Tax reform reduces risk, helps businesses prosper

COLUMBUS, Ohio (August 19, 2008) – Business owners are choosing Ohio as a preferred location for business development, relocation and expansion thanks in large part to sweeping changes in the state’s tax environment, according to the Ohio Business Development Coalition, the nonprofit organization that markets the state for capital investment. Based on the newly released, “Ohio Tax Reform: Year 2 in Review” report (http://www.ohiomeansbusiness.com/year2tax_report/obr_taxreport_year2.pdf), Ohio’s new tax reform and supportive environment for business and personal development make the state a top competitor in a 21st century, global marketplace.  

Independent, third-party economic models project that by 2010, the reforms will grow Ohio’s economy by increasing gross state product by $5.6 billion and personal income by $3.6 billion. It also is expected to lead to an additional $6.3 billion of new capital investment in Ohio’s economy.

The new tax structure, now in its third year of implementation, was a deciding factor for Amylin Ohio LLC, a subsidiary of San Diego-based Amylin Pharmaceuticals, Inc. to expand construction at its manufacturing facility in West Chester, Ohio. The expansion, announced in 2007, is part of an approximate $500 million total investment. Amylin is expanding the facility to manufacture a compound in development for the treatment of type 2 diabetes, a once weekly version of exenatide.

 “Ohio continues to improve on its world-class business climate, and the recent tax reform is another example of how the Buckeye state provides an inviting and collaborative environment to help businesses succeed,” said Daniel M. Bradbury, President and CEO of Amylin Pharmaceuticals, Inc. “Our manufacturing facility is an important investment in our mission to deliver life-changing medicines to the patients we serve, and Ohio is a valuable partner is helping us to accomplish that goal.”

With its revamped tax code, Ohio’s state taxes are on track to be the lowest in the Midwest for companies making new capital investments. Projections show that by 2010, Ohioans will see a real world impact of up to a 63 percent reduction in tax burdens. Just three years after implementation, the new tax code is already growing the state’s diverse economy, improving the standard of living and enhancing Ohio’s standing in an increasingly competitive market.

Ohio’s tax reform package benefits businesses by:
•    Reducing operating costs – No tax on inventory or corporate income
•    Enhancing productivity – No tax on investments in machinery and equipment
•    Attracting talent – Shrink labor costs through a 21 percent reduction in personal income tax
•    Creating a level playing field – All companies taxed the same low rate
•    Boosting return on investment – No tax on products sold to customers outside Ohio
•    Rewarding entrepreneurship – First $1 million in gross receipts are tax-free

“Business owners and entrepreneurs are realizing how, in Ohio, they’re able to find the perfect balance between successfully growing a business and still enjoying life,” said Ed Burghard, executive director of the Ohio Business Development Coalition. “Business owners profit from the bottom-line benefits of better work-life balance for their employees. Ohio’s low-cost, low-stress communities and combination of micropolitan and metropolitan cities provides executives and employees the resources and time to make any ambition achievable. Ohio truly is the state of perfect balance.”

About the Ohio Business Development Coalition
The Ohio Business Development Coalition is a nonprofit organization that provides marketing strategy and implementation to support Ohio’s economic development efforts. For more information, visit http://www.ohiomeansbusiness.com.

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Enzo Perfetto, Chairman

Home Builders Association of Greater Cleveland

6140 West Creek Road

Independence, Ohio 44131

(216) 447-8700

(216) 524-0758 fax

“Our mission is to propagate positive articles about Northeast Ohio.”

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Ohio a leader, magazine says, praising coordinated approach

Tops in bioscience

1. Pennsylvania

2. California, Massachusetts (tie)

4. Ohio, Texas (tie)

6. Illinois

7. New Jersey

8. New York

9. Florida

10. Kansas, Minnesota (tie)

Source: Business Facilities magazine

Ohio’s Third Frontier tech-funding initiative and university research programs have combined to put the state among the tops in the country for bioscience, a new report says.

Ohio was ranked as the best in the Midwest and fourth in the country, tied with Texas, for its bioscience strength, according to Business Facilities magazine.

The magazine is aimed at businesses and organizations looking to open or expand operations. The bioscience industry includes everything from food science and medicine to environmentally sensitive technologies and health-care innovations.

“Any state that appears in the top 10 should be considered an industry leader,” said Jack Rogers, the magazine’s editor-in-chief.

The rankings were based on numbers and types of facilities, research and development, and investments, and also factored in lifestyle issues such as cost of living, recreation and educational opportunities.

The magazine used data from the Biotech Industry Organization, Battelle and some government statistics to determine the rankings.

