Tag Archives: manufacturing

The Chicago region has a lot of human capital…and the workers have a stronger work ethic?

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A recent article discusses the potential workers in the Chicago region and how hard they work:

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“Probably the strongest work ethic of laborers is the folks in the Midwest,” the Houston-based founder of SparrowHawk Real Estate Strategists said, definitely not rhyming. “They’re just, I don’t know what they put in the water there, but they’re hard workers. And so you’ve got a good labor force.”…

Illinois Manufacturing Association president and CEO Mark Denzler recalls a businesswoman who recently moved her small manufacturing operations of about 50-70 workers to Mississippi with the goal of saving on costs. She regrets the decision, he said…

“When I’m around the warehouse workers in the Midwest — Chicago and all these other Midwestern cities — they’re different than the folks in the southeast and the folks in the West Coast. They just have a different work ethic,” he said…

“It would be really hard. I’d be suspicious of anybody who said they can do it,” Bruno said. “But there is this strong experience with work in the Midwest that it’s part of your development. It’s connected to your health and well-being.”

Contrary to the final paragraph above, I bet this could be measured. But, what would it show? And how would workers in Boston or New York City or Atlanta or San Francisco respond to the argument that Chicago workers have a stronger work ethic? Or, within the Midwest and Rust Belt, how about workers in Milwaukee, Cleveland, or Pittsburgh?

This is part of a bigger narrative about Chicago. it is part of its character. Even as it is a global city with an important finance sector and many professional and white-collar workers, it imagines itself as a blue-collar city relying on manufacturing. The loss of manufacturing jobs in the last sixty years hit Chicago hard, as it did many cities, yet the narrative continues.

I would be interested in a more recent study that looks at how residents of the Chicago area think about the purported work ethic. Does the narrative hold across locations, groups, and occupations? Does the idea of “the city that works” extend throughout the region and different kinds of workers?

The boom and bust RV cycles of Elkhart

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The latest rankings in the Emerging Housing Markets Index has Elkhart, Indiana at the top of the list:

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Small U.S. cities dominated The Wall Street Journal/Realtor.com Emerging Housing Markets Index in the third quarter, as high housing costs and remote-work opportunities drive many home buyers to seek out more living and outdoor space…

Elkhart, Ind., which bills itself as the RV capital of the world because its region is the country’s leading manufacturer of recreational vehicles, topped the housing index this quarter, followed by Rapid City, S.D., Topeka, Kan., Raleigh, N.C., and Jefferson City, Mo…

The recreational-vehicle industry is a major player in Elkhart’s economy. The Covid-19 pandemic spurred more RV demand, as households wanted to travel while keeping their distance from others. Wholesale RV shipments in the first eight months of 2021 rose 53.8% from the same period in 2020, according to the RV Industry Association…

The median home-sale price in Elkhart County rose 12.3% in August from a year earlier to $209,900, according to the Indiana Association of Realtors. There were 163 homes for sale that month, down from 220 a year earlier.

I am glad that Elkhart appears to be doing well at the moment. Having lived nearby for five years, the area has a lot to offer and economic development would be welcomed.

At the same time, it was not so long ago that Elkhart faced a difficult time. When the economy is not doing so well, such as in the late 2000s with a burst housing bubble, fewer people had money for RVs. Demand shrunk. Jobs disappeared. Before that, this area and South Bend were home to numerous manufacturers who went out of business or left. The homes have been cheaper here for a long time because few people want to move in.

It is good that this community in the Rust Belt at least has the opportunity to at times benefit from upticks in RV sales. Such industries and jobs could leave completely. But, having so many fates tied to one industry that can go up and down is trying in the long run. Numerous communities in the United States have looked to diversify their economic base – see the recent rush to add tech companies to their portfolios – even as they might have local economies based around a few companies or a few sectors. RVs may sell well one day and then conditions change and demand drops or new technology moves in. May Elkhart take some of this positive momentum and add to lineup of industries and services.

