Ohio makes things

By David Yost

The Vindicator

The Dow Jones Industrial Average recently dumped Alcoa and Hewlett Packard — two companies that actually make things. (DJIA also kicked Bank of America out of the club.) In some ways it’s more symbolic than important, but it’s still wrong- headed.

The three companies kicked to the side of the road were replaced by Visa, Goldman Sachs and Nike. That means a net loss of another manufacturer on the 30-stock index that used to be the measure of industrial America.

It wasn’t always that way, of course. The original DJIA in 1896 was made up of these companies:

American Cotton Oil, American Sugar, American Tobacco, Chicago Gas, Distilling & Cattle Feeding, General Electric

Laclede Gas, National Lead North American, Tennesee Coal & Iron, U.S. Leather (preferred), U.S. Rubber.

Notice anything? That’s right: every one of these companies produced something.


When the DJIA reached its current size of 30 companies in 1928, it was still industrial. Only Paramount Publix and Woolworth’s didn’t make things — an emphasis on manufacturing that continued for the DJIA through the early 1990s.

Then Walt Disney got on the list in 1991. Walmart and the Travelers joined in 1997. Home Depot and Citigroup got on board in 1999. The transformation of the DJIA followed the narrative that manufacturing was fading away.

Don’t get me wrong. We’re glad to have Citigroup jobs here in Ohio, and I shop at Home Depot all the time.

Today, a third of the companies on the DJIA are service companies. Services are great — but entertainers and retailers don’t have much to do if nobody’s making anything. You don’t need an accountant or a financier if you’re not making any money. Manufacturing is still the bedrock of the American economy, and the Ohio economy.

The reason an industrial average is so valuable as a tool for measuring the health of the economy is simple. If the companies that are making things are doing well, the rest of the economy will, too. There will be work for investment bankers and accountants and lawyers. Workers will have money to spend at Home Depot to fix up the house. Everyone will have money to shop at Walmart and go to Disney’s movies.

Success story

Agriculture “declined” in America from 51.9 percent of GDP in 1950 to 13.7 percent of GDP last year — and yet produced more than ever, fed more people than ever. That’s not a tragedy; it’s a success story. Manufacturing is, too.

That’s one of the reasons it frustrates me when Moody’s, the bond-rating service, refers to Ohio’s manufacturing base as an economic “exposure.” Our manufacturing base in the Buckeye State is strong, growing and the envy of the rest of the globe.

I’ve met with CEOs and CFOs of companies throughout Ohio — companies that are manufacturing world-class products. Those conversations point to a resurgence of manufacturing in Ohio. Many of them report gaining back orders they had once lost to overseas competitors — what folks are starting to call “re-shoring.” They also report that they cannot find skilled workers — a sign that demand for those workers is out-stripping supply. That would not be happening if things were bad here in the industrial heartland.

The DJIA may be more average than industrial these days, but here in Ohio, we remember that it’s manufacturing that keeps the economy humming.

David Yost is auditor of the state of Ohio.

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