Charles Chieppo is a research fellow at the Ash Center of the Harvard Kennedy School.E-mail: Charlie_Chieppo@hks.harvard.edu
One of the dilemmas tough times create is finding the resources to make strategic investments that can promote economic recovery. But Seattle-area governments' support for their resurgent manufacturing sector proves it can be done.
Reports of the death of American manufacturing have been grossly exaggerated. While companies like Facebook and Google grab most of the headlines, the nation has seen 33 months of factory expansion. Between 2010 and March of this year, the manufacturing sector has added 470,000 jobs, a growth rate 10 percent higher than that of the private economy as a whole.
I suspect I'm not the only one who was surprised to learn that the majority of American scientists and engineers work for manufacturers, or that industrial companies account for more than two-thirds of business research and development spending.
Part of the reason for the recent manufacturing renaissance is rising wages in China — up from one-third of U.S. levels to one-half in a decade. In the fourth quarter of last year, 22 percent of American manufacturers reported bringing some production back to America.
When Joel Kotkin, a widely read researcher on global, economic, political and social trends from whose blog I got this data, recently assessed manufacturing growth in the nation's 65 largest metropolitan statistical areas, Washington state's Seattle/Bellevue/Everett area topped the list.
At first blush, the high-tech home of Microsoft seems an odd candidate to have the nation's fastest-growing manufacturing sector. But like many other municipalities, Seattle was a blue-collar city long before grunge and gourmet coffee, and when it comes to job growth, industry continues to be its bread and butter.
Marco Lowe, director of Seattle's Office of Intergovernmental Affairs, points to the presence of Boeing, the many companies that do work for the aviation giant, lower shipping costs and increased global demand as reasons for Seattle's manufacturing success. Instead of taking credit for it, city officials are working with the state and county governments to nurture the resurgence. In the current economic and fiscal environment, that means making targeted, low-cost investments that can yield handsome returns.
Government officials are relying on industry to tell them what manufacturing's future will look like. Together, the state, King County and city governments are conducting a survey that asks companies how they would invest if regulation and taxes weren't considerations. Since all three levels of government are conducting the survey, they can work together to create an environment that comes as close as possible to what employers describe.
They are also focusing on capital investments in Seattle's industrial zone, where many buildings are 80 to 90 years old and other infrastructure is reaching the end of its useful life.
Together with the county, Seattle is developing a web-based database to map characteristics of the industrial area, such as where companies are located, the number of employees, and the location and nature of available buildings. The information will help guide city and county investments, match companies with appropriate sites and maintain an impressive area vacancy rate of less than 5 percent.
Training is another important ingredient. The typical community-college program takes two years, but area officials seek to prepare potential employees in one year or less. North of the city, Snohomish County is collaborating with Boeing on a 90-day training program to prepare people to work for the aviation company, the first 30 days of which are an online crash course in airline manufacturing.
Investment hasn't been the only secret of the area's success. Zoning isn't a very sexy topic, but it is a key to the city's thriving manufacturing sector. Seattle is one of the few large American cities with a large industrial area close to its downtown.
Opting for higher-rent retail and housing in such a desirable location isn't necessarily a mistake, but Seattle's decision to preserve manufacturing has paid dividends. "Though still difficult, manufacturing helped carry Seattle through the last recession with less pain than many other places suffered," Lowe says.
Fending off high-end development in the manufacturing area hasn't been easy, and the challenge is ongoing. Microsoft CEO Steve Ballmer and members of the Nordstrom family are among those currently fighting to build a basketball and hockey arena there.
But there are good reasons to resist the temptation — none better than the fact that Seattle's manufacturing sector actually makes it possible for someone without a college education to build a career and earn wages on which he or she can support a family. In 2010, the average annual factory wage in the area was $64,925, up 9 percent from 2007.
American manufacturing is on the rebound. Seattle-area leaders are proving that its renaissance can be nurtured by making strategic, common-sense investments that build on the region's strengths.