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Rust Belt

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Manufacturing Belt, highlighted in red

The Rust Belt, also known as the Manufacturing Belt, is an area in parts of the Northeastern United States, Mid-Atlantic States, and portions of the Upper Midwest. The region can be broadly defined as the region beginning west of the Northeast Megalopolis and running west to Minnesota, particularly the city of Duluth and the Iron Range. Because the area's economy was defined by the steel industry and other heavy manufacturing, Minnesota – with its massive iron mining operations integral to steel – is often considered to be "where the Rust Belt begins". The area immediate to Lake Erie is considered to be the "hub" of the Rust Belt. The region extends southward to the beginnings of the coal-mining regions of Appalachia, north to the Great Lakes and includes manufacturing regions of Southern Ontario and Quebec in Canada.

The name 'Rust Belt' came about due to the decline of industry in the 1970s, when many of the region's factories had been closed, and the resulting shuttered buildings were guarded only by rusting gates.[1]

Joblessness in the region increased rapidly in 2008 and 2009, surpassing 20 percent in some areas. A number of observers believe the recent inclusion in certain local economies of hydrogen fuel cell development, nanotechnology, biotechnology, information technology, and wind power may eventually result in notable gains for the region.[2][3][4] This could help revitalize the economy of affected communities. Past economic activity in the region formed a significant part of the heavy industry and manufacturing sectors of the American economy. The term Rust Belt signified the collapse, and the eventual restructuring of the steel industry, with the loss of hundreds of thousands of jobs in the region. Since then, the U.S. steel industry has been reinvigorated by automated processes which require fewer workers. Contraction of manufacturing jobs has displaced many workers in this region, particularly in Buffalo, Rochester, Syracuse, and Utica, New York; Pittsburgh, Bethlehem, and Erie, Pennsylvania; Cleveland, Toledo, and Youngstown, Ohio; Detroit and Flint, Michigan; Gary, Indiana; Milwaukee, Wisconsin; and Duluth, Minnesota; forcing this area — the focal point on the continent for steel mills and the automobile industry — to diversify. The region remains one of the world's preeminent manufacturing areas in spite of the late 2000s recession.

Geographic definition

Although manufacturing exists nationwide, the region is roughly defined as comprising the northern sections of Illinois (particularly the southern portion of the Chicago Metropolitan Area); northern and central Indiana and Ohio; southeastern and northwestern Wisconsin; the Lower Peninsula of Michigan; western and central New York, especially around Buffalo, Rochester, and Syracuse; Northern New Jersey and the outer boroughs of New York City[citation needed]; most of Pennsylvania; far western portion of the Maryland panhandle; and the northern part of West Virginia, particularly the Northern Panhandle. Saint Louis, Missouri may be considered a manufacturing center, although the surrounding parts of Missouri and Illinois are not part of the region.[5]

Sometimes the adjacent portions of the Canadian province of Ontario (particularly the southern and southwestern parts) are included as well, giving the concept an international dimension. This portion includes heavily industrial Ontario cities such as Hamilton, St. Catharines, Sarnia and Windsor. Toronto, despite a diverse concentration of manufacturing industries, is not included because of its long held position as a finance, banking, media, and transportation center within Canada.

Taken together, the American and Canadian areas described here correspond closely to the area defined by the journalist Joel Garreau as "The Foundry" in The Nine Nations of North America.

History

The area emerged as a primary center of manufacturing and industry due to access to resources and its proximity to navigable waterways. Ready sources of coal lay just to the south in West Virginia, Tennessee, and Kentucky, as well as in western and northeastern Pennsylvania; an immigration-driven population boom in the late 19th century provided workers for expanding industries; and easy access to shipping on the Great Lakes, and to the East Coast, was possible via canals, and later railroads. The region was one of the first in the United States to build railroad service (i.e., the Allegheny Portage Railroad). Coal, iron ore and other raw materials were shipped in from surrounding regions to cities such as Pittsburgh, Gary, Buffalo, Cleveland, and Youngstown, Ohio, which became centers of the steel industry. Duluth, Chicago, Cleveland, Buffalo, Detroit, Milwaukee, and Toledo emerged as major ports on the Great Lakes and served as transportation hubs for the region with a proximity to railroad lines.

