Manufacturing's Global Dimensions

Your competitors don't want you to have the information that fills this report. Protecting their competitive advantage, they don't want you to know just how much manufacturing means to them in places as distant and diverse as Kokomo, So Paulo, Silicon Glen, Shanghai, Toronto, Mexico City, Taipei, Osaka, Gauteng province, Singapore, Budapest, Detroit, and Crdoba. But your competitors have already made their commitments: They are betting their futures on these communities by locating their plants there. Some of these communities already are world-class centers of manufacturing. Others have yet to gain that distinction. But all of them are caught up in an industrial dynamic that is global in scope. Paul Helmke, the mayor of Fort Wayne, Ind., and the current president of the U.S. Conference of Mayors, recognizes the truth of that statement. He knows that in the scramble to recruit and retain manufacturers, his midwestern metro area of 363,811 is necessarily involved in international economic competition. He knows Fort Wayne's rivals are not only other U.S. cities, but communities in Canada, Mexico, and Europe as well. "If we don't think that way, we're not going to do well," Helmke states. His community and scores of other U.S. communities are involved in the world in another and very dramatic way. The Fort Wayne metro area posted $991 million in merchandise exports in 1996, the most recent year for which the U.S. Dept. of Commerce has data. That same year Kokomo, Ind., Fort Wayne's neighbor 80 miles to the southwest and the top-ranked U.S. community in IW's compilation of U.S. manufacturing metropolitan areas, recorded $2 billion in export sales. Second-ranked Detroit recorded $27.5 billion worth of merchandise exports. No. 3 Wilmington-Newark had $4.6 billion. Houston, the fourth-ranked U.S. manufacturing metropolitan area, posted $16.5 billion. And fifth-ranked San Jose led the nation in merchandise-export sales in 1996 with $29.3 billion. Significantly, although they sometimes lag behind events by as many as five years, such community-based data are readily available for the U.S. Collected and published by well-defined metropolitan statistical areas and consolidated metropolitan statistical areas, U.S. government data are consistent and can be easily compared. The same is not true for most of the rest of the world. Outside the U.S., for example, there is no consistent definition for a metropolitan statistical area. Indeed, occasionally dismissed with disdain as something "American," a standard metropolitan statistical area generally is a foreign concept beyond U.S. borders. Nevertheless, whether a metropolitan area is officially defined or not, IW's definition of a world-class manufacturing metropolitan area is exacting--and it goes beyond the statistical notion of a sizable population center being tied economically and socially to adjacent communities. A world-class manufacturing metropolitan area, whether it's in the U.S. or elsewhere in the world, is a place distinguished by its productivity and competitiveness; by its ability to attract new manufacturing while retaining and expanding its manufacturing base; and by the enterprise of management, labor, politicians, educators, and other community leaders. It is neither simply a statistic nor static. It is a place like Kokomo, where in addition to impressive manufacturing productivity today there's a community commitment to manufacturing's future. It is a place like greater So Paulo, where companies empower employees and invest in skills training and aren't consumed by the possibility workers will bolt for another firm several blocks away. And just as one factory and a rural highway do not a world-class manufacturing metropolitan area make, sometimes the place is other than one major city and its environs. In Japan, Tokyo and Osaka, and Nagoya in between, are three closely connected metropolitan areas. California's Silicon Valley really includes the San Francisco metropolitan area as well as the San Jose metro area. And Scotland's Silicon Glen extends nearly country-wide for 60 miles between Glasgow and Edinburgh. Significantly, IW's World-Class Communities--and those headed toward world-class status--are not the winners and runners-up in some sort of economic-development contest. Manufacturers around the globe have chosen these locations. They've chosen them by where they've placed their manufacturing investments in the past and by where they're now making investments for the present and the future. And one notable measure of just how critical industrial siting selection is to firms, and how protective they are of the process, is the reluctance--even refusal--of many company executives to identify for IW the communities they regard as world-class manufacturing locations. To identify and discuss them, claim the executives, would dull their companies' competitive edges. They have a point. In most of the world, the economy--the give-and-take economy of production and consumption--plays out not on a national level but in communities, states, provinces, prefectures, or cross-border regions where there's palpable synergism among suppliers, producers, and customers. Most labor markets and the majority of multilinked supply chains really operate at this level. It's the level at which human, capital, and natural resources really work. It's at this level that competitiveness gains momentum. In this report, you'll find the first-ever comprehensive global analysis of world-class manufacturing metropolitan areas. It is a composite product. Data, where available, have been combined with the in-depth reporting of an internationally experienced team. For both the U.S. and the rest of the world, we have focused on economic "outputs," on the performances of manufacturing communities in the marketplace. We have examined such critical measures as productivity, economic dependence on manufacturing, and manufacturing job growth. And we present a story of where manufacturing is today around the world--and where it is likely to be tomorrow. As we prepared IW's index of U.S. manufacturing strength in partnership with the Urban Center of the Maxine Goodman Levin College of Urban Affairs at Cleveland State University, we were able to draw on reliable data resources. Specifically, the U.S. Dept. of Labor's Bureau of Labor Statistics, the Commerce Dept.'s Bureau of the Census and Bureau of Economic Analysis, and like sources among the 50 states provided essential inputs for our output-oriented index. However, in most of the rest of the world, the statistical situation is quite different, as we discovered during the weeks we dug and then dug deeper for data. We dispatched hundreds of surveys and worked with embassies, consulates, and government departments to elicit meaningful numbers. The results of these efforts were disappointing. Not only did data comparable to U.S. statistics not exist, virtually no data existed--with the exceptions of statistics from Japan and Spain. Without reliable and comparable economic information, risk increases, investment lags behind its potential, and the economic well-being of countries as well as companies suffers. Turning this statement around, good information about the places where the real economics of production and consumption occur mitigates risk, encourages development, and provides a competitive advantage to those companies that use it. We believe we have done that. IW's 1998 World-Class Communities corrects for statistical deficiencies and details where manufacturing is today and suggests where it's headed all around the world. We weighed both IW's basic criteria for productivity and competitiveness and the unique qualities of each world region. We offer the results of our work with the expectation that it will help you improve the results of your work.