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