DAYTON, Ohio (WDTN) – An economics report by the Carnegie Endowment for International peace and the John Glenn College of Public Affairs at Ohio State examined how recent trade issues, tariffs and foreign policy were affecting the economy in Ohio and Dayton.
The Dayton economy is currently strong, with record construction in the city and downtown, including housing. But caution flags are starting to show, according to one of the report’s authors Dr. Ned Hill.
“There are large caution signs ahead,” Hill said. “The Fed will drop interest rates when they meet. Stimulus (from Trump’s 2018 tax cuts) will be cut in half this year, and cut in half next year. China’s economy is slowing down, which is no question. Europe also is slowing down because of Brexit and it’s showing signs of recession.”
TAKEAWAYS FROM REPORT ON OHIO ECONOMY
- Dayton’s economy has remained strong, thanks to consumer confidence and the remaining effect of Trump tax cuts.
- Ohio is the state most vulnerable to tariffs against Canada. Ohio’s automotive supply chain is highly integrated with Canada and Canadian investment and ownership of Ohio companies is high.
- Tariffs against China will hurt Ohio agriculture. China is the No. 2 destination for Ohio soybeans.
- Fuyao has remained unaffected by tariffs since moving to the U.S. and into the Moraine Truck Plant. The company regionalizing in North America in Dayton has been a benefit.
- Dayton could see significant economic loss from a combination of tariffs and the lack of crops this year due to heavy rains through the spring and early summer. Other economic loss could sprout from the tornado outbreak that destroyed areas in Northern Montomgery, Miami and Mercer counties.
- Ohio is a major supplier for Boeing and Airbus U.S. assembly operations, motor vehicle operations and appliances and produces the third-highest value of output in steel among states. Steel tariffs could start affecting Ohio manufacturing if they last long term.
The report said respondents who were questioned were often confused why tariffs were implemented against allies and countries that are highly-involved in the U.S. supply chain. Hill said the state most affected by the tariffs against Canada was Ohio, which has a high level of Canadian investment as well as company ownership.
Fran Stewart, the other author listed on the report, said Ohio remained vulenerable to tariffs against China because the country is the second-largest destination for Ohio soybeans.
Tariff and trade talk also create uncertainty in the market, according to Stewart.
Before General Motors shut down the Lordstown production plant, Ohio was second in the country in the production of automobile engines. Much of the U.S. auto supply chain is connected between Ohio and Canada, which put Ohio at significant risk.
Respondents were more in favor of tariffs against China over currency manipulation and unfair trade practices.
Where does Fuyao fit
Hill said the move by Fuyao into the former Moraine Truck Plant was smart on different levels. The company was also ahead of the curve on how companies are regionalizing their production.
Because it’s building car windows and windshields in the U.S., Fuyao won’t be subject to U.S. tariffs against China. Like other companies in the United States, it moved here to regionalize production to North America, like GM has moved offshored jobs in Dayton and elswhere in the U.S. to regionalize Asia.
Dayton economy still strong, but problems could lie ahead
Hill said Ohio’s economy has remained strong thanks to tax stimulus and high consumer confidence. He said that could change if a trade war escalates, but the area has some advantages to protect it.
While the auto industry is reaching a cyclical peak, Dayton’s biggest area employer is Wright-Patterson Air Force Base. If the goverment continues to invest in the base and projects aren’t rolled back because of border projects, the base could continue to be an economic boon for the area and for many different local industries.
Daytonians also have more advanced college degrees than any other city in Ohio per capita, meaning the workforce is highly educated and versatile.
“Dayton has become much more diverse, the downtown is looking better, but it still has the same issues as the rest of urban Ohio,” Hill said. “Unskilled and undereducated workers are employed now, and have seen their wages rise from $10-$12 an hour to $15, but as skills continue to evolve in the economy, they could be left out of work.”
While companies like Delphi and GM left the area, the economy has become more diversified. But one problem for Dayton is it doesn’t house any Fortune 500 companies since NCR left in 2008.
“It’s what Dayton is missing in that mix,” Hill said. “It’s a problem in a lot of places in Ohio. There’s no longer a traditional Fortune 500 company in Ohio, and if you’re a second-tier city, they aren’t moving to your city. You have to invent them – you can’t attract them. But Dayton also remains highly entreprenurial.”