Clark-Reliance Corp. has been located in Strongsville, Ohio, in the Cleveland metro for about 40 years. The company, a manufacturer of liquid level indication and filtration products, has seen tremendous growth during the past 18 months and decided it needed to reorganize its structure.
As part of the reorganization, Clark-Reliance divided its business into three operating groups, each of which has grown considerably, said Dennis L. Pesak, president and CEO of the company.
Part of the growth stems from the acquisition of smaller companies in Norcross, Ga., and Zelienople, Pa.
Those acquisitions not only helped Clark-Reliance grow its business, but it also left the company with an opportunity to contemplate a relocation to either Norcross (in the Atlanta metro) or Zelienople (in the Pittsburgh metro) when it decided to consolidate operations.
The decision wasn’t even close.
Clark-Reliance will shutter the facilities in Georgia and Pennsylvania and consolidate all operations in Strongsville, where the company is building a 21,000 square foot expansion to its current facility. The expansion is expected to be complete by February, and the consolidation should be finalized by May, Pesak said.
| “The idea of taking our trained work force and starting [somewhere else] would have been costly. The money we don’t spend on the relocation can easily be put back into the company.
Dennis L. Pesak, President & CEO, Clark-Reliance Corp. |
The company expects to add 50 jobs during the next 18 to 36 months, adding to its current work force of 120.
Considering all Factors
The decision to either relocate a facility to another community or state or expand in an existing location is one of the most important a company will ever make. The decision will have ramifications — either positively or negatively — for years to come.
There could be some justifiable reasons why a company decides it needs to relocate. But a relocation could cost millions of dollars, and there is always the possibility that it will end up impacting the company in an adverse way.
“If that happens, then you can kiss your company goodbye,” Pesak said.
On the other hand, a company could decide to stay and expand at its present location. There is a familiarity with the area, a work force that knows the business, and other important factors — tangible and intangible — that cannot be dismissed.
Clark-Reliance looked at several issues before deciding to stay in Strongsville.
First and foremost was the work force. Employees in Strongsville have a combined work experience of 1,600 years, with an average seniority of 17 years. Pesak said it is difficult, if not impossible, to put a monetary value on that level of experience.
Pesak said it would be difficult to find a highly skilled work force in either Norcross or Zelienople.
While the Atlanta metro attracts certain kinds of workers, he said, welders and fabricators are not among them.
“It would be hard to find anybody there that could do the job with the same level of productivity you get in the Midwest,” Pesak noted. “You cannot find manufacturing people in Atlanta. It is a totally different environment.”
In the case of Zelienople, Pesak said it is difficult to attract a work force there.
“The productivity in Cleveland is so much higher than in the other two locations,” he pointed out. “We’ve been able to attract a better trained work force in Northeast Ohio by a long shot.”
Another factor was real estate. Clark-Reliance already owns the property in Strongsville. In Norcross and Zelienople, the property is leased.
Pesak also said the cost of insurance and workers’ compensation, and the cost and availability of health care are better in the Cleveland metro area.
Help From the State
The state of Ohio did give Clark-Reliance an incentive package to help entice the company to stay. The company was awarded a 55 percent tax credit for seven years, valued at $345,065, and a $100,000 grant from the Ohio Investment in Training Program.
However, Pesak said the incentive package was not the final factor in the decision to stay in Strongsville.
“The tax abatement helps, but every state throws that at you,” he said. “We could have gotten more from Georgia if we would have moved our entire operation there.”
Pesak admitted that it is sometimes difficult to convince people to relocate to the Cleveland metro until they tour the region.
“Then they want to relocate,” he insisted. “The housing values, cultural amenities, the level of education and quality of life issues convince them this is an exceptional place to live and great place to raise a family.”
A company is only as successful as the work force it attracts and trains. Relocating to another state may have some financial appeal based on the amount of incentives offered to the company. But that financial gain will be more than offset if the company suffers a drop in productivity because of an inexperienced work force.
“The idea of taking our trained work force and starting [somewhere else] would have been costly,” Pesak pointed out. “The money we don’t spend on the relocation can easily be put back into the company.
“When you add up all the issues about owning the real estate vs. leasing, workers’ comp and other costs, the skilled work force, and where you can most cost effectively do the consolidation, we decided the Cleveland metro area was the place to be,” he added.
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