The largest business park in the United States is over 160 square miles

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Reading through a 2019 article in Wired about new fault line research on the West Coast, I noticed this paragraph about the biggest business park in America:

Eriksen’s offices are located in the Tahoe-Reno Industrial Center, the country’s largest business park. TRIC covers more than 160 square miles—three San Franciscos’ worth—of sculpted valleys and rocky hills. Its tenants include Google, Switch, and Tesla, along with 2,000 protected wild horses. TRIC is as sure a sign as any that the Reno area is reinventing itself, aiming to attract younger residents who come not for strippers and slot machines but for lucrative jobs and easy access to the great outdoors. Lance Gilman, the bolo-tie-wearing, larger-than-life businessman behind the development, told me that on his first tour of the land he saw a bird’s nest just sitting there on the ground, catching the light. He took it as a good omen, a sign of Reno’s impending transition from has-been gambling den in the mountains to tech-centric boomtown. (Still, this is Nevada: At one point during the planning phase, Gilman had to assume management of the nearby Mustang Ranch brothel—the first ever licensed in the state—to stop a biker gang from moving in and marring his glorious vision.)

One of Gilman’s employees, a project manager named Kris Thompson, agreed to take me on a tour of the site. We started at Tesla’s Gigafactory, which the company claims will be the largest building on the planet when completed. (“It put us on the world stage overnight,” Gilman told me.) Although still under construction, the Gigafactory was already so colossal that I could not make out its scale against the mountains beyond. As we drove on, Thompson directed my attention to the huge stone pads on which TRIC’s industrial structures are being erected. “We do not cut corners,” he said. “These pads have no subsidence. We have granite-basalt bedrock. For tech companies, that’s great.” (Eriksen seems to agree with this assessment: He and his colleagues have done nothing further to insulate their offices against quakes.) “The lack of a seismic threat in this area is one of our strengths,” Thompson continued.

But, of course, there is a seismic threat. According to Faulds, it’s about the same as what I already live with in California. The San Andreas may be closer to the breaking point, but the Walker Lane could see a major earthquake at any time.

Thompson and I returned to TRIC’s central office, where Gilman, now walled in by paperwork, was gearing himself up for several hours of new business calls. Last year, a company called Blockchains scooped up 67,000 acres of TRIC land to build a libertarian “smart city.” With that sale, the development had all but sold out. It was time, Gilman told me, to pursue new opportunities. “We’re in the path of growth,” he said, as heavy trucks boomed by on the highway, shaking the earth.

This four paragraph section is an interesting aside in the larger discussion of the Walker Lane Fault. But, it is a fascinating aside as office parks and industrial parks are not unique in the United States. Thousands of communities, ranging suburbs to exurban areas to more rural areas, have blocks of land set aside for commercial and industrial use. But, how many places have anything near 160 square miles set aside?

What makes this business park unique alongside the size is the relative location to other place, the particular setting, and the time the land became available. First, a location outside Reno puts the business park within roughly 4 hours of Silicon Valley and the Bay Area. That is not an easy commute but it can be done in a day or for a short trip. Second, the city of Reno and the state of Nevada have some features that are attractive to some companies. Third, having all of this land available now and in recent years means that some momentum can build regarding who is interested in the space (such as Tesla and libertarian-oriented firms). Take away one of these factors and the particular success of a business park of this size might be different or there might be a very different mix of interested companies. More broadly, numerous business facilities and stores sit vacant at desirable locations throughout the United States yet this business park attracts attention.

Job growth in the food service industry

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What does America make? Increasingly, at least in terms of the number of workers, the answer is food:

In 1990, manufacturing was almost three times larger than the food service industry. But restaurants have gradually closed the gap. At current rates of growth, more people will work at restaurants than in manufacturing in 2020. This mirrors the shift in consumer spending. Restaurants’ share of America’s food budget has doubled from 25 percent in the 1950s to 50 percent today.

