Manufacturing jobs coming back to Dayton, Midwest: A clear policy on specific categories will help U.S. rebuild, report says

Dayton Daily News - May 12, 2012
   

Steve Bennish

The U.S. can grow jobs with a clear national manufacturing policy that focuses on regional clusters of specialized companies such as those in machinery, composite materials, autos and aerospace in the Dayton metro area, a new report from the Brookings Institution said.

Ohio had 620,000 manufacturing jobs by the end of 2010 despite losing 39 percent of manufacturing jobs in a decade, said the report, “Locating American Manufacturing: Trends in the Geography of Production.”

The encouraging report detailed manufacturing growth in the Midwest that’s exceeding growth elsewhere. Nationwide, it said, manufacturing is “largely located in metropolitan areas, displays greater variety than may be recognized, and falls into six broad patterns” of clustering.

It said those industry clustering patterns include: computers and electronics, transportation equipment, chemicals, machinery, food productions and low-wage manufacturing industries.

Scott Koorndyk, executive vice president of economic development for the 14-county Dayton Development Coalition, said the report validates strategies here to build on existing clusters, such as aerospace and advanced materials, which restore the region’s historic manufacturing base.

“We are in the middle of the nation and in an area that is growing more quickly,” he said. “We are investing in early-stage technologies to build clusters in those things that we are good at.”

A coalition study said that since manufacturing is Dayton’s “driver industry,” the manufacturing losses here devastated the rest of the economy, making the Dayton metro area third in the nation for nonmanufacturing job losses in a decade.

Other Brookings’ report findings:

• A long-term shift of manufacturing to the South has ended. Between 2000 and 2010, the Midwest and the South each lost about a third of their manufacturing jobs. Between the first quarter of 2010 and the last quarter of 2011, manufacturing jobs in the Midwest grew by 5 percent, while manufacturing job growth in the South was 2 percent. Manufacturing in the Dayton metro area grew 4.5 percent.

• Metro areas, particularly large metros and central metro counties, are the nation’s manufacturing centers. Metros had nearly 80 percent of all manufacturing jobs in 2010, and 95 percent of very high-tech manufacturing jobs.

• Manufacturing pay varies widely, from almost $145,000 in average annual earnings in San Jose, Calif., to $35,000 in McAllen, Texas. Wages vary for education levels of workers, differences in products and processes, and worker bargaining power. In the Dayton area, the average manufacturing wage is $53,645, compared with $42,891 for all jobs.

The report is the latest in a string of think-tank reports criticizing policy drift that erodes the nation’s industrial power, fuels a $600 billion annual trade deficit, and hinders job growth.

The Brookings recommendations also line up with President Barack Obama’s $1 billion proposal to establish 15 federal manufacturing research centers in the U.S. An Ohio consortium, including the University of Dayton Research Institute, is pursuing a pilot center for additive manufacturing, also known as 3D printing.

Estimates say the $1.7 trillion manufacturing economy employs 11 million Americans directly and another 7 million in related business. It has an economic multiplier effect superior to any other industry.

Howard Wial, an author of the Brookings report, said neglect by U.S. federal leadership on balancing trade, promoting industrial development, vocational training and a broad swath of related issues has harmed the economy for a long period.

“We really welcomed off-shoring and didn’t do anything to discourage it,” he said. “On the domestic side, we didn’t pay attention to our manufacturing base and improving quality of products, or helping small and medium-size manufacturers improve productivity and innovation.”

But on the positive side, manufacturing is still a growth machine. The Institute for Supply Management says U.S. manufacturing has been expanding for 33 consecutive months.

Tim Krueger of Policy Matters Ohio in Cleveland, a co-author, said local and state economic development efforts and public funding should focus on local industry clusters, not select firms, or courting new industry. “What makes us more competitive is to use money toward a cluster of firms, organized on their own, and helping them find ways to work with research networks, invest in technology and workforce skills,” Krueger said.

In northeastern Ohio, for example, a coalition of 80 civic leaders developed a regional plan that includes Cleveland, Akron and Youngstown, for manufacturers.

A national policy should support innovative “high-road” manufacturing (aggressive innovation and productivity and high wages) in U.S. metros, Wial said.

A recent poll shows a slight majority of Ohioans support a right-to-work law in the state. Ohio also routinely uses tax credits and other subsidies to attract companies to the state.  But Susan Helper, economics professor at Case Western Reserve University and co-author, said, “We can make investments … , or we can watch things crumble.”

By the numbers:

38,487

Manufacturing jobs in Greene, Miami, Montgomery and Preble counties

$53,645

Average wage of manufacturing jobs in the area, which account for 10.1 percent of all jobs

+4.5 percent

Increase in manufacturing jobs from the first quarter of 2010 to the fourth quarter of 2011

11.3 percent: Number of manufacturing jobs classified as very high tech. The average wage is $51,451.

26.1 percent: Number of manufacturing jobs classified as moderately high tech. The average wage is $62,740.

-51.2 percent: Drop in manufacturing jobs in the Miami Valley from 2000 to 2010.

Top industries in the Dayton area

and share of manufacturing jobs

Machinery: 19.9 percent

Fabricated metals: 15.8 percent

Motor vehicles and parts: 10.9 percent

Source: Brookings Institution

Manufacturing jobs coming back to Dayton, Midwest

Manufacturing Jobs in Dayton Metro Area: 38,487*

Change in manufacturing jobs 2000 to 2010: -51.2%

Percent of manufacturing jobs classified as “very high tech”: 11.3 percent. Average wage: $51,451

Moderately high tech: 26.1 percent: Average wage: $62,740

Manufacturing jobs as a percent of all jobs: 10.1 percent. Average wage: $53,645.

Change in manufacturing jobs Q1 2010 to Q4 2011: + 4.5%

Top industries in Dayton and share of manufacturing jobs:

Machinery: 19.9%

Fabricated metals: 15.8%

Motor vehicles and parts: 10.9%

*Greene, Miami, Montgomery, and Preble counties

Source: Brookings Institution

Manufacturing jobs coming back to Dayton, Midwest

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