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Akron, Brain Belt, IndustryWeek, inflation-adjusted growth, Laura Putre, manufacturing, Ohio, plastics, polymers, recession, recovery, rubber, Rust Belt, technology, The Smartest Places on Earth, {What's Left of) Our Economy
Akron, Ohio, has become one of my favorite places in the world – honest to gosh. I’ve made some wonderful friends there over the years, had some great times, and learned lots from area manufacturers I’ve been lucky enough to get to know.
And because I’ve gotten pretty well acquainted with the city, and studied its economy, I was immediately suspicious of the recent IndustryWeek post spotlighting a book touting Akron as a leading example of “how the Rust Belt is turning into the Brain Belt.”
The thesis of The Smartest Places on Earth, by a former leading Dutch financial journalist and a Washington, D.C.-based economic consultant, has the ring of plausibility. For all its obvious struggles, America’s midwestern manufacturing heartland remains blessed with a wealth of engineering and technological talent and skilled workers. Therefore, it seems well positioned to capitalize on the promise of the newest technologies – which often spring in part from older technologies – and all their outsized growth and employment benefits.
Akron is also a plausible example of this transition. As IndustryWeek reporter Laura Putre correctly observes, “Times were dire for years” in this former center of rubber production. (Think “tires.”) But
“gradually, the region began to capitalize on its existing strengths—the material science expertise of its research universities, its workforce of engineers, scientists and tradespeople—and reinvent itself as the center of the polymer industry. According to statistics from the city’s website, upwards of 35,000 people in the Akron area are now employed in approximately 400 polymer-related companies.”
But here’s the problem: Despite making this transformation, at least according to the most authoritative (U.S. government) data available, Akron remains not only an American growth laggard, but an American manufacturing laggard. And P.S., I’m not talking about employment, which is what practically everyone thinks of when gauging manufacturing’s performance. There’s no doubt that, thanks to productivity improvement, industry today can turn out as much or more product than ever with fewer employees. I’m talking about output – the real measure of the sector’s health.
If Akron was getting so successful, why did its inflation-adjusted manufacturing production fall by so much more during the last recession (26.71 percent) than that of America’s cities as a whole (9.71 percent)?
Maybe something about the recession hit Akron harder than the rest of the country’s urban areas, and since the recovery has begun, it’s done much better? The numbers don’t bear out that thesis, either. From 2009 through 2014 (the latest figures available), Akron’s real manufacturing production rose by just 6.70 percent. Overall U.S. manufacturing urban output was up by 10.69 percent.
As a result, as of 2014, manufacturing in America’s cities was just 0.60 percent smaller than the peak it reached in 2007, just before the recession struck. In Akron, industry was still 21.80 percent below that peak.
The Smartest Places on Earth looks right on one point: The plastics and rubber industry (government data don’t separate them) helped prevent Akron manufacturing from performing even worse. During the recession, its after-inflation production dropped by only 6.52 percent, and since 2010, it’s risen by 19.45 percent. (These more detailed data only go up to 2013.)
But that improvement hasn’t been nearly enough to offset subpar performances in other major manufacturing sectors, especially fabricated metal products, machinery, and chemicals. Largely as a result, in real terms, manufacturing’s share of the Akron economy dipped from 15.63 percent in 2009 to 15.45 percent in 2014. (For U.S. metropolitan areas as a whole, it inched up from 11.51 percent to 11.55 percent.)
And that’s not because the rest of Akron’s economy has been killing it, even relatively speaking, during this historically feeble economic recovery. Since 2009, its constant-dollar growth has trailed that of American cities as a whole by 9.04 percent to 10.30 percent.
One of The Smartest Places on Earth‘s authors told Putre in an interview that the results of the kinds of transformations foreseen in the book “start to show up really in ten plus years.” And certainly no one should expect miracles, or anything close, overnight. But in the last year, American manufacturing has gone through an especially tough stretch, and Akron manufacturers told me on a recent trip that their area has been no exception. So just as with claims of a general U.S. Manufacturing renaissance, a heavy burden of proof remains with those insisting that a Brain Belt transformation will be a Rust Belt miracle worker.
RealityChek 