Yet, as Derek Thompson notes, our national rhetoric is still stuck in the era of factories and manufacturing:

But the most important feature of the restaurant jobs boom is not what it may say about the future, but rather the fact that it is happening in the first place. Trump and other politicians often say they want to help the common worker. But then they talk about the economy as if it were cryogenically frozen sometime around 1957. The U.S. still makes stuff, but mostly it serves stuff. To help American workers, it helps to begin with an honest accounting of what Americans actually do.

The jobs landscape has experienced much change in the last half century. Certain sectors – such as the tech industry or manufacturing – consistently receive a lot of attention. But, could someone unite the interests as well as depict a group to the public at large that would include restaurant workers, service workers, and nurses (among other fields that have grown tremendously)?

Middle class declines in the majority of US metropolitan areas

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A new study from Pew shows that the middle class did not do well in many metro areas between 2000 and 2014:

The report by Pew Research Center found that the share of the middle class fell in 203 of the 229 U.S. metropolitan areas examined from 2000 to 2014, including major cities such as New York, Los Angeles and Chicago, which saw a relatively sharp drop in its middle class.

For many areas, a big culprit in the declining middle was the falloff in manufacturing jobs during that 14-year period, when factories shed about 5 million workers from their payrolls nationally…

The news was not all downcast, especially for metro areas in coastal and border regions that have benefited from the boom in technology, trade and resources…

Among the 229 metro areas, which constitute about 76% of the U.S. population in 2014, there were slightly more areas that saw a bigger increase in the share of upper-income population than lower-income adults. Still, Pew’s Kochhar did not view that as a big win for the American economy. The median incomes of the lower, middle and upper tiers all shrank between 2000 and 2014, he said.

Three quick thoughts:

  1. The continued effect of losing manufacturing jobs cannot be overstated: this has hurt numerous cities for decades. It is not easy for any large city to transition from such jobs to opportunities in new sectors.
  2. Looking at this data at the level of a metropolitan region is helpful because it hints at broad patterns within regions that are often segregated by social class and race. The phenomenon of the rich and poor living right next to each other as well as trendy and wealthy communities getting a lot of attention is not exclusive to cities; similar patterns can be found in suburban areas.
  3. Connected to the second point is that solutions to income issues could come at the level of the entire region rather than within individual communities. How might entire regions help the middle class? Why don’t more large cities and surrounding suburbs work together on these issues? (I know why they don’t but that doesn’t mean that it wouldn’t benefit many local residents.)

Time seems to suggest urban politics = dealing with crime

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The latest issue of Time has an article on how the 2016 presidential contenders are tackling urban issues. Yet, the article only discusses crime and violence:

It’s an improbable plot twist after two decades of Republicans and Democrats embracing the tough-on-crime mantra of more cops and tougher sentencing. And like most political shifts, it’s driven by calculation as much as courage. As crime rates tumbled and budgets tightened, concern has grown over the financial and human cost of mass imprisonment. A recent Reason-Rupe poll found that 77% of Americans now favor eliminating mandatory minimum sentences, while 73% support allowing nonviolent drug offenders who have served their sentences to vote.

In response, nearly every candidate this year has jumped into a new national debate about how to reshape the criminal-justice system. “It’s an incredible political shift,” says Inimai Chettiar, director of the Brennan Center for Justice, a nonpartisan policy institute at New York University School of Law…

Urban politics has been fraught for liberals for the past 25 years, and arguably longer. The scars of the 1988 election were slow to fade: a generation of ambitious Democrats had watched Michael Dukakis get pilloried as a wimpy, soft-on-crime liberal, and they vowed to avoid the same trap. “You have moderates in the Democratic Party who frankly have been raised up with this deep faith that their political success is dependent on them being tough on crime,” says Ben Jealous, the former president of the NAACP. “You’re asking them to challenge an article of their political religion, and it’s very scary for them.”…

