Thursday, May 31, 2012

Explaining My Manufacturing Bias

I have a manufacturing bias.  It's true.  I believe in treating that sector of our economy more favorably than others.  I offer the following to explain why.

Mark Lautman from the Community Economics Lab was a speaker for a recent Columbus2020! Investors Update.  Among many take aways from his remarks, for me, was this slide.

Lautman made a key point.  If we didn't favor one sector over another in economic development, then we could "go open 100 laundromats" and call it development. 

Manufacturing, at least in Licking County, is part of our economic base and deserves a focus. 

Labeled "Econ. Base" in this slide, it is the core of our local economy.  In Licking County, according to various estimates, manufacturing is 15% of our economy.  It's an industry that brings in more dollars from outside the county than it consumes.

Service sector jobs such as construction, medical, insurance, finance, government, and the like are not our core base.  These are very important employers in our economy, but they tend to depend on the health of the local economy and local population for their existence.  On Lautman's slide, dependents are young people, retirees, and others who are not employed in either the economic base or the service sector.

Here's the point:  Mark's slide shows pretty well that when the economic base takes a hit that the rest of the economy suffers even more.  The "hit" on the economic base results in a bigger hit on the service sector and an even bigger hit on the rest of the economy.

Here's an example.  If 300 jobs were lost by a manufacturer, that could result in the loss of 600+ service-sector jobs and impact another 1,200+ people in the local area.  Thus, a loss of 300 core jobs, impacts over 2,000 people in the overall economy.

Anyone share my bias toward manufacturing now?

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