things ecosystem, the need to parse and secure a sea of digital datawill only increase. Without regional core competencies in areas such as data analytics and cybersecurity, Columbus-based companies risk losing thedigital arms race to collect, analyze, and act upon as much information as possible. Currently, the Columbus region’s workforce may lack the skillsnecessary to thrive in a world dominated by data.

! The Columbus region has achieved many of its most pronounced startup successes the area of Health Care. In recent years, half of the region’s ten largestrecipients of venture capital funding have been involved in Health Care, including two Health IT firms. Collectively, these five firms have secured morethan $175 million in venture capital funding since 2013.

! Continued growth of online retail activity may create substantial opportunities in E-Commerce & Logistics. Blessed with advantages of both geographyand infrastructure, the Columbus region’s E-Commerce & Logistics industry has performed strongly in recent years as e-commerce sales continue to rise. Atthe same time, many of the leading logistics occupations are among those most imperiled by automation. Increased trade activity, especially tofast- growing East Asia & Pacific markets, could help mitigate this risk.

! The growth of e-commerce may ultimately reduce the region’s status as a leading retail headquarters hub. Many traditional retailers have experiencedsignificant difficulty in adapting to increased online competition and evolving consumer tastes. The consequences for the Columbus region could beprofound. The region’s Professional Services/Corporate Operations cluster, which includes corporate headquarter operations, is more concentrated in theColumbus region than in any of the other 35 metropolitan areas in the US with one to three million residents.

REGIONAL INDUSTRY COMPOSITION

In the past five years, Automotive & Transportation, E-Commerce & Logistics, Finance& Insurance, Health Care, Manufacturing and Retail industries have directlyaccounted for approximately 40% of all job growth within the Columbus region.These industries also pay higher wages than the regional average and are crucial inthe efforts to increase the region’s per capita personal income.

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Executive Summary

POTENTIAL FAULT LINES

The ability of companies in the Columbus region to successfullyrespond to emerging global forces will be bolstered by moreextensive innovation infrastructure, greater integration with theglobal economy, and access to the world’s top talent.

TALENT

GLOBAL INTEGRATIONINNOVATION INFRASTRUCTURE

Despite its numerous competitive advantages, the Columbus region will face difficulty navigating fast approaching economic, demographic, and technologicaldisruptors without developing more robust innovation infrastructure, becoming more globally integrated, and further expanding its capacity to attracttalent.

The Columbus region’s employment is disproportionately concentrated among its largest employers. Companies with 1,000 or more employees accountfor more than 55% of all private sector workers, one of the highest rates in the country among major metropolitan areas. While a strong presence of largecorporations greatly benefits the Columbus region, regions with vibrant entrepreneurial scenes will be best equipped to translate emerging technological andeconomic changes into continued prosperity.

In many ways, the Columbus region has the ingredients needed to have a thriving entrepreneurial environment. The region has a wealth of talent, and eachyear local colleges and universities produce thousands of new graduates. Thanks to the presence of entities such as The Ohio State University, the BattelleMemorial Institute, and multinational firms with significant local operations, the region is also home to a remarkable level of R&D activity. Still, the region hasstruggled in recent years to convert brain power and basic research into commercially viable enterprises on a scale on par with its size.

Low levels of new business development are partially due to a lack of capital. Although venture funding in the Columbus region has nearly doubledsince 2012, it still trails levels enjoyed by many other regions, including both high-performing competitors as well as locales without especially notableinnovation economies. In other instances, the region lacks the built environments required of burgeoning firms. Despite The Ohio State University’s substantialphysical presence in Columbus, for example, the school currently lacks an innovation district.

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Executive Summary

THE REGIONAL RESPONSE

The collective power of the region’s major employers, combined with deep reservoirsof human capital and an extensive research capacity, provides the Columbus regionwith significant advantages in an increasingly competitive global environment.Realizing the full potential of the region’s economy will require continued commitmentto a shared regional vision and collaboration among leaders.

While igniting the Columbus region’s latent capacity for innovation will require an inward focus, the region should also expand its global connectivity.Although Columbus boasts hundreds of foreign-owned companies, the region isn’t highly integrated with the global economy. The vast majority ofinternational firms with operations in the Columbus region—Japanese automotive companies—represent a single country operating in one industry. Exportsfrom the region are limited compared to similarly-sized metros, as is the proportion of employment supported by foreign-owned companies. From E-Commerce & Logistics to Retail, many of the Columbus region’s leading industries would benefit from stronger international ties.

A greater global presence will also contribute to the Columbus region’s ability to attract talent. During the past decade, the Columbus region hasaccomplished a feat few other Midwestern metros have achieved—strong population growth combined with high levels of educational attainment.This trend is both a reflection of economic success and one of its primary drivers. The influx of new residents, however, has been largely driven by residentsmoving into the region from other locations in Ohio. Future growth will require drawing more residents from beyond the state’s borders through a continuedemphasis on the region’s quality of life balanced with a level of affordability that is attractive to both residents and employers alike.

During much of the past decade, the strong spirit of public-private collaboration that characterizes the Columbus region has helped it stand apart from manypeers and competitors. Trust among regional leaders is complemented by a remarkable level of engagement among local CEOs. Ultimately, advancing theColumbus region’s economy in the years ahead will require continued investment in a shared vision singularly focused on helping local firms bothlarge and small prepare for the coming era of disruption.

REGIONAL LEADERSHIP

SWOT Assessment

Strengths, weaknesses, opportunities, and threats are presented for each of the Columbus region’s leading industries, through the lens of global forces and current preparedness for disruption.

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STRENGTHS

! Few major metropolitan areas have a more concentrated Automotive &Transportation industry than the Columbus region. With over 14,000workers, the Columbus region is home to 80% more Automotive &Transportation jobs than the US average.

! Over the past 35 years, Honda has invested billions of dollars inexpanding and renovating its Marysville plant, a facility that supportsan extensive network of suppliers in the region.

! Honda’s Marysville facility recently began production on battery packs,an increasingly important component of automobile production.

! Columbus is home to numerous manufacturing R&D facilities, whichprovide the region with a high-skill, high-wage workforce that isrelatively insulated from the forces of automation.

WEAKNESSES

! The Automotive & Transportation industry in the Columbus region islargely dependent on the health of a single company—Honda.

! Honda has been conservative in its embrace of self-driving cars. Thoughthe company recently announced a partnership with Alphabet’s Waymodivision, the company has trailed many of its competitors in thedeployment of automated technologies.

! Developing new technologies may force a growing number ofautomakers to partner with one another on research and productionefforts, a trend that may favor leading automotive regions such asMichigan or tech hubs such as California. Honda, for example, recentlylaunched a joint venture with General Motors to produce advanced fuelcell stacks in the Detroit region.

THREATS

! The growing adoption of electric vehicles will significantly reduce thenumber of parts required to assemble an automobile, a move that maythreaten suppliers.

! After several years of record sales, the market for automobiles in the USis shrinking.

! While automation has helped domestic manufacturers remaincompetitive, it may also limit or even reduce the number of workersneeded to support the Automotive & Transportation industry.

! Autonomous vehicles will reduce personal automobile ownership as theMobility-as-a-Service business model becomes increasingly widespread.The transition will further declining automobile sales and reduce demandfor personal automobile insurance.

OPPORTUNITIES

! The Columbus Smart City Initiative, which involves $50 million in fundingfrom the US Department of Transportation, as well as hundreds ofmillions of dollars in additional investments from private partners, willplace the Columbus region at the forefront of the mobility revolution.

! The Transportation Research Center’s new SMART Center provides theColumbus region with a state-of-the-art testing ground for autonomousand connected vehicles.

! The Ohio State University's Center for Automotive Research managesmore than $8 million in sponsored research projects annually.

! The Route 33 Smart Mobility Corridor, a 35-mile stretch of highwayadjacent to The Ohio State University's Center for Automotive Research,the Transportation Research Center, and Honda, will soon facilitate thetesting of autonomous and connected vehicles.

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STRENGTHS

! The Columbus region’s geographic location is ideal for E-Commerce &Logistics operations. Nearly half the US population is located within a10-hour drive of Columbus.

! On a proportional basis, the Columbus region is already home to 60%more E-Commerce & Logistics jobs relative to the US average.

! Rickenbacker International Airport provides the Columbus region withone of the few airports in the US primarily dedicated to cargo traffic. In2017, international air cargo at Rickenbacker increased 65%.Scheduled air cargo service continues to grow, and the airport recentlyreceived approval for an Expediated Customs Clearance Facility.

! In addition to its Rickenbacker, E-Commerce & Logistics operations in theColumbus region benefit from extensive interstate connections, rail, andintermodal facilities.

WEAKNESSES

! Currently, exports in Columbus represent a relatively small share ofregional economic activity. The lack of greater export activity within theColumbus region may limit growth opportunities for the E-Commerce &Logistics industry.

! Historically, retailers in the Columbus region have supported asignificant amount of cargo activity at Rickenbacker. While the airporthas diversified its cargo base in recent years, future declines among theregion’s major retailers could negatively impact traffic volumes.

! In several counties in the Columbus region, including Fairfield, Knox, andPickaway, a relatively large proportion of E-Commerce & Logisticsworkers are age 55 and older—increasing the risk of future laborshortages.

THREATS

! The rise of e-commerce may threaten existing retailers headquarteredin the Columbus region. While e-commerce activity nationally remainsless than 10% of total retail sales, several legacy retailers in theColumbus region have struggled to capture consumer interest in recentyears.

! Amazon has recently made substantial investments in expanding itsinternal logistical capabilities. If the company continues to bring deliveryfunctions in-house, it could threaten companies such as UPS and FedExthat currently support the Columbus region’s E-Commerce and Logisticsindustry.

! An emerging trade war could dampen E-Commerce & Logistics growthin the years ahead as companies reexamine existing supply chains.

OPPORTUNITIES

! The Columbus region’s E-Commerce & Logistics industry includes bothmajor corporations and smaller firms. The region is home to significantoperations for UPS, FedEx, DHL, and Amazon. Four E-Commerce &Logistics companies based in Columbus were also included in Inc.magazine’s 2018 rankings of the 5000 fastest-growing privatecompanies.