Of all the 2016 hopefuls, perhaps nobody else grasps the complexities of urban policy like O’Malley, Clinton’s closest rival for the Democratic nomination. The former Maryland governor spent two terms as Baltimore’s mayor, transforming the crime-ridden city into a laboratory for urban policy, wielding data-driven crime-fighting techniques like CompStat and a zero-tolerance approach to community policing. Crime plunged. But in the eyes of some critics, his tactics laid the kindling that was set ablaze when 25-year-old Freddie Gray died April 19 of injuries suffered in police custody. (Six officers have been charged in connection with his death.)

In an article that is supposedly about how more politicians are now getting it right (turning to the large issue of the criminal justice system/mass incarceration), they miss the boat in tying urban politics to dealing with crime. Cities are only about crime and violence? Doesn’t this just feed the same stereotypes of urban areas that have been held for decades and are consistently portrayed through the media?

If politicians were serious about tackling urban issues, how about they start with these two issues:

1. Residential segregation. A century or so of separating where people can live based on race (and class) has long-term consequences. Read American Apartheid by Massey and Denton again, particularly to see how white-black relationships have been shaped by residential patterns.

2. Economic opportunities. Globalization and deindustrialization have devastated numerous urban neighborhoods as jobs – particularly in manufacturing – disappeared. Read William Julius Wilson’s work in The Truly Disadvantaged and When Work Disappears. How are jobs and capital going to flow to poor neighborhoods?

American manufacturing jobs “stepped off a cliff” in the 2000s

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The loss of manufacturing jobs was particularly significant in the 2000s:

Manufacturing job loss has been a fact of American life since the 1970s, but in the 2000s manufacturing stepped off a cliff, shedding 5.8 million jobs, or about one of every three—most of them before the Great Recession began at the end of 2007. Illinois alone lost 320,900 manufacturing jobs, or 36.6 percent of its total, in the 2000s. Good jobs for those without a college diploma disappeared in the 2000s and generally did not come back. In December of 2000, the ratio of unemployed job seekers to job openings had been 1.1 to 1. At the end of the decade, it spiked to 6.1 to 1. The 2000s was the first recorded decade of zero job growth…

There are still more than 12 million manufacturing jobs in the U.S. and output is as high as ever, and just behind China’s. In an overlooked story, the United States added manufacturing jobs for 12 months in a row in the past year. The gains are modest, but such a winning streak has only happened four times in the last 30 years. Some business elites have shifted their thinking. General Electric’s CEO Jeffrey Immelt wrote in 2012, “Outsourcing that is based only on labor costs is yesterday’s model.”

As the article suggests, the 1970s get a lot of attention for a downward slide in manufacturing jobs but this pattern has held up in other recent decades – until this past year or so. The initial downward slide was certainly important; it led to the work of sociologists like William Julius Wilson who noticed the negative effects on poor urban neighborhoods. But, the loss of manufacturing jobs also has long-term consequences that may still be hard to imagine.

Report on Chicago manufacturing: “punching below its weight”

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Chicago’s rise was aided by manufacturing but a new report says manufacturing in the region is lagging:

While the 14-county tri-state area was the fourth-largest exporter among the 100 top metro areas nationwide in 2012, it fell to the middle of the pack on gross domestic product growth, export growth and exports as a share of economic activity, according to “Revival in the Heartland: Manufacturing and Trade in Chicago,” a report to be released Wednesday by HSBC Bank and the Chicago Council on Global Affairs.

“Manufacturing in Chicago is an old heavyweight slugger, punching below its weight,” the study stated, noting that it remains the second-largest economic driver in the region after government and social services…

Study authors and individual manufacturers cite a range of historical factors that have contributed to the weak performance:

•A lack of civic and government attention to the sector because of a perception that it was dying.

•An absence of intraregional cooperation on economic issues.