Deteriorating U.S. net international investment position (NIIP) has caused concern among economists over the effects of outsourcing and high U.S. trade deficits over the long-run.[6]

Outsourcing of manufacturing jobs in tradeable goods is an important issue in the region. One culprit has been globalization and the expansion of worldwide free trade agreements. Anti-globalization groups argue that trade with developing countries has resulted in stiff competition from countries such as China which pegs its currency to the dollar and has much lower prevailing wages, forcing domestic wages to drift downward. Some economists are concerned that long-run effects of high trade deficits and outsourcing are a cause of economic problems in the U.S.[7][8] with high external debt (amount owed to foreign lenders) and a serious deterioration in the United States net international investment position (NIIP) (-24% of GDP).[6][9][10] Some economists contend that the U.S. is borrowing to fund consumption of imports while accumulatiing unsustainable amounts of debt.[6][10] On June 26, 2009, Jeff Immelt, the CEO of General Electric, called for the United States to increase its manufacturing base employment to 20% of the workforce, commenting that the U.S. has outsourced too much in some areas and can no longer rely on the financial sector and consumer spending to drive demand.[11]

Since the 1960s, the expansion of worldwide free trade agreements have been less favorable to U.S. workers. Imported goods such as steel cost much less to produce in third world countries with cheap foreign labor, see steel crisis. Beginning with the recession of 1970-71, a pattern emerged. Competitive devaluation combined with each successive downturn saw traditional U.S. manufacturing workers experience lay-offs. Wealth-producing primary sector jobs such as those in manufacturing and computer software were often replaced by much lower paying wealth-consuming jobs such those in retail and government in the service sector when the economy recovered.[12][13] A gradual expansion of the U.S. trade deficit with China began in 1985. In the ensuing years the U.S. developed a massive trade deficit with the Asian nations of China, Japan, Taiwan, and South Korea. As a result, the traditional manufacturing workers in the region have experienced economic upheaval. This effect has devastated government budgets across the U.S and increased corporate borrowing to fund retiree benefits.[9][10] Some economists believe that GDP and employment can be dragged down by an large long-run trade deficits.[12][13][14][15]

Transformation

Other types of advanced manufacturing have emerged in these states such as biotech, nanotech, infotech, and cognotech. Robotization has led to other types of manufacturing output which require fewer workers with varying skills. Moreover, job gains in these areas have not been nearly enough to keep pace. As a result, middle class incomes and savings in the United States have been negatively impacted.

States in the Midwest have had to keep their tax structures competitive. A May 16, 2006 opinion column by Lawrence J. McQuillan and Hovannes Abramyan of the Pacific Research Institute stated, "Jobs are flocking to low-tax states for a reason... The Pacific Research Institute has crunched the tax numbers in all 50 states and published the 'U.S. Economic Freedom Index' ranking all states according to how friendly or unfriendly their policies were toward free enterprise and consumer choice in 2004... In 2005, per capita personal income grew 31% faster in the 15 most economically free states than it did in the 15 states at the bottom of the list. And employment growth was a staggering 216% higher in the most free states."[16]

Some attribute job losses to labor unions; however, a February 2009 report by the Economic Policy Institute showed that there may not be a negative correlation to unionization and international competitiveness, but there may be a positive one.[17] A March 3, 2008 Wall Street Journal editorial claimed that, while Ohio lost 10,000 jobs in the past decade, Texas created 1.6 million new jobs. The editorial stated, "Ohio's most crippling handicap may be that its politicians – and thus its employers – are still in the grip of such industrial unions as the United Auto Workers. Ohio is a 'closed shop' state, which means workers can be forced to join a union whether they wish to or not. Many companies – especially foreign-owned – say they will not even consider such locations for new sites. States with 'right to work' laws that make union organizing more difficult had twice the job growth of Ohio and other forced union states from 1995–2005, according to the National Institute for Labor Relations. On the other hand, Texas is a right to work state and has been adding jobs by the tens of thousands. Nearly 1,000 new plants have been built in Texas since 2005, from the likes of Microsoft, Samsung and Fujitsu. Foreign-owned companies supplied the state with 345,000 jobs."[18] A September 13, 2008 opinion column by Phil Gramm and Mike Solon stated, "Yes, Michigan lost 83,000 auto manufacturing jobs during the past decade and a half, but more than 91,000 new auto manufacturing jobs sprung up in Alabama, Tennessee, Kentucky, Georgia, North Carolina, South Carolina, Virginia and Texas."[19]

Another factor may be the increased transportation integration and migratory patterns within the United States; though these studies ignore the water shortages which will limit future growth in the Sunbelt. Proximity to energy sources has become less important, and access to lower-wage labor markets of the Sunbelt has been a factor.

