From Site Selection magazine, May 2015
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The Century of the Center
Economists, others see Central US flexing economic muscle for a long time.
hoever called the great industrial region of the US interior the “Rust Belt” certainly did not intend that moniker to be a compliment.
Conjuring up images of shutdown factories, laid-off autoworkers and dilapidated communities, the Rust Belt served like a journalistic hammer to regional aspirations of economic prominence.
The problem is that something happened on the way to the funeral for a region that includes everything from Pittsburgh and Rochester to Minneapolis and Milwaukee and beyond. The center of the country refused to die.
While documentarian Michael Moore pilloried the region with “Roger and Me,” the middle section of America decided to fight back. And it wasn’t just triggered by federal bailouts of the automotive industry either. It was engineered the old-fashioned way by ingenuity, risk-taking and hard work.
Jeffrey Lyttle, senior vice president of JPMorgan Chase in Columbus, Ohio, says the central region of the US is one of “promise and growth and vibrancy. Most of our growth has occurred in the latter half of the 20th century and more recently. We are still a relatively young urban center.”
In terms of American history, the Great Lakes and Central Plains States economy is the “millennial in the room” — the upstart, young, highly educated professional that’s knocking down the door of leadership to the board room and starting to take charge.
From Rust Belt to TrustBelt
Consider the evidence:
- From 2010 to 2013, the Great Lakes region grew its GDP at a faster rate than the Southeast US.
- The 15-state region of the Great Lakes and Central Plains had 104 million people, produced $683 billion in exports, and accounted for 38,395 patents in 2013.
- A total of 432 of the Fortune 1000 companies base their headquarters in this mega-region.
- If this mega-region were a country, its $5.6 trillion GDP would make it the third-largest economy in the world behind the US and China.
A March 2013 article in Site Selection was the first to bill this mega-region as the “TrustBelt,” but lately a number of corporate executives and site consultants are beginning to follow suit.
Consider the words of Tracey Hyatt Bosman and Michelle Comerford, consultants with BLS, in a recent column for The TrustBelt Report — a publication of Conway Inc., publisher of Site Selection: “The past quarter century has taken a toll on the Midwest’s reputation. Struggling industries, labor union strikes, bureaucratic issues, heavy tax burdens and regulations, and corporate flight led to the unfortunate nickname of ‘The Rust Belt’ — coined to reflect cities in economic decline with shuttered plants and rusty smokestacks. Yet many areas of the Midwest have faced their challenges head-on. This hasn’t happened overnight, but the Midwest is creating a better business climate, grabbing the attention of business leaders, and successfully attracting new investment across a diverse range of industries.”
Data compiled by Site Selection verify these claims. In the 2014 Governors Cup competition, five TrustBelt region states ranked in the top 10 for total new and expanded corporate facility projects. Ohio placed second and Illinois placed third, while Kentucky, Michigan and Pennsylvania finished sixth, seventh and eighth, respectively.
In the past two years alone, the TrustBelt accounted for 4,300 new and expanded corporate facility projects. Over the past three years, facility projects in the TrustBelt have created more than 325,000 new jobs.
The TrustBelt also employs 5.1 million manufacturing workers. Of the 10 US states that employ more than 400,000 manufacturing workers each, seven of them are in the TrustBelt: Michigan, Ohio, Indiana, Illinois, Wisconsin, Pennsylvania and New York.
The question is — how did the TrustBelt region pull off this transformation? According to Bosman and Comerford, the renaissance was jumpstarted by a combination of public policy changes and a renewed commitment to investment in infrastructure and innovation. Indiana, Michigan and Wisconsin all enacted right-to-work laws, Ohio overhauled its tax structure for manufacturers, and Chicago founded and funded 1871 — a high-tech incubator that spawns a new digital startup every 24 hours.
“Midwestern communities are also finding ways to proactively create a home for New Economy companies, including preparing sites for them, such as the dedicated effort of AEP — a multi-state, Ohio-based utility — to identify, certify and market select properties in its territory as data center sites,” note Bosman and Comerford.
A Rallying Cry for Detroit
The BLS consultants are not alone in their assessment of the region. Ben Schulman, communications director for the American Institute of Architects Chicago, writing for NewGeography.com, said: “Rust Belt cities don’t exist because the narrative surrounding them over the past few years has slowly changed. No longer are they identified as places of decay; now the story is that they’re places of opportunity and renewal. This conviction is emerging against the backdrop of a general sort of reintroduction of the American city as a great, good place; a crucible of talent, energy, youth and creativity.”
A recent trip to Columbus, Ohio — host city of the first-ever TrustBelt Conference (set for May 31-June3) — confirmed this. In an extended interview with Columbus Mayor Michael Coleman at his office in City Hall, the mayor spoke eloquently about how every city in the TrustBelt region is connected. He even called upon his fellow mayors throughout the region to rally to the cause that is the rebuilding of Detroit.
“I believe in the power of cities,” he said. “Detroit has the same power as Columbus to rebuild itself and remake itself. I think the future of Detroit is great. If Columbus could accomplish everything that we have done in this city, then Detroit is capable of doing that too.”
Mayor Coleman added that “the city that stays the same falls behind. If you are going to remain competitive in the new global economy, then you constantly have to evolve as a city. If you don’t, then someone else will come along and eat your lunch.”These days, places like Columbus, Chicago and Pittsburgh are the ones doing the eating.