The Columbus region has been a dominant market for the retail sector and in the financial services sector with many Fortune 500 companies headquartered in the region. On this episode of the Economic Development podcast, Kenny McDonald, President & CEO of One Columbus, discusses the impact that COVID-19 has had on accelerating the retail shift to e-commerce and the growing FinTech sector. He also shares the role that the privatized Jobs Ohio has on supporting venture-backed companies and the inclusion fund being launched to close the equity gap.
We’re very lucky as a region to have state entities privatized from 10 years ago such as Jobs Ohio, which helps to have platform already in place to provided the support needed during the pandemic. As a result, we’ve been able to invest in venture-backed companies
- 02:20 – The specific strengths in the economic development landscape that will help our recovery through the pandemic
- 04:04 – One of the weaknesses in economic development are the inequities across Black and minority communities in addition to the lack in digital access.
- 07:32 – As headquarters to some of the largest retailers in the country, Kenny shares how the shift was already happening to e-commerce and how the pandemic is accelerating that in addition to the creation of fulfillment centers. Kenny also discusses the concentration of financial services companies in Columbus and the impact it’s having in FinTech.
- 12:23 – Kenny discusses the region’s investment in venture-backed companies.
- 13:15 – An inclusion fund has been established to fund minority businesses.
Kenny McDonald 00:00
And I think we have an enormous role to play in not just rebuilding and restarting but reimagining the profession and the practice of economic development as we move forward and address the pandemic health crisis with it. We have the economic crisis that we have across the world. And finally, the racial injustices and inequities that we have across particularly the US.
Fabiola Fleuranvil 01:01
I just wanted to chat with you and have you share your perspectives with our listening audience in terms of how the state of economic development looks like these days for you now that we’re moving into recovery and resiliency as an industry.
Kenny McDonald 01:16
Well, our industry was, like a lot of industries undergoing a lot of change anyway, as we started this decade, and just like a lot of the other industries, that change has been accelerated. And all of our strengths and weaknesses have been brought to the surface over the last hundred days. And I think we have an enormous role to play in not just rebuilding and restarting but reimagining the profession and the practice of economic development as we move forward and address, you know, the pandemic, the health crisis that we have, the economic crisis that we have across the world. And finally, the racial injustices and inequities that we have across, particularly the US.
Fabiola Fleuranvil 02:14
Wow. So you’re starting off heavy. So let’s jump right into it. So I definitely want to hear what you see as strengths in the economic development industry that COVID-19 has revealed? And then what does the reimagining look like as well?
Kenny McDonald 02:32
Well, as for strengths, from the US perspective, we have the largest economy in the world. And, you know, we do ultimately have the rule of law. And you know, so many things that makes the US a prime location for growth over the long term, and while that may slow us down in some ways, and cause lots of consternation in hand wringing and with a debate about, what we should do over time. We still have what I think are the greatest companies in the world that have innovation built into them, both large companies, as well as a system that rewards risk and rewards, and failure even for those entrepreneurs that are willing to quit their job or take a risk to put their own money or their family’s money into a small venture in an effort to make it a big one. And that’s a rare thing across the world. And I think we have to continue to remind ourselves of our many strengths as we start to rebuild and those basic principles that we hang on to as we move through this.
Fabiola Fleuranvil 03:57
So what would you say are some of the weaknesses that you think needs to be addressed as we’re moving out of this pandemic?
Kenny McDonald 04:04
Well, we’ve obviously had a lot of misalignment. Right? So, there’s arguments about whether we should focus on big business or just venture-backed high growth companies or truly those main street businesses – those startup businesses that we have in every community. And you’ve seen that there’s incredible inequities and the resources there to put into economic development, from community to community, even within Metro Metropolitan markets, like our own, the dollars and the energy spent in minority community and their ability to build wealth and everything is really limited by that same for some of our rural communities. And both of those communities are some of our most entrepreneurial populations, and I think they’re just really under-leveraged. So I think that’s something that’s been under invested in that’s caused it to be weak, but it doesn’t have to be a weakness going forward.
Secondly, I think that we talked about infrastructure and how to rebuild our infrastructure across the country for a long long time. You know it can be a weak point. And if we go across nations of the world and the infrastructure that they’ve built and invested in, in Asia in Europe, I wish we would have probably spent more, because it’s going to be really hard to do that now. With major federal state and local deficits in the foreseeable future, it can be really hard to rebuild infrastructure in the way that we’ve done it in the past. The infrastructure is going to be necessary for us to rebuild our economies. That means broadband, so that people can now tap in online education, work from home across all kinds of communities. I just got off the call on that in our region on how we’re going to develop broadband and get it to school aged children. Even if they can go back to school, they’re going to need it to do their homework when they get home. And at worst, if they can’t go to school, it’s going to be a necessity for them to have that in their home and device to access it.
Fabiola Fleuranvil 06:37
So it’s good to hear that your region is investing in broadband, particularly as you know, virtual school may seem to be more of a norm than anything. And then going back to your comment about innovation. So you know right now, what COVID is revealing is just a surge in new innovations around immunology and technology, particularly in the search for vaccines and other issues that may help to solve this virus crisis, but within your region at the micro level, what would you say are some of the opportunities that you think have been revealed since COVID-19? And that can be from an industry perspective. So if you’re seeing more industry growth or more potential to really target certain industries that may have been under invested or perhaps haven’t received the larger share of the focus. What do you think some of those opportunities are?
