The Atlas of U.S. Manufacturing

Dec. 21, 2004
The top 25 metro areas don't stand pat. They adapt to change.

Each of the top 25 manufacturing centers in the U.S. can spin statistics that show the breadth and depth of the manufacturing activities within its community. But most important, the numbers reflect the hard work that business, civic, and government leaders in each of these metropolitan statistical areas (MSAs) have put into making their region among the best. Indeed, if you analyze the top 25 MSAs in the U.S. to see why they've risen to the top, you'll find that even though their key industries may differ, they have much in common. Synergies among businesses. Skilled human resources. Nearby natural resources. An excellent transportation network. But more of that later. What separates the four Medalist communities in the U.S. from the other U.S. cities in the top 25 is their critical mass. Each -- Chicago, Houston, Detroit, and San Jose -- has developed a critical mass in at least one industry that helps it retain and attract more manufacturing. Chicago From high atop the Sears Tower, most visitors to Chicago first notice the glistening waters of Lake Michigan and the cultural attractions along the city's waterfront. But with its diverse mix of industries and support services, the Chicago MSA is also the best U.S. community for manufacturing. It has six industries -- industrial machinery, fabricated metals, food, electronics and electrical equipment, printing and publishing, and rubber and plastics -- that each employ between 48,000 and 82,000 workers. What's more, 15 of the area's 25 largest employers are manufacturers -- in industries encompassing oil and gas, steel, food, health-care products, medium- and heavy-duty trucks, and electronics. (Only in San Jose, where 14 of the top 18 employers in Santa Clara County are manufacturers, does manufacturing have a higher concentration among the top 25 employers.) "Chicago is . . . a strong headquarters city [and] . . . also has a sizable manufacturing production base, particularly in metals and high-tech," says Edward W. Hill, professor of urban studies and public administration and senior scholar at the Urban Center of the Maxine Goodman Levin College of Urban Affairs at Cleveland State University (CSU). "It also has a full range of manufacturing from large international corporations to small family-owned firms." In addition, Chicago's solid air, rail, and truck network is a distribution plus. "Because it is a one-day flight from Chicago to nearly anywhere [in the world], manufacturers have put numerous regional centers in the area," states CSU's Hill. "They choose Chicago because of its proximity to transportation, suppliers, customers, and similar businesses, [as well as] its skilled labor force." Indeed, in two of the last three years, Chicago has been the top location in the nation for new manufacturing sites, according to Site Selection magazine. "It is a classic American manufacturing city," says Hill. "It has had an overall decrease in manufacturing employment. But it has coupled that with productivity increases and a skyrocketing increase in the value of the products that the region makes." (Chicago provides a larger share of the U.S. GDP than any other MSA and had the second-largest dollar increase -- next to Houston, the second highest-ranked U.S. manufacturing community -- in manufacturing gross metropolitan product from 1993 to 1996.) Houston Even though more than 54% of the economy of the Houston MSA is dependent in some way on the energy or petrochemical industries, the region has reinvented itself this decade into a new, more diversified economy. The result: a 26.5% increase in manufacturing jobs in the 1990s. So while Houston's skyline may represent a town that oil built, high-tech is now reshaping it. In addition to its oil-related jobs, Houston now has a solid computer-manufacturing base led by Compaq Computer Corp., a new biotech core -- the number of companies doubled to 170 between 1994 and 1997 -- as well as an excellent high-tech engineering infrastructure. "Houston is in the forefront of the shift from a resource-based economy to a knowledge-based economy," says Pamela House Lovett, president of the Economic Development Div. of the Greater Houston Partnership. A case in point: Manufacturing jobs in industrial machinery and equipment -- largely computer-related -- increased slightly in 1998 despite an Asian-economy-induced 13% drop in oil-field equipment jobs. What's more, since 1990, the industrial-machinery-and-equipment sector has had a combined 75% job growth that accounts for 36% of the region's net job gain this decade. "That reflects Compaq's growth and the many Compaq suppliers that have established operations in Houston to facilitate just-in-time delivery to them," says Lovett. Compaq employs nearly 14,000 -- or almost as many as the area's two largest oil companies combined. Another 19% of the region's net job growth this decade derives from fabricated metals; jobs have increased 36% since 1990. "Major petrochemical projects have created a demand for plate work, sheet-metal work, valves, and pipe fittings," says Lovett. Detroit If ever there were a community with a mission, it is Detroit. And its new spirit couldn't be better timed. It coincides with a prosperous era for the automotive industry -- the throne upon which the region's world-class status rests. Yet even more impressive than the ability of the third-highest ranked U.S. area to sustain its own economic strength is the way suburban regions around Detroit are becoming global centers for both domestic and foreign automotive operations. In 1998 alone:

  • London-based auto supplier LucasVarity PLC, now in the process of being acquired by TRW Inc., relocated its worldwide auto headquarters to Livonia.
