Rural Minnesota suffering from 20% loss in manufacturing jobs since 2000

Make a mental image of rural Minnesota.

If you’re like me, the picture that comes instantly to mind features a barn, a silo, a tractor and a farmhouse flanked by a grove of trees.

How about a smokestack?

Much as we think of our rural counties as farm country, they also have carried more than their weight over the years of support for manufacturing jobs. Roughly three-fourths of Minnesotans live in cities. But nearly 40 percent of the state’s manufacturing jobs are someplace outside a major city.

Now that mainstay of the rural economy is in trouble. Even before the Great Recession, manufacturing jobs were melting away from Minnesota at a rate that scared many a small town. Rural areas have lost one in five of those jobs during the past decade.

Factories picked up the slack
What’s true in Minnesota is true across the Midwest, according to a new report [PDF] from the Chicago Council on Global Affairs. 

Cities also have lost manufacturing jobs, too — even at a higher rate than their rural counterparts. But diverse urban economies have buffered some of the blow, diverting workers to jobs in banks and brokerage houses and other service industries.

For their part, small towns and cities came to depend far more heavily on factories as replacements for farm jobs that faded away over years of mechanization and consolidation in agriculture.

“As farms consolidated and the farm population fell, factory jobs — often based on autos, food, and agricultural equipment — picked up the slack,” the report says.

“Rural towns and counties depend on manufacturing even more than Midwestern cities, where service industries dominate,” it says. “Put simply, as goes manufacturing, so goes the rural Midwest. Today, that industry is going away, and much of the rural Midwest’s economic vitality is going with it.”

Automation and much more

The Great Recession accelerated that decline, but didn’t cause it. The causes are many. To name a few:

• Factory work increasingly is automated, a transformation that may be good for productivity but bad for job numbers, especially jobs formerly filled by low-skilled workers.

• Some manufacturers left the country in pursuit of cheap labor and/or overseas markets.

• Orders have fallen off from major industries — such as construction and auto making — that once were prime customers for items made by smaller manufacturers.

Add the recession’s impact, and factory jobs appear to be going over a cliff in Minnesota.

The state had 95,348 more manufacturing jobs in the year 2000 than it had at the end of 2009, according to the Bureau of Labor Statistics’ Quarterly Census of Employment and Wages.

The government doesn’t provide estimates for rural areas. But it does break out the Twin Cities metro area, Duluth, Mankato, Rochester, St. Cloud and Winona.

Manufacturing jobs in Minnesota
Source: Minnesota DEED
* Cities include Twin Cities area, Duluth, Mankato, Rochester, St. Cloud and Winona

Peel away the numbers for those cities, and you see that the rest of Minnesota lost nearly 29,000 manufacturing jobs during the decade, about 20 percent of what it had in 2000.

In terms of scale, that’s the population equivalent of losing all of Hibbing, Alexandria, Bird Island and Hayfield.

Bold strategies for a brighter future
The loss adds up to this daunting reality: Rural areas in Minnesota and across the Midwest need bold new development strategies in order to save their economic lives.

As political campaigns gear up for the final weeks before the November election, you can expect a barrage of pledges to restore jobs across Greater Minnesota. Don’t believe them unless the candidates offer bold and fresh ideas for rebuilding the state’s manufacturing base or else replacing manufacturing jobs with some other work.

“The rural Midwest could have an economic future as bright as its vibrant past,” says the Chicago Council’s report. “But it is basing its twenty-first-century future on a twentieth-century playbook. This is not a recipe for success.”

Stop chasing smokestacks
For starters, towns and counties will need to stop chasing smokestacks in competition with near neighbors. For years, local economic development agencies have spent millions on infrastructure and tax breaks to lure companies from other places — only to lose them later.

“For more than a half century the rural Midwest has followed one basic path to economic development: Recruit a factory to the edge of town, and give away the farm to get it,” the report says.

In the 12 Midwestern states, something approaching 80 percent of development budgets goes to such recruitment incentives. County economic development boards and local business groups preserve lines in the sand when they should be pitching in to promote regional growth.

But selling the home town as a cheap place to make things is a strategy that crashes in failure for workers and their communities when some other place offers a cheaper deal.

Instead, local boosters need to build on the region’s many other economic assets — its natural resources, its hard-working people, its central location, its schools and universities, and its scientific base.

Pull together
Further, towns and counties need to pull together with their neighbors — instead of competing against each other.

“Partnering regionally to compete globally is what’s needed,” the report says. “Only by combining their forces to create new businesses and good jobs at home will the towns and counties of the rural Midwest compete and thrive in a global economy where this sort of collaboration is fast becoming the norm.”

Some Minnesota regions already have taken steps to transform their economies along those lines. The report cites a regional project in Southern Minnesota as a model for the entire Midwest.

