manufacturing in ohio: world-class and under- appreciated by all but the market edward w. hill the...

Manufacturing in Ohio:World-class and under-appreciated by all but the market

Edward W. HillThe Urban CenterLevin College of Urban AffairsCleveland State University

Levin College of Urban Affairs, Cleveland State University

2

Public policy and manufacturing in Ohio: The Challenge

The challenge of the “new economy” and “high tech” is to understand it—to get it rightPublic policy is currently getting it wrongWhat is the reality of technology, its impact on production, and its impact on incomes in Ohio?


3

Real Per Capita Income 1969- 1998 in 1998 Dollars

Period 1 Period 2 Period 3

Period 4

Period 5


4

Real Per Capita Income Relative to the US Average

Period 1 Period 2 Period 3 Period 4

Period 5


5

What Does High Tech Mean?

Two popular meaningsIT, computers, software and and bio-pharmaceuticalsNew productsThere is confusion between the technological content of products and new products


6

What Does High Tech Mean?

Bureau of Labor Statistics: Those industries with high demands for

technologically specialized labor

Bureau of Labor Statistics definition R & D workers per 1,000 workers

US average is 3 per 1,000 Technologically oriented workers per

1,000 US average is 38 per 1,000


7

BLS: 10 Technology-Intensive Industries(At least 5 times US average)

Industrial chemicals Drugs Computer and office equipmentCommunications equipmentElectronic componentsAerospace

Search and navigation equipment Measuring and control devicesComputer and data processing servicesResearch and development testing services


8

BLS: 18 Technology Industries(2 times US average, but less than 5 times the average)

Plastics materials & syntheticsSoaps, cleaners & toilet goods Paint & allied productsAgricultural chemicalsMiscellaneous chemical processes Petroleum refiningOrdnance & accessoriesEngines & turbinesConstruction & related machinery

Special industrial machineryGeneral industrial machinery Electric distribution equipHousehold audio & video equipMotor vehicles & equipmentMedical equipment, instruments & suppliesPhotographic equipment & suppliesEngineering & architectural servicesManagement & public relations services


9

The Specialization of Central Cities in Technologically Intensive Employment

Source: U.S. Department of Housing and Urban Development, SOCCDS

Technology-Intensive 1997 City Market Share

Share of

Private Employment

Metropolitan Area Metro Area Central City

Cleveland-Akron 6.7% 6.3%

Akron 6.1% 5.1%

Cleveland 6.9% 6.8%

All Areas Total 7.0% 6.9%

Atlanta 6.5% 6.9%

Austin-San Antonio 7.6% 7.5%

Austin 9.5% 9.5%

San Antonio 6.1% 6.1%

Boston NECMA 8.6% 8.0%

Minneapolis-St. Paul 7.0% 7.0%

San Francisco CMSA 8.9% 8.1%

Oakland 7.4% 5.8%

San Francisco 7.0% 6.9%

San Jose 12.3% 11.0%

Portland, Oregon 7.0% 6.8%


10

Ohio’s Technologically Intensive Employment


Share of

Private Employment


Cleveland-Akron 6.7% 6.3%

Akron 6.1% 5.1%

Cleveland 6.9% 6.8%

All Areas Total 7.0% 6.9%

Baltimore 6.8% 6.8%

Buffalo 6.4% 6.0%

Charlotte 6.5% 7.0%

Chicago 7.3% 7.3%

Cincinnati 6.6% 6.8%

Columbus, O hio 6.0% 5.9%

Dayton 7.4% 7.2%

Detroit 6.4% 6.4%

Fort Wayne 7.5% 6.7%


Share of

Private Employment


Grand Rapids 6.7% 6.8%

Hartford 7.2% 7.0%

Indianapolis 6.1% 6.0%

Louisville 6.1% 5.9%

Milwaukee 7.7% 7.7%

Philadelphia 7.5% 7.6%

Pittsburgh 6.8% 7.6%

Providence 6.7% 7.7%

Rochester 8.9% 11.0%

St. Louis 6.7% 7.5%

Toledo 6.4% 5.9%

Wilmington, DE 6.1% 5.2%


11

High Technology or Technology-Intensive Production

“Business-to-business trade isn’t growing up in high-tech centers like Silicon Valley; it’s developing in industrial hubs like Cleveland and Detroit. As B2B trade expands, there will be a flight of talent and venture capital money to support these efforts, leaving the coasts feeling a bit of frost—while middle America experiences the Internet boom in 2001.”

