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Manufacturing in Ohio: World-class and under-appreciated by all but the market

Manufacturing in Ohio: World-class and under-appreciated by all but the market. Edward W. Hill The Urban Center Levin College of Urban Affairs Cleveland State University. Public policy and manufacturing in Ohio: The Challenge.

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Manufacturing in Ohio: World-class and under-appreciated by all but the market

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  1. Manufacturing in Ohio:World-class and under-appreciated by all but the market Edward W. Hill The Urban Center Levin College of Urban Affairs Cleveland State University

  2. Public policy and manufacturing in Ohio:The Challenge • The challenge of the “new economy” and “high tech” is to understand it—to get it right • Public policy is currently getting it wrong • What is the reality of technology, its impact on production, and its impact on incomes in Ohio? Levin College of Urban Affairs, Cleveland State University

  3. Real Per Capita Income 1969- 1998 in 1998 Dollars Period 2 Period 3 Period 4 Period 5 Period 1 Levin College of Urban Affairs, Cleveland State University

  4. Real Per Capita Income Relative to the US Average Period 1 Period 2 Period 3 Period 4 Period 5 Levin College of Urban Affairs, Cleveland State University

  5. What Does High Tech Mean? Two popular meanings • IT, computers, software and and bio-pharmaceuticals • New products • There is confusion between the technological content of products and new products Levin College of Urban Affairs, Cleveland State University

  6. What Does High Tech Mean? • Bureau of Labor Statistics: • Those industries with high demands for technologically specialized labor • Bureau of Labor Statistics definition • R & D workers per 1,000 workers • US average is 3 per 1,000 • Technologically oriented workers per 1,000 • US average is 38 per 1,000 Levin College of Urban Affairs, Cleveland State University

  7. Industrial chemicals Drugs Computer and office equipment Communications equipment Electronic components Aerospace Search and navigation equipment Measuring and control devices Computer and data processing services Research and development testing services BLS: 10 Technology-Intensive Industries(At least 5 times US average) Levin College of Urban Affairs, Cleveland State University

  8. Plastics materials & synthetics Soaps, cleaners & toilet goods Paint & allied products Agricultural chemicals Miscellaneous chemical processes Petroleum refining Ordnance & accessories Engines & turbines Construction & related machinery Special industrial machinery General industrial machinery Electric distribution equip Household audio & video equip Motor vehicles & equipment Medical equipment, instruments & supplies Photographic equipment & supplies Engineering & architectural services Management & public relations services BLS: 18 Technology Industries(2 times US average, but less than 5 times the average) Levin College of Urban Affairs, Cleveland State University

  9. The Specialization of Central Cities in Technologically Intensive Employment Source: U.S. Department of Housing and Urban Development, SOCCDS Levin College of Urban Affairs, Cleveland State University

  10. Ohio’s Technologically Intensive Employment Levin College of Urban Affairs, Cleveland State University

  11. High Technology or Technology-Intensive Production “Business-to-business trade isn’t growing up in high-tech centers like Silicon Valley; it’s developing in industrial hubs like Cleveland and Detroit. As B2B trade expands, there will be a flight of talent and venture capital money to support these efforts, leaving the coasts feeling a bit of frost—while middle America experiences the Internet boom in 2001.” --Forrester Research, February 2000 Levin College of Urban Affairs, Cleveland State University

  12. Composition of Employment in Ohio Levin College of Urban Affairs, Cleveland State University

  13. Employment Growth: The Wrong Measure for Ohio Levin College of Urban Affairs, Cleveland State University

  14. The Role of Manufacturing in Ohio’s Economic Growth Levin College of Urban Affairs, Cleveland State University

  15. Real Gross Metropolitan Product for the Cleveland-Akron CMSA (1992 dollars) Period 2 Period 3 Period 4 Period 5 Levin College of Urban Affairs, Cleveland State University

  16. Ohio’s Real Productivity Levin College of Urban Affairs, Cleveland State University

  17. Five Parts to the Production Process • Headquarters • Research, design, development, & deployment • Production or procurement • Marketing, sales, and service • Distribution or logistics Levin College of Urban Affairs, Cleveland State University

  18. Product Life Cycle • Incubation • Infant • Take-off • Maturity • Stable maturity • Restructured • Decline Levin College of Urban Affairs, Cleveland State University

  19. Looking at the Cycle Profit Sales Output incubation take-off maturity decline restructured infant Time Levin College of Urban Affairs, Cleveland State University

  20. Interaction with regional economies: Application of Technologies Levin College of Urban Affairs, Cleveland State University

  21. Interaction with regional economies: Labor Demand (occupational) Levin College of Urban Affairs, Cleveland State University

  22. Three Public Policy Issues • The role of software and information technology in the economy • Land assembly and renewal • Business taxes Levin College of Urban Affairs, Cleveland State University

  23. Three Public Policy IssuesFour Facets of Information Technology • Economic development infrastructure • Ubiquitous software & network applications • Applying IT to existing products • Export products: competitive advantage • Example: factory automation systems Levin College of Urban Affairs, Cleveland State University

  24. Three Public Policy IssuesLand as Competitive Infrastructureall costs are per acre • Land assembly & clearance • Greenfield: $25,000 - $50,000 • Reused land: $200,000 - $300,000 • Cost differential: $150,000 - $275,000 • Annualized profit differential • At a 15% rate of return • $22,500 - $41,250 per acre Levin College of Urban Affairs, Cleveland State University

  25. Estimated Tangible Personal Property and Corporate Franchise Tax Revenues for Each $1,000 of Gross State Product in 1996 Agriculture $ 1.40 Mining $31.20 Construction $ 4.30 Manufacturing $15.80 Transportation & Public Utilities $ 4.50 Wholesale trade $10.00 Retail trade $10.80 FIRE $ 2.80 Services$ 3.70 Average $ 9.40 Levin College of Urban Affairs, Cleveland State University

  26. Manufacturing in Northeast Ohio • It’s all about products • World-class and under-appreciated by all but the market Levin College of Urban Affairs, Cleveland State University

  27. Chicago-Gary-Kenosha Cincinnati-Hamilton Dallas-Fort Worth Denver-Boulder Detroit-Ann Arbor-Flint Houston-Galveston Miami-Ft Lauderdale Milwaukee-Racine Philadelphia-Wilmington-Atlantic City Portland-Salem San Francisco-Oakland-San Jose Seattle-Tacoma-Bremerton The 12 Comparison CMSAs Levin College of Urban Affairs, Cleveland State University

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