Kenny McDonald 07:32
Well, as the fog clears a little bit from the crisis, we kind of go back to where our core industries, and our examples of that in our region would be our automotive sector, finance and insurance sector, and our retail sector. We have a lot of headquarters in retail here with Abercrombie & Fitch and Athena and all those companies that are headquartered in our market, for example, all of them were undergoing pretty substantial changes. We started in January, right before all of this was happening, and they were under threat globally. And more than anything, we’re under threat from a technology standpoint.
When I say that the crisis has accelerated that, I’m really happy as the dust clears a little bit that we look at the companies and the players we have in our market, we feel really good about their competitiveness. So Honda is our great partner in the automotive world here and has a manufacturing and engineering headquarters in our region. And then we’re leaning heavily into technology mobility and electrification which will be accelerated as we go forward. And we are proud to have them as a partner.
Same is true in finance and insurance. JPMorgan Chase is our biggest single private sector employer in our region, and they’re investing in FinTech, what Nationwide Insurance is investing in insurance, and other players like that, that are doing the same – they’re investing in the future. Their industries are bringing companies to our region and bringing payroll to our region. That looks a lot different than it did 10 years ago.
The retail sector is you know, one way to describe it is just the math. Columbus, Ohio used to represent an enormous amount of the mall that you used to go to with Elle brands, Abercrombie and Lane Bryant, everybody is here as well as the jobs associated with these brands. All those companies are transitioning to e-commerce platforms. We happen to be a major fulfillment logistics center globally, and are seeing some of those companies pivot incredibly well. Big Lots would be another one that’s headquartered here that’s pivoting to e-commerce, and that is fascinating to see it happen right in front of us. It’s messy, but I have a lot of confidence in those kinds of industries as we move forward.
The final one I’ll mention is our investments in health and bio health, in particular gene and cell therapy in our market through Ohio State University and Nationwide Children’s Hospital. You know, the shift in healthcare innovation is fascinating, and thankfully, we’re turning that into investment in jobs in our region, with some recent announcements with Andalan, Pile Sciences and Sarepta, a Boston based gene therapy company, which is setting up and making substantial investment in Columbus. So, not all is lost and not all is terribly a downer, but it’s a lot of good stuff going on.
Fabiola Fleuranvil 11:22
So there definitely seems to be a lot of opportunity. So when you mentioned reimagining, just with your retail sector, for example, and how the shift now is towards e-commerce, that’s potentially a growth opportunity for your region to really focus on a lot of the technology that’s fueling e-commerce these days. And perhaps that could be a growing segment that could be invested in. So I actually see a lot of opportunities.
You mentioned FinTech. You know, there’s so much chatter in the industry about whether or not companies are going to be looking for new headquarters and cost saving measures ,and with JP Morgan already in your market and the growth of FinTech even more. So in these next few years, perhaps that’s also another recruitment tool for your region. So I definitely see a lot of opportunities. And that usually happens when the dust settles after crisis. I mean, obviously, we haven’t seen something of this magnitude. But typically, when cooler heads prevail, that’s when the best ideas tend to come forth, and it seems like that’s what’s happening in your market.
Kenny McDonald 12:23
Well, and we have some tools to accelerate that as well. So we’re very lucky in our region to have state entities privatized from 10 years ago such as Jobs Ohio. And that platform has been enormously helpful even in the last hundred days where we’ve been able to invest in venture-backed companies and leverage that investment to have their partners invest from the private sector into them as well. So those companies that we have that were, growing anyway, we’re investing in them.
Fabiola Fleuranvil 13:02
You were mentioning that there are some tools that you’ve been able to use in your region . And some of it is investing in some of the companies that had high growth potential. So has that been in response to COVID?
Kenny McDonald 13:15
Oh, yeah. So there’s a lot of things started anyway, but Jobs Ohio had the platform and a funding mechanism that allowed us to help some companies with payroll directly within our own state to actually help invest in some venture-backed companies. So for our highest growth companies, we’re actually getting some additional fuel during this time, some of which are growing substantially, maybe even because of the crisis. Maybe they’re in healthcare or something like that, and that is getting a lot of investment anyway.
We’re also starting an inclusion fund that is investing in smaller businesses, and in catalytic projects within our minority communities, our minority business community and our rural communities to go get things started, and it isn’t always to save things. And I’m just proud to say that it was created 10 years ago. Jobs Ohio has been a great partner. It’s been a great platform to work with for the last 10 years. But where it’s really showing its strength is in the last one hundred days.
Fabiola Fleuranvil 14:40
That’s remarkable, particularly the inclusion fund. I totally believe in investing in and growing the existing companies more so than recruiting from the outside market. So there seems to be a lot of optimism and a lot of potential that’s happening in your region. So I’m happy to hear about it.
Kenny McDonald 14:58
Well, yeah, and there’s a lot of, I will say, and I would be remiss if I didn’t say that there’s been a lot of damage to the economy.
And there’s been a lot of people that have had very healthy businesses going into this, and that were running phenomenal businesses that no longer exist. So where we’re spending our time is, first, talking to existing industries, absolutely trying to help them think about the move towards the future.
We are still recruiting companies actively from around the world. And we’ve remained really active in places like Japan and Europe, because we believe in those relationships. We do the same thing across North America. So our attraction work has not stopped a bit. And then we’re spending even more time with our smaller businesses in high growth companies here that we see have a great future in trying to not only grow but close some gaps in those companies that have had a hard time getting funding that again, falls in our minority community.
Fabiola Fleuranvil 16:19
So it seems like you’re creating a region that’s inclusive for all types of businesses. So that’s good to hear. So I appreciate you sharing all this with us.
Kenny McDonald 16:27