A major factor in helping Ohio achieve its position is the Third Frontier Project, a 10-year, $1.6 billion initiative designed to promote high-tech business and support education.

Of the $637 million awarded between January 2002 and June 2007 through the project, 55 percent was allocated to bioscience-related development and commercialization, according to the Ohio Department of Development.

The project has led to an additional $2.7 billion in investments and has helped create or retain 4,850 jobs in Ohio.

“I think it confirms a trend that we see developing,” Rogers said. “The fact that (Ohio) passed some states (in the ranking) indicates they are making progress.”

He declined to say where Ohio ranked last year except to say it was not in the top 10.

“The states that are succeeding are the ones that have a really coordinated approach (and) are harnessing their universities and labs and creating hubs that support this type of industry,” Rogers said.

Industrial support, coupled with major educational institutions, is something Ohio possesses.

Ohio’s wealth of higher-education institutions is “at the core of its strength and growth in bioscience,” said Ed Burghard, executive director of the Ohio Business Development Coalition, in an e-mail.

“The Ohio State University, Case Western Reserve University and University of Cincinnati are among the most prominently ranked research facilities in the nation,” he said.

Institutional grants are often awarded through the National Institutes of Health and make up a large portion of the $627 million in funds allocated in the state.

The funding requires private-sector collaboration, said Matt Schutte, director of corporate communication at BioOhio, a nonprofit business and education advocacy group.

The number of nationally recognized bioscience- related companies also helped Ohio cement its position in the top 10.

“Ohio is home to literally a ‘who’s who’ of bioscience success stories,” Burghard said.

Companies include GE Healthcare, Pfizer, Procter & Gamble and Cardinal Health, along with smaller operations working to bring products to market.

In 2006, biosciences in Ohio were worth $146 billion, almost 18 percent of Ohio’s total economic output. Central Ohio’s share was $6.5 billion, according to a growth report by BioOhio.

“(Biosciences) is so diverse, so the industry will have pockets of strength,” Schutte said. “In Ohio, it will be medical devices and equipment.”

Of the 818 bioscience organizations in Ohio, 383 are at least partially involved in medical devices or equipment. Second is pharmaceuticals and therapeutics, with 195 organizations in the state.

“We are starting to recognize and realize Ohio is a great place to take medical manufacturing product to market,” Schutte said.

The logistical advantages of Ohio’s location are appealing to companies as well as its research facilities, work force and low property costs, he said.

Ohio does face challenges in maintaining its status as a biotechnology leader.

One area to improve “is being able to develop and recruit enough talent to keep the industry going,” Schutte said.

Brought to you by:

Public Relations Committee

Enzo Perfetto, Chairman

Home Builders Association of Greater Cleveland

6140 West Creek Road

Independence, Ohio 44131

(216) 447-8700

(216) 524-0758 fax

“Our mission is to propagate positive articles about Northeast Ohio.”

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Chagrin Boulevard is Ivy Zelman’s Wall Street.

The top-ranked analyst established her firm Zelman & Associates in Beachwood last year when she left financial giant Credit Suisse, opting to stay in the area where she and her husband are raising three children.

“I’ve got a pretty good gig here relative to what I’d have in New York,” she said. “You can have a great office here and an easy commute. The quality of life is just ten times better than I could ever have in New York.

“Some of my colleagues were like, ‘I can’t believe you want to live in Cleveland,’ ” she said.

Her firm is the newest member of Northeast Ohio’s budding and bustling investment research community. While financial epicenters like New York and London command attention, experts say firms formed here are gaining recognition.

Today, more than 300 researchers actively follow industries and publicly-traded companies in high-paying “knowledge economy” jobs in Cleveland and suburbs such as Beachwood and Independence. They sell their research to investors looking to make financially-rewarding stock picks.

As chief executive and president of New York-based Integrity Research Associates, Sandy Bragg oversees an office of analysts who evaluate the research of other analysts. Northeast Ohio firms have started to grab his attention, and the work of several analysts have earned accolades in annual rankings produced by business publications like the Wall Street Journal and Institutional Investor magazine.

“The reality is investment research can be done from almost anywhere,” Bragg said. “There is no reason why you have to do investment research in New York or Boston or London.”

The lineage

For decades, Roulston & Co. and McDonald Investment Inc. dominated Cleveland’s investment research industry. But Roulston exited the business in 1996 to focus exclusively on asset management and McDonald was acquired by KeyCorp two years later.

