An Ache In The Heartland
Pinned to the walls of Roger Yane's Lufran Inc. office -- just south of the eastbound breakdown lane along Interstate 271 in Macedonia, Ohio -- are a pair of maps. One depicts the continental United States, the other the greater metropolitan area of Dallas. Lufran designs and manufactures industrial heating and control equipment for national distribution, and geography seems to be much on its young president's mind. Sitting in his office, he glances at the maps repeatedly as he delivers an impromptu discourse on the state of his company -- and the state of his state.
"It didn't take a genius to see the coming downturn in the plating and automotive industries," says Yane through a thick cloud of Lucky Strike smoke. "Which is why, in 1980, I decided we had to develop a new market in the semiconductor industry. In order to do that, of course, you really need to establish a presence out there [in Silicon Valley]. You need to be able to run down the street and have your product tested by the customer who's using it."
Yane waves a cigarette in the general direction of Santa Clara County, Calif.
"But it's even more basic than that," he says, referring to Lufran's proposed relocation plans. "I think the biggest problem here is the lack of government visibility and leadership. Emotion is a great motivator, you know. When I don't see any enthusiasm, I don't get enthusiastic. And I just haven't seen much interest in small companies coming from the state level. I dunno, they must think we'll all be here no matter what they do."
He exhales slowly. "This part of the country has a slow rate of change," he adds, "just like any big business. The few controlling industries here have all been hit hard. Yet people in Ohio refuse to believe the facts that are staring them in the face. Sometimes they have to get shocked -- slapped around, even -- before they move ahead. So, yeah, we're thinking about moving. The Texas people have been unbelievably supportive."
Twenty-five stories above downtown Columbus and just across the boulevard from the State House, Al Dietzel stares up at a chart of his own.This one is an 8' x 8' grid panel, color-coordinated in red, green, and black, and it lists the major components of Ohio's new economic recovery plan and their scheduled implementation. Dietzel, director of development under Richard E. Celeste, the governor of Ohio, calls this office "the war room" and says, "The greatest value of this [chart] is that the names of all the people responsible [for these programs] are right up there on the wall, and they know Dietzel's next door. There's no place to hide."
For most of the past year, Dietzel himself has been a moving target all over Ohio. From Cincinnati to Toledo, the diminutive bureaucrat has caucused with industry executives, labor leaders, small business groups, financiers, and academicians. The principal product of these meetings is a multipart document entitled "Toward a Working Ohio: A Strategic Plan for the Eighties and Beyond," the first comprehensive economic planning program Ohio has ever produced. As striking as the plan's particulars are -- and they include fresh initiatives for job retraining, technology transfer, small business enterprise centers, institutional investment in entrepreneurial concerns, and a host of other proposals -- perhaps more significant is the process by which it was assembled. After months of canvassing, 1,200 rough-draft copies were mailed to business, labor, university, and community leaders throughout Ohio for preliminary review. One respondent submitted a critique longer than the original report. Small wonder Dietzel calls policy-making a "dynamic, continuing process."
Then, too, there is an uncharacteristically sober tone to the whole report. "Demographic and economic forces," notes the introduction, "have had a significant impact on Ohio's development during the past three decades. The State has not given them the attention they deserve. The consequence is that Ohio citizens have paid a tremendous price in lost economic opportunities and ineffective public programs."
Al Dietzel is a man with a mission -- and a mandate. "Part of our problem," he confesses, "is that, historically, we've done some extraordinary things for companies wanting to move into Ohio and virtually nothing for the ones that are already here. The first thing Celeste told me was, 'Do nothing for any outside company that you wouldn't do for one we've already got.' But it's hard to overcome history."
He sighs. "People in this state want leadership, but they don't want a state plan that's a State Plan, if you know what I mean. They want something that's a product of the best minds in Ohio. Something that addresses the problem of venture and seed capital, that creates the kind of sophisticated network to evaluate new technologies that you find on the East and West Coasts. And it has to build on our indigenous strengths. Ohio is not going to be the next silicon-chip center of the free world. We are an old manufacturing state trying to adapt to new markets."
