For most of the 20th century, Pennsylvania, Ohio, Michigan and Wisconsin formed much of the core of America's once-formidable manufacturing heartland. But since the 1970s, powerful forces have been hammering away at this region. Fully replacing the massive numbers of lost jobs with work offering comparable pay and benefits has proved to be an impossible dream.
Can the Rust Belt be great again?
By Dave Beal and Fred Zimmerman
"It's not that easy to bring them back," said Bob Harper, president of United Steelworkers Local 1123, which represents 2,000 workers at the Timken steel and bearings plants in Canton, Ohio. "We know that."
But now, Donald Trump has promised to reinvigorate the Rust Belt. He campaigned hard on populist themes, against trade agreements and for jolting the status quo in Washington. From Scranton to Saginaw, the strategy worked. Trump won the election by flipping Pennsylvania, Ohio, Michigan and Wisconsin to red from blue.
The role these states played in the election resonated with us. Fourteen years ago, our book, "Manufacturing Works," tracked industrial job and payroll trends in each of the nation's 3,142 counties. We discovered jarring declines in the Rust Belt and elsewhere, but we also identified companies and communities that found ways to cope, improve and even shine.
There was reason for optimism. Our book appeared in the wake of the dot.com crash. A buzz was in the air "getting back to basics," meaning manufacturing. Then came the financial crisis, two months before the 2008 presidential election. As the country quickly sank into a deep recession, the Rust Belt absorbed yet more pain. Many voters there turned to a fresh face that November, Barack Obama.
Obama carried all four states in 2008 and again in 2012. Many assumed Hillary Clinton would do it again. But by 2014, the long decline in manufacturing jobs had taken yet another dive, down 16 percent from 2007 in Ohio, off 15 percent in Pennsylvania, shaky elsewhere. Generally, the frustrations of many in these states had been brushed aside for years by distant journalists, pundits and politicians.
Ohio's Stark County, where Canton is located, roughly split between Obama and Mitt Romney in 2012, but in 2016 Trump rolled up a 56-39 percent margin.
In Pennsylvania, Trump flipped Erie County, where General Electric cut 1,500 well-paying union jobs this year — a third of the 4,500 at its locomotive factory there. Instead, GE is building up production in Texas.
Harper guesses that at least 40 percent of his Local 1123 members voted for Trump. This, despite Trump's support for right-to-work laws that are anathema to union leaders. Harper said the local had more than 8,000 workers at Timken roughly 20 years ago; since then, the company has expanded to Southern states.
Timken, long a highly regarded manufacturer deeply engaged in community affairs, is Stark County's largest industrial employer. But in 2014, activist investors allied with the California State Teachers' Retirement System forced Timken to split into two companies. Local 1123 represents workers at both companies: Timken, which makes bearings and other related products, and TimkenSteel.
Harper worries that the breakup will reduce the long-standing research, distribution and economies of scale that gave Timken enduring benefits as a single company. Suzanne Berger, founder of an international technology initiative at MIT, has studied the breakup. She shares Harper's concerns. "When we learned about the Timken shareholders' vote, we realized that we were seeing up close and in real time the forces that over the past 30 years have transformed and shrunken manufacturing in the U.S."
Trump has promised to stop companies from shutting down and moving jobs out of the country. But it's not clear how that could be done.
Here are some of our thoughts:
More scrutiny is needed of Wall Street's financial engineers, their intermediaries and the highly paid executives who continue to reap gains by stressing short-term "shareholder value" and mergers. All too frequently, this culture has led to windfall gains for a few while disadvantaging entire communities for generations.
Our national cost structure has to be examined more deeply. Labor costs are not the principal reason why jobs are moving to lower-cost areas. Our chief cost anchor is largely the colossal overhead that our workers must carry as they face worldwide competition.
Our country needs a broader view of comparative advantage — the economic principle justifying the mutual benefits of free trade. Better education, greater efficiency and more availability of strategic materials would improve a nation's comparative advantage. None of these occurs solely because trade agreements are signed. Also, when trade pacts lead to job losses, the affected workers need public support to move into new occupations; many argue that not enough of this support has been forthcoming.
Let's also examine permitting. Responsible permitting is necessary, but too many people, organizations and uncoordinated single issues bog down the process.
A manufacturer needs three things to be globally competitive today: impeccable quality, rapid delivery and reasonable costs. Quality can be enhanced by strategic control of materials and vastly improved education. Rapid delivery requires an up-to-date, well-maintained infrastructure. And the more efficient the entire country, the more reasonable the costs.
While huge numbers of well-paying union jobs in manufacturing are gone forever, a lot of good industrial jobs remain. Contrary to the prevailing wisdom, average wages for those jobs are growing.
Yet, the reality is that huge chunks of American manufacturing jobs have been automated or moved to other lands to be close to emerging markets. So overall, recharging America's industrial heartland, through some combination of new manufacturing jobs and good jobs in other sectors, looms as an industrial-sized challenge.
Still, there is hope. A lot more can be done to strengthen manufacturing, in the Rust Belt and in the rest of America.
Dave Beal is a former Pioneer Press business editor and columnist. Fred Zimmerman is an emeritus professor at the University of St. Thomas who has served on numerous corporate boards.
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Dave Beal and Fred Zimmerman
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