Industrial retention: A brief literature review

(This summer I read a series of ten articles related to industrial retention in contemporary developed country cities. The intent was to see if there are lessons Korea can learn from the West as it proceeds through its phase of deindustrialization. The rough and short summary of my findings follow.)

Throughout much of the 20th century, US manufacturing has been dominated by large, vertically integrated producers who were believed to generate their productivity from internal economies (most typically economies of scale). However, in the 1970s this mass production, Fordist organization of production began to rapidly change. New communication, computation, and transportation technologies were employed by OEMs (Original Equipment Manufacturers) to outsource and sometimes offshore manufacturing production. (Korea was one country to benefit from this transition.) This process reduced risk and labor costs for the OEMs. Such post-Fordist production relies on the higher value-added production of smaller, customized batches of goods for their profits and tends to be organized in dense clusters of firms that learn from each other, increasing rates of innovation (Helper and Stanley, 2010; Scott, 2001).

As a result urban manufacturing has also gone through a major transformation (Curran, 2007, 2010; Rantisi, 2002; Scott, 2001). Large, polluting, mass-production factories in mature industries have generally left US cities for more environmentally and labor friendly locations overseas or in rural areas. Those manufacturers who have remained in the city are those that need to be in the city. Oftentimes they need to be in the city in order to be close to the customers. For some, like printing, these customers are firms in the highly lauded “New Economy” or “information age” sectors, like finance and media. For others, like food processing and furniture manufacturing, these customers are the highly paid workers in the high-profile sectors. These consumers have altered their consumption patterns to prize “commodified symbolic forms” that define their identities and position them within their social networks (Scott, 2001).

Urban manufacturers’ importance has been overlooked in the general infatuation with New Economy firms. However, there is ample evidence that they typically pay higher wages than new jobs created in the service sector, supporting middle income households (Curran, 2010; Helper and Stanley, 2010). Urban manufacturers are also often more profitable as well (Helper and Stanley, 2010). It has also been suggested that urban manufacturing reduces costs for the leading high-profile sectors and that it contributes to the resilience of urban economies by widening the production portfolio.

Though this economic restructuring began to impact the US from the 1970s, it appears to be affecting Korea now. Therefore, this is an opportunity to plan ahead and retain and strengthen the potential strength of urban manufacturing.

Despite their advantages, urban manufacturers have been facing strong real estate pressures in the US. Residential and commercial users are able to pay higher rents than manufacturers and often seek out manufacturing spaces because they find them inherently desirable (e.g., loft living and “authenticity”) (Curran, 2007) or because they are displaced from prime locations by more affluent residents and firms (Pratt Institute Center for Community and Environmental Development (PICCED), 2001).

In order to protect these “silent partners” in local urban economies and the higher wage jobs they provide, academics and policy advocates consistently suggest two major forms of intervention (Mayer, 1998; Mistry and Byron, 2011; Pratt Institute Center for Community and Environmental Development (PICCED), 2001; Rast, 2005). First, cities should create special purpose manufacturing districts that actively exclude or limit other uses. This eliminates higher rents due to competition with residential and commercial uses and expands the number of spaces available since land owners have not incentive to warehouse their properties while they await a rezoning. Second, cities should offer financial, technical assistance, and development programs targeted at small manufacturers that rent their spaces and tie this in to worker education programs that facilitate the hiring of local residents.

However, achieving these goals is not an easy task. Urban regime theory, according to Rast (2001; 2005), would suggest that successful retention and revitalization of urban industrial areas requires a base of community support. This support could presumably come from industrial associations seeking to survive, community development groups seeking better quality jobs for their residents, and labor unions looking to protect their workers. Building an active base of support and renewed recognition of the importance of urban manufacturing is necessary to build the political power that would convince leading politicians to incorporate them into the ruling coalition.

Bibliography

Winifred Curran. ‘From the frying pan to the oven’: Gentrification and the experience of industrial displacement in Williamsburg, Brooklyn. Urban Studies, 44 (8):1427–1440, jul 2007. doi: 10.1080/00420980701373428.

Winifred Curran. In defense of old industrial spaces: Manufacturing, creativity and innovation in Williamsburg, Brooklyn. International Journal of Urban and Regional Research, 34(4):871–885, 2010. doi: 10.1111/j.1468-2427.2010.00915.x.

Norman Fainstein and Susan Fainstein. Governing regimes and the political economy of development in new york city, 1946-1984. In John Hull Mollenkopf, editor, Power, Culture and Place: Essays on New York City, pages 223–260. Russell Sage Foundation, New Yok, 1989.

Susan Helper and Marcus Stanley. External economies: How innovative small manufacturers compete. 2010.

David L. Imbroscio. Overcoming the neglect of economics in urban regime theory. Journal of Urban Affairs, 25(3):271–284, 2003.

John R. Logan and Harvey L. Molotch. Urban Fortunes: The Political Economy of Place. University of California Press, Berkeley, CA, 1987.

Neil S. Mayer. Saving and creating good jobs: A study of industrial retention and expansion programs. Technical report, Center for Community Change, 1998.

Nisha Mistry and Joan Byron. The federal role in supporting urban manufacturing. Technical report, What Works Collaborative, 2011.

Paul E. Peterson. City Limits. The University of Chicago Press, Chicago, 1981.

Pratt Institute Center for Community and Environmental Development (PICCED). Making it in New York: The manufacturing land use and zoning initiative. Technical report, Municipal Arts Society, New York, 2001.

Norma M. Rantisi. The local innovation system as a source of ‘variety’: Openness and adaptability in New York City’s Garment District. Regional Studies, 36(6): 587–602, 2002.

Joel Rast. Manufacturing industrial decline: The politics of economic change in Chicago, 1955–1998. Journal of Urban Affairs, 23(2):175–190, 2001.

Joel Rast. The politics of alternative economic development: Revisiting the Stone-Imbroscio debate. Journal of Urban Affairs, 27(1):53–69, 2005.

A. J. Scott. Capitalism, cities, and the production of symbolic forms. Transactions of the Institute of British Geographers, 26:11–23, 2001.

Clarence N. Stone. Urban regimes and the capacity to govern: A political economy approach. Journal of Urban Affairs, 15(1):1–28, 1993.