Dietzel and Yane have never met. As matters currently stand, in truth, they have a better chance of bumping into one another at the Dallas-Fort Worth airport than in downtown Cleveland. But the two make instructive bookends. One oversees a multimillion-dollar advertising campaign selling Ohio ("Ohio . . . The Heart Of It All") to business and tourist markets; the other says, "Let's not make the situation here look good, let's make it look bad. Make it look bad, then come up with a plan to fix it." One points to such programs as the $32-million Thomas Alva Edison Partnership Program as proof that Ohio can forge meaningful alliances between the public and private sectors, between academe and the entrepreneur; the other laments that when one Ohio company made last year's INC. 500 list of the fastest-growing private companies in America, it got congratulatory letters from a dozen state governors -- but not Celeste. "It was like your father not showing up for your high school graduation." One sees a map full of promise; the other stares beyond it to new frontiers. In Ohio, the heart of it all, there is, plainly, plenty of rhetoric and plenty of rust. Rust, and distrust.
Roger Yane is a native Ohioan who moved east and became an IBM Corp. computer repairman before working his way up to a salesman's job. In time, he moved back to the Buckeye State to help run his father's business. When he took over, Lufran had a promising product and little bank debt. Over the ensuing 10 years, Lufran has grown to 53 employees and $2.8 million a year in revenues, and has twice switched sites as its manufacturing needs have expanded. The company moved to its current 12,000-square-foot location three years ago, after Yane had rejected the idea of buying real estate, because he feared the market wouldn't hold its value in recessionary times. But if he has one recurrent headache, he says, it is dealing with the local labor market.
"Hiring engineers is a problem," says Yane, who has three of them on the payroll, "because they're not used to working for small companies. They aren't flexible enough to wear a lot of hats -- you know, design a high-tech component one day and fix the toilet the next. And then there are the unions. There was a TV show -- '20/20,' I think -- that featured some unemployed auto worker from around here. I saw it, called him up, and offered him a job the next day. Not because I felt sorry for him, but because I thought he could help my business. Turned out he didn't want the job. He said he could make more on unemployment. Well, hell, I can't afford to compete with my own unemployment bureau. That's screwy.
"I don't blame the unions," he continues. "Management created the situation by giving them the concessions. What I've got to deal with is the residual mentality that says labor jobs are worth $30,000 or $40,000 a year. When we went to Texas, the first thing they told us was, 'Come on down, but don't bring any of your Northern crap with you. No unions, no polluters, no anti-Southern bias.' We said, 'Okay,' and then we called in the local business community and told them what their competition was. They didn't even know Texas has no [corporate income] tax. Right after that, we got hit with a 260% increase in our unemployment tax -- and we hadn't even laid anybody off.
"I'll give you one other example. I got a phone call about a year ago from the city of Macedonia, asking for a contribution to a fund for laid-off workers. 'Sure,' I said, 'I'll put some money in. When do I get it back?' There was no answer on that. 'Well,' I said, 'what kind of tax break can I look forward to?' 'Tax break?' they said. I said, 'There's your problem, boys. I don't run my business to subsidize failure. And this state has been doing that for years."
Al Dietzel headed up the Columbus-area Chamber of Commerce for four years before moving into state government. A runner in his spare time, Dietzel evinces little patience with the slow grinding of governmental gears. When the idea emerged to streamline business licensing by creating a one-stop shopping center for forms, Dietzel insisted it be up and running in a month. It was.
"To a certain extent," he says, "perception is reality. And one, of the perceptions -- one of the myths, really -- about Ohio is that, because we've been highly unionized, we have an employer-employee relationship problem. I'd say the larger problem is convincing traditional adversaries to work in partnership. Getting our state universities to recognize that is hard enough, but there are only a few of them. At the labor-management level, we're dealing with hundreds of local unions, most of them autonomous. So I like it when I hear someone like Bill Sheehan, executive secretary-treasurer of the Cincinnati AFL-CIO Labor Council, stand up and say that at least half of the labor problem rests with his people. That kind of talk encourages me."
Yane says he is listening. "I've got a lot of respect for anyone who's willing to try something," he says, "even if it fails. But there's gotta be some bloodshed around here. Excuses are one thing, action's another." At least one action seems certain: Come October, Lufran will move part of its manufacturing operation to Texas. Beyond that, the boys in the war room have their work cut out for them.