  • German firm Mannesmann VDO AG moved its research and engineering department from Winchester, Va., to Rochester Hills.
  • French automotive systems manufacturer Ecia formed a U.S. subsidiary in Troy.
  • Belgian exhaust-systems manufacturer Bosal Industries Inc. set up operations in Warren.
  • Japan's Calsonic NA moved its headquarters from California to Farmington Hills.
  • Unova Inc.'s Lamb Technicom Machining Systems opened a robotics plant in Chesterfield Township and designated it the headquarters for its auto-related transfer-systems operations.
San Jose Just as Detroit feeds off its critical mass in the automotive industry, San Jose -- the highest-ranked high-tech MSA in the U.S. and the fourth-highest-ranked MSA overall in the U.S. -- feeds off the largest cluster of high-tech companies anywhere in the world, its R&D strengths, and huge sums of venture capital. Indeed, with more than 4,000 high-tech companies, the region's corporate roster reads like a who's who in information technology, electronics, and computers. Not coincidentally, R&D-related employment in the San Jose metro area accounts for 15% of all jobs -- three times the national average -- compared with 10% in Boston and 7.8% in Austin, according to data from Regional Financial Associates, West Chester, Pa., and the U.S. Labor Dept.'s Bureau of Labor Statistics. Silicon Valley typically receives between 25% and 34% of U.S. venture-capital money each year. The 1998 total: $3.3 billion. At the end of 1998, manufacturing jobs accounted for 28% of all jobs in the region, up 3.5 percentage points from 1997, says the California Employment Development Dept. That's because, despite problems arising an ocean away in financially troubled East Asia, every key sector of the San Jose MSA -- software, semiconductors, computers and communications, and defense/aerospace -- added jobs during the first half of 1998. Credit worker productivity. The value-added per employee in Silicon Valley has increased 6% annually in the 1990s and 49% overall -- from $75,963 in 1990 to $113,066 in 1997, reports Joint Venture's 1999 Index of the Silicon Valley. And per-employee productivity in high-tech is much higher: $248,808 in computers/communications, $228,958 in semiconductors, and $171,233 in software. Adding to its appeal: Unlike other regions where growth has been a death knell for livability, the San Jose region has retained the lifestyle amenities that appeal to high-tech entrepreneurs. Common Factors That Chicago, Houston, Detroit and San Jose have emerged as the top four MSAs in the U.S. indicates an even larger trend: Manufacturing strength in the U.S. is shifting back toward the country's largest regions. Nineteen of the 25 top-ranked manufacturing regions in the U.S. are MSAs where the number of jobs -- both manufacturing and nonmanufacturing -- exceed 1 million. Only one community without that 1-million-job base -- Kokomo, Ind. -- cracked the top 10, as 13 regions made the U.S. list of top 25 for the first time. Only nine metro areas -- Kokomo, Elkhart, Detroit, San Jose, Boise, Austin, Janesville, Grand Rapids, and Lake Charles -- appear on the roster for the third straight year. What's behind the resurgence and first-time appearance in the top 25 for MSAs such as Boston, Philadelphia, Cleveland, St. Louis, Atlanta, New York, Minneapolis, and Oakland? The answer lies in the elements of the new manufacturing. Value is being added in production, to be sure, but also in developing, selling, shipping, and managing things. Thus, U.S. communities with strong R&D (such as Philadelphia) and areas that have excellent financial services or a multitude of company headquarters (such as New York) are reemerging as world-class manufacturing centers. But, despite all the MSAs new to the 25, the industries that drive the U.S. manufacturing economy are still high tech, oil, and autos. America can count eight high-tech centers, three pipeline economies, and six transportation-equipment communities among its top 25. Not surprisingly, most of the communities are adding big value to the goods they produce. Indeed, all of the 14 MSAs in the U.S. with the largest three-year increase in the dollar value of their gross metropolitan product between 1993 and 1996 appear in the top 25. So do all but one of the 13 MSAs that had the biggest percentage shares of U.S. GDP in 1996. Beyond the high value of their goods, America's top 25 manufacturing communities also tend to:
  • Capitalize on the presence of a key industry or company by building the community strengths needed to attract just-in-time suppliers.
  • Work diligently to attract foreign companies looking to set up either a U.S. headquarters or a production facility.
  • Retain current manufacturers by listening to and responding to their needs, and by finding companies in allied industries in order to build a greater critical mass that will expand the region's jobs growth and manufacturing synergies.
  • Find a way to overcome any short-term dislocation such as the Asian problems that affected economies worldwide.
