industrial flight: assessing the damage and planning recovery
TRANSCRIPT
Industrial Flight: Assessing the Damage and Planning Recovery
Overview
• What People are Saying about Industrial Flight
• Hallmarks of Industrial Flight• Mature Industries vs.
Emerging Industries• Global Competition in a
Regional Model• User Considerations• Assessing the Damage• Planning Recovery• Coming Up Next Time
What People are Saying about Industrial Flight
John McCain- “The jobs that are leaving the state of Michigan have left and are not coming back. We are going to try to create new jobs.”
Barack Obama- “What I said was that NAFTA and other trade deals can be beneficial to the United States because I believe every U.S. worker is as productive as any worker around the world, and we can compete with anybody.”
Hillary Clinton on NAFTA- “It's been good for some areas, bad for others.”
Hallmarks of Industrial Flight
• Decline of an industry (often manufacturing in the United States)
• Not immediately replaced by a new Industry
• Negative effects of the decline ripple through other sectors of the local economy
Mature Industries vs. Emerging Industries
• Where are the Jobs?
• Risk Differential
• Income Differential
• Cost/Benefits associated with both
Global Competition in a Regional Model
• Regions are competing in a Global Market
• Capital Flows and Differing Regulations
• Movement of Industry
User Considerations
• What are the experiences of your organizations?
• What are the Pros/Cons of focusing on a Mature Industry vs. an Emerging Industry?
Assessing the Damage with Policy Insight
• Industry Flees…– A Loss of 500 Motor
Vehicle Parts Manufacturing Jobs in Western New York
– Effects on the Local Economy
• Output• Demand• Income• Employment
Planning Recovery (1)
Building from the Ashes• There has been a loss of jobs and to
recover a completely new industry is attracted to an area– Pros: Industry is fresh, generally
provides high wages and growth– Cons: Emerging industries usually
small, often utilize highly specialized labor and other inputs
• Example: New York loses 500 Industrial/ Manufacturing Jobs, but they attract a new bio-tech firm providing 400 Jobs
Planning Recovery (2)
Bringing Them Home• Attract back a mature industry or an
industry that utilizes leftover human capital– Pro: Uses existing skilled labor and
infrastructure– Con: Difficult to do, can depend
upon exogenous factors (e.g. FX rates)
• Example: Michigan loses auto industry jobs but either the American automakers regain high competitiveness or attract some other heavy industry to the area
Planning Recovery (3)
Mixing New and Old• Attract a New Industry with a
complementary manufacturing sector– Pros: Helps spur future growth and
incomes while still utilizing extant resources
– Cons: Tough to find industries with strong innovation – quality manufacture connection. Can the attendees think of any?
• Example: Attract Bio-tech to your area, and attract Pharmaceutical Manufacturing
Coming Up Next Time
Moving the Masses: The Economic Impact of Migration