Northeast Ohio welcomes economic growth through surge in energy production

Northeast Ohio was once called “Steel Valley” for its network of manufacturing that supported communities up and down the Ohio River. Then came steel’s decline, loss of jobs and another more unfortunate nickname: “The Rust Belt.” After the Great Recession battered the country, Ohio’s northeast city of Youngstown hit a record unemployment rate of more than 13 percent in 2009.

That was just six years ago.

Today, the area is booming – largely because it is tapping one of the country’s most dynamic sources of natural gas, located underground in what’s known as the Utica and Marcellus shale formations. This has triggered unprecedented economic growth in a once-moribund area of the country. Manufacturing giant Vallourec built a billion-dollar, state-of-the-art facility in Youngstown because of those vast reserves.

Vallourec’s steel mill – the largest investment in the state since General Motors opened a plant in 1966 in nearby Lordstown – now employs more than 650 people. More jobs were created when a Vallourec sister company began production at an $80 million pipe-threading plant in May. Gas and oil production companies now form a hub of economic activity in Youngstown, driving growth throughout the industry and the businesses that serve them, from sandwich shops to law firms.

Three Workers Entering Factory

One of them, the Timken Company, invested $225 million to expand an existing steel plant in the region. A spinoff from the company, TimkenSteel, is building a $40 million facility near Canton, Ohio. Another – ArcelorMittal, the world’s largest steel manufacturer – infused its Shelby, Ohio facility with a $30 million expansion.

Despite these recent developments, Youngstown residents have not forgotten the woes of just a few years ago.

“The most vivid image for me was hearing about and watching all the houses go into foreclosure,” said Guy Coviello, vice president of government affairs and media at the Youngstown-Warren Regional Chamber of Commerce. “My wife and I were searching for a new home at the time. We looked at one that was in foreclosure. The previous owner took everything: copper pipes, kitchen cabinets, flooring, handrails.”

Coviello says today “people are working. Houses are selling faster. This is statewide, but in many ways, the epicenter for recovery is right here.”

Even though the drop in oil prices over the past several months has affected the natural gas industry, production is expected to continue to increase steadily in the years to come.

The ripple effect of natural gas development extends throughout different businesses in the region. Ohio law firm Bricker & Eckler LLP discovered that this regional investment in the shale industry has also spurred development in an array of projects around the state, ranging from pipeline operations to new hotels and rail transportation. The firm says those projects add up to more than $22 billion.

That kind of money is also creating new opportunities for Ohio’s young people.

“Where I really see the impact is in the number of students that are coming to Youngstown State University wanting to pursue careers in oil and gas,” said Jeffrey Dick, professor and chair of Youngstown State University’s Department of Geological and Environmental Sciences and director of its Natural Gas and Water Resources Institute.

Digital tablets in classroom

According to Dick, the number of geology majors at Youngstown State has more than doubled in the last four years from roughly 25 to almost 60. The trend is also seen in fields such as environmental science, chemical engineering and civil engineering.

Best of all, Dick said, “now that these students are coming out of the pipeline with the educational background, they’re getting hired at great-paying jobs.”

These fields can be lucrative for young graduates. According to Ohio’s Department of Job and Family Services, the average salary for jobs in the state’s shale industries ranges from $60,000 to $70,000. That compares to about a $45,000 average salary across all industries in the state.

Dick is optimistic about what he calls an “energy renaissance.” He believes it will bring states like Ohio, West Virginia and Pennsylvania “a tremendous amount of opportunity for further expansion and growth” for the next two decades or more. He envisions the future of natural gas in Ohio with “hope, and that’d be followed by jobs.”