! The Columbus Smart City Initiative will include a project that embedssensors in trucks traveling to and from Rickenbacker International Airportto help coordinate speeds and increase fuel efficiency.

! Despite a substantial increase in recent years, trade from the Columbusregion to Asia remains fairly modest. Continued growth should createadditional Asian market opportunities for local E-Commerce & Logisticsoperations.

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Finance & Insurance

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STRENGTHS

! The Columbus region is home to an expansive Finance & Insuranceindustry. Among all 35 US metro areas with populations between one tothree million, the Columbus region has the fourth greatest number ofFinance & Insurance workers.

! Eight companies - including Chase, Nationwide, Huntington, and Discover- collectively employ more than 45,000 workers in the Columbus region.

! The emergence of usage-based insurance contributed to the emergenceof the Columbus region’s most heavily funded startup to date—RootInsurance. Root Insurance’s innovative approach to pricing automobileinsurance based on driver behavior has helped the company securemore than $90 million in venture backing.

WEAKNESSES

! While large Finance & Insurance corporations such as Chase andNationwide possess the resources necessary to weather industrychanges, smaller market players based in the Columbus region may findit difficult to adapt to an evolving competitive landscape.

! The limited number of direct flights at John Glenn Columbus InternationalAirport may impede the ability of Finance & Insurance companies to dobusiness throughout the country and internationally.

! While Columbus boasts an impressive Finance & Insurance presence, theregion’s software and IT industry is more limited. In the years ahead,the lines that have traditionally separated these two sectors willincreasingly blur.

THREATS

! By automating processes that are currently handled by humans,blockchain technology is a long-term threat to some Finance & Insuranceoccupations. Thus far, JP Morgan Chase has retained its internalblockchain group in New York City.

! The rise of self-driving automobiles will disrupt the automobile insurancemarket. For companies such as Columbus-based Nationwide, whichgenerates nearly 25% in total sales from auto policies, diversifyingrevenue will be paramount in the years ahead.

! While the Finance & Insurance industry in Columbus is varied, the regionis home to a disproportionate number of occupations, such as insuranceunderwriters and claims adjusters, that are susceptible to futureadvances in automation.

OPPORTUNITIES

! In addition to Root Insurance, two other Finance & Insurance companiesare among the ten 10 most-funded startups in the Columbus region inrecent years—Beam Dental and 2Checkout. Beam Dental is adental insurance company while 2Checkout facilitates online payments.

! The relatively new data analytics program at Ohio State University willbolster the region’s Finance & Insurance talent and demonstrates thecapacity of local educational institutions to quickly respond to industryneed.

! Nationwide recently launched Nationwide Ventures, a $100 millionventure capital firm focusing on Finance & Insurance innovations. Boththe fintech and insurtech markets create significant opportunities forestablished market leaders to partner with nascent startups ondeveloping new products and services.

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Health Care

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STRENGTHS

! Bolstered by large employers such as Cardinal Health and NationwideChildren’s Hospital, Health Care is among the largest and fastestgrowing industries in the Columbus region. The industry employs morethan 90,000 workers throughout the region. Employment has increasednearly 20% during the past five years.

! The Ohio State University College of Medicine is home to severalnationally ranked Health Care programs, including researchand primary care. Ohio State University continues to expand Dublin’semerging innovation district, which includes the osteopathic medicinecollege. Columbus State Community College also offers multiple HealthSciences programs.

! In recent years, the region has produced several successful Health Carerelated startups, including Health IT firms.

WEAKNESSES

! The Columbus region lacks much of the infrastructure necessary tosupport large-scale innovation in the Health Care industry. Withoutadvanced wet lab facilities, for example, biotech firms will find itdifficult to grow in the Columbus region.

! Despite the size of the industry, just two Health Care companies in theColumbus region are among Inc. magazine’s list of the 5000 fastest-growing private companies.

! The Columbus region is not as well established a destination for medicaltreatment as its neighbor to the north, Cleveland.

THREATS

! Government expenditures in Health Care in Ohio may proveunsustainable. Medicaid spending within Ohio, for example, has risensharply in recent years and now consumes nearly 38% of the state’sbudget.

! As most Health Care employment in the Columbus region is locally-serving, any slowdown in the region’s population growth rate would tolimit future industry employment gains.

! Increased pressures to reduce costs may limit future Health Care industrygrowth and favor less traditional industry players. A push towardsgreater industry efficiency, for example, may favor regions withstrengths in technology deployment rather than traditional Health Careservices. The proportion of IT & Software employment in the Columbusregion trails many of its competitors.

OPPORTUNITIES

! Since 2013, three Health Care startups have been among the Columbusregion’s most heavily funded firms. Sollis Therapeutics has raised nearly$50 million to develop non-opioid treatments for pain. FloShield hasraised nearly $30 million for its visualization system to assist in surgery.

! A renewed focus on licensing and spinoff activity, as well aspartnerships with The Ohio State University and venture fund Rev1, haspaid dividends to Nationwide Children’s Hospital. Last year, a genetherapy treatment originally developed at Nationwide Children'sHospital, was purchased by Novartis for nearly $9 billion.

! The Battelle Memorial Institute is a research and developmentjuggernaut. In 2016, the organization posted $4.8 billion in revenues.Health Care is one of the few areas in which it has both government andcommercial offerings.

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Manufacturing

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STRENGTHS

! The Non-Automotive Manufacturing industry in the Columbus regionemploys more than 50,000 workers. Between 2012 and 2017,Manufacturing employment in the Columbus region increased 6%.

! The Columbus region’s Manufacturing industry is bolstered by strengthssuch as research and development and logistics. Many of the region’slargest Manufacturing firms, including Abbott Nutrition, West-WardPharmaceuticals, and Scotts Miracle-Grow, have research operations inColumbus.

! Columbus’s Manufacturing industry continues to benefit from the region’soverall affordability. Industrial lease rates remain competitive, andOhio’s tax environment for capital-intensive facilities is generallyfavorable.

WEAKNESSES

! Despite employment gains in recent years, the number of workers in theColumbus region’s Manufacturing industry has declined by more than25% since 2001. On a proportional basis, the Columbus region is hometo approximately 30% less Non-Automotive Manufacturing employmentrelative to the US average.

! Manufacturing has among the oldest workforces of any industry in theColumbus region. In several counties within the region, approximately30% of all individuals employed in Manufacturing are age 55 andolder.

! As a proportion of its overall economy, exports from the Columbusregion remain relatively modest.

THREATS

! The growing prospect of a trade war may make it more difficult fordomestic manufacturers to compete globally.

! Although the unionization rate for private workers in the Columbusregion is less than 5%, Ohio is often perceived as having a strong unionpresence. This is especially true given the recent wave of Midwesternstates, including Michigan, Indiana, and Wisconsin, that have adoptedright-to-work statutes.

! Although the Manufacturing industry is relatively automated comparedto most other industries, the trend will further accelerate in the yearsahead. Increased automation may limit future Manufacturingemployment gains and shift skills requirements for workers.

OPPORTUNITIES

! Growing international trade, especially with Asian countries, may createadditional market opportunities for Manufacturing firms based in theColumbus region. Already, several companies with a strong localpresence, including Honda and Worthington Industries, also haveoperations in China.

! The Ohio State University’s NanoSystems Laboratory, the Center forSuperconducting and Magnetic Materials, and the Ohio ManufacturingInstitute all provide opportunities for greater industry collaboration.

! Several other post-secondary institutions in the Columbus region,including Columbus State Community College, Central Ohio TechnicalCollege and Career & Technology Education Centers, feature programsfocused on advanced manufacturing and mechanical and electronicscareers.

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Retail

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STRENGTHS

! The Columbus region is home to numerous national retail headquarters,including Abercrombie & Fitch, Bath & Body Works, Big Lots, DSW,Express, The Limited, and Victoria’s Secret.

! The Columbus region’s role as a retail hub is supported by a deep poolof talent. The Columbus region boasts the third greatest concentration offashion designers in the US, for example. Among 35 examinedbenchmark regions, Columbus also has the highest concentration ofProfessional Services/Corporate Operations employment, a sector thatincludes various business support and corporate headquartersoperations.

! Columbus continues to be an attractive test market for retailers and fastfood outlets due to the region’s concentration of national retailers and abroadly representative population.

WEAKNESSES

! In recent years, many of the Columbus region’s major retailers haveexperienced flagging sales. While Bath & Body Works has posted salesgrowth in recent years, comparable sales at Victoria’s Secret, DSW andExpress have fallen for much of the past two years. Abercrombie & Fitchhas repeatedly posted sales declines during the five years. The Limitedonly recently emerged from bankruptcy.

! Relatively few new retail brands have emerged from the Columbusregion during the past two decades. Though apparel brands such asHomage and Eloquii are growing, both companies remain relativelysmall.

! Despite strong population and employment growth, retail employment inthe Columbus region remains nearly 10% below 2001 levels.

THREATS

! With less than 10% of all retail sales, e-commerce already threatensvirtually all traditional brick and mortar retails, including those based inthe Columbus region.

! Leading retailers in the Columbus region have struggled despite astrong economy and healthy levels of consumer spending. Any economicslowdown could wreck further havoc on these companies’ fortunes.

! Although the market for subscription-based retail has soared in recentyears, the trend has largely been ignored by the Columbus region’slargest retailers.

! The future of retail may lie at two extremes—companies such asAmazon that can provide a virtually limitless inventory of goods andfirms that can provide highly customized options such as made-to-orderclothing. Currently, neither is the focus of Columbus-based retailers.

OPPORTUNITIES

! Though e-commerce sales at Columbus-based retailers such as L Brands,Abercrombie & Fitch, and DSW are rising, there is room for additionalonline sales growth.

! Despite a challenging retail environment, several brands in the Columbusregion remain favorites among the Millennial generation, includingVictoria’s Secret, Express, and Bath & Body Works.

! As evidenced by the recent openings of fulfillments center for GwynnieBee and LeTote, both subscription services for women’s clothing, thepotential for expanding retail operations is enhanced by the region’sextensive logistics capabilities.

