Manufacturing and Development in Rural Areas. Derrick Slocum Rural Planning Seminar Prof. John Keller. Sources : William A. Galston and Karen J. Baehler “Rural Development in the United States” Dennis Roth “Thinking About Manufacturing: A Brief History”. Introduction.
Rural Planning Seminar
Prof. John Keller
change in rural economy this century.
-- Change generated wealth and boosted standards of living for
millions of rural residents.
1960’s created large pool of cheap surplus labor which
became the new source of comparative advantage from
rural areas during 1970’s and 1980’s.
advantage of the labor surplus.
-- ”Rural Renaissance”
the manufacturing sector to fuel rural economic growth on
a large scale.
demand, manufacturing will be important wealth generator
and important market for goods and services produced by
--Markets failed to generate adequate levels of investment in production technology in rural factories.
--Failed to provide access to advanced services.
-- Failed to develop collaborative networks.
Some Facts about Growth
--Absolute job loss during 1980-82 mainly from high-wage and low-wage manufacturing industries.
--Medium-wage manufacturing increased its constant dollar share of GNP from 1972 to 1984, mostly due to performances in high-tech industries.
--Low-wage grew in relative size. Yet, these high-growth sub- sectors were too small to offset the declines experienced in the larger industries within manufacturing.
--Between 1986 and 1991, 2.5% growth compared to 0.2% for the total non-farm business sector.
--Between 1979 and 1986, 2.3% growth compared to 1.1% for the total non-farm business sector.
Good and Bad Times
--Late 60’s into the 70’s, companies were looking for cheaper land and labor. Rural America gained an advantage.
--Low land prices, taxes, and wage rate in the country enticed many manufactures to move their facilities and jobs from urban to rural areas.
--Between 1969 and 1976, rural manufacturing increased at an average of 1.4%, while urban manufacturing declined 1.1% during that same time.
--By 1979, 44% of all rural residents lived in counties dominated by manufacturing.
--Between 1976 and 1984, rural manufacturing employment rates remained the same while urban areas expanded their goods-producing jobs 0.7%.
--The recessions of the 80’s, with trade deficits, hampered U.S. manufacturers, especially in rural areas.
--Unemployment rates rose two percentage points more in rural areas than in urban areas between 1979 and 1982, all the while, the national employment rates remained the same.
--During that period, employment in rural manufacturing dependent counties fell 5.6%.
Some Exceptions to the Rule
--Crawford County Missouri experienced a 20% job growth between 1979-1984, mostly in manufacturing.
--Hoke County North Carolina experienced a growth of more than 50% in manufacturing between 1977-1984.
--’plain vanilla’ manufacturing – bending metal, consumer products, or contributing to the motor vehicle industry.
--Regional characteristics – large minority population, concentration in more remote rural areas, jobs in food processing industries.
--Continued advantage of low taxes, low-skill, and low-wage workforce.
--Aggressive local leadership with pro-growth attitude.
--Lack of access to information and communications, high transaction costs, and historic dependence on urban economies are probably to blame.
--Build on their natural resource strength.
--Localities and States can pursue “import substitution”
--Strategies to facilitate natural processes by which new manufacturing enterprises are born from old enterprises.
--Trouble finding large enough sample, even “partially automated”.
--Likely path is adoption of new process technology.
-- Foreign investment
--Almost half of it concentrated in the South.
--Mostly in the form of acquisitions of existing business
--A period when foreign investment in U.S. manufacturing increased 42%.
--Lack of information
--Regulations at home and abroad
--Critical form of “leakage” suffered by rural areas.
--Quality of local school systems must be maintained and improved.
--Localities be responsive to the training needs of employers already in operation, especially those firms interested in retooling, including small firms.
--This reputation is in regard to one particular subgroup – individuals with a high school diploma or less.
--Economy built on branch plants embrace a culture of absentee ownership, power concentrated in the hands of a few outsiders creating a dependency between local workers, managers, and chiefs at headquarters.
--Ties between producers and ties between an industry and its community.
--Successful, small-scale, flexible manufacturing depends on the larger community to establish basic rules about job distribution, training new workers, and preventing firms from exploiting their workforce.
--Goal: a system that can innovate and adapt to market changes without sacrificing the quality and stability of jobs.
--Perpetuate existing inequities in industrial relations and fall short of the qualitative goals of development, like relieving poverty, generating attractive occupational opportunities for young people, and building community self-sufficiency.