Frank Sinatra once famously crooned, “My kind of town, Chicago is.” These days he would be joined by a chorus of business and industry executives who have chosen to invest in the Windy City. In fact, 385 companies either expanded or located in Chicago in 2014, resulting in the city being named Site Selection’s Top Metro in the US for the second straight year. The consecutive wins are a pleasant endorsement, says Jeff Malehorn, president and CEO of World Business Chicago.
“Winning back-to-back speaks to the economic leadership and the work being done here in the city and the region,” he says, tipping his cap to Mayor Rahm Emanuel, assorted partner organizations and the business community.
Chicago’s appeal is hardly surprising. The city’s boasts outstanding transportation and logistical assets, including two international airports, a rail hub and seaport, and stands at the crossroads of major Interstates. Chicago and the region are home to a wealth of talent educated at some of the nation’s premier colleges and universities. Foreign companies looking for a US home are drawn to the city’s diverse ethnic population. “Any company outside the US can look to Chicago and see a home,” says Malehorn.
Project highlights for Chicago in 2014 include:
- Valence Health — a health services company based in Chicago adding 500 jobs over the next five years;
- Yelp — the online review and advertising site based in San Francisco, Calif., is opening an office in Chicago and plans to hire 300 employees;
- Braintree — the global payments platform expanded into a 65,000-sq.-ft. (6,000-sq.-m.) headquarters on the eighth floor of the Merchandise Mart. The company is adding 360 new jobs by 2017.
- ADM — the food services company opened its new global headquarters in downtown Chicago in August 2014.
“We have momentum,” Malehorn says. “You can be nothing but bullish. You see it in the metrics.”
In figures released in January, Chicago posted its lowest unemployment rate since April 2008, 6.2 percent. The number of city residents employed in December 2014 increased by more than 38,000. The jobs were mostly attributed to professional and business services, education and health service and transportation and warehousing. Malehorn says diversity is a theme in Chicago’s growth, but so is innovation and disruption.
“No single sector dominates,” he says. “We’re one of the most diverse cities by industry, and yet every industry and company is either going to be technologically enabled or disrupted. That’s why we spend a lot of time making certain we’re competitive, whether in information technology, clean tech, advanced manufacturing, or bio and med tech. These firms are attracted to the Chicago region because they’re near the talent and this broad customer base and transportation.”
All-Star Success In an All-Star City
Several years ago Major League Baseball selected Cincinnati to be the site of the 2015 All Star Game. But the city on the banks of the Ohio River has been a top choice for companies for long time and last year it climbed three spots, from number six to number three, among Site Selection’s Top Metros.
“Greater Cincinnati is not an overnight success,” says Johnna Reeder, president and CEO of the Regional Economic Development Initiative (REDI) Cincinnati. “While other regions fought to hang on during the 2008 recession, Cincinnati doubled down with investment in infrastructure and housing. It’s created an environment where new companies are moving to town and expanding. Cincinnati is hot right now.”
Fabian Schmahl, president and CEO of ThyssenKrupp Bilstein, located in Hamilton just north of Cincinnati, agrees. In addition to the low cost of doing business, excellent workforce and logistical infrastructure, Schmahl says the partnership between the state and local economic development offices is remarkably close. “All of them do a really good job being pragmatic, not bureaucratic,” he says. “They find solutions instead of finding problems. The response time is amazing. But it’s more than the timeline, it’s the attitude.”
Last year, ThyssenKrupp broke ground on a $26 million, 60,000-sq.-ft. (5,600-sq.-m.) expansion that will create an additional 200-plus jobs. The company manufactures shock absorbers and complete suspension solutions. “Everything exciting coming out has our products, like Tesla,” Schmahl says. “We’re very future and technology oriented.”
A 10-year lease was coming up for Empower, a longtime media marketing agency located in the Mount Adams area of Cincinnati. Though the company considered moving elsewhere, including serious looks at Chicago and across the river in Kentucky, CEO Jim Price says a number of factors kept them in Cincinnati.
“If we went to Chicago, you’re talking about a 20-percent increase in what you’re going to pay in rent and the increase in salary to keep up with cost of living,” he says. “In Cincinnati you have sophisticated marketing with the low cost of overhead. That was a key differentiator. Simply by staying here, we’re able to provide very sophisticated services to our client at fees that are 20 percent less than Chicago and possibly 30 to 40 percent less than New York.”
The company received a five-year job creation tax credit through the Ohio Tax Credit Authority. Empower plans to add 40 full time positions over the course of five years that will add $2.8 million in additional annual payroll. And talent attraction isn’t a problem. In June 2014 the company added 15 new jobs; seven of those new employees came from outside the city. “Two were from New York, some from Texas and some from Illinois,” Price says.
Cracking the Top Ten
The biggest jump of any metro in the Top 10 was made by Louisville, Ky. In 2013, the city was ranked 16th, but last year Louisville leapfrogged seven spots into the ninth place on the list with 86 projects. Among the region’s top projects for 2014, the Ford Motor Company announced two expansions totaling $209 million and GE Appliances revealed plans to invest $280 million in equipment and facilities upgrades.
In addition to manufacturing, the city saw business expansions or attractions in several key industries including food and beverage (Beam Suntory and Mesa Foods), business services (FirstSource Group), and logistics (UPS Supply Chain Services). Mary Ellen Wiederwohl, executive director of Louisville Forward, gives a great deal of credit to the leadership of Louisville Mayor Greg Fischer, an entrepreneur and small business owner.
“He has walked in the shoes of business people and understands when government needs to help and when to get out of the way, and most importantly how we best serve this economic engine we’ve got running on all cylinders in Louisville,” Wiederwohl says.
Conversations with companies either looking to locate or expand quickly falls into two categories, people and place. “They ask, ‘Do you have the talented workforce with the skills I need?’” says Wiederwohl, “And, ‘Where can I locate and what’s the cost of doing business there?’ We have a very attractive set of answers.”
Several years ago, the city made a commitment to encourage degree completion and development and is now above the national average in the number of citizens holding associates or bachelors’ degrees. “We launched an apprenticeship program here in Louisville that’s very cutting edge addressing our middle skills issue as an economy,” adds Wiederwohl. “We have a robust innovation culture here helping to create the next cutting edge business in our region. Our real estate solutions are a very high value proposition. Finally we have this great, funky culture in Louisville. We have ‘bourbonism,’ we’ve got a great live music scene and rank high in our food culture. You have this great package in a livable city where you can afford to live.”