! The pending Expediated Customs Clearance Facility will further bolsterthe Columbus region’s ability to become a business-to-consumer logisticshub.

Global Competitive Forces and Regional Impacts

The following section includes a discussion of nine global forces and their potential impacts on the Columbus region.

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Global Competitive Forces

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Global technological, economic, and demographic forces willreshape communities across the US in the years ahead.Technological innovations such as autonomous vehicles andautomation will disrupt a host of industries, including Automotive& Transportation and Manufacturing. Evolving consumerpreferences could transform industries such as Retail and Finance& Insurance. An aging population increases the threat of laborshortages in industries such as Manufacturing and E-Commerce &Logistics while fueling significant growth in areas such asHealth Care.

The nine global forces examined in the following pages aredeeply intertwined. Rising health care costs, for example, arefueled by both demographic changes and technologicaladvances. The advent of self-driving cars will be enabled bytechnological innovation as well as the fact that an overwhelmingproportion of Americans live in urbanized metropolitan areas.

In some instances, these global forces create significant risks forexisting market leaders, including companies located in theColumbus region. In other areas, an evolving competitiveenvironment will generate new opportunities for both establishedcompanies and burgeoning startups. In the decades to come,regions that collaborate to help local companies anticipateand take advantage of change will emerge as the country’smost prosperous. Those that ignore impending disruptors willface serious challenges like the loss of businesses, outmigration oftalent, and declining quality of life.

Regional Impact

DEMOGRAPHIC

! Aging Population! Growing Diversity! New Urbanization

TECHNOLOGICAL

! Automation Advances! Mobility Revolution

! Datafication of Everything

ECONOMIC

! Rise of E-Commerce! Global Power Moves Eastward! The Decline of Dynamism

Competitive Forces Examined in this Report


Automated Future – National Trends

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Technologies that automate functions currently performed by humans are poised torevolutionize the labor market. Automation will eliminate and/or fundamentally transformjobs that are routine and follow formal operating rules. At the same time, it will fuel thecreation of new occupations. While the rise of automation will help maintain US economiccompetitiveness, it will also create significant disruptions in the labor market.

The transformation of US manufacturing operations during the past 30 years helps illustratethe implications of an automated future. Despite the loss of approximately five millionmanufacturing jobs since 1987, total domestic manufacturing output has increased by morethan 80% during the past three decades. While the elimination of manufacturing jobs hascreated economic challenges in many communities, other regions have managed to promotethriving manufacturing sectors in part by delivering a workforce capable of operatingincreasingly sophisticated machinery.

The disruptive impacts of automation extend beyond manufacturing. Researchers at OxfordUniversity, for example, estimate that nearly one-half of US employment is at high risk ofautomation over the next two decades. More immediately, a survey conducted byPricewaterhouseCoopers found that nearly 60% of CEOs believe robotics will allow themto eliminate jobs over the next five years. The most imperiled occupations include positionsin transportation, office administration, and financial services.

New technologies may also facilitate the creation of many new employment opportunities.Deloitte’s analysis of the UK job market over the past 15 years revealed that technologyeliminated 750,000 jobs but simultaneously created 3.5 million new positions.

In the years ahead, the most successful regions will be those that assist workers withupdating their skills to be productive in a more automated world.

Over the next two decades, automation may reduce employment in a host of occupations.

Occupation Groups at Greatest Risk of Reduced Demand Through 2030

Occupation Description Probability of Growth

Other Transportation Workers 0.333Motor Vehicle Operators 0.330Material Moving Workers 0.314Legal Support Workers 0.310Other Office and Admin. Support Workers 0.304Financial Specialists 0.289Communications Equipment Operators 0.289Rail Transportation Workers 0.286Vehicle and Mobile Equipment Mechanics 0.283Extraction Workers 0.277Textile, Apparel and Furnishings Workers 0.226Food Processing Workers 0.221Plant and System Operators 0.220Forest, Conservation and Logging Workers 0.194Metal Workers and Plastic Workers 0.173Woodworkers 0.166Financial Clerks 0.153Assemblers and Fabricators 0.140Printing Workers 0.133Other Production Occupations 0.113

Source: Avalanche Consulting / Pearson, Nesta & Oxford University


Automated Future – Regional Impacts

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! Researchers associated with Pearson, Nesta & Oxford University recently analyzed theUS occupations at greatest risk of automation. Approximately 19% of all occupationswere identified as likely to decline through 2030.

! The list of highly threatened occupations includes those in Automotive & Transportationand Manufacturing (Assemblers & Fabricators and Other Production Occupations), E-Commerce & Logistics (Motor Vehicle Operators and Material Moving Workers), andFinance & Insurance (Financial Clerks and Financial Specialists). These six occupationsalone employ 87,500 workers in the Columbus region. Collectively, more than 220,000individuals in the Columbus region are employed in the 20 most imperiledoccupations.

! Previous studies have estimated that the impacts of automation could be even moresevere. Researchers at Oxford University, for example, estimates that more than 80% ofProduction occupations that help support the region’s Automotive & Transportationand Manufacturing industries could be eliminated over the next two decades. Thefigure for E-Commerce and Logistics occupations such as Packers and Material Moversexceeds 90%.

! The move toward automation may be especially difficult for small and mediumbusinesses in the Columbus region. Honda, for example, recently spent $267 million onupgrading its Marysville plan, including the addition of 350 advanced welding robots.Without the capital to finance such expenditures, smaller firms may find it difficult tocompete. More than 80% of manufacturers in the Columbus region, for example, havefewer than 50 workers.

(Continued) Source: Avalanche Consulting / Pearson, Nesta & Oxford University / EMSI

Occupation Groups at Greatest Risk of Reduced Demand Through 2030

Occupation Description Regional Employment

Other Transportation Workers 2,498Motor Vehicle Operators 28,445Material Moving Workers 46,350Legal Support Workers 2,830Other Office and Admin. Support Workers 28,002Financial Specialists 24,106Communications Equipment Operators 630Rail Transportation Workers 85Vehicle and Mobile Equipment Mechanics 10,800Extraction Workers 256Textile, Apparel and Furnishings Workers 1,806Food Processing Workers 3,106Plant and System Operators 1,511Forest, Conservation and Logging Workers 71Metal Workers and Plastic Workers 11,218Woodworkers 777Financial Clerks 24,299Assemblers and Fabricators 15,026Printing Workers 2,433Other Production Occupations 17,065TOTAL 221,313

Hundreds of thousands of workers in the Columbus region are employed in occupations

at significant threat of disruption.


Automated Future – Regional Impacts, Continued

04

! Increased adoption of automated technologies in the Automotive & Transportation andManufacturing industries will require expanded workforce training opportunitiesthroughout the Columbus region. Past workforce studies of the region, however, havefound that a lack of vocational training options forces companies in the region to assumea leading role in providing training to their workers.

! While Columbus State Community College has a Modern Manufacturing Work Studyprogram that includes instruction on robotics systems, the school awards fewer than 100mechanical engineering degrees each year. A recent partnership between Robotics &Advanced Manufacturing Training Education Collaborative (RAMTEC) and robotsmanufacturer FANUC provides robotics certification at vocational schools throughoutCentral Ohio. While the collaboration may help boost robotics talent, it has only recentlyexpanded into the Columbus region.

! Citibank estimates that approximately 30% of banking jobs could be eliminated by2025 due to technological disruption while researchers at Oxford University project thattwo-thirds of the occupations that support the Columbus region’s Finance & Insuranceindustry could be eliminated in the next 10 to 20 years.

! Industry job losses would have a disproportionate impact on the Columbus region.Thanks to companies such as JPMorgan Chase, Nationwide, and Huntington Bancshares,the Finance & Insurance sector is 50% more concentrated within the Columbus regionrelative to the national average. The Finance & Insurance industry is also a major sourceof high-paying jobs, with average industry salaries in the Columbus region exceeding$82,000 annually.

FINANCE & INSURANCE AS % OF TOTAL EMPLOYMENT AMONG METROS WITH POPULATION 1-3 MILLION

Source: Avalanche Consulting / EMSI

With one of the country’s greatest concentrations of Finance & Insurance

employment, industry disruption could have a disproportionate impact on the Columbus region.

Columbus 5.0%


Mobility Revolution – National Trends

04

In the coming decades, the world will witness the greatest revolution in personal mobilitysince Henry Ford unleashed the era of mass car ownership more than 100 years ago. Thecontinued adoption of electric vehicles, combined with fast approaching reality of self-driving cars, promises to transform our economy and the way we live.

Although electric cars represent less than 2% of all automobile sales in the US, the marketcontinues to experience significant growth. Between 2015 and 2017, electric vehicle salesincreased by more than 70%. According to estimates by PricewaterhouseCoopers, electricvehicles will represent more than one-third of all car sales by 2030.

The transition towards electric drivetrains has enormous implications for the automobilesupply chain. From a mechanical perspective, electric vehicles have fewer components thantraditional automobiles with internal combustible engines. More than one-third of the30,000 parts in a traditional car, for example, may be eliminated by electrification. Inaddition to diminished demand for new components, existing suppliers will face a reduceddemand for aftermarket parts. While the market for battery and other electric motorcomponents will help offset these declines, the transition may jeopardize some suppliers’ability to stay in business.

While the impact of electric vehicles will be felt more immediately, the rise of autonomousvehicles will to be even more transformational. Mass deployment of autonomous vehiclescould bring an end to car ownership in its current form. Instead of purchasing cars outright,tomorrow’s consumers will rely more on car-sharing services. The resulting decline inautomobile sales could be substantial. According to estimates by McKinsey, by 2050,shared automobiles will account for one-third of car sales. The decline of the consumer automarket will also impact the insurance industry. While self-driving technology will reduceaccident claims, fewer cars on the road also means fewer insurance policies. Additionally,automakers may be forced to assume liability when accidents involving autonomous vehiclesoccur, further eroding the personal insurance market.

PROJECTED GLOBAL ELECTRIC VEHICLE PRODUCTION

Source: Avalanche Consulting / International Energy Agency

3.1

125.4

2017 2020 2025 2030

Projections from the International Energy Agency, which accounts for adopted and

announced policies by governments throughout the world, anticipate a dramatic rise in global

sales of electric vehicles through 2030.