Many of the metro areas in the region have experienced an expansion in their suburban populations while central city populations have decreased. Examples from the 2000 U.S. Census include Detroit, Flint, Cleveland, Philadelphia, Pittsburgh, Erie, Duluth, Niagara Falls, which is an important center for the chemical industry, Buffalo, Binghamton, Rochester, Akron, Toledo, Syracuse and many more, despite revitalized downtown areas.[20] Northern states have mounted a "Cool Cities" initiative to reverse the trend. The 2004 population estimate showed states in the region averaged around 2% net growth due to some migration, even as many of those in retirement age moved southward. Cities with existing infrastructure like those in the Midwest are better equipped to accommodate future increases in projected U.S. population growth.[21]

Presidential candidates have focused increased attention to the economic concerns of the region which contains the pivotal electoral states of Ohio, Pennsylvania, Michigan and Wisconsin.

See also

Notes

  1. ^ Pollick, Michael. "What is the Rust Belt?". Retrieved 2009-09-05.
  2. ^ Bradley, David (2004-02-06). "A Great Potential: The Great Lakes as a Regional Renewable Energy Source" (PDF). Retrieved 2008-10-04.
  3. ^ "Great Lakes eyed for offshore wind farms". MSNBC, Associated Press. 2008-10-31. Retrieved 2008-11-14.
  4. ^ Conway, McKinley (2008-06-23). "Multi-billion Dollar Wind Turbine Race Spurs Scramble for New Production Sites".
  5. ^ "St Louis Escapes Its Rust-Belt Past", NPR, All Things Considered, May 17, 2006. Accessed November 15, 2006.
  6. ^ a b c Bivens, L. Josh (December 14, 2004). Debt and the dollar Economic Policy Institute. Retrieved on June 28, 2009.
  7. ^ Roberts, Paul Craig (August 7, 2003).Jobless in the USA Newsmax. Retrieved on June 23, 2009.
  8. ^ Hira, Ron and Anil Hira with forward by Lou Dobbs, (May 2005). Outsourcing America: What's Behind Our National Crisis and How We Can Reclaim American Jobs. (AMACOM) American Management Association. Citing Paul Craig Roberts, Paul Samuelson, and Lou Dobbs, pp. 36-38.
  9. ^ a b Cauchon, Dennis and John Waggoner (October 3, 2004).The Looming National Benefit Crisis. USA Today.
  10. ^ a b c Phillips, Kevin (2007). Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism. Penguin. ISBN 9780143143284.
  11. ^ Bailey, David and Soyoung Kim (June 26, 2009).GE's Immelt says U.S. economy needs industrial renewal.UK Guardian.. Retrieved on June 28, 2009.
  12. ^ a b David Friedman, New America Foundation (2002-06-15).No Light at the End of the Tunnel Los Angeles Times.
  13. ^ a b Sir Keith Joseph, Centre for Policy Studies (1976-04-05).Stockton Lecture, Monetarism Is Not Enough, with forward by Margaret Thatcher. (Barry Rose Pub.) Margaret Thatcher Foundation (2006).
  14. ^ Free Trade Bulletin no. 27: Are Trade Deficits a Drag on U.S. Economic Growth? | Cato's Center for Trade Policy Studies
  15. ^ Causes and Consequences of the Trade Deficit: An Overview
  16. ^ 'Live Free or Move', by Lawrence J. McQuillan and Hovannes Abramyan, May 16, 2006
  17. ^ Bivens, Josh (February 25, 2009).Unions do not undermine international competitiveness. Economic Policy Institute.
  18. ^ Texas v. Ohio, Wall St. Journal, March 3, 2008
  19. ^ If You Like Michigan's Economy, You'll Love Obama's, Wall St. Journal, September 13, 2008
  20. ^ Incorporated Places of 100,000 or More, Ranked by Percent Population Change: 1990-2000 US Census Bureau, Census 2000. Accessed November 16, 2006.
  21. ^ Haya El Nasser (May 27, 2006).[1].USA Today. Retrieved on June 28, 2009.

References

  • American Steel, Richard Preston (1991), Prentice Hall. ISBN 013029604X
  • Images of the Rust Belt, James Jeffery Higgins (1999), Kent State University Press. ISBN 0873386264
  • Industrial Sunset, Steven High (2003), University of Toronto Press. ISBN 0802085288
  • Meyer, David R (1989). "Midwestern Industrialization and the American Manufacturing Belt in the Nineteenth Century". The Journal of Economic History. 49 (4 December 1989): 921–937.
  • People and folks: gangs, crime, and the underclass in a rust- belt city, John Hagedorn and Perry Macon (1988), Lake View Press. ISBN 0941702219
  • Reorganizing the Rust Belt, Steven Henry Lopez (2004), University of California Press. ISBN 0520235657
  • Revival in the rust belt, Daniel R. Denison and Stuart L. Hill (1987), University of Michigan Press. ISBN 0879443227
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