But, the hottest practice among the leading manufacturing MSAs in the U.S. is to create, for each industry, a single regional contact for both existing and prospective business investors. Texas trio Because it has three metro areas -- Houston, Dallas, and Austin-San Marcos -- among the top 25 manufacturing communities in the U.S., no state has more manufacturing bragging rights than Texas. Two other states -- California with San Jose and Oakland, and Indiana with Elkhart and Kokomo -- have more than two representatives in the top 25. Credit training and tax aid for part of Texas' achievements. One state-funded program provides grants to employers to develop customized training. Another provides money to community colleges to develop training programs that local businesses need. In addition, since 1989 Texas communities have had the option of raising their sales tax from one-eighth to one-half percentage point to fund economic-development activities. What's more, both Dallas (No. 5) and Austin (No. 13) are riding high-tech's horse. And although Dell Computer Corp. and the companies that have followed Dell to Austin give the Hill Country region more visibility, Dallas, with its strong telecommunications, sector, employs half of the state's high-tech workers, says the American Electronics Assn. For example, the top 20 computer and information-tech companies in the region account for 32,000 people. The top 20 telecommunications companies employ 35,000, with four of them -- Northern Telecom Ltd., MCI World Com Inc., Fujitsu Ltd., and L.M. Ericsson Telephone Co. -- providing 16,000 jobs -- double what they did in 1992. The Greater Dallas Chamber projects there will be 40,000 new telecommunications jobs by the year 2010. Indeed, expansions or relocations announced by telecommunications companies in just the last three years promise to add more than 9,000 new jobs -- more than negating the 6,000 jobs lost in 1998 because of Asian-business-related cutbacks. Despite the cutbacks, however, manufacturing employment for the region still rose to 250,100 in 1998 -- up from 237,400 in 1996, says the Texas Workforce Commission. That's about 15% more manufacturing jobs than exist in Houston. One reason: Dallas' geographical location -- 96% of the U.S. population can be reached by truck or rail from Dallas within 49 hours. And Dallas-Ft. Worth Airport is within four hours of almost all U.S. markets. But even as Houston has diversified and Dallas has grown its high-tech base, Austin, with its well-deserved reputation for innovation, cannot be ignored. Credit the still-phenomenal growth of Dell, a company whose stock split for the seventh time in seven years last month. Dell's Austin-area employment now hovers near 15,000. It often hired as many as 100 people a week during 1998, and late in the year broke ground on yet another manufacturing site. Not surprisingly, semiconductor manufacturers continue to build or expand to be near Dell and the second-largest U.S. concentration of software-development companies. Cisco Systems Inc. last year bought two high-tech companies and moved their operations to Austin. And upstart software writer Trilogy Software Inc. has increased employment from less than 200 to more than 800 in the last two and a half years. "The chip industry remains the dominant driver of Austin's economic growth," says Annette Argall, director-existing industry development for the Greater Austin Chamber of Commerce. And Samsung Electronics Co. Ltd.'s $1.3 billion fabrication plant, its first plant in the U.S., completed in late 1997, has "opened the door for additional growth among suppliers and industrial customers." Rather than just hope that more growth occurs, chamber officials are working with the region's key industries. A recently completed Next Century Economy Study tags electronics, semiconductors, computers, computer peripherals, and computer software as the core industries where "there is a critical mass because a lot of companies have come in to supply those industries," relates Argall. Equally important, the study triggered the creation of 10 industry groups -- one for each major industry sector -- and pulled together people from key companies in each industry to discuss the business issues critical to them. "We will see what we need to do -- as a community -- to act on them," says Argall. Innovation in Beantown Another high-tech MSA in the top 25 that CSU's Hill labels an "innovation economy" -- along with San Jose and Austin -- is Boston. All three possess IT manufacturing, strong academic research that leads to technology breakthroughs, and government research contracts that create or develop technology used by manufacturing. Hill says the Boston MSA (No. 6) has reinvented itself several times. It has been a mill town, a defense and high-tech economy, a mini-computer mecca, and now a region strong in medical devices, information technology, and footwear, the latter thanks to Reebok International Ltd., Rockport Co., and Stride-Rite Corp. "Our growth is coming from small and medium-sized firms, many of which were started by entrepreneurs, using new technology developed in research universities," agrees Brian Gilmore, executive director of the Associated Industries of Massachusetts. A prime example: Data-storage specialist EMC Corp.'s growth during the