In January, this column will celebrate its fifth anniversary. When Tom Fleming and I originally conceived of the idea back in 1998 (as an occasional “Letter From Rockford” to be written by various local activists), we were capitalizing on the fact that our city was considered by marketing agencies and national chains as an ideal testing ground, because, demographically—on questions of race, income, education, etc.—Rockford represented the national averages.
Seven years later, that is no longer true—minorities make up a greater percentage of the population than they do in the nation as a whole; average income is slightly lower (depending on which statistics you believe); educational levels have slipped. It is too early to tell whether these trends are harbingers of America’s future direction, but one thing is clear: Economically, Rockford is still forecasting America’s future.
For a city of 150,000 people, a solid economic base requires that income flow in from the outside. In this respect, the frenzy of commercial development on the east side of town over the past 20 years has actually decreased Rockford’s economic viability, not increased it. The lion’s share of every dollar spent at a national chain, such as Wal-Mart, leaves the local economy, never to return—unless, of course, it returns in the form of another local Wal-Mart Supercenter. Rockford will soon have five, positioned strategically around the city, pumping money out of the local economy and funneling it to Bentonville, Arkansas, and China—any place but here.
Contrary to the belief of government planners in both parties, sales-tax revenue, by itself, is not an accurate measure of economic health. Far more telling are such statistics as average household income (essentially flat over the last 30 years in inflation-adjusted dollars); average hours worked per household (up about 50 percent during the same period); bankruptcies (setting new records almost every month, both locally and nationally); savings rates (near the lowest point in the history of the United States); mortgage debt (at record levels, spurred on by low- and no-cost loans and reverse mortgages, which suck the equity out from under senior citizens and break the ties between generations by ensuring that the family house cannot be passed down to the children); and credit-card debt (rising every month, as even such venerable financial institutions as Chase Manhattan offer vast credit lines to people they would not have dreamed of servicing ten years ago).
That last fact is very important, because it shows the ultimate hollowness of the consumer economy. According to CardWeb.com Inc. (www.cardweb.com), average household credit-card debt in 2004 was $9,312, up 29 percent since 1998, when the most recent dramatic decline in manufacturing employment began. That’s almost $700 billion in outstanding credit-card debt. So while both the Clinton and Bush administrations have done little or nothing to arrest the decline of American manufacturing, we have been financing our consumption with one of the most expensive forms of debt, and that money that we never had in the first place has been leaving our communities—and some portion of it has gone to finance the expansion of “American” manufacturing in China, furthering the death spiral.
The service-economy model that was supposed to replace manufacturing has similar problems—it only increases the economic health of a community if it brings in money from outside. But service-industry execs, like their counterparts in multinational manufacturing concerns, are always looking for ways to decrease costs, and thus it was almost inevitable that such things as call centers—which did bring money into local economies—would be outsourced.
Tourism is a form of the service economy that, by definition, cannot be outsourced, and it can benefit local economies, but it only works for areas that are attractive as tourist destinations. Rockford may be a pleasant place to live, but it is Pollyannish to believe that it is more desirable as a tourist destination than similar cities of its size throughout the Midwest. Indeed, it is less desirable than, for instance, Midwestern cities on the shores of the Great Lakes. And the economic potential of tourism to Rockford is further undercut by the fact that most of the tourists who do come here stay out in the great Wasteland on the eastern edge of town, just off the tollway. While the chain hotels and restaurants out there generate sales-tax revenue, they do not generate much money that will stay in the local economy and, thus, cannot form a solid economic base for the city’s future.
And so, for better or worse, the economic health of Rockford has to be tied to businesses that bring money into the city by exporting products out. That does not necessarily mean manufactured goods—software, for instance, is an exportable product—but manufactured goods have been, and still remain, the lifeblood of this community. While it may be true that, strictly in terms of dollars, healthcare and public education today “contribute” more to Rockford’s economy than manufacturing does, those are sterile “industries.” G.K. Chesterton was right when he said that we cannot all make a living taking in each other’s laundry, and that is even more true of warehousing children in public schools or treating each other’s ailments, real or imagined.
And so we come back to production—good old-fashioned, as in many of the factories around town, or newfangled and high-tech, such as the techniques being developed at the EigerLab (a research and development center in Rockford funded with both public and private funds). Even today, as manufacturing in Rockford begins to rise back up out of the recent economic downturn, 23 percent of Rockfordians are employed in manufacturing. Another 23 percent hold jobs that are dependent upon local manufacturers. In other words, the economic fate of almost half of the population of Rockford is tied to manufacturing. That’s far more people than those whose livelihood is dependent on healthcare, education, or tourism. If Rockford is to survive, the decline in manufacturing needs to be arrested, and positive steps need to be taken to increase manufacturing employment in Rockford.
