Why Are So Many Companies Moving to Ohio?

With supply chain shortages lingering and the pandemic bringing mounting challenges for companies across a range of industries, one of a variety of trends has emerged: a growing number of companies are relocating or boosting operations in the U.S. And one state that has seen a particular windfall of business growth is Ohio. In this segment of Backstage Pass, recorded on Jan. 21, Fool contributors Rachel Warren and Jason Hall discuss. 

Rachel Warren: I thought this was interesting. And one point I really wanted to make specifically about Ohio, it is one of only, I believe, six states that does not have a state-level corporate income tax. So there is a very big -- 

Jason Hall: Follow the money.

Warren: Yeah, there's a very big incentive. That was my first thought. I'm like, OK, what's their corporate tax laws? There's a very big incentive for companies to go there and to set up shop there.

But I think another thing that we've been seeing throughout the pandemic and then over the last two years as the supply chain issues have just eroded further, is that if you don't have control over your supply chain, you're going to have a really, really hard time surviving and being profitable and continuing to serve the customers you need to serve and draw investors in this volatile environment.

Because one of the issues that's been affecting everyone from small companies to big giants like Amazon (AMZN -1.01%), who actually have quite a lot of control over their supply chain compared to some smaller companies, is still these disruptions. I think that it makes sense that you are seeing some of these bigger companies closing the loop, bringing things back home to the U.S. I think it could create a lot of jobs.

I think that that can be a fantastic thing. Another thing I was a little curious as to why Ohio specifically, besides the obvious tax benefits. There was actually an article about this on a website called Fastcompany.com. One of the things that they noted as a potential reason for why you have some of these big companies have been moving headquarters or facilities to Ohio, is there's so much crowding on the coasts.

In Ohio, you're right smack dab in the middle, it's very easy to get to either coast by air, if you need to, for example, if executives traveling or whatever the case may be. But another thing that the report mentioned was that there is a lot of high-tech talent in the area. Ohio State University, it's one of the nation's largest universities.

Apparently, 50% of OSU graduates spend more than two years in Columbus. There's a lot of new and raw talent for companies to tap into there. I thought that was interesting. What's also interesting is apparently, "the Cincinnati Airport is the seventh-largest air cargo station in North America, driven by the likes of DHL (DPSGY -0.24%) Express as well as home to Amazon Air's first nationwide hub," according to this piece.

There's a lot of logistical as well as talent side of things and tax benefits to these companies to go there. I think there's a lot of factors, but I think when you look at it at the whole, it makes sense. I don't necessarily think we are going to be seeing, going back to the industrial revolution era level of manufacturing jobs.

I do think like you guys were saying automation and technology, they do and will fulfill a lot of those roles, particularly as technology develops. But I do think at the same time, you are going to need skilled workers to fill a lot of the gaps. I think one of the things people maybe don't always focus on is the value of learning a trade-based profession.

Maybe we'll see more people returning to those kinds of vocations as well. I think this trend of some of these larger companies closing the gap in their supply chain, I think we're going to continue to see that.

All in all, I think this is interesting news, but I think it's good news for people that are maybe concerned about the job market, concerned about getting the products they need, this seems to be a sign, I think, of good things to come.

Hall: It's just like winning a war in manufacturing. Sure, you want to have the biggest guns and the best gear, but you win it on logistics. That's being right there, that whole Cincinnati, Louisville, Kentucky Hub is a major logistics hub for rail and for air travel.

I think FedEx (FDX 0.04%) is in Louisville right there. Maybe they're in Memphis. No, they have something in Louisville. It's pretty important. Here's the thing. They're going to manufacturer stuff there, and then they're going to ship it to Southeast Asia for packaging.