last 12 years has made it an industry giant. Two long-time area companies, Polaroid Corp. and Digital Equipment Corp., purchased last year by Compaq, have similar histories. "We are a big center for the mutual-fund industry, a big center for venture capital, and we have a fine research education base in our colleges and universities," says Gilmore. "That is the fuel for entrepreneurship. People aren't afraid of investing in new ideas, and that has been part of our culture for a long time." Boston-area hospitals, for example, receive more research dollars from the National Institutes of Health than any other group of hospitals in the U.S. One result: strong medical-device and biotech industries. But it wasn't like that earlier in the decade. "The situation was so critical [the region lost 125,000 manufacturing jobs from 1987 to 1996] it caused legislators and various business groups to work for public policy that would make Massachusetts an environment that was again attractive to new investment," says Gilmore. State legislators increased the investment tax credit, established an R&D tax credit, reformed the workers' compensation system and reduced its premiums by 50%, cut the cost of state-mandated unemployment insurance by 20%, and reorganized the K-12 education system. Altogether since 1990 the state has enacted 28 tax measures and economic-development incentives. "That has contributed to a much more positive view about Massachusetts as a place to do business," Gilmore asserts. Unemployment has dropped from nearly 10% in 1991 to less than 3%, and most of the lost jobs were regained. Silicon Valley giants Sun Microsystems Inc. and 3Com Corp. are adding Boston-area facilities that will employ several thousand additional workers. Equally important, says David Terkla, chair of the economics department at the University of Massachusetts-Boston, the region appears "well positioned for substantial growth" out to the year 2005. Among the expected growth areas: business services, computer-processing services, and information technology. "While product manufacturing in the IT sector is lagging, software and systems integration are soaring," adds Craig L. Moore, professor of political economy at the University of Massachusetts' Isenberg School of Management, Amherst campus. As he points out, IT employment had a net increase of 24.5% -- or 28,783 jobs -- from 1995 to 1998, with software accounting for 42.5% of that growth. "The IT cluster is critical to the future prosperity of the state, not just for its direct benefits, but also for the . . . access it provides to other key clusters." Cities reinvented After struggling economically for several years, three other one-time industrial centers -- Philadelphia, Cleveland, and New York -- also have regained much of their manufacturing prowess. While Philadelphia continues to labor to create jobs in the core city, its outlying regions are doing well, thanks to pharmaceuticals. Merck & Co. Inc., for example, employs 9,000 people, and SmithKline Beecham Corp. has 7,200 employees and has made $800 million of investments during the last 15 years. In addition, more than 100 biotech companies have relocated or been formed in the Philadelphia MSA since 1986. Almost 6,000 people work in the area's biotech firms now, compared with virtually none a decade ago, says Jeff Davidson, executive director, Pennsylvania Biotechnology Assn., State College, Pa. Pennsylvania ranks third nationally after California and Massachusetts in the number of biotech workers. One draw: the third-largest concentration of advanced research institutions in the U.S. "Our advantage has become technology and human resources," says John Claypool, executive director of Greater Philadelphia First. A boost from pharmaceuticals and biotech has pushed the region's jobs to a record 2.3 million. "Philadelphia is better positioned than at any time since its heyday after World War II," claims Mark Zandi, chief economist for Regional Financial Associates. Also, last year the city of Philadelphia set aside $400 million in public funds to persuade Norwegian shipbuilder Kvaerner A/S to move its headquarters from New York and take over an abandoned naval shipyard. The shipbuilding and repair deal calls for Kvaerner to employ at least 500 people initially; the company says it will initially employ 900. "The investment will create an economic cluster beyond those 900 jobs," says Claypool, who expects steel platers and engine builders to be among the firms signing on as suppliers. Cleveland, in contrast to Philadelphia, rebuilt its city first to try to attract more manufacturing, says Jack Kleinhenz, chief economist and senior director of research at the Greater Cleveland Growth Assn. (GCGA). "We felt that preserving the urban setting was critical . . . to helping the overall prosperity of the region" and rebuilding an economy that had stumbled badly in the late 1970s and 1980s. More than $7.5 billion in public and private investment has been directed in the last decade into the downtown and lakefront areas: the Tower City shopping complex in 1991; the restoration of the theater district, a continuing program that started in the late 1970s; a new basketball arena and baseball stadium in 1994; the Rock and Roll Hall of Fame and Museum in 1995; and the Great Lakes Science