(Millions)


Mobility Revolution – Regional Impacts

04

The approaching mobility revolution has enormous implications for three of the Columbusregion’s leading industries—Automotive & Transportation, E-Commerce & Logistics, andFinance & Insurance.

! Autonomous cars and the accompanying Mobility-as-a-Service (MaaS) business modelwill lead to a decline in automobile sales and transform how automobiles are sold. TheColumbus region’s Automotive & Transportation is currently predicated on producingapproximately 700,000 cars annually. If automobile sales falter, the impact on theColumbus region could be sharp. Even today, Automotive & Transportation employmentin the Columbus region remains below pre-recession levels despite all-time record carsales in 2015 and 2016.

! As Honda remains the lodestar of the Columbus region’s Automotive & Transportationindustry, the company’s ability to adapt to the approaching mobility revolution isessential. The company’s presence in Central Ohio helps support large firms such as TSTech and Safelite as well as hundreds of other automotive suppliers.

! Until very recently, Honda has been relatively conservative in the race to develop self-driving cars. In an analysis by Navigant Research, Honda ranked near the bottomamong all automakers in the deployment of automated vehicles. In 2018, however, thecompany announced a partnership with Alphabet’s Waymo division. While joint venturessuch as these may help accelerate Honda’s transition to autonomous vehicles, it couldalso diminish the role of the company’s R&D facilities in the Columbus region.

(Continued)

COLUMBUS REGIONAUTOMOTIVE & TRANSPORTATION EMPLOYMENT


18,023

14,319

2001 2017

Between 2001 and 2017, Automotive & Transportation employers in the Columbus

region shed one-fourth of their workforce. Most of these jobs never returned.


Mobility Revolution – Regional Impacts, Continued

04

! Thanks to Smart Columbus, the region has a unique opportunity to kickstart theMobility Revolution. Backed by $50 million in funding from the US Department ofTransportation and the Paul G. Allen Family Foundation, as well as hundreds of millionsof dollars in additional funding from public and private sources, Smart Columbus aims toredefine transportation.

! Despite the Smart Columbus initiative as well as several unique automotive-relatedresearch facilities, such as the Transportation Research Center and the US Route 33Smart Mobility Corridor, the Columbus region’s startup scene is largely devoid ofAutomotive & Transportation companies.

! As the deployment of autonomous vehicles is likely to first occur within commercialsettings, the Columbus region’s E-Commerce & Logistics industry may be among thosemost immediately affected.

! Any disruption to the E-Commerce & Logistics industry could have a significant impact onthe Columbus region. On a per capita basis, E-Commerce & Logistics employers in theColumbus region employ 60% more workers relative to the national average. There arenearly 48,000 E-Commerce & Logistics workers in the Columbus region, with tens ofthousands of additional logistics workers in other industries, such as Retail andManufacturing. The industry has been directly responsible for approximately one inevery seven jobs created in the Columbus region since 2001.

! The decrease of individual automobile ownership will also ripple throughout insurancemarkets. Accenture, for example, projects a potential $25 billion decline in automobileinsurance premiums by 2045 due to autonomous vehicles. Given thehigh concentration of the Finance & Insurance industry, a shrinking market fortraditional liability products could have a disproportionate impact on the Columbusregion’s economy.

COLUMBUS REGION’S INC. 5,000 COMPANIES BY INDUSTRY (2017 REVENUE IN MILLIONS)


Despite the industry’s large presence in the Columbus region, there are no Automotive & Transportation companies among the region’s

Inc. 5000 firms or among the leading recipients of venture capital.

BY INDUSTRY (2017 REVENUE IN MILLIONS)BY INDUSTRY (2017 REVENUE IN MILLIONS)


Finance & Insurance

Health Care

IT/Software

Non-Automotive Mfg.

Pro. Svcs / Corporate Ops.

Real Estate / Construction


The Datafication of Everything – National Trends

04

The amount of information available for collection and analysis will increase exponentiallyin the years ahead. In a world awash in statistics, advances in predictive analytics andartificial intelligence will be needed to bring meaning to large data sets. Ensuring theintegrity and privacy of sensitive and increasingly comprehensive data will also requireenhanced cybersecurity capabilities.

As connected devices become ubiquitous, the world will witness the emergence of anInternet of Things (IoT) ecosystem in which nearly any activity can be measured.Communication between devices will be commonplace. Autonomous cars will communicatewith other vehicles and the built environment, giving rise to smart cities. Manufacturers willbe able to monitor supply chains, maintain quality control, and incorporate predictivemaintenance into finished products. In Health Care, IoT technology will improve diagnosticsand patient care. A host of related technologies, including predictive analytics, machinelearning, and artificial intelligence will be critical in advancing these innovations.

Advances in data analytics and artificial intelligence (AI) also promise to revamp currentlending and insurance practices. AI may automate underwriting and claims processes, andpowerful data analytical capabilities can help insurance companies better calculate risk.The emerging “fintech” industry, which involves the application of technology to makefinancial services more efficient, has become a darling of both venture capitalists andestablished Finance & Insurance firms. In 2017, KPMG estimated that global fintech fundingtopped $31 billion, with established industry leaders providing much of the investment.

Armies of connected devices and sophisticated data analytic capabilities can accomplishlittle if they are not extraordinarily secure. Consumers and businesses alike will be reluctantto embrace autonomous vehicles, for example, if they can be readily hacked. Similarly,ensuring the integrity and confidentiality of financial and medical data is critical to theviability of the burgeoning fintech and health IT industries. From Health Care to Finance &Insurance, cybersecurity will play a more prominent role in virtually every industry.

PROJECTED NUMBER OF CONNECTED DEVICES(EXCLUDING COMPUTERS, PHONES & TABLETS)

Source: Avalanche Consulting / IoT Analytics

Within the next year, the number of connected devices is projected to

surpass the world’s population.

5.97.0

8.3

9.9

11.6

13.5

2017 2018 2019 2020 2021 2022

(Billions)


The Datafication of Everything – Regional Impacts

04

In the coming years, the ability to generate, analyze, and secure information will play acentral role in operational success of companies across a wide variety of industries.

! Smart Columbus provides an opportunity for the Columbus region to become a leader insmart city innovation. According to an analysis by Deloitte, smart cities’ capitalinvestments within the Columbus region already exceed those in areas such ascybersecurity and IoT technology.

! The recent launch of the Smart Columbus Operating System, a platform that will providedevelopers with an opportunity to leverage real-time traffic information to build newapplications, may ultimately serve as a global model for smart city innovation.

! The Columbus region may not be producing a sufficient level of IT talent. The Columbusregion awards fewer IT-related, post-secondary degrees than regions such as Atlanta,Austin, Boston, Detroit, and Raleigh. Columbus is the only region among these peerswithout a Science & Engineering school ranked as top 25 by US News & World Report.

! Increased competencies in IoT technology and data analytics may be key in helpingColumbus-based retailers more effectively compete with online retailers and betterrespond to evolving consumer tastes. Delivering in-store availability information to onlineshoppers—a growing demand among “omnichannel” consumers—requires sophisticatedinventory management capabilities that are often facilitated by IoT technology. NeitherVictoria’s Secret nor Bath & Body Works offers this feature to their customers.

(Continued)

WORKFORCE SKILLS LOCATION QUOTIENT

Data Analytics

Cybersecurity

Source: Avalanche Consulting / Deloitte

1.0 1.3

2.22.4

0.9

2.1 2.1

1.21.4 1.9

1.41.0 1.1 1.9

Colum

bus

Atlan

taAu

stinBo

ston

Detro

it/AA

Pittsb

urgh

Ralei

gh

The shortage of data analytics and cybersecurity skills among the Columbus region’s workforce disadvantages existing and new businesses.


The Datafication of Everything – Regional Impacts, Continued

04

! Powerful data analytics have also been foundational to the rise of fast fashion brandsthat can quickly identify trends and provide highly customized inventories to individualstores. The growing importance of data helped Prevedere, a local predictive analyticscompany that provides forecasting insights to industries such as Retail and Automotive,recently secured nearly $24 million in venture capital funding.

! In an effort to ensure that they are not displaced by emerging technologies, several ofthe leading Finance & Industries players in Columbus have recently taken action tobolster regional innovation capacity. In 2016, Nationwide launched NationwideVentures and Refinery 191. Nationwide Ventures is a venture capital firm focusing oninnovations in fintech and insurtech while Refinery 191 is an innovation lab. Nationwidehas committed $100 million to the effort.

! The Columbus Collaboratory is another promising opportunity to promote cross-industrycompetencies in new technologies. Backed by companies such as Cardinal Health,Huntington, L Brands, and Nationwide, the Columbus Collaboratory develops advancedanalytics and cybersecurity solutions for its corporate backers.

! IoT technologies may also revolutionize the automobile insurance market, thanks to theemergence of usage-based insurance. Instead of paying a premium based on factorssuch as driving history and age, usage-based insurance is determined by real worldbehavior. With more than $90 million in venture capital backing, Columbus-based RootInsurance has already emerged as a promising usage-based insurance innovator.

(Continued)

LEADING COLUMBUS REGION VENTURE-BACKED FIRMS(2013-2018 TOTAL VENTURE FUNDING IN MILLIONS)

Source: Avalanche Consulting / Pitchbook

During the past five years, half of the 10 leading recipients of venture capital funding

have been companies involved in Health Care. Two of these firms specialize in providing

Health IT services.

Data Analytics

Finance & Insurance

Health Care / Health IT

Retail

(2013 2018 TOTAL VENTURE FUNDING IN MILLIONS)(2013 2018 TOTAL VENTURE FUNDING IN MILLIONS)

Root Insurance

$91.5

Beam Dental$33.0

2CheckOut$7.0

Sollis Therapeutics

$49.9

Healthspot$40.6

FloShield$29.7 Eloquii

$42.2

Olive$32.8 Prevedere

$23.7

Aver$23.1


The Datafication of Everything – Regional Impacts, Continued

04

! Health analytics promises to revolutionize the treatment and diagnosis of disease while helping control costs. With health care spending on an upwardtrajectory, the market opportunities are seemingly boundless. Since 2013, half of the Columbus region’s 10 leading recipients of venture capital funding havebeen companies involved in Health Care. Two of these, Olive and Aver, are Health IT firms. Olive, an artificial intelligence company focused on Health Care,recently raised more than $30 million in venture capital. Aver, a software company that helps health care providers bundle payments for medical procedures,has secured more than $23 million in funding.