•Freight rail gridlock.

•Lingering wariness about expanding business within the state, given its fiscal problems.

The article notes the ongoing loss of manufacturing jobs in recent decades, even on top of the decline of such jobs in the 1960s and 1970s. The initial drop significantly impacted social conditions, as noted by William Julius Wilson in his writings. Even as Chicago has avoided the decline narrative associated with numerous other Rust Belt cities (Detroit as a common example but also including places like Cleveland, Buffalo, Youngstown, and numerous other cities), a steady decrease in manufacturing continues to present challenges.

Mapping NYC’s manufacturing facilities in 1919

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A 1919 map of New York City’s manufacturing facilities provides insights into the city’s manufacturing prowess:

In 1919, this list shows, New York produced more than 50% of total national output in twelve lines of manufacture, and was competitive in many more.

Geographer Richard Harris, writing about industry in the city between 1900-1940 in the Journal of Historical Geography, points out that because of the particular products New York was known for (lapidary work, women’s clothing, millinery), many industrial workers were women. In 1939, they represented 36% of the total workforce. Workers in Lower Manhattan, where many garment factories were located, were particularly female.

Harris points out that although factories tended to move outward into the boroughs after 1919, before WWII the city did retain many factories in its central core, bucking the nationwide trend of suburbanization of industry. In 1940, 60% of New York workers had manufacturing jobs.

In the midcentury period, however, development trends turned toward offices and corporate headquarters. Zoning regulations made building more factories difficult.

In recent years, the city’s economy has rested on the service and financial industries. While manufacturers still do set up shop in the city, the scope of their activities is specialized. According to the New York City Economic Development Corporation, industry now provides just 16% of private-sector jobs. New York still produces garments, textiles, and printed material, and has increased production of packaged foods (see this October 2013 report from the NYCEDC for details [PDF]), but city factories tend to be smaller and to employ fewer workers.

This is an impressive range of industrial capabilities in 1919. As the above section notes, today New York City doesn’t have much of a manufacturing image due to the rise of Wall Street, the finance industry, the sector, and entertainment industries. Yet, 16% of manufacturing jobs in New York City still adds up to a big number of employees and firms, even if these facilities are not in highly visible areas in Manhattan. Additionally, some of the more hip areas in New York City today, such as Williamsburg and SoHo, are places that were ripe for gentrification and redevelopment in recent decades after large industry left in the mid 20th century.

Should new “Buy American” pushes be lauded if they occur because goods are now cheaper to make in the US?

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Walmart is purchasing and selling more goods made in America – primarily because making some things in America is now cheaper:

In many cases, Wal-Mart’s suppliers had already decided to produce in the United States, as rising wages in China and other emerging economies, along with increased labor productivity and flexibility back home, eroded the allure of offshore production.

Though wrapped in the stars and stripes, the world’s largest retailer’s push to bring jobs back to the United States also makes business sense both for suppliers and retailers.

Some manufacturers are finding they can profitably produce certain goods at home that they once made offshore. And retailers like Wal-Mart benefit from being able to buy those goods closer to distribution centers and stores with lower shipping costs, while gaining goodwill by selling more U.S.-made products.

“This is not a public relations effort. This is an economic, financial, mathematical-driven effort. The economics are substantially different than they were in the 80s and 90s,” Bill Simon, chief executive of the Walmart U.S. chain, told the Reuters Global Consumer and Retail Summit earlier this month.

To restate, this isn’t because of some commitment to the United States or patriotism or creating American jobs. This is because the goods can be made more cheaply in the US due low-wage workers in other countries now earning more and rising transportation costs. Thus, if items could once again be made and shipped more cheaply overseas, businesses would likely chase that again. Granted, profits of American companies might be good (shareholders, for example, might be happy) but is this the only way to assess manufacturing and sales decisions? Is selling products partly on the fact that they are made in America then somewhat deceptive?