Center in 1996. A football stadium is slated to be ready for the new Cleveland Browns by this August. "This has created a critical mass in the downtown area which . . . has proven to be an important factor in the overall growth and prosperity of the region," says Kleinhenz. "It has helped strengthen the area's economic base and stabilized the manufacturing base." Cleveland's MSA has averaged more than 6,000 business start-ups in each of the last six years and in 1997 added more jobs than at any time in the previous 10 years. Cleveland is a production center for steel, autos, and specialty chemicals, says CSU's Hill. Critically for Cleveland, enough of its skilled labor stayed when the economy soured. "When the good times returned, we had a pool of people who could be retrained and move where they were needed -- people who expected to work eight hours for eight hours' pay and not say no to a second shift or a Saturday or Sunday job," says Charlie Webb, vice president-business development at the GCGA. That's part of the reason, he says, that Aluminum Co. of America closed a facility on the West Coast and expanded its operations in Cleveland, adding 400 people, and why Ford Motor Co. expanded its Brook Park engine plant and is building a new aluminum foundry. Although the number of manufacturing jobs in the Cleveland MSA is lower than 20 years ago, the community's economic-development officials are quick to point out that many manufacturing jobs from years past are today incorrectly listed by government statistics as service jobs, "because so many manufacturers have outsourced services that once were [part] of their businesses," says Kleinhenz. While Cleveland rebuilt its downtown to strengthen its manufacturing base, New York has capitalized on a strong national economy and its reputation as a headquarters and financial-services center and media capital to regain most of the jobs it lost from 1989 to 1992. "The steady expansion of the national economy, the bull market, and the emergence of new technology-driven industries are what's behind the region's resurgence," says Robert D. Yaro, executive director of the Regional Plan Assn., billed as the oldest U.S. economic development group. "New York is a very efficient place for headquarters activities because of the concentration of financial, accounting, legal, marketing, advertising, and business services." The epicenter of the resurgence: Wall Street and the high-value, time-sensitive documents its businesses require. In addition, a rapidly expanding group of technology-driven firms -- many of which do not neatly fall into existing industrial classifications -- have emerged in the '90s to provide new jobs, says Yaro. Among them: software development, biotech, and computer services. "They have grown out of existing industries" to provide the services that allow "publishing, advertising, and communications to flourish." Autos and oil In contrast to areas that have reinvented themselves, grown their manufacturing cores, or capitalized on their strengths in innovation, several MSAs remain among the top manufacturing centers in the U.S. because of nearby oil and gas fields or ties to the world of transportation.
  • In Lake Charles, the eight largest petrochemical producers provide 75% of the region's manufacturing jobs.
  • Virtually all the manufacturing jobs in Baton Rouge come from nine chemical and plastics producers -- companies that have invested $2.5 billion in expansions during the last three years.
  • Recreational vehicles and manufactured housing account for 60% of Elkhart's manufacturing base.
  • In Kokomo, DaimlerChrysler AG, Delphi Delco Electronics Systems, and Haynes International Inc. provide all but one-half of one percent of the region's manufacturing jobs, with DaimlerChrysler and Delco providing 19,500 -- or 90.7%.
  • The GM Truck & Bus plant drives the Janesville-Beloit, Wis., economy, and Toyota Motor Corp.'s assembly plant in Georgetown, Ky., has altered the economic landscape in Lexington. Of these MSAs, Lexington has done the best job of diversifying its economy. But others also are moving in that direction. For example:
  • Lake Charles has put together an economic-development initiative called "2004: Shaping the Next Millennium."
  • Baton Rouge has a government-appointed commission, Vision 2020, that will study during the next 18 months what needs to be done to "retain the industries that we have and recruit other types of industry," says Jimmy Lyles, president of the Greater Baton Rouge Chamber of Commerce.
  • Janesville has a Smart Start program to support new businesses. And two groups -- Forward Janesville and the Major Industries Council -- work to retain businesses by jointly developing solutions to problems.
  • The Kokomo/Howard County Development Corp. has hired a consultant, says President Charlie Sparks, to "study the community's economic strengths and weaknesses . . . and see which industries are or could be most attracted to the area."
  • Elkhart's 2010 Coalition "is working on downtown and urban redevelopment and improving the community infrastructure," says Jay Scherbenske, economic-development director at the Greater Elkhart Chamber of Commerce. "While industrial growth has been a strong point, employers want to know that the Elkhart area is a good place to live."
