Midwestern industries of the future require regional plans and a regional focus

Marshall Plan poster

I listened in on a panel discussion this morning, “Made in America: A Revival in U.S. Manufacturing?”  The Chicago Council on Global Affairs was the sponsor so the panel focused on midwestern manufacturing, which is apt, since that’s where most manufacturing occurs. In a word, the message was, “we’re optimistic.”  The potential for a revival is good. But listening to the panel, I couldn’t help but think about the issue brief, “A Midwestern Marshall Plan?” [pdf] by Richard Longworth that I’d picked up before taking my seat. Where, I wondered, amid calls for lower corporate taxes and less regulation was a discussion of regional cooperation and regional planning in accelerating and expanding this optimistic manufacturing future?

But first, to the good news on the manufacturing front. As William Strauss from the Federal Reserve Board in Chicago reported, manufacturing is on a tear. While gains in productivity mean we won’t see the recovery of all the lost jobs, gains will continue, he said. And those manufacturing sectors that took the hardest hit are bouncing back the most. The benefits of this “renaissance” to the Midwest are, if not maybe headline-worthy, at least in the right direction. Michigan, for example, inched up from the state with the absolute worst unemployment rate, to five slots above.  Or as Strauss put it, “The Midwest has gone from having horrible unemployment to just as lousy as the rest of the country.”

Ok, at least it’s movement in the right direction. Yet amid the optimism and talk of future growth was a void: there was not one mention of regional cooperation. Granted, the panel was limited in its time and scope, but the lack of a regional focus in a panel organized by a council on global affairs was notable. …Or not. The Midwest, Longworth reminds us in his brief, has a long and storied history of individualism. As he reported, “I was astonished to go to state after state [in the Midwest] and talk with true experts in those states who knew everything about their own state but had literally no idea what was going on next door across the state line.”  He might have added that they also probably knew little about what was going across county lines in their own metro regions.

States battled other states for factories, he says, “in an orgy of smokestack chasing.” Universities and colleges “competed for students, faculty, projects, and grants as fiercely as their football teams competed on Saturday, never thinking that this Midwestern brainpower, put together, could create an intellectual powerhouse that would draw the best and the brightest–and the richest–from around the world.”

This scrapping among themselves for every investment, job, and tax break left a “balkanized” Midwest, he says. The lost opportunity was heart-breaking.

But rather than lamenting the past, Longworth argues for a renewed regional focus in industries of the future: water, biotech, nanotech, green industries. All of these new industries are, by their nature, regional, and require a regional cooperation that will take some doing. Take clean water technology, for example. The Great Lakes is the largest source of fresh water in the country and holds 20% of the world’s freshwater supply. A recent National Intelligence Council paper, Longworth notes,  said of clean water that the first movers to develop and deploy cheap, energy-efficient clean-water technologies could gain “huge geopolitical advantage.” Beyond that advantage are new industrial uses of water for farming, biofuel, nanotech, and others.

As Longworth notes, the University of Wisconsin, Milwaukee, is exploring freshwater research, but it would be an even better effort if it teamed with other lakeside schools such as University of Illinois at Chicago, Wayne State in Detroit, and Case Western in Clevelanad. He offers several other examples of new industries in nanotechnology, bioscience, and green tecnnology that can all find a home in the Midwest, and that could benefit enormously from regional cooperation.

He also notes the potential of a regional transit industry. “We should stop thinking about an auto industry per se,” he argues, “and start thinking about a transit industry geared to the 21st century needs of the nation and the Midwest. That industry would include autos and light transit within urban regions, and high-speed rail that would literally tie the region together.

Such cooperation would require less-fragmented government backing, less sequestered academic research, and more venture capital. Indeed, what we need, he says, is a new Marshall Plan.

The original Marshall Plan revived a war-torn Europe by reviving trade, rebuilding industry, and restoring consumer markets. Most important, it injected new hope and purpose to a devastated population. (think Detroit, Akron, and other rust belt cities.) One element in particular, he notes, was its local control. The Europeans themselves decided how to spend the money. The Marshall Plan acted like a “strategic program of recovery and growth rather than a disaster fund.”  It also made coordinated economic policy seem normal.

For the Midwest, leading the way in future industries like water, biotech, and transit, will require a similar mindset. The industries of the future only make sense if pursued on a regional basis, Longworth argues. “The wind blows across state lines and the sun shines where it will. Great Lakes water laps at eight states, not one. Plant and animal expertise spreads evenly across the Midwest. No high-speed rail network can be locked within one state.” The states and metro areas must band together to share costs and brainpower and in doing so become much more efficient. Federal initiatives and incentives to states focused on education, infrastructure, and research, could be devised to spark regional cooperation. Currently, most money goes to individual cities or states. Why not instead, Longworth argues, take a page from the Marshall Plan playbook and stipulate that midwesterners must work together to come up with projects that would revive the entire region?

There was no talk of this regional effort in the manufacturing panel, unfortunately. Perhaps in exchange for a corporate tax break that all the panelists agreed was needed is a stipulation that manufacturing band together to develop new innovations in production and delivery that could have an extended reach. After all, the region once thrived on the exchange of ideas of men like Ford, Timken, and Kettering, and innovators never thrive in a vacuum.

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