Sowing the Seeds
Reviving Rural Manufacturing in Pennsylvania to Grow a Better
Economy
By Bill Kirchner
James Carville, Louisiana native and one of President Bill Clinton’s
chief political strategists, once famously characterized Pennsylvania
as Pittsburgh on one side, Philadelphia on the other, and the state
of Alabama sandwiched in between. While Carville’s observation
may seem to reflect a bit of the bitterness he felt after advising Harris
Wofford’s failed senatorial campaign in the early 1990s (which
was then upset by a dark horse Republican candidate named Rick Santorum),
it also reveals what few outsiders completely understand, and even some
Pennsylvanians forget: that this Commonwealth is largely a rural state.
According to the U.S. Census Bureau, Pennsylvania has the second-highest
rural population in America. As Wofford and Carville found out, politically
speaking, those votes are many and they count. And economically speaking,
rural manufacturing counts more heavily towards the Commonwealth’s
overall prosperity than some might guess. Specifically, states Northwestern
PA Industrial Resource Center’s (NWIRC) David Andersen, “Manufacturing
in rural Pennsylvania accounts for 25-30 percent of total employment
and 28 percent of earnings.”
But like the rest of the state and the country, the rural economy in
Pennsylvania is hurting. Its rural manufacturing fields, so to speak,
are turning brown and increasingly barren.
The technology-based economic boom of the 1990s largely bypassed rural
areas and as William Desciak, Executive Director of Northeastern PA
Industrial Resource Center (NEPIRC), reminds us, longtime manufacturers
and those who located in rural areas in the last two decades for lower
labor costs face the crippling challenge of “increased competition
from foreign producers with even lower labor and production costs and
a lousy economic climate overall.”
According to James Shillenn of the Industrial Modernization Center (IMC)
in Williamsport, “Many manufacturers in rural areas have traditionally
competed primarily on lower labor costs. With increased globalization
of manufacturing, competing on lower labor costs is no longer a viable
business strategy.”
According to the Federal Reserve Bank of Kansas City, in the United
States overall, “rural manufacturing employment in 2002 fell 4.6
percent, a sharper drop than in metro areas for the second straight
year.”
Newly elected Governor Ed Rendell recognized the trouble in Pennsylvania’s
heartland long before he took office and spent an unprecedented number
of campaign hours in small towns and rural counties from Cambria to
Luzerne trying to impress upon rural voters his understanding of their
economic value to the Commonwealth and his plans to rekindle economic
growth in their communities. Many credit that effort as a key part of
his winning strategy.
Rendell made clear he would set aside funding for programs that “target
blighted rural areas” in addition to urban and suburban ones.
But with budget shortfalls, the details on how his administration will
do this and how much it can spend to fertilize rural economies is still
up in the air.
The Case for Manufacturing
A recent Pew Partnership study revealed that the lack of “living
wage” jobs was far and away the top concern among those living
in rural communities. While those interviewed and surveyed also cited
concerns about health care and education (plus the usual social ills
of drug addiction, crime, lack of youth supervision), jobs were clearly
seen by rural residents as the source of treating these symptoms. The
study made clear that rural residents have a keen understanding of their
own economies – living wage jobs lead to the prosperity that tends
to alleviate the social ills that begin to plague struggling communities.
To understand the problem, one needs to understand the unique and specific
nature of Pennsylvania’s rural economy.
Andersen says, “Manufacturing pays wages 50 percent above other
rural jobs. Furthermore, manufacturing is critical to the economy of
many of the small cities and towns that have come to depend upon just
one or two plants.”
A quick look at the state’s own statistical breakdown of average
wages in Pennsylvania, sorted by occupation, reveals this in another
way. The majority of jobs classified as manufacturing have average annual
wages which fall in the $25,000-$40,000 range, while the majority of
service industry jobs (which include tourism, gaming, retail, etc.)
are in the $14,000 to $25,000.
