Re-industrializing the heartland will require experimentation
Lessons from our new report on Ohio’s high-tech workforce
Rebuilding high-tech American manufacturing is back in vogue, and with good reason. The United States is falling behind China in a growing set of strategic industries, particularly in manufacturing.
Over the last few months, a major focus of my research has been on one state playing a key role in America’s drive to reassert technological supremacy across a range of key industries, from semiconductors to drones: Ohio. This research has culminated in today’s release of a new report, Silicon Heartland: The Evolution of Ohio’s High-Tech Workforce.
The report focuses on Ohio’s technical workforce and outlines some principles for attracting, training, and retaining talent for an era of reindustrialization.
One key thread: Ohio and the Midwest have a long history of developing innovative, practical models for high-tech talent development. The state and region will need to draw on that tradition to revitalize high-tech manufacturing.
Ohio’s recent struggles
Since 1997, real GDP in Ohio’s manufacturing sector has grown just 14 percent, while the manufacturing sector of the Midwest overall has grown 44 percent.1 Even the broader region falls short of the country as a whole, as manufacturing has continued to move south over the last few decades. Nationwide, manufacturing’s contribution to GDP has grown more than 70 percent since 1997.
Manufacturing employment in Ohio has fallen 45 percent since 1979, the year manufacturing employment peaked nationwide. The only Midwestern state to suffer a larger decline is Illinois. The large Ohio counties of Franklin, Cuyahoga, and Hamilton have lost a combined 250,000 manufacturing jobs.
But recent trends need not be destiny. Ohio and its neighbors have a rich history of engineering excellence. For more than a century, the Midwest has spawned new models in technical education. This tradition of radical experimentation and innovation is one that policymakers should draw upon as they look to rebuild their high-tech workforces.
Ohio’s proud past of workforce development
Many of the region’s top universities can trace their lineage to the Morrill Act of 1862, which created the system of land-grant universities. Unlike the elite colleges of the day on the East Coast, these universities were focused on addressing practical industrial and agricultural challenges from the start. Congress directed each state to establish:
“…at least one college where the leading object shall be, without excluding other scientific and classical studies, and including military tactics, to teach such branches of learning as are related to agriculture and the mechanic arts, in such manner as the legislatures of the States may respectively prescribe, in order to promote the liberal and practical education of the industrial classes in the several pursuits and professions in life.”2
Today, the Midwest boasts eight of the top 50 engineering departments in America, some of which originated from the Morrill Act.
At the turn of the century, the University of Cincinnati invented the modern co-op program, directly placing students within the city’s ecosystem of German machine-tool firms. The co-op model is now a global phenomenon, with hundreds of such programs now in operation across the world.
With the rise of mass automobile manufacturing, Ohio’s neighbors to the north created new technical schools, including the General Motors Institute, to meet the industry’s insatiable demand for engineers and technicians. This school exploded in size in the 1920s, combining hands-on experience on factory floors with coursework that trained students in technical skills that allowed them to take on more advanced roles. The General Motors Institute would eventually become Kettering University, which still produces highly successful engineering graduates in the auto industry and other adjacent sectors.
As these examples make clear, the Midwest has historically excelled at building workforce training models that are well-tuned to the needs of industry, pragmatic, and applied.
Today, evidence is mounting that Ohio needs to do better in this area. The share of apprenticeship programs in the state devoted to manufacturing has fallen from 15 percent to six percent over the last 25 years. At the undergraduate level, nearly 40 percent of engineering majors who went to school in Ohio live elsewhere after 10 years. At the PhD level, fewer than one-quarter of engineers stick around. Ohio has numerous advantages, from a low cost of living to cheap energy, that might make it attractive to high-tech manufacturing. But it needs new workforce development and attraction tools.
Policy to attract, develop, and retain talent
In Silicon Heartland, I recommend three types of new workforce-related reforms.
1. The state should adopt a flexible, demand-driven workforce training grant.
The best workforce training models are likely to be sourced from the ground up, rather than from top-down mandates by state officials. This idea was originally proposed by American Compass as a federal reform, but could easily be adopted by specific states.
2. Congress can help states like Ohio retain more of their top foreign-born talent with long-overdue reforms to America’s high-skilled immigration system.
I mention two ideas — the Chipmaker’s Visa and the Heartland Visa — that would be particularly useful to Ohio as an emerging semiconductor manufacturing hub. Both of these visa programs would boost the retention of international students graduating from Ohio’s universities in technical fields.
3. Ohio should break down barriers to mobility that hinder the movement of workers from one firm or industry to another.
We have long advocated for a ban on restrictive noncompete agreements, which suppress workers' wages, innovation, and entrepreneurship. Banning such agreements at the state level would expand options for Ohio’s technical talent and boost startup formation.
To be sure, there are some major bright spots in Ohio already.
In my visit there, I learned about Lorrain County Community College’s growing set of semiconductor programs, which include progressive credentials up and down the chipmaking supply chain. In Columbus, Ohio State’s Electrical and Computer Engineering department has risen to the challenge posed by Intel’s arrival in the state, doubling in size and adding 12 new credentials in just two years.
These responsive, practical success stories are great starting points for broader reform. Embracing their spirit of flexibility, adaptability, and experimentation could go a long way towards building the workforce Ohio needs to recapture its place as a high-tech manufacturing powerhouse.
You can read the full Silicon Heartland report here.
1997 is the year when BEA’s sectoral GDP by state data begins.
National Archives, “Morrill Act (1862).”
The cost of doing business in any community is a major factor in business locations, particularly those that sell outside of the immediate area where physically located. The cost of leasing a facility or purchasing a facility is important. And, the cost of either leasing or purchasing is directly related to how a community taxes real estate. The optimum rate of taxation on buildings (which are depreciating assets that require ongoing expenditure for maintenance and periodically huge expenditures for systems replacement) is ZERO. The optimum taxation on a land parcel is its potential annual rental value (i.e., its economic rent). Economic rent is unearned to the private owner; it is determined by locational advantage and the quality of public goods and services brought to the location. If the local taxing jurisdictions (and there are usually three four: town/city, county, township and school district) combine to fully capture the location's economic rent, the selling price of the location will fall to close to zero. The combination of these two systemic changes will cause owners of land to bring the land held to its highest, best use, or sell to someone who will. The ability to profit by speculating in land rather than useful economic activity will be removed.
Edward J. Dodson, M.L.A.