The Rise of E-Commerce – National Trends

04

Although brick and mortar stores still account for more than 90% of retail sales, the rise ofe-commerce has already caused significant disruption in the Retail industry. During the firstthree quarters of 2017, national retail chains accounted for a record 7,000 store closures.The so-called “retail apocalypse” is particularly striking, given the robust performance ofthe broader economy. Despite consistent increases in US consumer spending during the pastfive years, profitability has remained slim for many traditional retailers.

The migration of retail dollars online has already become manifest in America’s builtenvironment. After decades of expansion, only a handful of new shopping malls have beenconstructed in the US during the past decade. With far more retail space on a per capitabasis than any other nation, however, the existing retail infrastructure in the US may beunsustainable. According to estimates from Credit Suisse, up to 25% of all US malls are atrisk of closing by 2022. In the years ahead, repurposing dead malls will emerge as amajor challenge (and opportunity) in communities throughout the country.

While the physical footprint of retailers may be on the decline, the e-commerce sector iscurrently on a building binge. According to estimates by Cushman & Wakefield, warehousespace absorption exceeded a record 825 million square feet between 2014 and 2016.The continued rise in the number e-commerce fulfillment facilities, combined with ever largerwarehouses and low unemployment, has increased the difficulty companies face in securingappropriate sites and a sufficient workforce.

As the e-commerce industry matures and legacy retailers adapt to the evolving competitivelandscape, the lines separating the two are beginning to blur. Amazon, for example, hasestablished multiple physical outlets, and the company’s purchase of Whole Foods instantlymade it a leading grocer. At the same time, internet sales increasingly represent a growingproportion of sales for traditional retailers.

E-COMMERCE SALES AS % OF TOTAL RETAIL SALES

Source: Avalanche Consulting / US Census Bureau

Traditional brick and mortar stores still account for more than 90% of all retail sales.

0.8%

9.1%

2000 2017


The Rise of E-Commerce – Regional Impacts

04

! Historically, the Columbus region’s role as a hub for Retail Headquarters has been adistinct advantage. In recent years, however, the region’s major retailers haveexperienced significant challenges. While Bath & Body Works and Big Lots have postedsales increases in recent years, comparable sales at DSW, Express, and Victoria’s Secretdeclined for much of the past two years. Earlier in 2018, Abercrombie & Fitch postedthe first quarterly sales increase in five years. In 2017, The Limited filed for bankruptcy.

! The region currently benefits not only from traditional retailers based in Columbus butalso those with fulfillment centers in the region. This includes Eddie Bauer, RestorationHardware, lululemon, and JC Penney. In recent years, JC Penney’s sales have largelystagnated, and Eddie Bauer’s operations have been recently combined with those ofPacific Sunwear. Slowing sales at any of these retailers could ultimately impact theColumbus region’s E-Commerce & Logistics industry.

! The diminished health of retailers, both those based in the Columbus region as well asthose with significant local operations, could threaten the region’s ProfessionalServices/Corporate Operations cluster, which employs more than 86,000 workers. Thecluster, which includes corporate headquarter operations, is more concentrated in theColumbus region than in any other metropolitan area in the US with one to three millionresidents.

! The continued growth of e-commerce sales could also displace thousands of well-payingjobs—the average annual wage for Professional Services/Corporate Operationsworkers in the Columbus region is nearly $85,000.

CHANGE IN ANNUAL REVENUE (2017-2018)

Company Headquartered in Columbus Region

Company with Fulfillment Centers in Columbus Region

Source: Avalanche Consulting / Wall Street Journal

-0.3%

0.5%

5.0%

13.0%14.3%

-4.9%

2.2%

-3.5%-2.5%

JC Pe

nney

L Bran

ds

Abercrom

bie &

Fitch

lulule

mon

Resto

ratio

n Har

dware

Ascena

Gap

1800 F

lowers

Expres

s

While several retailers with significant fulfillment centers in the Columbus have recently enjoyed strong revenue growth, locally-based

companies have largely struggled.


The Rise of E-Commerce – Regional Impacts

04

! While the rise of online shopping threatens many of the leading retailers based inColumbus, it also creates significant opportunities for the region’s E-Commerce andLogistics industry. Nearly one-half the US population located within a 10-hour drive ofColumbus, a geographic advantage that has helped boost E-Commerce & Logisticsemployment in the region by more than 50% since 2001.

! Rickenbacker International Airport continues to grow as an international cargo hub,thanks to direct routes to Europe, Asia and the Middle East. In 2017, total internationalair cargo traffic surged 65%. Despite growing traffic, Rickenbacker is not yet amongthe 25 leading cargo hubs in the US. Its potential to grow is high.

! Though Amazon has added thousands of job in the Columbus region in recent years, ithas made even larger investments in its logistics facilities elsewhere. If this trendcontinues, it could take business from third-party delivery partners such as DHL, FedEx,and UPS that collectively employ more than 5,000 workers in the Columbus region.

! In recent years, the Columbus region has produced several fast-growing E-Commerce &Logistics firms. In 2017, the region’s E-Commerce & Logistics industry boasted four Inc.5000 companies with more than $105 million in combined revenues. These firms includeMES, Ease Logistics, and Vantage Point Logistics.

! Further declines in the brick and mortar retail environment will create a significant needfor creative real estate redevelopment approaches. At the same time, the growing sizeof distribution facilities needed to support E-Commerce and Logistics operations willincrease the need for large sites in proximity to the region’s existing logisticsinfrastructure.

TOP 30 US CARO AIRPORTS BY LANDED WEIGHT2017

Source: Avalanche Consulting / Federal Aviation Administration

While traffic at Rickenbacker International Airport continues to climb, the airport ranks

27th in total cargo volume among US airports.

Memphis International23.9 billion pounds

Rickenbacker International1.1 billion pounds


Global Power Moves Eastward – National Trends

04

Since 1980, the economies of East Asia and Pacific countries have grown at more than twice

the rate of North American countries.

The economic transformation of the East Asia & Pacific region during the past 40 years isdifficult to understate. In 1980, the total gross domestic product of the region—whichincludes China, Korea, and Singapore, among many other countries—was barely half thatof North America. Less than two generations later, the East Asia & Pacific economy is nearly15% larger than the North American economy.

A consensus about the collective benefits of global free trade has been central to thegrowing economic might of the East Asia & Pacific region. Since 1980, global trade hasincreased nine-fold. During this period, China catapulted from a marginable center ofproduction to the world’s largest manufacturer. Supply chains became increasinglycomplex, with the production of goods often involving component parts from a multitude ofindividual countries. While the growing manufacturing prowess of China and other countriesin the East Asia & Pacific region contributed to the decline of domestic production in the US,the increase of both US exports and imports helped boost employment in industries such asLogistics & Distribution.

While the global balance of power is expected to continue shifting eastward, there is farless agreement on US economic policy than in years past. Many US companies, includingmany domestic manufacturers, continue to look toward East Asia & Pacific as a vital marketfor future growth. General Motors, for example, already sells more cars in China than inthe US. At the same time, political support for free trade has faltered. In 2017, the USshelved the Trans-Pacific Partnership, which would have encompassed 40% of the world’seconomy. Additionally, the threat of a global trade war continues to increase as both theUS and China have imposed and/or announced escalating rounds of tariffs coveringhundreds of billions of dollars worth of goods. Despite these short-term obstacles, however,East Asia & Pacific will remain a vital market for US firms as the region’s economic cloutfurther accelerates.

GROSS DOMESTIC PRODUCT

Source: Avalanche Consulting / World Bank

$4.5

$21.4

$3.1

$21.0

$1.8

$24.0

0

5

10

15

20

25

(trillions)

1980 2017

North America

Europe & Central Asia

East Asia & Pacific


Global Power Moves Eastward – Regional Impacts

04

! The Columbus region’s economic integration with the global economy remains limited. Atslightly more than 8%, Columbus export levels are rather modest relative to the overallsize of the region’s economy.

! The region also has a comparatively small share of employment in foreign-ownedestablishments. The Columbus region ranks 16th among the 35 US metros with one tothree million residents in the share of private employment supported by foreign-ownedestablishments.

! During the past decade, however, trade to China has increased dramatically. Accordingto the International Trade Administration, exports from the Columbus region to Chinatripled between 2005 and 2016. Despite these gains, the value of regional exports toChina remains just 25% of export levels to Canada.

! While the vast majority of foreign-owned firms in the Columbus region are based inAsia, most of these companies are headquartered in Japan. Of the approximately 525foreign-owned firms operating within the Columbus region, more than 250 areJapanese. The cumulative total for other countries in Asia—including China, India, HongKong, South Korea, and Taiwan—is less than 40.

! Approximately two-thirds of foreign-owned firms in the Columbus region aremanufacturers. Other foreign-owned firms in the region are primarily engaged in fiveother industries—Professional, Scientific & Technical Services, Wholesale Trade, Finance& Insurance, Transportation & Warehousing, and Information.

(Continued)

Exports from the Columbus region to China have soared during the past decade.

However, overall trade volumes to China remain relatively modest.

Source: Avalanche Consulting / International Trade Administration

204.1%

115.3%

15.2%

China Mexico Canada

% CHANGE IN EXPORTS FROM THE COLUMBUS REGION2005 - 2016


Global Power Moves Eastward – Regional Impacts, Continued

04

! Retailers based in the Columbus region have only limited exposure to internationalmarkets. Big Lots has no stores in foreign countries and DSW has just a handful of retailoutlets in the Middle East. Since L Brands operates hundreds of stores worldwide, theremay be significant room for growth.