The Southern Minnesota Initiative Foundation and 14 other organizations launched the ambitious project two years ago in a bid to boost the competitiveness of 38 counties across Southern Minnesota, home to nearly 1 million people.

The first look through their new regional lens was sobering. Even before the recession hit, Southern Minnesota lagged behind the rest of the state in per capita income, job growth, productivity and economic staples such as venture capital and broadband access, according to a study by the Rural Policy Research Institute’s Center for Regional Competitiveness in Missouri.

By several measures, Southern Minnesotans had been far less prosperous than their neighbors in the Twin Cities. In Fillmore County, for example, the median household income was $43,776 in 2007, compared with $60,943 in Hennepin County and $79,213 in Scott County.

But the region also had promising economic prospects with a solid base in health care, agriculture and food processing.

Through a series of round table discussions, regional leaders have been gathering ideas and forging strategies for pulling together to leverage those assets into a better future.

You can find more context for the southern Minnesota Regional Competitiveness Project in this MinnPost report.

Safe spaces and coaches
Minnesota-based foundations and companies have pumped millions of dollars into similar projects around the state.

“These projects fit the new global paradigm for rural economic development because they go beyond local political boundaries and instead focus on the economic potential of the region to compete,” says the Chicago Council’s report.

That’s easy to say. But turning around old ways of thinking and doing business is an immense challenge that calls for fresh ideas from leaders at every level. It calls for diminishing political power in some cases and yielding competitive advantage in others.

“To succeed, regional leaders will need a neutral ‘safe space’ where new partnerships can be forged,” the report says. “They will also need ‘coaches’ that can effectively bring local players out of their traditional silos and combine their strengths on a new economic team.”

Until now, such coaches have been in critically short supply.

Can we find some in this year’s crop of candidates? Let’s hope so, because the stakes are very high for rural Minnesota.

Sharon Schmickle covers science, Greater Minnesota and other topics. She can be reached at sschmickle [at] minnpost [dot] com.

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Comments (4)

  1. Submitted by Jeff Goldenberg on 10/06/2010 - 12:01 pm.

    I have seen this decline first hand. As part of my work I have spent a lot of time the past seven years working with and selling to Minnesota rural health care organizations – primarlily community hosptals and longterm care facilities.

    In nearly every town I visited, these facilities are the largest or close to the largest employers left in the community. People drawing blood, serving food, cleaning rooms were formerly bendinig metal, doing assembly or doing office duty in the front office of manufacturers.

    Serving the infirm and aged is about the only growth industry left in much of rural Minnesota. While an OK backstop for the moment, this is an unfortunate signpost on the road to economic extinction.

  2. Submitted by Greg Kapphahn on 10/06/2010 - 12:11 pm.

    In the figures reported, here, we see the result of all those changes our Republican friends have demanded in order to “improve the business climate” in Minnesota – results which have been dismal, even prior to the current economic downturn.

    It’s clear that the “improved business climate” that they demanded (and continue to demand) has not really been aimed at increasing jobs for regular people and improving the climate for small businesses throughout the state, nor at assisting new business startups (which supply the MOST new jobs) but only aimed at padding the pockets of owners and executives of already-established LARGE businesses i.e. the already fabulously wealthy (which clearly shows in the massively growing income disparities in the state).

    It seems to me that this growing INCOME gap is far more important and far more damaging to the lives of average Minnesotans than the education gap that they and the media SO love to use to bash teachers and public education (even while expressing massive admiration for those who do poorly in school but are successful in later life as if, in doing so, those lucky individuals are getting even, perhaps even proving they are smarter than the teachers who gave them low grades for failing tests and not bothering to do their homework).

    I applaud the new approach being taken in Southern Minnesota and only hope similar approaches can be taken in the central part of the state and earnestly hope that, since such efforts run counter to the seeming Republican goal of ensuring that regular people are simply unable to find well-paying jobs with decent benefits, those same “Conservatives” won’t invent a way to pull the rug out from under, or pull the plug on such efforts.

    But my bet is, they will. If not through public policy, then through buying up those newly-started businesses in order to absorb them or simply liquidate them, thereby ensuring there is NO competition for their existing companies and NO better opportunities for their underpaid workers.

  3. Submitted by Dan Stoltz on 12/15/2010 - 07:18 am.

    Greg, what does

    “even while expressing massive admiration for those who do poorly in school but are successful in later life as if, in doing so, those lucky individuals are getting even, perhaps even proving they are smarter than the teachers who gave them low grades for failing tests and not bothering to do their homework”

    have anything to do with manufacturing jobs in southern MN?

    or is this just some forum for Liberals or self-described “progressives” to vent their hate for Conservatives?

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