For proof of how hard the ongoing recession has hit northwest Ohio, look no further than the unemployment numbers.
In the counties comprising the Toledo Metropolitan Statistical Area alone, December unemployment rates reached 12.4 percent in Ottawa County, 10.3 percent in Fulton County, 9.9 percent in Lucas County and 8.3 percent in Wood County. Just one year before, those numbers ranged from 5.4 percent in Wood County to 7.2 percent in Ottawa County, noted Dr. Michael Carroll, economics, in his presentation at the seventh annual State of the Region conference Jan. 28 in Perrysburg.
Carroll is director of BGSU’s Center for Regional Development, which hosted the event at the Hilton Garden Inn at Levis Commons.
While unemployment has been on the rise everywhere, “it doesn’t appear to be affecting the urban areas as much,” Carroll said. In addition to Ottawa and Fulton, the northwest Ohio counties with December unemployment rates over 10 percent are all predominantly rural: Huron (13.5 percent), Crawford (11.5 percent), Williams (11.2 percent), Wyandot (10.4 percent) and Henry (10.2 percent).
That may be because automotive and manufacturing facilities that were built outside urban areas are being affected more by the current recession, the BGSU economist said. “The urban core is being spared some of this because they don’t have the Honda plants, for example,” he added.
Sparked by the credit crisis, this downturn differs from its predecessors both in its simultaneous strike on manufacturing and banking, and its global perspective, Carroll said.
It also has the makings of the longest recession since the Depression of the early 1930s. The nation weathered 16-month downturns from November 1973-March 1975 and again from July 1981-November 1982. The economy has now been in decline for 14 months, so even a midsummer turnaround would put that number at roughly 20 months, he pointed out. And because northwest Ohio’s economic upswings have historically lagged about six months behind the rest of the country, the first quarter of 2010 would represent a “best case scenario” for the region’s recovery, he said.
But Carroll isn’t optimistic about that. “I don’t see any of the fundamental indicators pointing in that direction,” he explained, citing the lack of consumer confidence and credit in banks, as well as a housing market still in decline. “I don’t see anything changing.”
But he does believe the downturn could be beneficial in terms of clarifying needs. Redirection of political commitment to economic development is in order, and orchestration of a true regional development strategy may be possible, he noted. Needing to ensure their ability to compete in the global marketplace, manufacturers should explore strategic alliances with other local firms, he advised. “Firms can compete and cooperate,” according to Carroll. “Significant economic change creates an opportunity for restructuring and collaboration.”
In addition, he cautioned that local governments must prepare for an increase in public service demands—a common occurrence during tough economic times. On that front, he continued, retraining of former production workers will likely be the key issue.
Aside from that expected loss of manufacturing jobs, credit restrictions and increased government oversight are likely to be the most noticeable changes resulting from the recession, Carroll said. “Banking regulation and tighter availability of credit will be the biggest things coming out of this,” he predicted.
The other local speaker at the Jan. 28 conference was ldeveloper Larry Dillin, who said the retail sector has been strong at Levis Commons—one of his company’s projects—but is having difficulty getting financing in many places.
Also on the program were Jack Schultz, author of Boomtown USA: The 7½ Keys to Big Success in Small Towns, and Dr. Thomas Klier, an economist at the Federal Reserve Bank of Chicago and an auto industry expert.
Among Klier’s points was how interrelated the industry has become. Foreign automakers don’t want to see their American competitors fail because they all have common suppliers, he said, explaining that the failure of one of Detroit’s Big Three could snowball to a supplier, creating a problem for other carmakers as well.
The unfolding transformation of the auto industry is uncharacteristic of an institution that normally changes slowly, said Klier. He predicted that the recent proposed alliance of Fiat and Chrysler won’t be the last such proposal, since the Detroit automakers must have plans for change in order to receive bailout money from Washington.