Transforming Industrial Regions of North America and Europe: Opportunity and Imperative

What We Learned

The two-day event proposed new approaches, including how to effectively communicate with residents of struggling economic regions and how to support them in invigorating local and regional economies.

To effectively aid struggling communities, leaders must first see things as residents do: the hollowing out of communities; the loss of local schools and sports leagues; degraded main and high streets; and lost cultural facilities, union halls, local papers, family-owned shops, taverns, and restaurants.

As UK MP Lisa Nandy noted, the loss of opportunity and the decline of institutions that build and reinforce civic pride leads to a loss of a sense of identity.

A first step on the path to a new sense of optimism is ensuring that national and federal leaders understand these issues, and then providing the resources to mend the tears in the economic and social fabric of communities.

Congresswoman Cheri Bustos explains her approach to understanding constituents’ lives and needs.

In cities and towns that still struggle economically, leadership that focuses on the people, and pays attention to their tangible and immediate needs, can build “permission” to be heard on larger things.

Rachel Wolf outlines how to create momentum for economic investment and change.

To be effective, leaders must bring the resources and external investments needed to implement solutions. If done well, this can create trust between communities and national leaders—trust that will nurture support and acceptance of additional investments that can move their economies forward in more substantive ways, such as with larger-scale investments in people, infrastructure, skills, and innovation.

But as Mayor Thomas Westphal of Dortmund, Germany, argued, the plan for economic evolution has to come from within. It must be specific to each community and owned and operated by community residents and leaders.

Change cannot be “done to” a community or perceived to be coming from others, even if the change is backed by good intentions. From West Germany coming in to the former East to rebuild its economy, to the European Union telling Central European communities they must go green, to Washington pundits offering “solutions” for heartland people and places, such efforts have the unintended consequence of triggering negativity and resentment and reminding industrial-community residents of their loss of control.

Thomas Kralinski, former state secretary of Brandenburg, details how top-down policies spurred populism in East Germany.

Solutions have to come from the people. From Milwaukee, Wisconsin, to Sheffield, United Kingdom, to Windsor, Ontario, to the communities of Germany’s Ruhr valley, the transformational strategies that have enabled industrial regions to find new footing in a globalized, technology-driven knowledge economy have come from within.

Comments from the Symposium Chat

A hopeful new future for industrial communities can be built by embracing their historical identities and building from them. Residents in these heartland industrial communities are proud of their legacies of making things and contributing to their nation’s economic and political success.

Birgit Klohs talks about how Grand Rapids, Michigan, built on past successes to grow its economy.

Richard Jones of the University of Manchester discusses the use of local identity as the basis for long-term planning in Sheffield.

And in communities whose economic identity was lost—as in Pittsburgh, the former Steel City, or Manchester, once the world’s textile capital, or Dortmund, a former coal and steel capital—community members must confront this reality, identify their community’s strengths, and envision a new future.

^{Don Carter of Carnegie Mellon University describes the collapse of steel in Pittsburgh in the late 1970s and early 1980s, and the beginning of a rebirth.}

Perhaps the most important thing leaders can do to empower these industrial regions’ new success and optimism is to refrain from talking down to residents, patronizing them, or viewing them with pity.

Rachel Wolf says it’s important for leaders and policymakers to avoid condescension.

Residents don’t like being called “left behind” (in the United States) or in need of “leveling up” (in the United Kingdom). They do not consider themselves “postindustrial,” living in “Rust Belts,” or in need of “restructuring.”

Comments from the Symposium Chat

Instead, wrote Iowa farmer Matt Russell in a symposium chat comment, what residents should hear from their leaders is: “We see you. We understand why you are upset with the conditions of your community. You and your community and future success is a national priority. We are here to support and offer resources for you to build your own future.”

Understanding Populism and Place

To open the symposium, several leading scholars discussed the meaning of populism, the historical significance of the present moment, and the relationship of this political phenomenon to geographical place.

Cas Mudde of the University of Georgia laid out a broad conceptual framework for the discussion. He offered a definition of populism and traced its history and impact.

As Mudde argued, populism is nothing new, but the current wave of populism since the Great Recession is distinctive in that it is virulent, widespread, and concentrated primarily in the far-right wing of the political spectrum. The current populist wave poses a particularly worrisome threat to liberal democracy around the world, in that today’s populist leaders ascend to power via majoritarian democratic means but then quickly begin to undermine many of liberal democracy’s core features: the rule of law, minority rights, and the separation of powers.

As Mudde argued, populism and place are strongly connected.

