With the Great Recession in the rear-view mirror, and economic prospects looking firmer for America, there’s chatter that we may be finally witnessing a Rustbelt recovery. Economic trends are changing in favor of the Great Lakes region, meaning that the area may soon be an extremely cost-competitive place to do business for all types of industries.
Given that the region’s economic fate continues to be tethered to “old economy” industries, it’s hard for many to imagine forging a new future in the area without resurrecting formerly flourishing industries.
A new Great Lakes economy will be a cocktail of both old and new industries, and if done probably will leverage the region’s existing assets to build a new, more sustainable economic paradigm.
A Great Foundation For An Economic Rebirth
What many fail to consider about the Great Lakes region is that this area used to be the world’s largest manufacturing powerhouse. Much of that infrastructure remains intact, and could set the stage for a 21st century industrial renaissance.
As a result of its manufacturing past, the Great Lakes cities have what the Brookings Institution calls “the industrial and institutional infrastructure necessary to power an innovation economy.” Bottom line: The region produces a ton a graduates in the science and engineering fields (36 percent of the nation’s total) from 32 major public and private research universities. Along the same lines, about one-third of America’s patents were awarded to people and companies in the Great Lakes.
Large multinational companies like Ford and GM make their home in the region, while the region’s geography is favorable for export-driven industries (the Great Lakes are connected to the Atlantic Ocean through the St. Lawrence River in Canada).
Overall, the backbone for a new economy exists, and there’s one big ingredient that will drive investment: the low cost of doing business.
Bringing industry back: The economics of insourcing
For years, American companies outsourced their manufacturing abroad, as the cost of doing business was much lower. Today, because of new technology, higher wages abroad, and plentiful of cheap energy driven by the shale revolution, many people point to the rejuvenation of American manufacturing being around the corner.
Essentially, we’re getting to the point that domestic manufacturing is becoming cost-competitive with places like China. That might entice industries to boomerang their way right back to the place where they started: the Rustbelt.
There’s a case to be made that the Great Lakes competes with places abroad as much as it does with other cities in the United States when it comes to labor and industry. As metro areas all over the country struggle with affordable housing, the Great Lakes region has plenty of areas that are affordable and ready for an influx of residents.
Corporations looking to expand will likely be tempted by the ideal mixture of an educated workforce coupled with a dramatically lower cost of living. There are few places that can compete with the Great Lakes on those fronts.
Takeaway: Stop the bleeding
For many folks, a reversal of economic fortunes in the Rustbelt couldn’t come fast enough.
Many of these now-half-empty cities depended on a single-employer that eventually fell victim to economic forces and shut down. Many argue that the economic turmoil experienced by old economy hubs was reflected in many reliably Democratic Great Lake states voting for Donald Trump in 2016.
In order to address these now pivotal constituencies concerns, politicians have to stop the bleeding of the economic foundation in the Great Lakes. This will involve some expert incentivization and strategic government intervention. How this actually plays out over the next few years remains to be seen.
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