! The Columbus region continues to increase the flow of travelers connecting todestinations in Asia and the South Pacific. Since 2010, air passenger traffic to Japanand China has increased 69% and 66%, respectively. Air passenger traffic to India andHong Kong also increased significantly. Despite these gains, the Columbus region lacks asingle direct flight to any major international destination.

! The Columbus region’s global identity remains relatively less developed than othercomparable metros. Even within the US, the Columbus region occasionally suffers frommisperceptions that it is a “Rust Belt” community, due to its Midwestern location.

! The Ohio State University (OSU) is arguably the most internationally diverse institution inthe Columbus region. The university’s foreign enrollment is nearly 6,000, and more thantwo-thirds of these students are from China. OSU also operates a global gateway officein Shanghai, which provides opportunities for international faculty research andpartnerships with firms based in the Columbus region.

Source: Avalanche Consulting / US Census Bureau / World Bank / L Brands

Despite the growth of the global middle class, the number of foreign

operations of retailers headquartered in the Columbus region is low.

36

44

0

10

20

30

40

50

China Ohio0

0

1

1

2

2

POPULATION VERSUS VICTORIA’S SECRET STORES

Population

Victoria’s Secret Stores

1.4 billion

11.7 million


The Decline of Dynamism – National Trends

04

Historically, the dynamism of the US economy has been disproportionately fueled by youngcompanies. During the past three decades, however, the pace of new business creation hasslowed. According to research from the Brookings Institute, for example, the share ofemployment represented by firms less than 10 years old has declined by a third since1987. The cause has been a collapse of new business formation.

The decline of business dynamism has important implications for the US economy. Perhapsmost importantly, new business formation is central to productivity gains and technologicalinnovation. Young firms with fresh ideas are often the first to identify new opportunities.Over time, these upstarts can ultimately replace their older, less productive counterparts.IBM, for example, largely missed the personal computer revolution. Sears, once a retailpioneer, recently declared bankruptcy. Despite massive investments by Microsoft, Googleremains the king of search. Although it is impossible to predict which companies will thrive inthe face of disruptors such as automation and autonomous vehicles, there is good reason tobelieve that it may not be not today’s corporate titans.

There is also growing evidence that the lack of new business formation restricts wagegrowth. As business dynamism has fallen throughout the US during the past severaldecades, average wages for workers have largely stagnated. New firms provideopportunities for professional advancement, and switching jobs is often the quickest path toa higher-paying job. With few companies competing for the talents of individualemployees, there may be fewer opportunities for workers to command higher salaries.

RATE OF NEW BUSINESS CREATION IN THE US


Since the 1970s, the rate of new business creation has fallen by nearly half.

2000 2017

10.0%

17.1%


The Decline of Dynamism – Regional Impacts

04

! During the past decade, the Columbus region has thrived in large part due to the hiringtrends of its largest and most established employers. Since 2004, mature firms (those

in business for six years or longer) have accounted for all net employment gains inthe region.

! Employment in the Columbus region is also highly concentrated among large employers,which includes firms with more than 1,000 workers. Large firms employ more than 55%of all workers within the Columbus region. Among the 35 US metropolitan areas withbetween one to three million residents, only Orlando, Las Vegas, and Jacksonville havea higher share of employment supported by large companies.

! Employment among the Columbus region’s largest firms has accelerated in recent years.Between 2004 and 2014, firms in the Columbus region with 1,000 or more employeesaccounted for more than 60% of all job gains.

! While most major metropolitan areas have struggled with flagging business dynamism,the Columbus region’s highly educated workforce and exceptionally strong researchcapabilities provide a strong foundation for innovation. Historically, though, the regionhas struggled to leverage its human capital and basic research into commercially viableinnovations. On a per capita basis, for example, the Columbus regions generates 80%fewer patents than peer regions, such as Austin or Raleigh.

! Despite its immense physical footprint within the Columbus region, including manyareas featuring limited development, The Ohio State University has no dedicatedinnovation district.

(Continued)

During much of the past decade, mature companies have fueled all employment

growth in the Columbus region

-20.4%

-17.6%

8.4%

< 1 Year Old 1 to 5 Years 6 Years andOlder

COLUMBUS REGION EMPLOYMENT CHANGE BY FIRM AGE2004 - 2014



The Decline of Dynamism – Regional Impacts, Continued

04

! A lack of capital has historically been one of the Columbus region’s greatestimpediments to cultivating a more vibrant innovation ecosystem. Though the availabilityof venture capital has increased substantially in recent years, thanks to the efforts oforganizations like Rev1, funding levels remain relatively modest. On a per capita basis,venture funding levels trail communities such as New Orleans, Rochester, and Pittsburgh.

! Fintech 71, a technology accelerator backed by a consortium of Ohio-based companies,may serve as a model for leveraging existing regional industry strengths to form newbusinesses. The program provides startups with funding, access to sponsor companies,and mentorship opportunities. Due to the massive capital requirements of operating inthe Finance & Insurance industry, combined with significant regulatory oversight, futurepartnerships between legacy companies and fledgling fintech and insurtech firmsare likely.

! In addition to greater funding, the absence of physical infrastructure may also be animpediment to greater new business development. For example, a gene therapydeveloped by Nationwide Children's Hospital and Ohio State University's medicalschool, ultimately led to a $9 billion deal with Novartis. Without adequate wet labspace in the Columbus region, the company that initially licensed the technologyrelocated to Chicago.

Source: Avalanche Consulting / US Census Bureau / College FinderIncludes metropolitan areas with 1 million or more residents

8,200 acresSan Jose, CA

4,100 acresHartford, CT

3,500 acresColumbus, OH

2,700 acresNew York City

2,600 acresSt. Louis

LARGEST COLLEGE & UNIVERSITY CAMPUSES IN MAJOR METROPOLITAN AREAS

Stanford University

University of Connecticut

Ohio State University

Rutgers

Principia College

The physical campus of The Ohio State University is among the largest in the country.


Aging Population – National Trends

04

The US population is rapidly aging, with significant implications for the country’s economy.As the average lifespan of Americans continues to rise, spending on health care will reachunprecedented heights. According to Federal government projections, within a decade theHealth Care industry will capture $1 of every $5 spent in the US. The need for supportservices for a growing elderly population will fuel significant demand in specific health careoccupations while also straining the public coffers.

In the next 20 years, the number of elderly individuals in the US will increase significantly.Accommodating a new demographic reality will require massive investments in health careinfrastructure and a significant boost in workforce. Already, four out of the fivefastest-growing jobs in the US are related to health care, including home health aides,personal care aides, physician assistants, and nurse practitioners.

With more than 10,000 Baby Boomers turning 65 every day, the exodus of the BabyBoomer generation from the workforce may also to contribute to labor shortages. TheManufacturing industry may be especially vulnerable. In some manufacturing sectors, forexample, more than half of all workers are age 55 or older.

The coming generational shift will also see the Millennial generation assuming a leadingrole in shaping the country’s economic and political system. The transition from a world ledby the collective actions of the Baby Boomer generation to one in which Millennials rule willinvolve significant changes in the country’s consumer habits and political composition. Fromride-sharing services to e-commerce sales, Millennials have also been quick to embrace newtypes of commercial activities. Given that many cities have emphasized attracting youthfultalent in recent years, Millennials are also likely to first make political waves at the locallevel.

US POPULATION BY AGE GROUP


73.676.4

49.2

78.0

40

45

50

55

60

65

70

75

80

Projected Population (millions)

2016 2035

Children Under 18

Adults 65+

By 2035, the 65 and older population will outnumber children for the

first time in US history.


Aging Population – Regional Impacts

04

! In many ways, the Columbus region is well-positioned to thrive in a aging world. TheColumbus region is relatively young, and the presence of The Ohio State University andmany other local colleges and universities provides the Columbus region with acontinuous pipeline of new workers.

! Despite its relative youth, the Columbus region will not be entirely insulated from thebroader demographic changes unfolding in the rest of the country. Between 2020 and2030, the number of residents age 65 and older within the Columbus region is projectedto grew nearly three times faster than the rest of the population. With significantdifferences in the age composition of workers in individual counties and industries,employers may find it increasingly difficult to fill specific positions.

! Increased spending on health care will create new opportunities for the Health Careindustry within the the Columbus region. Already, Cardinal Health and NationwideChildren's Hospital are among the largest employers in the region. Since 2000, CardinalHealth’s regional workforce has climbed from fewer than 2,000 to more than 5,000.

! At Nationwide Children’s Hospital, a renewed focus on commercialization highlights theability of local research to drive significant global innovation. Thanks in part topartnerships with The Ohio State University and venture fund Rev1, NationwideChildren’s Hospital’s licensing and spinoff activity has steadily risen in recent years. In2018, a gene therapy treatment originally developed at Nationwide Children'sHospital was behind a $9 billion purchase by pharmaceutical giant Novartis.

! Consumer-oriented companies based in the Columbus region may thrive in a worldwhere Millennials have increased purchasing power. In a survey of 15,000 Millennialsby the advertising agency Moosylvania, five companies with a significant presence inColumbus ranked among the top 100 favorite brands: Victoria’s Secret (10), Express(13), Honda (35), Bath & Body Works (65), and Chase (75).

COLUMBUS METRO POPULATION PROJECTIONS BY AGE2020 - 2030

Source: Avalanche Consulting / Ohio Development Services Agency

Between 2020 and 2030, the number of residents age 65 and older in the Columbus

region is projected to grow three times faster than the rest of the population.

6.4%

18.6%

8.5%

0%

5%

10%

15%

20%

< 65 Age 65+ Total


Growing Diversity – National Trends

04

During the past 25 years, the US population has become increasingly diverse. Over thenext quarter century, this trend will further accelerate. Today, more than half of all childrenborn belong to minority racial and ethnic groups. From both a demographic and economicperspective, the most successful regions in the US will be those that welcome and support adiverse population.

Since the first census was conducted in 1790, the non-Hispanic, White population in the USpopulation increased every year through 2015. In both 2016 and 2017, however, theWhite population in the US fell by approximately 31,000 individuals. With additionaldeclines projected through 2060, the White population is expected to become a minorityby 2045. Increasingly, regional growth will be determined by the ability of communities towelcome people of color.