Katherine Cramer of the University of Wisconsin–Madison echoed these themes, drawing from her research on attitudes, values, and resentments among rural residents of Wisconsin.

Stephen Weymouth of Georgetown University continued the discussion on populism, speaking to two key questions: What explains the emergence of the current populist wave, and why has that wave come overwhelmingly from the right wing?

As Weymouth noted, economic geography is an important part of the answer to both questions.

Technological developments are producing diverging spatial patterns of economic development in the United States and elsewhere. The globalization of production, the spread of automation, and the increasing ability to trade services (not just goods) globally have led to growing regional disparities in economic structure, performance, and prosperity.1

Meanwhile, Weymouth noted, the growing high-tech and knowledge-driven services industries increasingly cluster in what are often labeled “superstar cities.” Technological change over the past several decades has led to differences in economic performance between rural and thriving urban areas, and these differences in economic performance have exacerbated the cultural tensions that have fueled the populist revival.

• 1See, for example, Richard Florida, The New Urban Crisis: How Cities Are Increasing Inequality (New York: Basic Books, 2017).

Comments from the Symposium Chat

Answers to Weymouth’s second question—why current populist movements mainly emerge from the right wing—relate to the decline of manufacturing in formerly industrial regions. That decline, combined with the United States’ deep-rooted, painful history of racism, creates a perceived status threat to white populations in certain parts of the country. Drawing on social-identity theory, Weymouth argued that this perceived threat draws white residents in those areas to populist candidates such as former President Donald Trump who promise a nationalist industrial revival and who signal sympathy for the status concerns of white voters.

Pauliina Patana of Harvard’s Kennedy School of Government drew on her research on France and Finland to highlight the emergence of sharp regional disparities in growth and prosperity. These disparities, she said, create divergences in important aspects of community conditions such as housing affordability and residential mobility, which in turn reshape political geography.

In thriving urban areas, the rising cost of housing has made city living unaffordable for people in other parts of the country, creating barriers to moving to where the jobs are.

At the same time, residents on the economic periphery face the other side of the housing coin—they live in stagnating areas where the housing market is depressed and the value of individual homes is declining. These challenges compound the difficulty of relocating from these regions and cities in search of upward mobility.

Feeling locked into a place fuels a sense of hopelessness and resentment, creating opportunities for populist candidates to garner support in key geographies. People prefer to see their communities as they once were.

^{Lisa Nandy says the losses of younger populations have profound implications for communities.}

But residents who cannot exit because they are boxed out of more expensive communities—or who decide not to leave—voice their frustration at the ballot box. Right-wing populist parties actively amplify these residential issues, while mainstream parties often exacerbate these dynamics by focusing their attention on issues that are important to wealthier urban voters rather than on issues such as affordable housing.

Tony Pipa, senior fellow in the Center for Sustainable Development at the Brookings Institution, says the United States lacks a coherent set of policies for rural America.

Another challenge, argued UW-Madison’s Cramer, is that solutions to support social mobility—even obvious ones such as improved education and skill levels—have become wrapped up in identity politics. Perceptions of educational needs are very closely intertwined with the cultural-political divide generated by the populist challenge.

For example, higher education is increasingly associated with urban, left-leaning elites, while struggling communities place more emphasis on practical solutions such as job training and technical college. At the end of the day, the two sides are talking past one another.

Making Change

What Works

The discussion at the symposium led to rich insights about how to accelerate economic transition in similarly situated regions, and about the varied tactics and strategies that work.

The following strategic guidance and overarching principles for creating economic transformation emerged in sessions with mayors, local and regional leadership, and economic development practitioners.

1. Let change come from the people

Leaders of effective change strategies consistently reinforced the importance of civic and community engagement.

Thomas Westphal outlines how to build a bottom-up plan for economic transformation.

Julia Taylor says leaders have to build trust.

Manchester Mayor Andy Burnham covers the appeal of locally rooted solutions.

As Rachel Wolf argued, leaders who listen to their communities and stay in touch with their needs get permission to do more.

2. Implement coupled, holistic, and integrated strategies

Many economic change practitioners discussed the importance of coupling strategies between organizations and institutions such as businesses, universities, and governments. Effective strategic change in communities works across community domains, and works from the bottom up and the top down.

Peter Berkowitz of the European Commission notes the challenge of inclusive growth in knowledge-driven economic development.

Grant Ervin notes the importance of bringing different institutional interests and voices together.

Katje Witte, Wuppertal Institute, explains how structural change must be specific to place and holistic.

As Birgit Klohs noted, the holistic approach needs to be inclusive, both in terms of people and across geographies.