Meanwhile, Toyota's impact on the Lexington region is undeniable. In the first 10 years after the Japanese-owned company arrived, manufacturing employment jumped 25%. Auto-related firms in the area now number more than 20. "Toyota's arrival has substantially increased manufacturing in central Kentucky," says Gina Hampton, project director at Lexington United. Suppliers have followed Toyota because the region is close to the center of what's considered the "auto axis" of the U.S. Another positive impact: The unemployment rate has dropped from 4.6% before Toyota's arrival to 2.3%. At the same time, the region has worked to make sure its economy is not totally dependent on Toyota. Five years ago, it created a Manufacturers Council in the aftermath of a survey of area manufacturers. "The council was created by government and civic leaders because we realized that we weren't communicating with the manufacturers in the Lexington area on a regular basis," says Bob Drakeford, director of economic development for the city. The payoff: Printer manufacturer Lexmark International Group Inc. expanded its manufacturing plant in 1995, increasing its workforce 25% to 5,000 people. Last year the firm moved its headquarters to Lexington. A $2.5 million investment by Timken Co. brought 150 new jobs to the region. As a result, even though Toyota provides 18.75% of the region's 40,000 manufacturing jobs, the area's 10 largest manufacturers provide only half of the area's manufacturing jobs -- not the 90% that is typical in MSAs dependent on one company or one industry. High-tech hitch In car-crazy America, it's difficult to imagine that any community would reject an auto-assembly plant. Nevertheless, several communities are opting instead for high-tech industries. Why? A new auto production center probably can't match high-tech's potential for job growth. And high-tech encompasses a greater diversity of companies and industries; rarely do their business cycles turn down all at the same time. Phoenix-Mesa, Albuquerque, Portland, Oreg.-Vancouver, Wash., Boise, and Oakland are top-ranked manufacturing MSAs -- thanks to high-tech. Oakland's downtown area is emerging as a high-tech center with 250 high-tech companies, half of them in telecommunications, mostly in software or consulting. Credit the data-communication network and extensive fiber-optic infrastructure in renovated buildings in downtown Oakland's Innovative Technologies district. There's also a growing biotech core. Boise, another of the newer high-tech centers, actually has one of the smaller high-tech bases. It's highly dependent on Micron Electronics Inc., Micron Technology Inc., and Jabil Circuit Inc., which in 1998 purchased the longtime Hewlett-Packard Co. printer plant. Still, these three companies have helped to increase manufacturing jobs in the region by 50% since 1990 to more than 35,000. And Boise government and educational leaders clearly understand that high-tech is the area's ticket to economic success. The Boise Area Economic Development Council (BAEDC) has an economic-development committee that visits area companies to help solve their problems. A Tech Prep program allows high school students to take college courses toward their technical degrees. And in the last two years, Boise State University has added two new schools: the College of Applied Technology, a standalone school that expands the concept ofvocational/technical training, and the College of Engineering, which is building a new facility that includes a high-tech cleanroom, says Shirl Boyce, vice president of BAEDC. In contrast to Boise, Portland often is associated with several well-known, long-established, non-high-tech manufacturers -- shoe giant Nike Inc., truck builder Freightliner Corp., and Fort James Corp., a paper-products company. But, in fact, Portland has been a magnet for high-tech for more than two decades. The reason: a lifestyle coveted by workers in those industries, including the lure of being less than an hour away from the ocean, and "land and labor costs that are lower than many of the other West Coast cities," says Mike Ogan, program manager-business development at the Portland Development Commission. As a result, he says, the region has built, in stages, the critical mass that high-tech needs. In the '80s, Japanese companies such as Fujitsu, Seiko Epson Corp., NEC Corp., and Komatsu Ltd. made significant investments. More recently, between 1994 and 1996 the semiconductor industry alone announced $14 billion in planned investments. Intel Corp., the region's largest employer, had two expansions, and LSI Logic Corp., WaferTech, Wacker Siltronic Corp., and S.E.H. America Inc., among others, moved to the region, adding another 5,000 jobs. Overall, manufacturing jobs in the Portland MSA are up 23.5% this decade. High-tech employment has risen 65% since 1992 and now provides 40% of the region's 152,000 manufacturing jobs. Asian economic problems caused some short-term dislocation in Portland last year: Intel temporarily halted construction on a new $1.5 billion factory in Hillsboro, and two semiconductor-industry suppliers, L'Air Liquide SA and Du Pont Photomasks Inc., also put construction projects on hold. However, the region was still awash in new jobs or projects from other high-tech firms. WaferTech began production at its $1.2 billion microchip plant in Camas, Wash., that now employs 650 workers. LSI Logic began production in December 1998 at its new wafer-manufacturing plant in Gresham that employs 500 and announced plans for an R&D facility that will employ 600 more. Hyundai Electronics America opened a $1.4 billion semiconductor-fabrication plant that employs 776 in Eugene in March 1998, its first plant outside of South Korea. And Integrated Device Technology Inc.'s chip plant in Hillsboro with 270 workers is just a year old. Portland, like Austin, credits some of its success to the industry cluster teams that determine where the concerns of different industries overlap. In addition, Portland Ambassadors, a group of local private-sector CEOs, "work with us on business development as advocates," says