Diversity is critical in sustaining economic vitality. At the regional level, diversity isassociated with greater levels of entrepreneurship and innovation. At the company level,studies have found that more diverse teams lead to higher rates of creative problem-solving and greater revenues. Communities that fail to embrace diversity risk facingsignificant workforce and leadership challenges and risk becoming less innovative than theirmore diverse peers.

US POPULATION CHANGE2016 - 2017

Source: US Census Bureau

Non-Hispanic Whites are the only segment of the US population where deaths outpace births.

2,344,759

-31,516-500,000

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

People of Color White, Non Hispanic


Growing Diversity – Regional Impacts

04

! The Columbus region is less racially and ethnically diverse than the country as a whole.White residents represent approximately 74% of the Columbus region’s population.Nationally, the figure is 61%.

! While the Columbus region has a higher share of Black and African-American residentsrelative to the US average, the region has proportionally fewer Hispanic and Asianresidents.

! Between 2010 and 2017, the population of the Columbus region increased by 9%.Among the US 35 regions with populations between one to three million people, theregion’s growth rate ranked 13th. Only Portland, Oregon, outpaced the Columbusregion in population growth during this period, while also having less racial and ethnicdiversity.

! While it is possible that the Columbus region will continue to be an outlier in postinghealthy population increases in the absence of greater diversity, doing so may becomebecome increasingly difficult in the years ahead.

! The Columbus region’s lack of greater diversity may limit its attractiveness to prospectivefirms looking to expand or relocate existing facilities. In particular, foreign companiesoften prefer communities with racial and ethnic diversity.

0%

20%

40%

60%

80%

-10% 0% 10% 20% 30%

POPULATION GROWTH & RACIAL/ETHNIC COMPOSITION IN METROS W/ POPULATIONS BETWEEN 1-3 MILLION


Population Growth, 2010 - 2017%

of

Popu

latio

n W

hite

, Non

-Hisp

anic

, 201

6

Columbus Region

With US population growth increasingly driven by racial and ethnic minorities, the lack of greater diversity in the Columbus region could limit future population gains.


The New Urbanization – National Trends

04

While much of the US population has been flocking to metropolitan areas for decades, theprocess has accelerated in recent years. A renewed interest in city living, especially amongyounger individuals, combined with record low migration rates and a lack of housingconstruction, have contributed to the suburbanization of poverty and burdensome housingcosts in many metros.

In recent years, metropolitan areas have accounted for virtually all US population growth.Unlike in years past, recent metropolitan area population gains in many regions extend intothe urban core. While heightened interest in city living has helped revitalize downtownsthroughout the US, the resulting influx of residents has priced a growing number of lower-income households out of the urban core. During the 2000s, for example, the number ofsuburban residents living in poverty exceeded the urban poor population for the first timein history.

The burden of rising metropolitan home prices extends far beyond the city center. The lackof affordable starter and mid-size housing units has been especially acute, a trend that hasdisproportionately impacted younger individuals. In 2017, the proportion of Americans whomoved hit the lowest level since the US Census Bureau began tracking migration in 1948.Much of the decline is attributable to the large number of Baby Boomers who are aging inplace, a dynamic that limits the availability of housing for new residents. Notably, the lackof housing inventory has not fueled a boom in residential construction. According to ananalysis by the Federal Reserve Bank of Kansas City, the number of US housing starts hasdeclined nearly 50% on a per capita basis since 2005.

The new urbanization trends in the US will create challenges for communities throughout theUS. Without the physical and social service infrastructure often found in cities, the suburbsoften struggle to meet the needs of a growing population living in poverty. At the sametime, governments may have to revisit issues, such as land use regulations and relatedobstacles that limit home construction and density.

US POPULATION GROWTH BY METROPOLITAN STATUS2016 - 2017


In recent years, virtually all US population growth has occurred in the country’s metropolitan areas.

98.5%1.5%

0% 25% 50% 75% 100%

Metropolitan Areas Non Metropolitan Areas


The New Urbanization – Regional Impacts

04

! In recent years, no region in Ohio has benefitted more from internal migration patternswithin the state than Columbus. Since 2010, only 28 of Ohio’s 88 counties have postedpopulation gains.

! With a combined 151,000 new residents, Franklin and Delaware counties haveexperienced the greatest population growth within the state. The collective gains of theremaining 26 Ohio counties that have experienced population growth since 2010 is lessthan 100,000.

! According to figures from the Internal Revenue Service, on a net basis residents fromother parts of Ohio accounted for all migration gains in the Columbus region between2015 and 2016. Sustaining the population growth rates enjoyed by the Columbusregion in recent years may require greater rates of migration by individuals livingoutside of Ohio.

! Accommodating additional growth within the Columbus region will also requireadditional housing stock. While the number of housing permits issued in the Columbusregion has risen approximately 30% during the past five years, multi-family units haverepresented a disproportionately large share of new inventory. In 2017, single-familyhomes accounted for nearly 80% of housing permits issued in the US. In the Columbusregion, the figure was less than half.

! According to recent analysis by the Greater Columbus Home Builders Association, theregion is not constructing a sufficient number of housing units. In anticipation ofpopulation growth, the region needs to construct 14,000 housing units a year. It iscurrently building just 8,000 new housing units annually. If this trend continues, it coulderode the overall affordability of the Columbus region.

NET MIGRATION INTO COLUMBUS METRO BY SOURCE2015 - 2016

Source: Avalanche Consulting / Internal Revenue Service

On a net basis, all migration into theColumbus region in 2016 was driven by individuals from other parts of Ohio.

3,334

-2,969-4,000

-2,000

0

2,000

4,000

From Ohio From Outside ofOhio

Regional Industry Cluster Analysis

The Appendix includes a series of cluster analyses to evaluate the Columbus region’s current competitive position for each of its leading industries. The region is benchmarked against 34 other US metros with populations of one to three million.

Appendix

Economic Assessment & Community Benchmarking 45

Regional Industry Cluster AnalysisThe following analysis places the largest and most concentrated industries in the Columbus region in a broader competitive context. Like the previous section,the performance of the Columbus region is benchmarked against 34 other metropolitan areas with populations between one to three million. The fiveexamined industries include Automotive & Transportation; E-Commerce & Logistics; Finance & Insurance; Health Care; Manufacturing; and ProfessionalServices/Corporate Operations. Collectively, these industries have been directly responsible for approximately 40% of all employment growth in theColumbus region during the past five years. The section concludes with a brief examination of the industry composition of the region’s largest employers, itsfastest-growing private companies, and firms that have received significant venture capital in recent years.

Automotive & Transportation – Among benchmark regions, the Columbus region boasts the fifth most concentrated Automotive & Transportation industry. Ona per capita basis, the Columbus region is home to approximately 80% more Automotive & Transportation jobs relative to the US average. Between 2012and 2017, Automotive & Transportation employment in the Columbus region increased 8.3%.

E-Commerce & Logistics – Between 2012 and 2017, E-Commerce & Logistics employment increased in every examined benchmark region. In the Columbusregion, E-Commerce & Logistics employment rose by more than 20% in the past five years. While a majority of benchmark regions posted even greater ratesof E-Commerce & Logistics employment growth, the industry remains heavily concentrated in the Columbus region. With 60% more jobs than the US average,the Columbus region has the fourth most concentrated E-Commerce & Logistics industry among benchmark regions.

Finance & Insurance – On a proportional basis, Finance & Insurance employment in the Columbus region is 50% more concentrated relative to the USaverage. Among benchmark regions, the Columbus region has the seventh most concentrated Finance & Insurance industry. Between 2012 and 2017, Finance& Insurance employment in the Columbus region increased 7%.

Health Care – With more than 90,000 workers, Health Care is among the largest industries in the Columbus region. It is also increasing at a substantial pace.Health Care employment in the Columbus region rose by more than 19% between 2012 and 2017.

Manufacturing – Non-Automotive Manufacturing employment is limited in the Columbus region. On a proportional basis, the Columbus region has 30% fewerNon-Automotive Manufacturing jobs relative to the US average. Since 2012, Manufacturing employment in the Columbus region has increased 6%.

Professional Services/Corporate Operations - The Professional Services/Corporate Operations sector includes various business support operations, includingcorporate headquarters. Professional Services/Corporate Operations is 40% more concentrated in the Columbus region compared to the US average. Nobenchmark region has a greater concentration of Professional Services/Corporate Operations employment.

APP 1


Regional Industry Cluster Analysis

APP 1

This section provides a detailed examination of industry trends and composition in Northeast Florida. The analysis highlights recent employment trends –including industry size, growth rates, and relative concentration to the US average.

The industry analysis utilizes Location Quotients (LQs), which represent the relative concentration or density of a specific industry in a region compared to the USaverage. For example, a 1.5 LQ indicates that the local industry has 50% more jobs as a share of the overall economy than the US. This implies localcompetitive strengths in that industry. Note that because LQs are a relative measure, a high concentration in one industry means that others will have lowerconcentrations.

The chart on the following page combines LQs, growth rates, and relative size to illustrate the Columbus region’s industry performance since 2012. Thehorizontal axis displays employment growth of each industry. The vertical axis shows the LQ or relative concentration. The size of each bubble indicates thenumber of local jobs in the industry. Generally, industries can be grouped into four categories:

NEGATIVE GROWTH POSITIVE GROWTH

HIGHER CONCENTRATION

LOWER CONCENTRATION

TOP RIGHT – STRONG & ADVANCING

Contains industries that are more concentrated in the region and are growing. These industries are usually built on highly competitive local

assets and are also experiencing strong national and international growth.

BOTTOM RIGHT – WEAK BUT ADVANCING

Contains industries that are under-represented in the region but are growing. If growth continues, these industries will eventually move into the top-right quadrant. These are generally considered “emerging” industries

and good potential targets for economic development activities.

TOP LEFT – STRONG BUT DECLINING

Contains industries that are more concentrated in the region butare declining (negative employment growth). Over time, theseindustries may fall to the bottom left as job losses eventually lead to adeclining concentration.

BOTTOM LEFT – WEAK & DECLINING

Contains industries that are under-represented in the region (lowconcentration) and are also losing jobs. In general, industries in thisquadrant reveal a lack of regional competitiveness.