Comments from the Symposium Chat

3. Fashion a new story of hope

Residents need to believe in a future for themselves and their communities. One of the functions of community leaders is to engage with their constituents and help to construct a new, affirmative narrative based on who they are and where they are going.

Grant Ervin on the power of a positive vision.

Michael Vassiliadis, President of IG Bergbau, Chemie, u. Energie, says codetermination can create a hopeful vision for the future.

4. Build on who you are

Residents don’t want to feel that they can’t take pride in their community or that their hard work is being belittled by outsiders. External efforts to create a new community identity or the application of labels such as “postindustrial” can build resentment. Rather, effective change agents and agency come from building on the legacies of the past—the pride and competencies forged by leadership in the industrial economy—and adapting this identity to a new economy.

Mayor Tom Barrett of Milwaukee describes how the city’s history as “the machine shop of the world” gave it strength in engineering and technical professions.

^{Mayor Andy Burnham explains how Manchester builds on its past to tackle the digital economy and decarbonization.}

5. Work on demand and supply

Economic-development practitioners note the importance of talent, education, and skill building, and creating an environment and conditions in communities that both attract newcomers and keep local talent. But equally important is nurturing the creation of new businesses and jobs that pay well.

Peter Berkowitz of the European Commission shares lessons on creating new jobs and businesses.

Mayor Jeff Lehman of Barrie, Ontario, argues that policymakers should focus on careers, not jobs.

6. Build public-private partnerships

Successful community transition efforts demand effective public- and private-sector collaborations, in which business, labor, government, and nongovernmental organizations share the same strategy.

Mayor Rosalynn Bliss of Grand Rapids, Michigan, describes how her city’s history of public-private collaboration helped reverse decline.

7. Borrow success and make your own version

Many successful economic change leaders adopt ideas and strategies from other communities and adapt them to meet their own needs.

Julia Taylor, Greater Milwaukee Committee, speaks on the benefits of sharing and stealing good ideas.

Former Grand Rapids, Michigan, Mayor George Heartwell says mayors are great “idea thieves.”

8. Provide the necessary resources

Policies that respond to a degraded social fabric and the loss of community institutions, and which afford the education, skill-development, innovation, and commercialization of new products and services that support good-paying jobs—all take significant resources. Economic changemakers emphasized the nature and the scale needed to manage effective change.

Peter Berkowitz of the European Commission discusses the need to create capacity for change.

Former Mayor Frank Baranowski of Gelsenkirchen describes what happens without sufficient resources.

9. Think beyond the traditional economic development tool kit

Just as successful communities managing economic transformation strive to evolve their existing economies and business bases, practitioners of economic development say there’s a need to adapt the thinking, strategies, and traditional tools of economic development in light of new forces that affect the work of economic development.

Peter Berkowitz proposes that traditional economic development policies must adapt to today’s challenges.

Evolving those strategies means rethinking traditional economic development tools—such as tax breaks and other giveaways that may not work.

Comments from the Symposium Chat

Paths to New Economic Success

Local communities and regions in the process of structural economic change can leverage their assets to create economic success in today’s changed economy.

As detailed in the 2020 Chicago Council on Global Affairs report A Vital Midwest and the symposium background paper Paths to New Prosperity in Industrial Regions of the West, industrial regions on both sides of the Atlantic are developing a variety of paths to find new economic purchase in a changed world.

While many of these communities share similar economic development patterns, some choose to integrate a number of strategies as part of their transformation effort, while others lean in to one or two powerful levers to drive economic change. The symposium and the recent reports highlighted several pathways to community economic success, including the following:

Innovation and Universities

Many communities lean on colleges, universities, and other research and education institutions as powerful engines of skill building, innovation, and community development.

Peter Berkowitz outlines the role of universities in place-based strategies.

Global Engagement

Several economic development leaders stressed the economic payoffs of their communities’ global engagement, trade, and growing partnerships with the world.

Jay Byers, CEO of the Greater Des Moines Partnership, breaks down how global engagement benefits local communities.

'Green' and 'Blue' Economy Building

As communities seek to evolve their focus from the industries that powered the previous century to the sectors that are fueling today’s economy, many are rebooting their existing economic bases for leadership in the “green” and “blue” sectors and sustainable industries of tomorrow.

Mayor Thomas Kufen, Essen, Germany, speaks on transitioning from a coal city to a green city.

Advanced Manufacturing

Industrial regions and communities have rich manufacturing histories, but today’s efforts focus on evolving leadership in advanced manufacturing, often referred to as manufacturing 4.0.

Mayor Jeff Lehman of Barrie, Ontario, points to local advantages in advanced manufacturing.

