Great Lakes region rebounds

9.21.11 | The Great Lakes region, once a resiliency poster child for what-not-to-do is, according to a new report, among the most resilient regions emerging from the recession. Nate Berg, writing for the new Atlantic Cities project, reports that the Great Lakes is on a bit of a tear economically, largely thanks to manufacturing. Reporting on the latest Brookings Institution Metro Monitor report, he notes that, “The 21 metropolitan areas of the Great Lakes region are among the most resilient areas coming out of the recession.”

“In a bit of a surprise,” he continues, it is the metro areas with the strongest ties to auto manufacturing that are rebounding the fastest, including Detroit, Youngstown, Akron, Grand Rapids, Madison, and Toledo.  Detroit and Youngstown, which were hit extremely hard, and have been emblematic of the decline in U.S. manufacturing since the 1970s, enjoyed manufacturing job gains of 10 and 19 percent, respectively, between the second quarters of 2010 and 2011.  Of course, as Berg also notes, they remain still far in the hole, having recovered only about 16-30% of their original lost manufacturing jobs since the recession.

Perhaps this rebound isn’t so surprising. As we noted in a prior blog, Network member Ed Hill and colleagues have found in their paper, “Economic Shocks and Regional Economic Resilience” that regions with more production-based economies rebound more quickly–are more resilient–after economic shocks than regions with more knowledge-based economies, such as health-care dominated sectors.

A key reason is that economies that are cyclical, such as manufacturing, tend to rebound most quickly after a dip. And they tend to employ those with lower skills, which helps boost employment gains broadly. (See GM’s encouraging announcement today on hiring low-skilled workers.) The problem is, those very traits make a region more vulnerable to downturns in the first place.

Youngstown’s rebound reminds me of Sean Safford’s fascinating book, “Why the Garden Club Couldn’t Save Youngstown.” In it, he compares the diverging paths of economic growth in Allentown, PA, and Youngstown.

Youngstown, he finds, writing before the recession, was less resilient than Allentown in both bracing for change (already in the 1950s they knew the steel mills could not hold) and in responding to the economic shock when it came in the late 1970s and early 1980s. The key difference turned on the civic organizations in both cities. It turns out that Youngstown had as many civic organizations working on the problem as Allentown, but they were less effective because the networks were too tight and insular. They had, in the parlance of sociologists, too few “loose” ties or bridging ties.

In Allentown, in turn, the civic ties among elites connected actors who were not otherwise connected. Their connections bridged the two worlds (civic and economic) more effectively. In Youngstown, in contrast, the civic ties simply amplified contacts among actors who were already well-connected to one another. (Network director Margaret Weir and colleagues found related results in the implementation of key transportation policy in Chicago and Los Angeles. Read more here.)

Like the strong but sometimes insular networks of small towns, the tightness and closeness can block new ideas or stifle innovation, and create in-fighting and stagnation. With histories of sharp and protracted labor battles like those in Youngstown, the sides can easily become entrenched.

In addition to the civic relationships, leaders in Allentown also prepared better for the impeding economic shock by diversifying its economy, building partnerships with local universities for research and development, and fostering public-private partnerships to encourage “sunrise” industries such as electronics and bio-medical technology while transforming the plants and equipment from the “sunset” industries into new uses. The efforts paid off. By 2004, Allentown had far more employment in the knowledge-intensive growth industries than Youngstown, including higher-end service sector work in finance and insurance. Meanwhile, Youngstown’s service sector was (at least by 2000) dominated by call centers and private and publicly owned prisons.

Allentown also scores much higher, with a ranking of 23 on BRR’s Resiliency Capacity Index compared with Youngstown’s rank of 121 (out of 361 metro areas).

The lessons from these books and research suggest that the sustainability of any rebound in the Great Lakes region will depend on wheels set in motion years ago, coupled with a civic sector that builds bridges to a variety of sectors with the influence, motivation, and power to move a city toward the future.

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