Rather than gutting investment research here, Roulston’s decision gave rise to Midwest Research. Founded by 15 former Roulston researchers, the firm gained enough traction to attract First Tennessee National Bank, which bought Midwest and slapped its initials out front to rename the company FTN Midwest in 2001. Today, FTN Midwest has 60 people in Cleveland and 165 nationwide in six offices around the country.

Marty Rizzo, FTN Midwest’s chief operating officer and director of research, was among the Roulston expatriates. Spinoff companies have stayed in Cleveland for several reasons, he suspects, including the most basic rationale — people enjoy the quality of life.

“It’s a great place to live,” Rizzo said. “People want to stay in the business and want to stay in town.”

The Roulston lineage extended further when two sets of researchers left FTN Midwest to form Longbow Research in 2003 and Cleveland Research Co. in 2006.

David MacGregor, the founding chairman and chief executive of Midwest Research, heads Longbow. The name, he said, was selected to give the firm a brand that suggested a tactical advantage, in the same way the longbow gave the outmanned British a tactical advantage over the French in the Battle of Agincourt.

That advantage, MacGregor believes, extends to the in-depth intelligence his researchers collect to analyze companies, as opposed to just using models. The firm has 70 employees.

He also believes working in Northeast Ohio has its advantages, both personally and professionally. It’s a great place to live, he said, and more conducive to independent thought than the “shallow idea pool” of Manhattan.

Also, MacGregor can get good recruits from the local colleges “at a more reasonable price than somebody graduating from Columbia or NYU.”

Other investment research businesses also sprang up in the region, including a firm of institutional real estate analysts called The Townsend Group, which opened in 1983 and spawned Courtland Partners Ltd. in 1995.

Market research firms that specialize in industry analysis, such as Research Investment Inc. and The Freedonia Group, also call the Cleveland area home.

The edge

While being more than 450 miles removed from Wall Street might seem problematic for an industry that’s so closely tied to the markets, investment researchers here say the distance and location offer an edge.

That edge and the ability to differentiate from others are key to attracting clients and creating clout, many said.

“I don’t know that we could do what we do anywhere other than Cleveland,” said Eric Bosshard, Cleveland Research’s chief executive and a former employee of both Roulston and FTN Midwest. “For us, it’s the team mindset of how we do what we do. It’s easier to do that with Midwest-type people.”

Cleveland Research aims to recruit locally and foster an atmosphere of collaboration that likely would be impossible in more individual-focused areas like New York and Boston, Bosshard said. That helps generate a different approach to research that separates his company from larger firms with more name recognition.

The distance from New York and other major financial cities also allows his analysts to take a fresh approach to research, he said.

“The purity of the thought process is a lot easier when you don’t know what everyone is thinking,” Bosshard said. “In those sort of money centers, there tends to be a group-think mentality.”

Many others agreed.

“It’s easier to do your own thinking when you’re not as influenced by what the mainstream is thinking,” Bragg said.

Bragg said firms owned by former Roulston employees have carried on the parent company’s tactic of thorough channel-checking, a practice that involves talking with a company’s suppliers, distributors, customers and competitors to glean a better understanding of its financial health.

“It’s part of their discipline,” Bragg said. “They have become well known among investors for that area of expertise.”

Developing a niche also has been a necessary move for many Cleveland research firms to compete, whether that means emphasizing channel-checking, focusing on a specific industry or capitalizing on the region itself.

“People like [that] you’re in Middle America. You drive your car and you go home and you have three kids,” Zelman said. “The non-New York clients see a lot of similarities in lifestyles, which I think is a real positive for us.”

Ivy Zelman

As an analyst for the housing sector, Zelman said many of her manufacturing and mortgage clients are based in the Midwest, including Cleveland’s KeyCorp.

Local companies seem more willing to approach her with business opportunities given her location, Zelman said. In New York, she said she would have been “a dime a dozen.”

Regardless of her mailing address, Zelman likely attracts clients because she’s widely considered one of the best housing analysts in the country.

Bosshard said for his company and others in Cleveland, similar acclaim resonates the loudest with potential clients.

“You’re not viewed as a second-class citizen,” Bosshard said. “You’re basically viewed as: ‘You’re from Cleveland. OK, that’s interesting. Now is your research any good?’ That’s really all anybody cares about.”

Brought to you by:

Public Relations Committee

Enzo Perfetto, Chairman

Home Builders Association of Greater Cleveland

6140 West Creek Road

Independence, Ohio 44131

(216) 447-8700

(216) 524-0758 fax

“Our mission is to propagate positive articles about Northeast Ohio.”

(If you do not want to be included in future releases, please hit reply and ask to be removed from list.)