Friday, February 1, 2013

The Geography of Manufacturing: The Lessons

The U.S. Department of Commerce report "The Geographic Concentration of Manufacturing Across the United States" makes three key points:

1. The national economy continues to rely on manufacturing and 25% of the nation's GDP growth in the past three years came from the manufacturing sector alone.

2. Yet where that growth comes from is heavily concentrated in regions of the country, particularly the Midwest, and in states, like Ohio.

3. That growth is also unequal within states.  The data shows manufacturing concentrating outside of metropolitan areas and urban counties.

So, what do we do with this knowledge?  Here's my two main thoughts:

1. Keep the Spotlight On Manufacturing.  Manufacturing enjoyed a spotlight in 2012 unlike any it had seen in decades.  Yet, time will tell whether that spotlight came because of it's resurgence and boosting of the national economy or came for purely political reasons as the Presidential election campaign was heavily-concentrated on manufacturing-oriented Ohio.

The 2012 State of the Union address mentioned manufacturing 15 times.  The Inaugural mentions totaled zero.  That's a potentially bad sign of things to come.

NAM President Jay Timmons said he saw it as his job to hold the winner of the Presidential election accountable for promises about manufacturing.  That's a necessary first step in ensuring that the "m" word doesn't disappear from the vernacular as the geographical reasons to care went away for a few years.

Manufacturing needs to capitalize on the spotlight, whether its more for its role in the national economy or for geographic political ones, and keep the issue top of mind in Washington.  Because manufacturing is located, unevenly, around the country, that challenge is that much harder.

There has to be no let up, particularly by leaders in the manufacturing-concentrated areas.

2. Halt the Urban vs. Suburban Approach to Policy.  We can grow the national economy with a focus on manufacturing and that growth benefits the nation as a whole. However, as the DOC report shows, there is an unevenness to where manufacturing is located even within states.

Politically, it would appear that geography, both nationally and within states, tends to favor turning a blind eye to manufacturing.  The urban, media centers are not where manufacturing is located.  It's too often out of sight, out of mind.

The way states like Ohio devote their resources for building new highways vs. redoing ones is a prime example.  It's an easy catch phrase from urban-biased lobbying groups to say "fix it first" but that approach only causes a fight over a ever-shrinking pool of highway funds.  Big, expensive re-do's get prioritized higher than forward-thinking, capacity-building highway projects outside of the metro areas.  New capacity generates more highway funding revenue.

Instead, policy needs to strike a balance.  Funds need to be ensured to go to building new capacity where the capacity to grow the economy exists too.  Build interchanges where manufacturing is located and will use them.  Add highway lanes where freight corridors get opened up and along where industrial parks are located.

Too many groups exist with the sole purpose of lobbying for urban interests at the expense of suburban ones. That so-called "smart growth" way of thinking needs to be halted that sees lobbyists fighting for a bigger piece of a shrinking pie approach. Rather, policy makers need to favor the balanced, overall one of fighting to grow the pie so everyone gets a bigger piece.

Bottom line:  The evidence is clear and this DOC report enforces it.  The future of the nation, and Ohio, rests on the success of manufacturing and that's in the suburbs.

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