In other states, when a small town’s big employers have gone and
no one has come in to take their place, too often rural economies find
themselves immersed in uncomfortably revealing conversations.
Typically, economic development discussions on Main Street begin centering
on things like considering a new Wal-Mart, or their representatives
to state legislatures might push their colleagues to consider various
forms of legalized gaming such as casinos and racetracks that can be
located in rural districts. Some communities even find themselves competing
with one another for a new state prison facility as one of just a few
of the more desperate ways to jumpstart economic growth and provide
jobs.
But NWIRC’s Andersen is quick to point out why these are not real
replacements for the living-wage jobs of rural manufacturing. He says
that gaming and tourism in particular are often “just wealth transfer.
We need wealth creation enterprises – namely factories –
the single biggest source of living wage income to rural families.”
Initiative
But the key roadblock to reversing this downturn, as Andersen describes
it, is that “while manufacturers may be the linchpins of their
communities, for the most part they are out of the loop when it comes
to access – access to investment capital, to human capital and
to technological advancement.”
Bill Desciak puts it more bluntly, “the biggest challenge facing
rural manufacturers is that they’re rural. They’re not connected.”
To combat this, the state’s Industrial Resource Centers have developed
a Rural Manufacturing Initiative, which seeks to conduct a three-year
pilot program to assist rural manufacturers. Its goals are to:
- Mold the role of manufacturing extension organizations to address
the distinct needs of rural manufacturers in the dynamic world of
global commerce;
- Assess and analyze the distinct needs of manufacturers in all rural
regions of the state;
- Develop and deploy educational programs and affordable project interventions
that will bring the benefits of lean manufacturing to rural firms;
- Enlist the cooperation of larger Pennsylvania-based manufacturers
with valued suppliers in rural regions of the state to enhance their
intra-state supply chains;
- Work with rural manufacturers and the educational systems in their
regions to better link their needs and interests;
- Explore and exploit the potential of telecommunications and distance
learning to serve small firms;
- Deliver lessons and tools that can be applied nationally, and;
- Retain at least 50,000 family wage jobs at energized rural manufacturers.
According to IRC directors, client manufacturers, and numerous others
who support the Initiative across the state, these steps need to be
taken in concert as a program of economic development that is necessary
to help both seed the future of rural manufacturing and nurture its
strong growth, while maintaining viability for rural communities and
their economies, long-term. The idea, according to Andersen, is to provide
rural manufacturers with the tools available “to their urban and
global counterparts.”
To be successful, economies (their drivers and their supporters) must
be connected. The Initiative seeks to do this. Which is crucial because,
as Andersen reminds us, “High-performance organizations must be
nested in high-performance communities/regions. In high-performance
communities, firms form networks of firms and then link those networks
to networks of support organizations – local, regional and statewide.”
Role Model
While a rare few among rural manufacturers, like the Proctor &Gamble
plant in William Desciak’s corner of the state, are what he calls
“oases unto themselves” with the vast resources of their
corporate parents at their disposal, many rural manufacturers are locally
grown. These make up the majority of rural firms, and their relative
isolation creates a need for access to technology, innovation and interaction.
First Quality Products, in tiny McElhatten, Clinton County, is one such
enterprise. IMC’s Shillenn says First Quality, “is a good
example of a company which has identified a niche in the hygiene products
field which is more resistant to foreign competition.”
Working with Shillenn and his staff at the IMC has made a critical difference,
according to the IMC’s Linda Weaver. “The company is located
in a very rural part of Clinton County. It is not close to any major
metropolitan area that would have a number of consultants they could
use. The IMC has an excellent staff with the same expertise as those
consultants and is located less than 25 miles away. The IMC’s
services have been a good match for the company’s needs.”
This includes Hazard and Critical Control Points (HACCP) training, Lean
Manufacturing Workshops and ISO 9000 Quality System Implementation.
The result is a new expansion based on the purchase of a large manufacturing
facility that was owned by International Paper and closed last year.
