Introduction
It’s an old joke, and not very funny anymore. “Will the last person to leave (fill in name of city) please turn out the lights?” We’re not picking on Flint for the sake of beating up on the downtrodden, but Flint is an exemplar – the poster child – for communities in economic death throes. Goodnight and Goodbye, by the way, has no connection with the Jonas Brothers’ song.
The dynamics of community collapse are complex; Flint has been dying for well over twenty-five years. But, at the core, the issue is that Flint is irrelevant to global automotive supply chains, and that’s the death knell. Hey, Flint is irrelevant to domestic automotive supply chains. It may even be irrelevant to the General Motors supply chain.
We tend to think of these collapses in terms of manufacturing, but there are frequently distribution operations closely tied in with manufacturing operations. And, there are distribution facilities and operations alone that can bring down communities when they fail. Further, manufacturing operations may trace their roots to placement in a supply chain. At one time there were really good reasons that steel mills were in northern Ohio, western Pennsylvania, northwest Indiana, and northeast Illinois, considering what it took to get iron ore from the Mesabi Range through the Great Lakes. That, then, made the location of automotive operations a slam dunk. That was then, and this is now, and we assemble automobiles in Alabama, Georgia, Tennessee, Kentucky, and other places that would have made no sense at all in the early 1900’s.
There are many reasons for distribution center job losses. When the parent manufacturer shuts down is obvious. When sourcing radically changes is another. The network must be reconfigured if goods arrive at Los Angeles/Long Beach instead of coming from the next town over. Similarly, points of entry on the Mexican border that replace local production demand shutting down old facilities and building/acquiring new ones.
When a distribution center closes, all may not be lost. If the facility is located in a natural distribution centroid like Atlanta, Columbus, Memphis, et al, there may be other jobs in the area, later if not sooner. But, if the facility is a legacy of a long-ago acquisition, stands alone in a remote location, or otherwise falls outside the lines of a rationalized distribution network, the lost jobs may have disappeared into the void forever.
So, this is a supply chain issue at its core, and it’s time to face some grim facts. For many, many of these operations those lost jobs aren’t coming back – ever.
Looming Realities
Those lost manufacturing and distribution jobs aren’t going to magically re-appear “when things get better” – not when production has gone to Asia or Central America. They’re probably not going to be replaced by equally high-paying positions that use the skills that were useful in the old jobs. For sure, they won’t come back because of pronouncements by politicians, who shamelessly exploit the human tragedies involved in order to grab a few more votes (some while taxing the enterprises that might retain – or bring in – job-creating operations if it weren’t for the taxes).
“Economic stimulus” packages won’t do the job either, not when the community and its workforce can’t find a relevant value-adding slot in a healthy supply chain. And, some of the Band-Aids that even well-meaning politicians might slap on the wound may do more long-term harm than good.
Economic stimulus deserves a chapter all its own. Suffice it to say, for the moment, that investments in genuine infrastructure elements represent critical priorities. That doesn’t mean more “bridges to nowhere,” and it most certainly doesn’t mean restoring the gilt décor in the Ol’ Opry House downtown. Cowboy Up And Deal With it
We don’t want to gloss over the genuine misery of real people who get caught up in local economic collapse. And, training in 21st-century skills is a must, whatever the next steps for a town or an industry. But, simply having a capable workforce more or less in place is not a compelling argument for jobs to move into a depressed area.
Our humanitarian tendencies are sometimes attracted to the idea of spending public money (stimulus package or other) on the suffering community. But, these are generally sops, without long-term and sustainable benefit. Despite the human hardships involved, the money would be better spent – would benefit more people for a longer time – elsewhere.
We have got to learn the battlefield hospital techniques of triage. This does emphatically not mean that the most severe cases get the most attention soonest. Somewhat the opposite - the most dire cases, the terminally injured, don’t get any attention, and neither do the merely slightly wounded, who can recover on their own. Rescue efforts are poured into those seriously wounded, but with a fighting chance of making it. We need to learn to do the same with economically wounded communities. Those that have no chance should get nothing, and our resources need to be poured into those that can came back and play productive value-adding roles in a new economic model. That is, the rescue money becomes an investment, with a chance of manifold payback over generations – not just a handout, in which the money metaphorically dribbles through the fingers of the recipients until it is gone.