--Forrester Research, February 2000


12

Composition of Employment in Ohio


13

Employment Growth: The Wrong Measure for Ohio

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997

Year

% C

han

ge

fro

m P

revi

ou

s Y

ear

Annual % Change in Manufacturing Employment

Annual % Change in Total Employment


14

The Role of Manufacturing in Ohio’s Economic Growth

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997

Year

Mil

lio

ns

of

$92

24.5%

25.0%

25.5%

26.0%

26.5%

27.0%

27.5%

28.0%

28.5%

29.0%

29.5%

30.0%

Pe

rce

nt

of

GS

P

Real Gross State Product (GSP)

Manufacturing's Dollar Contribution to GSP

Manufacturing's Share of GSP

$291.4 billion

28.4%

$82.7 billion


15

Real Gross Metropolitan Product for the Cleveland-Akron CMSA (1992 dollars)

Period 3 Period 4 Period 5Period 2


16

Ohio’s Real Productivity

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997

Year

Ave

rag

e G

SP

pe

r W

ork

er

-

5,000

10,000

15,000

20,000

25,000

30,000

Re

al

$ D

iffe

ren

ce

Real Manufacturing GSP per Worker ($92)

Estimated Difference in Productivity (Manufacturing - Non-manufacturing)

Real Avg GSP per Worker Excluding Manufacturing ($92)

-$587

$45,089 (manufacturing)

$45,676

$45,489

$28,441

$73,930


17

Five Parts to the Production Process

1. Headquarters2. Research, design, development,

& deployment3. Production or procurement4. Marketing, sales, and service5. Distribution or logistics


18

Product Life CycleIncubationInfantTake-offMaturity Stable maturity Restructured

Decline


19

Looking at the Cycle

Time

Profit

Sales

Output

declinematuritytake-offincubation

infant

restructured


20

Interaction with regional economies:

Application of Technologies

Product Life Cycle Stage

Maturity

Parts of the Production Process Incubation Infant Take-Off Stable Restructured Decline

Integrated facility

Headquarters

Research, design,

development, & deployment

Production

Marketing, sales & service

Distribution/logistics


21

Interaction with regional economies:

Labor Demand (occupational)

Product Life Cycle Stage

Maturity

Parts of the Production Process Incubation Infant Take-Off Stable Restructured Decline

Integrated facility

Headquarters

Research, design,

development, & deployment

Production

Marketing, sales & service

Distribution/logistics


22

Three Public Policy Issues

The role of software and information technology in the economy

Land assembly and renewal

Business taxes


23


Four Facets of Information

Technology

1. Economic development infrastructure

2. Ubiquitous software & network applications

3. Applying IT to existing products4. Export products: competitive

advantage Example: factory automation systems


24


Land as Competitive Infrastructureall costs are per acre

Land assembly & clearance Greenfield: $25,000 - $50,000 Reused land: $200,000 - $300,000Cost differential: $150,000 - $275,000Annualized profit differential At a 15% rate of return $22,500 - $41,250 per acre


25

Estimated Tangible Personal Property and Corporate Franchise Tax Revenues for Each $1,000 of Gross State Product in 1996

Agriculture $ 1.40Mining $31.20Construction $ 4.30Manufacturing $15.80Transportation & Public Utilities $ 4.50Wholesale trade $10.00Retail trade $10.80FIRE $ 2.80Services $ 3.70Average $ 9.40


26

Manufacturing in Northeast Ohio

It’s all about productsWorld-class and under-appreciated by all but the market


27

The 12 Comparison CMSAs

Chicago-Gary-KenoshaCincinnati-HamiltonDallas-Fort WorthDenver-BoulderDetroit-Ann Arbor-FlintHouston-GalvestonMiami-Ft Lauderdale

Milwaukee-RacinePhiladelphia-Wilmington-Atlantic CityPortland-SalemSan Francisco-Oakland-San JoseSeattle-Tacoma-Bremerton

manufacturing in ohio: world-class and under- appreciated by all but the market edward w. hill the...

Documents

urban development

us average period

soccds slide

intensive employment

dollars period

high technology

workers us average

technology industries