Ogan. "They will meet with prospects and tell them what it is like to operate a business here." Arizona also uses industry clusters to protect and expand its high-tech industry, which state officials estimate has had a $14.7 billion direct impact (and a $31.7 billion indirect impact) -- 80% of that in the Phoenix-Mesa area. The state's six largest manufacturers are all high-tech companies, all but one of them located in Phoenix, and the Phoenix region has more than 700 high-tech companies. The region's high-tech jobs continue to grow despite continuing Asian-market troubles. Four major billion-dollar expansions by Intel, Motorola Inc., Microchip Technology Inc., and Sumitomo Corp. will add nearly 4,500 jobs in the next three to five years. "The key to success for the Arizona economy in the next century will be to maintain and expand its share of the critical high-tech sector," says the Greater Phoenix Economic Council's latest report. That's why the governor's strategic partnership for economic development identified the state's key industries and organized them into clusters -- self-funded by the industries -- that meet monthly or bimonthly to address critical issues. "Now competing companies sit down on a regular basis and discuss the issues that are the key for the growth of their industry," says Michael Farmer, international marketing director, Greater Phoenix Economic Council. Right now, she says, the high-tech cluster is addressing legislative issues to make sure the region remains a pro-business climate. The biotech industry is looking at technology transfer and international trade. "The industries themselves drive these clusters, but the economic-development people [and others] provide support," says Farmer. "It is an invaluable benefit for economic developers to have this one venue to tap into. Now if we are trying to attract a biotech company to the area, we can say: 'Here are the companies operating in Arizona, and this is how they are organized.' Through the cluster, a new company has access to the entire industry it is in and all its suppliers and support services, all in one shot." The cluster concept has enabled the Phoenix region to more easily attract non-high-tech manufacturing, as well. The third-largest North American robotics company, Motoman Inc., recently opened a Phoenix location. Netherlands' ASM Lithography NV moved its headquarters to the Tempe area. Computer and electronics distributor Avnet Inc. moved its 500 headquarters jobs from New York to Phoenix. Pretzel manufacturer Snyder's of Hanover recently broke ground on its first manufacturing plant outside of Pennsylvania in Goodyear, Ariz. By contrast, the much newer high-tech region of Albuquerque doesn't have anywhere near the amount of high-tech manufacturing that Phoenix has. But its emergence is a remarkable achievement for a region that once depended almost exclusively on the defense industry for jobs. The region's three largest employers -- with nearly 8,000 employees -- are now Intel, Philips Semiconductors, and Motorola's Ceramic Products Div. And their presence has lured high-tech firms such as Silmax Inc. and Sumi-tomo Sitix semiconductors. What's more, in the last three years Philips and Sumitomo have expanded, and Intel added 1 million sq ft of manufacturing space. Intel is spending $1 billion to retool one of its fabrication plants, and Sumitomo is in the process of adding 300 workers. As a result, high-tech employment now dwarfs the 2,000 jobs provided by Honeywell Defense Avionics Systems and GE Aircraft Engines. Manufacturing jobs are up 41% since the arrival of Intel in 1980. And the long-range outlook is even brighter, although Asia's troubles triggered job cuts by Motorola and temporary layoffs by Philips in 1998. One reason: Local companies such as El Encanto Inc.'s Bueno Foods, Roses Southwest Papers, and two manufactured-housing companies new to the area will add more than 500 jobs, offsetting the more than 500 jobs lost last year when Levi Strauss & Co. closed its plant in the region. Also, the Albuquerque Technical Vocational Institute quickly stepped in to retrain those workers, setting up 60 classes for 16 weeks of training at the Levi Strauss site. More than 300 of the former Levi Strauss employees signed up. "We have had an enormous amount of effort between private industry and the education system to ensure that we have a technical workforce that will meet the demands of these new companies," says Jack Jekowski, president of the Technology Industries Assn. of New Mexico. "Two years ago, companies might have crossed us off their list [of possible locations] because of the lack of a technical workforce. Now they see [us] as an incredibly rich source of technically trained individuals." In addition, business and colleges are jointly developing specific curricula for technology sectors such as communications, biomedicine, and fiber optics. It's such a rosy outlook that by 2005 the New Mexico Dept. of Labor projects that the number of manufacturing jobs in the Albuquerque MSA will be 42% higher than in 1993. In addition to high tech, Albuquerque expects its bilingual workforce and the presence of nearby national laboratories -- including the Airborne Laser Laboratory, the Air Force Research Lab, and Sandia National Laboratories -- to boost manufacturing growth, especially now that the national labs are under a mandate to spin out new technology for commercial use. "We have a strong bilingual workforce. Companies doing business in South America and Latin America are looking to us because of this," says Jekowski. Plus, the new federal research philosophy "spurs manufacturing growth for entrepreneurs." Just hard work Fittingly, four MSAs -- Atlanta, St. Louis, Minneapolis-St.