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Specialization is key to Midwest's economic future, says expert

This article first appeared in the St. Louis Beacon, June 6, 2011 - The Midwest's better days economically are in the rearview mirror as far as historian and journalist Richard C. Longworth is concerned. But Longworth, a senior fellow with the Chicago Council on Global Affairs, believes Midwestern cities like St. Louis, Kansas City and even small towns in the heartland can re-emerge as economic powerhouses by specializing in any number of fields.

"We were the powerhouse of the industrial age," said Longworth. "We were the Silicon Valley of the industrial age. All the stuff that powered the American economy during the 19th and most of the 20th centuries came from the Midwest."

"Now," he added, "it's over."

Longworth, author of "Caught in the Middle: America's Heartland in the Age of Globalism," should know. He's racked up more than 55,000 miles on his odometer criss-crossing the nation's heartland to chronicle the phenomenon. A former foreign correspondent for UPI and the Chicago Tribune, Longworth is now a senior fellow with the Chicago Council on Global Affairs. He is scheduled to speak at the Seeds of Change event at the Donald Danforth Plant Science Center next week.

Longworth said the evidence of post-industrial decline is rampant from the Rust Belt to the upper Midwest where vocational obsolescence has spent decades becoming almost a cherished tradition.

"We got used to it," said the Iowa native. "Your granddaddy worked in the mill. Your father worked in the mill. You worked in the mill. Your kids were going to work in the mill."

Until the mill finally disappeared. What was left behind were decaying downtowns with shrinking populations and outdated economic models in metropolitan areas where the landscapes of urban city centers tend to be dominated more by sports stadiums and government buildings than the industries of the future.

"It's really an archipelago of ghettoes of people who have been left behind by this global era," Longworth, creator of the blog, the Midwesterner. "There's no place for them. You see the high dropout rates, the high poverty rates. It's a pretty grim prospect. We just have not been able to come to terms with this new outside world."

Areas that have fared better have had two ingredients the Midwest has lacked, he said. One is the venture capital seen in cities along America's coasts. The other, is what Longworth called a "cluster economy," a fiscal base built upon an emerging specialization and its associated industries. He cites examples like Grand Rapids, Mich., and its increasing focus on medical research, Milwaukee's concentration on fresh-water issues and Kansas City's foothold on veterinary medicine and animal health as indications that some places are trying to create that growth.

Even small towns can find prominence by gaining a position in a specialized field. Beginning with a company that made wooden splints for broken arms, Warsaw, Ind., now flourishes as the global headquarters of the orthopedic implant industry. Tiny Thief River Falls in northern Minnesota has gained notoriety in the snowmobile industry.

Often based in college towns, such specializations tend to become self-reinforcing, sometimes spawning other companies in the same field as former employees from one organization become founders of another. They also may branch out with offshoot industries or research institutions that play support roles. For instance, a headhunting firm for orthopedic executives sprang up in Warsaw while Wisconsin's Marquette University started a major in water law.

"These places tend to spin off expertise," he said. "One of the problems we have here in the Midwest is that we have all sorts of business services -- legal, accounting, PR, consulting -- that are based on the old heavy industrial economy."

He said St. Louis has an advantage in this respect with research organizations like the Danforth Center, major companies like Monsanto and noted educational institutions like Washington University.

"When I did the book, I found out I was really just saying out loud what a lot of other people around the Midwest were already thinking," he said. "A lot of people are thinking the right way, including a whole lot of people in St. Louis."

Longworth said states and localities need to think regionally and universities should work more to collaborate with industry and each other to promote common goals in an increasingly diverse, complex and global economy.

"You've got competition between the two Kansas Cities to lure industry a couple of miles back and forth," he said. "States fight with each other. States compete with each other, but the real competition is 10,000 miles away."

Physical connections would be a benefit as well. Longworth said a high-speed rail link between Chicago and St. Louis would help both communities by mimicking the connectivity of the more tightly packed cities in the Washington-to-Boston corridor.

"We've both got good things going on," he said. "We're just too far apart to leverage them."

Longworth spoke about the need to create a solid middle class in the region. That was easier in the old economy, he said, where factory jobs at decent wages could create financial stability and home ownership for many families. However, that dynamic changed as assembly lines, plants and downtowns became idle, creating some good jobs at the top, many bad jobs at the bottom and very little in the middle. He cited the research of an Ohio State University professor who termed the phenomenon the "hourglass economy."

"That's really kind of peculiar to the Midwest," he said. "The rest of the country -- the Southeast, the West Coast -- the pattern is more square."

David Baugher is a freelance writer in St. Louis.

David Baugher
David Baugher is a freelance writer in St. Louis who contributed to several stories for the STL Beacon.