Place-Based Assets

Other industrial regions start by building on their own unique attributes of place, including natural, historical, and cultural assets and institutions.

Mayor Rosalynn Bliss of Grand Rapids, Michigan describes the importance of creating community conditions to keep residents and attract newcomers.

Talent

Many industrial communities have found promising pathways to success by attracting new talent and tapping the workforce skills of the entire population.

Jeff Lehman says building talent can be an anti-populism strategy.

Welcoming Immigrants

Other communities look to welcome immigrants as a powerful vector in driving population growth, entrepreneurship, and innovation.

Steve Tobocman, executive director of Global Detroit, highlights immigrants’ contributions to economic revitalization.

Sarah Wayland explains why welcoming immigrants should not be viewed as a “humanitarian project.”

Integrated, Multifaceted Strategies

Other communities animate more multifaceted economic development plans, where a combination of strategies and elements have turned the tide of decline and nurtured a new era of economic vitality.

Tim Bartik, senior economist at the Upjohn Institute in Kalamazoo, Michigan, explains how partnerships helped revive Kalamazoo.

Comments from the Symposium Chat

Where We Go from Here

There is an urgent need for local, regional, and national governments across Europe and North America to come together and address the challenges posed by deindustrialization and technological change that is driving political discontent.

It must become a national priority to work across borders and help renew regional economies in industrial heartland communities.

Mayor Andy Burnham of Manchester argues for reducing the focus on London and correcting regional imbalances.

The prosperity of these regions affects not only the lives of residents but also the health of democracies. Governments at all levels must support these communities and regions in developing and implementing winning strategies that draw on the best ideas to build new economic success—by forming new transatlantic networks, sharing best practices, and nurturing effective, homegrown solutions and strategies.

As the symposium made clear, the pathways forward must not be imposed by leaders. They must be built from the ground up, empowering and supporting community residents, businesses, political leaders, and local institutions. We must embrace these challenges as our collective challenge. Only then will we see more good jobs, growing firms, vibrant downtowns, high standards in healthcare and education, and modern infrastructure linking these regions to one another and to the rest of the world.

The alternative leads to problems for us all: Disconnection. Resentment and anger. Economic decline. A lack of opportunity for residents and their families. A loss of optimism about the future. A sense that others do not understand or care, or that certain people and places do not matter as much as others. Unchecked, these feelings of discontent become fertile ground for division, distrust, and disaffection. When people and places feel ignored or disrespected, entire democracies and economies are weakened and threatened.

This is an urgent issue on both sides of the Atlantic. As a critical step to advance this work, the symposium organizers have joined with other interested partners in an ongoing transnational initiative and learning program aimed at animating policies, practices, and strategies that accelerate economic transformation in these industrial regions.

The goals of this initiative include the following:

• Focus leaders’ attention and actions on the need for enhanced place-based economic development that supports residents of communities in economic transition.
• Place this priority on the agendas of appropriate transatlantic meetings and dialogues involving the United States, Canada, the European Union, and the United Kingdom.
• Continue to build a network of transatlantic interlocutors including local and federal leaders, researchers and policy analysts, and practitioners of economic structural adjustment and change committed to this priority and the work of sharing ideas, models, policies, and lessons around driving economic transformation.
• Strengthen transatlantic collaboration and, in so doing, our democracies.

Conclusion

Leaders of democracies face the critical task of attacking the root causes of right-wing populism, economic anxiety, and the relative decline of particular communities and geographies. Unless local and federal leaders focus on and support economic success in places where residents feel alienated and not in control of their lives, these citizens will continue to fuel a polarizing populist politics that undermines our democracies.

Out of the shattering experience of World War II, the United States and Europe took action to bolster liberal democracies and market economies across the transatlantic space by creating the Marshall Plan and the European Economic Community. Now we must rise to a new political, economic, and social challenge, one rooted in growing regional inequalities that threaten democracy and the broader international order. We must create mechanisms that will permit us to build models and successes, share them with leaders on the ground, and support communities in animating and implementing their own paths forward. Rebuilding the confidence and capacity of these communities will enable them to play their full part in remaking our economic and political future. The survival of the hard-won achievements of the postwar transatlantic partnership depends on it.

Only then will we assuage the anger and anxiety that feed nationalist and isolationist movements—and hollow out our democracies from within.

Acknowledgments

This report and the symposium that sparked it were made possible by the generous support of the German Foreign Office.

The report also reflects the significant contributions of the more than 100 symposium speakers and participants who shared lessons and learnings from industrial regions in both North America and Europe. Their contributions to this initiative have been invaluable.