Youngstown Advantage Redux

Janko focused my attention on an article in today's Business Journal. Here's the passage that resonated with him:

“I think if we can continue to develop Lordstown’s reputation as the center of gravity for the auto industry,” Ryan said, “the Cruze can be just the beginning.“ Developing a cluster of auto and auto-related companies in the Mahoning Valley, especially those related to alternative and green energy, is possible.

“We have a great opportunity with the green revolution because we offer everything that they would need. If they need business software development, we’ve got the Youngstown business incubator,” he elaborated. “If they need energy product development, we’ve got the Warren incubator. If they need research, we’ve got Youngstown State University. If they need job training we’ve got the community college -- we’ve got everything infrastructure-wise in place. Now it’s about going out and pitching the deal.”

Financial incentives are still important in luring business to the Valley, but they aren’t as important as they once were, Ryan said.

Today, knowing that there are opportunities to partner with YSU, the business incubator and other entities that can help businesses succeed long term are more important than incentives, he observed. Those possibilities along with the Valley’s skilled workforce, low cost of living and vision “are all in our favor,” Ryan said. “Youngstown State having the first STEM college in the state of Ohio sends a signal that we know where the future is.” He added, “I believe our area is leading the country out of the recession.”

In bold is the part of Congressman Tim Ryan's comments that jumped out at me. I'm not a big fan of financial incentives. I'm in good company:

While states battle to outdo each other with bigger incentives, there are smarter ways to attract or bolster companies, the nonprofit research center Good Jobs First of Washington, D.C., suggests in its [report] released today.

For instance: Concentrate efforts around occupations that already are strong in a specific region, rather than creating packages for specific companies. Nuclear, civil and other types of engineering along with biomedical fields are strong in Pittsburgh, so training and job growth efforts could be focused there, Good Jobs First said. ...

... The research center contends Pennsylvania's tax structure isn't significantly different from those in most other nearby states — in fact, it's in the middle of the pack — so the state should "do no more harm to the tax code."

Instead, Pennsylvania should hone its attention on workforce development and other issues such as growing its own employers rather than recruiting from outside, and pushing for better federal trade policies.

Especially in manufacturing, "The number of jobs lost offshore is dozens of times greater than the number lost to other states," Good Jobs First said.

For more, see the Wall Street Journal.

I'm not crazy about the proposed federal trade policy angle, either. But I appreciate the stated course for localities and states to follow instead of lavishing companies with all kinds of money. Even if the incentives do work, the gains are ephemeral. There is always another place that can afford to offer a better deal. Frankly, it is extortion and a lot like the leveraging of brain drain hysteria to get voters (or politicians) to support some boondoggle.

I look around the Rust Belt and I see many regions with the same assets. What sets apart one shrinking city from the rest? Not to scratch the scab off of a recent wound, Sean Safford's research comparing and contrasting Youngstown with Allentown offers possible comparative advantage. I believe that the Mahoning Valley civic infrastructure could be the envy former manufacturing centers across the country. However, Pittsburgh probably holds that distinction thanks to some remarkable partnerships and economic vision that started, in some cases, 50-years ago.

The current civic infrastructure bodes well for the future. It's a big change from the Youngstown Safford saw. The legacy of the James Traficant era won't disappear overnight and the ravaged economic landscape will continue to dominate the headlines. Pittsburgh is just beginning to shake the rust off of its national image, a process that has taken decades and at least two major urban reinventions that served as a model for many US cities such as Minneapolis. This hard-won transformation isn't easy to replicate, unlike generous tax incentives or even substantial tax reform.

The task before us now is to get the good word out and help the ambitious to understand the unique value proposition. This result still eludes Pittsburgh, as the Power of 32 fiasco indicates. Let's hope that the TechBelt Initiative is better up to the task. This should be an open and inclusive process, not business as usual.