Lima, Ohio gets creative with CDBG funding to train residents for advanced manufacturing careers

The city of Lima, Ohio has a long industrial legacy. In the 1920s, Lima thrived with strong demand for its steel. The city was also a hub of innovation, producing most notably the “Lima A-1,” which became the prototype for the modern steam locomotive. By 1930, the city was home to an estimated 93 industrial companies that collectively employed more than 8,000 local residents.

Throughout the city’s history, Lima’s manufacturing base has ebbed and flowed. By 1934, the city’s industrial employment had been cut in half. There was an uptick during World War II, a decline immediately thereafter, and yet another resurgence in the late 1950s and early 1960s. As was the case in many Rust Belt cities, industry started to flee Lima in the 1970s and 1980s.By the mid-1990s, Lima had lost more than 8,000 jobs and the city’s population plummeted by almost 20 percent.

Lima struggled to redefine itself, and the local economy suffered. Unemployment eventually climbed to over 16 percent, far higher than Ohio’s statewide average. City officials knew they’d have to get creative in order to put residents back to work.

In 2006, the City of Lima agreed to leverage a portion of its Community Development Block Grant (CDBG) funds to invest in workforce development. CDGB funds are allocated by the U.S. Department of Housing and Urban Development (HUD) on a formulaic basis and can be used for a variety of housing and economic development activities. Most cities use CDBG funding to supplement the costs of large-scale redevelopment efforts, the creation of affordable housing, and for programs related to strengthening small businesses. It’s unique for a city to use its CDBG funding for the purposes of workforce development.

Job training would certainly have benefitted a number of industries in Lima. But rather than taking a broad-based approach to workforce development, Lima adopted a clear focus on advanced manufacturing.

Although Lima’s manufacturing base had weakened over the years, there were still more than 20 chemical process and operations companies in the area employing more than 4,000 local residents. The City recognized this as an opportunity to support businesses expansion and recruitment while also preparing low-income residents for the industry’s well-paying jobs. It partnered with educational institutions, career training facilities, and local businesses to develop a cluster-based approach to workforce development. The training would benefit all advanced manufacturing companies, though stakeholders paid particular attention to the skills needed by Lima’s chemical process and operations companies that struggled to find qualified employees.

The end result was the creation of a Basic Manufacturing Certificate program that was partially funded using the City’s CDBG allocation. The Certificate proved to be a valuable stepping stone to highly-regarded stackable certification programs offered by Lima’s Apollo Career Center and Rhodes State College that train people for careers in the advanced manufacturing industry.

In the grand scheme of things, the program costs the City very little. It allocates only $7,000 of its CDBG funds to the program on an annual basis, but this funding is enough to leverage additional funds to meet the total project budget of approximately $43,000 annually. Local employers report that before the program, they would have to spend weeks training new hires for certain manufacturing jobs. Now, thanks to the Basic Manufacturing Certificate program, employers have access to a pool of trained job seekers ready to get started right away.

Many of these job seekers were previously unemployed or underemployed. The workforce pool also includes displaced workers—those who lost their jobs when the industry declined and who require some retraining to meet the current needs of advanced manufacturing companies.

The Basic Manufacturing Certificate has helped people like Johnny Jackson, who landed a job with the Lima Pallet Company after serving an 18+ year prison sentence, and Larry Gilcrease, who was quickly hired as a Floor Technician at Proctor & Gamble’s liquid detergent plant in Lima.

The Basic Manufacturing Certificate program feeds into the region’s broader cluster-based workforce development strategy, and the strategy appears to be working. Lima’s unemployment rate has dropped to just over 5 percent and is now on par with the statewide average.

Some workforce gaps still remain. Local businesses say they’re still struggling to fill a few niche positions, such as welders. “Business is good,” says Gene Heitmeyer, General Manager at Diamond Manufacturing of Bluffton. “We’ve been growing at a terrific pace, and our workforce is almost 500 percent bigger than we were four years ago. But to continue this kind of growth, we need more qualified welders, a lot more.”

There are focused efforts to get non-traditional workers into advanced manufacturing jobs as well. In 2015, four female high school students swept the competition at MakerFest, Lima’s new career expo that showcases manufacturing and the skilled trades. One company, Diamond Manufacturing, was so impressed by 11^th-grader Tracey Long that they offered her a job on the spot.

Lima’s workforce development approach highlights the importance of aligning workforce development strategy with clusters to maximize economic growth. Traded clusters – groups of industries that export goods and services out of a region – like advanced manufacturing are particularly important for economic development because they are associated with higher growth in employment, business formation, wages and innovation. A 2014 study by ICIC titled “The Missing Link: Clusters, Small Business Growth and Vibrant Urban Economies” finds that cities can maximize their impact by aligning their economic development activities, including workforce development, with their high-performing clusters. Cluster initiatives provide a framework for organizing disparate public policies and public investments directed at economic growth.

This example also demonstrates the opportunity for creative approaches for leveraging CDBG funding. The default need not be investments in real estate, affordable housing or small business technical assistance. CDBG funding is especially critical for inner cities, as funds can be used more flexibly than other resources.

The CDBG program is not without its critics—most notably, President Trump. The current administration’s proposed budget eliminates the $3 billion CDBG program, noting that it is “not well-targeted to the poorest populations and has not demonstrated results.” A new brief by the Urban Institute, however, says the lack of evidence “may be more related to a lack of investment in evaluating the program rather than to a lack of true impacts.”

The Urban Institute recommends increasing funding for the program, but also suggests better targeting geographies with the greatest need, and setting aside additional funding for evaluation. Recommendations also include changing eligibility rules so that CDBG funding would be spread across fewer communities and better target low- and moderate-income neighborhoods.

Like any program, there are undoubtedly important reforms that can be made to the CDBG program. However, the program—described by local officials as the “heart, lungs, and backbone of cities and counties”—certainly should not be eliminated. The success of efforts like those in Lima provide a reminder that CDBG dollars can have a big impact on people and places that need it most in the U.S.