Closure of Lordstown plant will have a negative economic impact of over $3 billion

Cleveland State University’s Center for Economic Development estimates that the closure of the General Motors plant in Lordstown, Ohio will have a negative impact of $3 billion in total economic output. This includes the loss of $270 million in labor income and almost $600 million of value-add to the economy. In addition, the region will lose over $12 million in state and local tax revenue.

The Lordstown plant officially closed on March 6, eliminating over 1,600 jobs at the GM plant and almost 3,000 jobs in the regional economy. Accounting for previous closure of the 3^rd and 2^nd shifts, the Youngstown region lost over 7,700 jobs and more than $8 billion in overall economic activities. Measured in Gross Regional Product value (equivalent to GDP regionally), the region has experienced a 9 percent loss due to the closure.

The CSU study, which was funded by the U.S. Economic Development Administration, sought to examine the impact of the closing on the Youngstown region and assess potential assets the community can utilize to grow its economy moving forward.

“Lordstown was a significant economic driver in the region in terms of direct and indirect employment, support to the local tax base and as a customer for numerous local businesses,” says Dr. Iryna Lendel, director of the Center for Economic Development, which is housed in CSU’s Maxine Goodman Levin College of Urban Affairs. “However, the area does have numerous resources that can be engaged to attract additional investment and offset the job and output losses that have occurred.”

Lendel argues that two groups of regional industry drivers (GRIDs), oil and gas and growing legacy manufacturing, are particularly poised for growth and should be the targets for federal, state and private investment. Combined, these two GRIDs currently produce $2.7 billion in output annually and employ over 5,300 workers.

Lendel also notes that special attention should be paid to the continued restructuring that is occurring in additional manufacturing sectors as well as the medical and service industries, which represent the region’s declining economic base. Job retraining initiatives, educational support and tax incentives should be targeted at workers in these sectors as businesses continue to adjust to declining demand.

“A number of industries, including oil and gas extraction, petroleum products manufacturing, steel production and aluminum manufacturing, have recovered from the Great Recession, are growing and will benefit from expansion of their supply chain within the region,” Lendel adds. “At the same time, several industries continue to lag behind and economic development agencies and local governments need to develop specific initiatives to address the challenges these businesses face, while assisting workers in these fields in adjusting to the continued restructuring that is likely to occur.”

In partnership with the Eastgate Regional Council of Governments, Lendel and her team have met with area elected officials, economic development leaders, and non-for-profit organizations to share their findings and plan on working with Youngstown leaders to assist in developing a comprehensive economic growth strategy for the region.

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