Recent Research: Is It the Water? Great Lakes Region & Manufacturing Job Loss

"More than one-third of the nation's loss of manufacturing jobs between 2000-2005 occurred in seven Great Lakes states: Illinois, Indiana, Michigan, New York, Ohio, Pennsylvania, and Wisconsin," write Howard Wial and Alec Friedhoff in a new paper from the Metropolitan Policy Program of the Brookings Institution. Bearing the Brunt: Manufacturing Job Loss in the Great Lakes Region: 2000-2005 reveals that, despite these statistics, manufacturing - with its 38 percent increase in productivity during the period - remains a major driver in six of the seven state's economies.



The change was dramatic in most of the studied states, in which more than one in five manufacturing jobs in 2000 did not exist by 2005. For five of the seven states, the percent change in manufacturing employment exceeded the national average of -17.6 percent: Michigan (-24.3 percent); New York (-22.7 percent); Pennsylvania (-20.9 percent); Illinois (-20.8 percent); and Ohio (-20.3 percent).



After discussing the impact of this most recent restructuring of U.S. manufacturing, Wial and Friedhoff look more closely at the impact of the job losses on the 25 largest manufacturing-dependent metropolitan areas of the Great Lakes. All but one, Peoria, Ill., lost manufacturing jobs during the past decade. Canton, Ohio, and Flint, Mich., suffered the loss of the greatest share of manufacturing employment, with decreases of 31.1 percent and 29.5 percent, respectively.



The authors also found that the sustainability of more established jobs was limited: Those Great Lake cities that had their highest manufacturing employment figures before 1998 experienced sharper cutbacks than those whose manufacturing employment peaked in or after 1998.



Growth of high wage advanced service industry jobs is offsetting the loss of manufacturing jobs in a handful of metropolitan areas, with Indianapolis and Cincinnati seeing net growth of more than 30,000 advanced service jobs. Despite growth of advanced service jobs, those large metro areas closer to the Great Lakes, however - Chicago, Detroit, Cleveland, Rochester and Flint - all still suffer net losses of manufacturing jobs exceeding 22,000 positions.



Wial and Friedhoff also make policy recommendations for states to consider to either retain/expand manufacturing employment or soften the impact of future losses:

• "States, which partially fund the Manufacturing Extension Partnership program, should expand their efforts to help manufacturers adopt cutting edge technologies, reorganize work to increase productivity, and move into less price-competitive product markets.
• "Some states, such as Pennsylvania, fund 'early warning' systems that identify manufacturing plants at risk of closing and intervene to help them remain competitive; other states should do so as well. These initiatives could be funded by redirecting economic development spending away from expensive efforts to recruit new firms from out of state.
• "States should condition all economic development assistance they provide to firms on firms agreement to participate in performance benchmarking and upgrading-assistance programs.
• "To the extent that Great Lakes states continue to provide financial incentives to lure manufacturers to relocate, they should provide those incentives only to firms that buy a substantial portion of their components and raw materials from within the region. Such within-region sourcing will benefit local economies in those states more than will sourcing without regard to location.
• "States should help manufacturers form consortia dedicated to product and process upgrading, modernization, and associated worker training. Such consortia already exist in the Milwaukee area and northeast Ohio and in a growing number of advanced manufacturing industry clusters in Pennsylvania.
• "Finally, federal and state policies must help manufacturing-dependent regions replace those manufacturing jobs that cannot be retained. Such policies could help those regions diversify their industrial bases (e.g., by building on existing technologies, skills, or other regional assets), expand employment in existing high-wage service-sector firms, and foster the growth of small, locally based firms."

Bearing the Brunt: Manufacturing Job Loss in the Great Lakes Region: 2000-2005 is available at: http://www.brookings.edu/metro/mei/20060727_manufacturing.pdf



Links to this paper and more than 4,000 additional TBED-related research reports, strategic plans and other papers can be found at the Tech-based Economic Development (TBED) Resource Center, jointly developed by the Technology Administration and SSTI, at: http://www.tbedresourcecenter.org/.



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