Dealing with Globalization in Dayton, Ohio

Reason’s Sam Staley’s new column on how Dayton, Ohio, is dealing with globalization. Staley writes:

Since the early 1970s, nearly 15,000 manufacturing jobs disappeared at NCR. Automobile plants cut payrolls as the economy restructured toward services, and foreign competition outsold domestic manufacturers. As late as 1990, five General Motors plants employed more than 20,000 people regionally. Now, fewer than 12,000 work in these factories and Delphi is on the cusp of closing two more plants. NCR’s world headquarters employs fewer than 3,000 people. Mead Paper Company has merged with a competitor, becoming MeadWestvaco and its corporate headquarters has moved to Richmond, Virginia. As the economy has tanked, the city has shrunk. After peaking at more than 260,000 people in 1960, the city is barely clinging to a core city population of less than 160,000. In the 2000 census, Dayton ranked 147th in size nationwide. Its metropolitan area is now ranked 59th. Meanwhile, the suburbs have grown. Nearly 74 percent of Montgomery County’s population lived in Dayton in 1930. The growth of suburban cities shrunk that proportion to less than a third by the mid 1980s. Now, less than 20 percent of the metropolitan area’s population lives in the city of Dayton. Dayton’s early dependence on traditional manufacturing, with a particular emphasis on assembly line work, put the region at a competitive disadvantage as growing international trade and dramatically reduced transportation costs allowed for the global dispersion of factory work. Yet perhaps most remarkable is not the region’s decline, but its resilience. Despite the ongoing decline of manufacturing sector, the metropolitan area still knits together a population of over one million people. What accounts for this? First, the regional economy has diversified. Now, as in other metropolitan areas, the growth in employment is in services. Two local major health care networks – Premier Health Partners and Kettering Medical Network – employ 15,300 in facilities that are nationally recognized for their quality of care. Wright Patterson Air Force Base is a center for scientific research and development and employs another largely civilian workforce of 21,000. Second, some of the large industrial companies of the past have evolved to meet the needs of an information economy. NCR, while its presence has diminished, is now a high tech company. Reynolds & Reynolds, a former business forms manufacturer, now provides software in niche markets such as auto sales. The region is also home to the legal information services provider Lexus/Nexus, now a division of Reed Elsevier but originally a division of the Mead Paper Company’s investment in data management services. Third, core parts of the traditional manufacturing base literally retooled to become globally competitive. In the early 1980s, more than 600 machine shops employed nearly 20,000 people. As the 1990s unfolded, this number had fallen by half. As the 21st century got its start, the number of tool and die shops had revived and employment was rebounding close to 15,000. The shops remain small, but they are deeply invested in global trade. Productivity is up along with incomes. Fourth, the region remains at a strategic logistical and demographic location in the Midwest. The city of Dayton is at the cross roads of two major interstate highways – the major east-west link I-70 and the north-south connector of I-75. Combined with access to three major airports, the Dayton region can easily benefit from and tap into economic growth in nearby metropolitan areas such as Columbus, Cincinnati, and Indianapolis. Ironically, many of the highway improvements some believed would “empty” the downtown – the interstates plus a partial beltway, I-675 – ended up tying the city and suburbs to other larger urban areas and enhanced the region’s geographic importance.