APP 1

SOURCE: EMSI / AVALANCHE CONSULTING. INCLUDES NAICS CODES 3336, 3361, 3362, 3363, AND 3369

AUTOMOTIVE INDUSTRY EMPLOYMENT

0

1

2

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

STRONG BUT DECLINING STRONG & ADVANCING

LOC

ATI

ON

QU

OTI

ENT

–20

17

EMPLOYMENT GROWTH, 2012 - 2017

WEAK & DECLINING WEAK BUT ADVANCING

Pittsburgh

Hartford

Portland

Providence

OrlandoBaltimore

Las Vegas

New OrleansDenver

Jacksonville

Oklahoma CityMemphis

San Jose

Tucson Salt Lake City

SacramentoRichmond

Austin

Rochester

Raleigh

Milwaukee

Indianapolis

Charlotte

Columbus[8%, 1.8 LQ]

Cleveland

BuffaloBirmingham

Cincinnati

San Antonio

Kansas City

Grand Rapids[31%, 4.3 LQ]

Virginia Beach [64%, 0.4 LQ]

Nashville[42%, 3.8 LQ]

Louisville[68%, 4.3 LQ]

St. Louis[92%, 0.8 LQ]

The Columbus region’s Automotive & Transportation industry employs approximately 14,300 workers. Among the examined benchmark regions, the Columbusregion has the fifth greatest number of Automotive & Transportation jobs. The region also ranks fifth in industry employment concentration. Between 2012and 2017, regions with established Automotive & Transportation clusters absorbed most employment gains. Regions with the largest Automotive &Transportation clusters—including Columbus, Grand Rapids, Kanas City, Louisville, and Nashville—captured more than two-thirds of all industry employmentgains among the examined benchmark regions during this period. Among these five regions, however, the Columbus region’s Automotive & Transportationindustry experienced the slowest rate of employment growth.



APP 1

SOURCE: EMSI / AVALANCHE CONSULTING. INCLUDES NAICS CODES 4811, 4812, 4831, 4841, 4842, 4881, 4882, 4883, 4884, 4885, 4889, 4911, 4921, 4922, AND 4931

E-COMMERCE & LOGISTICS INDUSTRY EMPLOYMENT

0

1

2

0% 20% 40% 60%

STRONG & ADVANCING

LOC

ATI

ON

QU

OTI

ENT

–20

17


WEAK BUT ADVANCING

PittsburghHartfordPortland

Providence

OrlandoBaltimore

Las Vegas

New Orleans

Denver

Jacksonville

Oklahoma City

Memphis[7%, 3.4 LQ]

San Jose

Tucson

Salt Lake City

Sacramento

Richmond

Austin

RochesterRaleigh

Milwaukee

Indianapolis

Charlotte

Cleveland

Buffalo

Birmingham

Cincinnati

San Antonio

Kansas City

Grand Rapids

Virginia Beach

Nashville

Louisville[24%, 2.4 LQ]

St. Louis

Between 2012 and 2017, E-Commerce & Logistics employment increased in all 35 examined benchmark regions. During this period, E-Commerce & Logisticsemployment in the Columbus region grew by approximately 20%. Among benchmark regions, the Columbus region has ranked 20th in E-Commerce &Logistics employment growth during the past five years. With a location quotient of 1.6, E-Commerce & Logistics employment remains heavily concentrated inthe Columbus region. Among benchmark regions, only Memphis, Louisville, and Indianapolis are home to proportionately more E-Commerce & Logisticsworkers than the Columbus region.



Finance & Insurance

APP 1

SOURCE: EMSI / AVALANCHE CONSULTING. INCLUDES NAICS CODES 5211, 5221, 5222, 5223, 5231, 52332, 5239, 5241, 5242, 5251, 5259

FINANCE & INSURANCE INDUSTRY EMPLOYMENT

0

1

2

3

-15% -5% 5% 15% 25%

STRONG & ADVANCING

LOC

ATI

ON

QU

OTI

ENT

–20

17


WEAK BUT ADVANCING

Pittsburgh

Hartford

Portland

Providence

Orlando

Baltimore Las VegasNew Orleans

Denver

Jacksonville

Oklahoma City

Memphis

San Jose

Tucson

Salt Lake City

Sacramento

Richmond

Austin

Rochester

Raleigh

MilwaukeeIndianapolis

Charlotte

Cleveland

Buffalo

Birmingham

Cincinnati

San Antonio

Kansas City

Grand Rapids

Virginia Beach

NashvilleLouisvilleSt. Louis

The Columbus region is home to one of the largest and most concentrated Finance & Insurance industries in the US. In 2017, Finance & Insurance companies inthe Columbus region employed more than 51,000 individuals. Among examined benchmark regions, only Denver, Charlotte, and San Antonio have moreFinance & Insurance workers. Finance & Insurance employment in the Columbus region is approximately 50% more concentrated relative to the US average.Between 2012 and 2017, Finance & Insurance employment in the Columbus region increased by more than 7%. Among benchmark regions, Finance &Insurance employment growth in the Columbus region ranked 14th.


STRONG BUT DECLINING

WEAK & DECLINING


Health Care

APP 1

SOURCE: EMSI / AVALANCHE CONSULTING. INCLUDES NAICS CODES 621 AND 622

HEALTH CARE INDUSTRY EMPLOYMENT

0

1

0% 10% 20% 30%

STRONG & ADVANCING

LOC

ATI

ON

QU

OTI

ENT

–20

17


WEAK BUT ADVANCING

Pittsburgh

Hartford

Providence

Orlando

Baltimore

New Orleans

Denver

Jacksonville

Oklahoma City

Memphis

San Jose

Tucson

Salt Lake City

Sacramento

Richmond

Austin

RochesterMilwaukee Indianapolis

Charlotte

Cleveland

Buffalo

Birmingham

Cincinnati

San Antonio

Kansas City

Grand Rapids

Virginia Beach

Nashville

Louisville

St. Louis

Health Care employment increased in every examined region between 2012 and 2017. In the Columbus region, Health Care employment rose nearly 20%.On a percentage basis, the Columbus region ranked eight among benchmark regions in Health Care employment growth during this period. While local gainsin Health Care employment typically follow broader regional population growth patterns, employment concentrations may also reflect specialized medicalcare competencies. In 2017, Health Care employment in the Columbus region was nearly identical to the US average. The regions with the greatestconcentrations of Health Care employment—including Baltimore, Cleveland, and Pittsburgh—are all home to world leading medical institutions (Johns HopkinsUniversity, the Cleveland Clinic, and the University of Pittsburgh Medical Center).

Columbus[19%,

1.2 LQ]

RaleighPortland Las

Vegas


Manufacturing

APP 1

SOURCE: EMSI / AVALANCHE CONSULTING. INCLUDES NAICS CODES 331 THROUGH 332, 3331, 332, 3333, 3334, 3339, AND 334 THROUGH 339

NON-AUTOMOTIVE MANUFACTURING INDUSTRY EMPLOYMENT

0

1

2

-10% 0% 10% 20%

STRONG & ADVANCING

LOC

ATI

ON

QU

OTI

ENT

–20

17


WEAK BUT ADVANCING

Pittsburgh

Hartford Portland

Providence

OrlandoBaltimore

Las Vegas

New Orleans

DenverJacksonville

Oklahoma City

Memphis

San Jose

Tucson

Salt Lake City

Sacramento

Richmond Austin

Rochester

Milwaukee

Indianapolis Charlotte

Cleveland

Buffalo

Birmingham

Cincinnati

San Antonio

Kansas City

Grand Rapids[20%, 2.3 LQ]

Virginia Beach

Nashville

Louisville

St. Louis

After significant job losses earlier in the decade, the Manufacturing industry has rebounded in many regions. Between 2012 and 2017, Manufacturingemployment increased in approximately two-thirds of the examined benchmark regions. In eight regions, Manufacturing employment growth during thisperiod topped 10%. In the Columbus region, Manufacturing employment increased 6%. Non-Automotive Manufacturing employment is approximately 30%less concentrated in the Columbus region relative to the US average. Still, Manufacturing remains a large employer within the Columbus region. With morethan 51,000 workers, Manufacturing employment in the Columbus region is larger than in all benchmark regions except Denver, Charlotte, Austin, and SanAntonio.


WEAK & DECLINING

Columbus[6%,

0.7 LQ]

Raleigh[30%, 0.7 LQ]


Professional Services/Corporate Operations

APP 1

SOURCE: EMSI / AVALANCHE CONSULTING. INCLUDES NAICS CODES 5412, 5413, 5414, 5417, 5419, 5511, 5611, 5614

PROFESSIONAL SERVICES/CORPORATE OPERATIONS INDUSTRY EMPLOYMENT

0

1

-5% 5% 15% 25%

STRONG & ADVANCING

LOC

ATI

ON

QU

OTI

ENT

–20

17


WEAK BUT ADVANCING

Pittsburgh

Hartford

Providence

Orlando

Baltimore

New Orleans

Denver

Jacksonville

Oklahoma City

Memphis

San JoseTucson

Salt Lake City

Sacramento

Richmond

AustinRochesterMilwaukee

Indianapolis

Charlotte

ClevelandBuffalo

Birmingham

Cincinnati

San Antonio

Kansas City

Grand Rapids

Virginia Beach

Nashville[29%, 1.2 LQ]

Louisville

St. Louis

The Professional Services/Corporate Operations sector includes a host of business support operations, including legal, accounting, engineering, design, andresearch services. The sector also includes corporate headquarters. The Columbus region is home to one of the largest Professional Services/CorporateOperations sectors among benchmark regions. The Columbus region also has the most relatively concentrated Professional Services/Corporate Operationscluster. Professional Services/Corporate Operations firms employ more than 86,000 workers in the Columbus region. On a proportional basis, the Columbusregion supports approximately 40% more Professional Services/Corporate Operations jobs than the US average. Between 2012 and 2017, ProfessionalServices/Corporate Operations employment in the Columbus region increased nearly 13%.


WEAK & DECLINING


Raleigh

Portland[32%, 1.3 LQ]

Las Vegas[38%, 1.1 LQ]

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