That, of course, is easier said than done. But there are signs of hope. Perhaps most significant among them is the Manufacturers Alliance of the Rock River Valley (MARRV). Small manufacturers, like most small businessmen, have traditionally been an independent bunch. They haven’t necessarily viewed themselves in competition with their fellow manufacturers in Rockford—though too often they have—but they are used to being solely responsible for the success or failure of their own business. And if the current manufacturing crisis has taught us anything, it’s that this mind-set needs to change.
MARRV is a big step in the right direction. So far, over 40 local small manufacturers have come together to form a flexible network. Large manufacturers from outside the area, who are outsourcing more and more of their component production, now have one point of contact in Rockford that can help them find the right small manufacturer—or several small manufacturers—to fill their needs. And manufacturers who are members of MARRV do not need to worry about being unable to fulfill a customer’s request and possibly losing that customer as a result—they can turn to their fellow members as backup.
If this sounds a bit like a Frank Capra movie, well, all the better. Talking to such local manufacturers as Bob Trojan and Teresa Beach-Shelow and Mike Molander and Char Vincer, all of whom have been indispensable in getting MARRV off the ground, it is possible to believe that Frank Capra is alive and well. In their mouths, “cooperation” and “collaboration” and “combining resources” and “helping each other out” become more than buzzwords: They represent an older morality—a better morality—that disappeared long ago from the boardrooms and corporate offices of all-too-many large manufacturers who are now American in name only.
But for small manufacturers—locally owned companies, often family-owned and operated—this remains a way of life. And there is an increasing realization—among manufacturers themselves, among politicians, among those who live in cities such as Rockford—that manufacturing is not a monolith. Publicly held, multinational corporations have a different set of priorities—a different morality—from the small manufacturers who make up the economic backbone of Rockford.
The problem in American manufacturing is not simply foreign competition. NAFTA, GATT, WTO, permanent normal trading relations with China—all of these came at the tail end of one of the most extensive periods of mergers, acquisitions, and centralization in the history of American industry. And those mergers were driven by an obsession among corporate leaders with quarterly profit-and-loss statements that overshadows any other concern, including questions of national security and the well-being of their fellow Americans (their workers, their workers’ families, and the small manufacturers further down the production line).
The prosperity of America in the 20th century was built not on General Motors and Ford and Chrysler and General Dynamics but on the small manufacturers, often with 100 employees or less, who provided the lion’s share of manufacturing employment in this country—like such local companies as Rockford Acromatic and AutoMeter and Rockford Linear Actuation and LJ Fabricators and Dial Machine and the 40-plus companies that make up MARRV.
At one time, the interests of large manufacturers largely coincided with those of small manufacturers, but with the increasing mobility of capital and labor, their interests have now diverged. Corporate tax law, trade agreements, and even environmental and healthcare regulations have been structured to benefit large manufacturers—especially those who have the ability to move offshore and who have the resources to fund congressional and presidential campaigns.
Organizations such as MARRV represent one way of leveling the playing field. But we have to pursue a multipronged approach. We need federal tax reform that removes barriers to American competitiveness, such as the border-adjusted value-added tax that Rockford Institute board chairman David Hartman has proposed. (See “America for Sale” and “Taxation for Economic Survival” in the November and December 2004 issues of Chronicles.) We need to reduce taxes and regulatory burdens here in Illinois, so that Rockford can compete effectively with other cities in the United States. We need better schools, so that children in Rockford will be equipped with the skills and critical thinking necessary for modern manufacturing. We need local political leaders who understand that the economic health of this community depends on its manufacturing base. And we need citizens who once again take pride in Rockford’s role as a manufacturing center and who stop steering their children away from manufacturing as a career—and stop encouraging the best and brightest of the next generation to move away from their hometown.
America’s prosperity was built on manufacturing, and Rockford’s was as well. Our downtown was built upon a manufacturing base—and it can be rebuilt upon a revitalized manufacturing sector. Our park system, of which we are justifiably proud, was a legacy of our industry. Our river played an important role in the growth of manufacturing in Rockford, and the converted factories along its banks should serve as a constant reminder of what Rockford once was—and can be again.
Most importantly of all, manufacturing once formed the basis of Rockford as a community—of people bound together in a common cause, caring about the welfare of their neighbors and proud of their hometown. We don’t need, in the words of an old, failed marketing slogan, “A different kind of greatness”—we can have the old greatness back. The small manufacturers of Rockford still have pride in their hometown. It’s time the rest of us—here in Rockford, and across America—discovered it as well.