This is one of many examples of how IRCs have in Shillenn’s words,
“developed strong relationships with many of the local and smaller
manufacturers and helped them to stay competitive through the services
offered. As market conditions and competitive advantages change, the
IRCs can be a credible source of assistance to these manufacturers and
enable them to meet the challenges of these changes.”
Education
If we can replicate these success stories across the state, who will
work manufacturing’s future fields and keep them fertile? A recent
study by the Penn State Data Center revealed that between 1995 and 1997,
30,000 people (20,000 holding college degrees) aged 20-29 moved out
of Pennsylvania. Another 7,000 aged 30-39 left during the same period.
This exodus has been particularly painful in rural areas.
As Shillenn notes, “an additional challenge rural areas have is
that large numbers of young people do not want to live in a rural area
primarily because of the lack of diversity or opportunities, both professionally
and personally. However, there is evidence that young people are more
likely to stay if they can become involved in the community and local
businesses while they are still in school.”
This would require an investment in public education in rural areas
to revise the current bent of rural-serving colleges and universities.
“For the most part,” says NWIRC’s Andersen, “colleges
are not in tune with some of the latest practices. For example, ISO/QS
9000 or Lean processing techniques.”
Shillenn adds that, “Manufacturers will have to become more involved
in their communities and the education process. I believe that internship
programs would be an important strategy for engaging and retaining young
people. Part of making this work will be a commitment on the part of
companies to develop expectations and internal support structures for
recruiting and mentoring interns.
“This will be a challenge for smaller companies, since they currently
do not have the infrastructure to do this and educational institutions
do not have the resources to help companies develop this capability.”
This is where the IRCs and their Initiative, as Shillenn sees it, have
an important role to play. But the State and Rendell have the potential
to make the greatest impact on both the public schools and colleges
(through the state university system) to influence workforce development,
whether it’s K-12, college or adult education/re-education.
As Andersen notes, “The Governor is on the correct pathway. His
announced ‘Partnership of Ideas’ in conjunction with the
Pennsylvania Rural Development Council and their ‘Building Blocks’
are efforts that will also better enable rural workers to keep pace
with technological changes through a better-educated workforce. In essence,
this will enable greater use of advanced technologies that will gain
markets, allowing them to expand their businesses and create new jobs
in rural communities.”
Picture This
In the picturesque Juniata River Valley of south-central Pennsylvania,
Bedford’s Cannondale Bicycles manufacturing facility has been
producing its popular high-end mountain and road bikes for the Connecticut-based
firm since the late 1980s.
Even after a recent venture into the motocross and ATV markets failed,
Cannondale has reorganized to refocus on its core bicycle building business,
staying put in Bedford and providing hundreds of skilled manufacturing
jobs in the process.
The town, that like many in rural Pennsylvania, began as an early manufacturing
center with foundries and lumber mills, which grew into making everything
from glass to shoes, continues that tradition by making products its
founders might never have imagined.
Just down the river, in the shadow of Tussey Mountain in Everett, Lampire
Biological Laboratories has just purchased land to double the size of
its current 125-acre facility.
Manufacturing high-quality, at-home pregnancy tests, PSA tests for prostate
cancer screening and employee drug tests, Lampire employs cutting-edge
manufacturing techniques and innovative marketing to fill growing markets
and provide jobs in another of Bedford county’s rural communities.
The future certainly holds a number of challenges for rural manufacturing.
“How well we meet those challenges will profoundly effect the
lives of a large number of Pennsylvanians,” says Andersen.
But with some targeted assistance from the state, the Rural Manufacturing
Initiative, and the increased cooperation of schools, local governments
and business, these two Bedford County postcards of prosperity have
a chance to multiply all across the 52 rural-designated counties in
this Commonwealth as a healthy rural manufacturing base begins to take
shape.
Perhaps, even making it possible for the state’s rural communities
to have economies that are as lush and fertile as the Pennsylvania landscape
that surrounds them.
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