-Paul, and Grand Rapids -- are among the top 25 largely because of their manufacturing diversity and diligence in nurturing manufacturing. Atlanta's 15 largest manufacturers represent 12 different industries, a reflection of the broad mix of industrial sites and skills available in the region. "Greater Atlanta is very urban and very rural," says John Gilman, acting manager for economic development for the Metro Atlanta Chamber of Commerce. "This creates a huge range -- in terms of options -- for manufacturing sites." And since the region has been "proactive in maintaining superior infrastructure, we don't have to scurry to make sites ready. We've been ready for years." Hartsfield International Airport, for example, has 189 nonstop flights to U.S. cities and 25 nonstops to foreign cities. Since 1990, the region has increased manufacturing employment by 16% -- or 30,000 new jobs. Some 125 manufacturers have moved into the region in the last three years. Evenflo Co., an infant-product manufacturer, moved its production from Ohio. Southwire Cyber Technologies Inc. built a computer cable plant, and Novartis Co.'s CibaVision opened a contact lens production plant. Atlanta also has its share of high-tech jobs. More than three-quarters of the state's high-tech jobs -- which have grown 45% since 1990 -- are in the Atlanta region. In much the same way, St. Louis' central location has persuaded almost 20% of the nation's largest firms to locate manufacturing facilities in the region. Ford, GM, and DaimlerChrysler all have assembly plants in the area. Also in St. Louis: the former McDonnell Douglas aerospace operations now owned by Boeing Co., brewing giant Anheuser-Busch Cos. Inc., cereal-maker Ralston-Purina Co., and biotech giant Monsanto Co. "In spite of massive cutbacks in defense spending over the last decade, manufacturing still accounts for about 15% of all jobs in the region," says Richard Fleming, president and CEO of the St. Louis Regional Commerce & Growth Assn. "A lot of people [an estimated 5,000] who left McDonnell Douglas after the cutbacks started their own companies." The impetus: the Defense Adjustment Project, a public-private partnership that over a six-year period directed millions of defense dollars to help terminated employees, mostly from McDonnell Douglas, start their own operations. Since 1994 the Campaign for Greater St. Louis -- headed by Fleming's group and the Greater St. Louis Economic Development Council -- has helped add 70,000 new jobs in the region. "We've gone from a situation where St. Louis was not on the playing field to one in which we are routinely beating [cities] in head-to-head competition for major relocations," says Fleming. Two examples: Denver-based Gates Rubber Co. opened a plant in the St. Louis region and Insituform Technologies Inc. moved its headquarters and manufacturing from Memphis. There's also an improved business climate. The recently created Regional Production Council includes teams of manufacturers that address changes needed in the business climate: infrastructure improvements, tax credits, education reform. The region also is hoping to position itself as the Silicon Valley of biotechnology when the Danforth Plant Sciences Center -- where 100 biotech scientists will work -- opens this year. Another area with a similar diversity and where growth is driven by existing companies is the Minneapolis-St. Paul MSA. Indeed, more than 40 companies -- 14 of them privately held -- with revenues of $1 billion have headquarters in the region. One reason for that stability is a quality of life that many in the business community find comfortable. The region has the lowest average commute time of any major U.S. metropolitan area, natural gas and electric rates 12% to 18% below the national average, and a per-capita arts activity that's second only to New York. As a result, the Twin Cities are home to 93% of the state's 11,000-plus manufacturing firms. There are more than 600 medical-equipment firms, more than 850 food-processing plants, and nearly 2,000 companies producing industrial equipment and machinery, much of it related to computer manufacturing. With that extensive base, it's not surprising that much of the region's manufacturing growth is driven by existing companies, says Tony Goddard, acting president of the Greater Minneapolis Chamber of Commerce. For example, in 1998 medical-instruments giant Medtronic Inc. added 4,000 jobs, nearly doubling its employment. Cypress Semiconductor Corp., Toro Co., electrical-component manufacturer Graco Inc., and hard-drive manufacturer Seagate Technology Inc. all added production jobs. There also has been additional growth in rural communities where many of the suppliers to major companies locate, helped, in part, by "a concerted effort over the last decade to control some of the costs -- workers' compensation, industrial property taxes, and the capital-equipment sales tax -- that hit business hard," says Goddard. Grand Rapids' diverse group of industries is why manufacturing jobs in the Grand Rapids MSA increased 22.8% between 1987 and 1997. Some 2,200 manufacturers, including 30 with more than 500 employees, represent 19 of the 20 major industries. Yet, even with that diversity, the automotive and office-furniture industries drive much of the growth, particularly in related industries. "Much of the growth in rubber and plastic and industrial machinery is due to the auto and office-furniture industry seeking cheaper, yet stronger, lightweight materials and new, more efficient tooling," says Birgit Klohs, president, the Right Place, the area's nonprofit economic-development group. "There are endless synergies between industries in the area. That creates the growth." In the last five years, for example, jobs in the industrial-machinery-and-tooling sector are up 20%; in rubber and plastics, they are up 35%. For a midsized community, Grand Rapids also has had unusual success attracting some 40 non-U.S. manufacturers -- about half of them from Germany, including three that just established operations last year. "We have had a very aggressive international marketing program," says Klohs. "It is one of our core competencies. We network all over Europe and Japan at least three to four times a year, look at companies that are supplying the North American market, look at their volume, decide if they would fit here, and figure who can provide us leverage into that company."

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