A Roll Of The Dice We, beginning with afflicted cities and towns, need to get real about the realm of the possible. “If you build it, they will come” may work in the movies, but not so much in real life. Repairing infrastructure in a place that is irrelevant to new economic realities is a poor investment. Creating what are essentially tourist attractions in a place to which no tourists come – now or ever – is costly window dressing.
And, erecting a casino of either the Indian or Donald Trump variety is no substitute for real jobs in real companies. Granted, some locales have survived, if not prospered, with casino revenues, but we’re running out of places to put new ones. And, the last place to put one might just be in the heart of a community in which the residents can’t afford to gamble – and which very few outsiders would want to visit. “Let’s see, honey – will it be New Orleans or Gary, Indiana this year?”
A recent exception might be the Ohio case in which the state’s first casino was proposed for an area that had lost several thousands of jobs in the wake of a major parcel carrier’s exit from the US market. In this obvious supply chain example, voters rejected the initiative, so thousands remain out of work.
Rollin’, Rollin’, Rollin’One solution that we may not be paying enough attention to is the prospect, not of hoping that jobs will move into an area, but of newly trained (or previously appropriately skilled) workers moving to where the jobs are. Easier said than done, perhaps, in a period of general economic softness, but something to consider.
A significant – perhaps the biggest – socio-economic change this country experienced resulted from the massive movement from farms everywhere, but particularly in the South, of labor to feed the needs of industries in the North. Think automotive in the upper Midwest, and steel in the same areas. Consider the steel mill that built its own rail spur to the Mexican border to relocate workers – nearly one hundred years ago!
With auto (and related) plants closing, with steel mills closing or falling into the hands of foreign owners (and employing a fraction of their former numbers), with manufacturing continuing to shift away from traditional bases (and turning distribution solutions on their heads) is it time to re-evaluate possibilities for moving to where the work is?
Water, Water Everywhere . . .As what we sometimes call “rust belt” cities, which ignores their contributions to our national prosperity over the generations, contemplate alternatives, we are reminded of a point of view that suggested that access to water was an advantage that would win out in the end over the Sun Belt up-and-comers.
Admittedly, debate over how to apportion resources from, notably, the Colorado and Chattahoochee rivers flares up with some regularity. But water-rich communities throughout the north and northeast have continued to decline. And, we are reminded that the “Water Rules!” seers were waxing eloquent about this long-term advantage over twenty-five years ago – with no noticeable effect between then and now..
It’s clearly time to move past that vain hope and get arms around reality – before it gets arms around us.
Your Point Is? This isn’t totally about doom and gloom. There are going to be cities that get it together, reconfigure themselves, re-brand their strengths, and find ways to embrace changed roles in a new economy. We applaud them and their visionary leaders. To illustrate, while Dayton and its suburbs continue to decline, Akron, decimated by losses in the tire industry and others, has developed a viable local plastics industry.
Those that wait for a handout, though, are going to be disappointed, and those that won’t take off their rose-colored glasses, bitterly so.
So, with all the talk about rebuilding the infrastructure, which has immense implications for effective supply chain operations in the US, the easy answers may not be so easy. Our responsibility is to do our best to make sure that politicians and planners at all levels are doing the right things for the long haul, are spending money wisely (i.e., investing), and have their eyes wide open to realistic alternatives. Including knowing when to turn out the lights.
Bruce Strahan is a Partners in The Progress Group, Inc., an international supply chain and logistics consulting firm headquartered in Atlanta. He lead the Supply Chain and Manufacturing practice groups for TPG. Bruce did his graduate work at Georgia Tech, and was previously a Manager in Coopers & Lybrand’s SysteCon division. He may be reached at
770-804-9920 or bstrahan@theprogressgroup.com
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