Appalachia: This Is What Economic Revival Looks Like

On October 2, 2015 · 0 Comments

erllThe economy of southern Ohio has been devastated for years. Coal mining jobs that once paid $40,000 a year have been replaced by minimum wage service jobs–or nothing at all. Oil and gas hit bottom. And while loggers still work the forests, the timber is shipped directly to Japan and Germany, with no secondary wood processing jobs in the region. While the rest of the state has a 4 percent unemployment rate, the 1 1 counties in the Appalachian part of Ohio average as high as 17 percent.

“If you don’t have a job at Ohio University, you’re poor,” says June Holley, president of the Appalachian Center for Economic Networks (ACEnet).

But when ACEnet sought ways to invigorate the economy, the group realized that the area had one unrecognized asset: hundreds of tiny manufacturing firms. “We did a lot of research and were inspired by northern Italy, where hundreds of thousands of very small manufacturing firms were created in 15 years,” explains Holley. The secret was targeting markets, then working in collaborative ways to meet the needs of those markets. What one firm could not produce alone, several could produce by working together. At the same time, economic development organizations, banks and training centers were all geared toward helping the small manufacturer.

“We’ve been trying to explore how that strategy could work here,” says Holley. The strategy, called flexible marketing networks,” is bringing concrete results to the impoverished region. The first market pursued was accessible furniture for people in wheelchairs, products such as motorized counters, cabinets and sinks. Five companies banded together to make each product.

“These were existing, little teeny firms,” says Holley. “They couldn’t afford the $150,000 it takes for product development, so we borrowed that for them and set up a for-profit subsidiary to coordinate these joint efforts. ”

The next target was the high-end food market. With help from the local technical college, ACEnet is completing work on a kitchen “incubator,” a space with licensed kitchen equipment that budding food entrepreneurs can share. “We’re working with start-up businesses and small farmers who want to get into value-adding their products,” says Holley. “We provide space to prototype your business, without having to make a big investment.”

One family has a line of hot pepper products that is advertised in 11 catalogues. Another worker-owned Mexican restaurant that ACEnet helped launch has a line of salsas, which it hopes to market, together with other small local businesses making Mexican food products.

“Part of our strategy is to find partners out there in the market who want to have different kinds of relationships between producers and consumers,” says Holley. “We think we’ll see a whole shift from buying massive amounts of homogeneous goods to people buying less, but higher quality, wonderfully and locally made goods that are much more satisfying.”

One of ACEnet’s major emphases is community involvement, so that everyone from welfare recipients to bank officers participates in building the local economy. “When the firms started expanding, we brought together 16 people from low-income community groups, the vocational school and the welfare department and had them design an entry-level training program for the business,” she says. “One reason why these programs can be effective is everyone’s at the table. You’re not just guessing about what keeps low-income people involved in a training program, because theyre there, saying that it’s a major problem that you don’t have emergency child care,” Holley says.

Called a joint-design process, Holley says it’s “the most revolutionary kind of activity you can do.” ACEnet has used the same process for gaining access to capital, for settling up targeted loan funds and for using telecommunications. The idea is to include as many players as possible, enlist input from each participant and unleash a spirit of experimentation and risk-taking.

ACEnet has also inspired other community groups in the region. In western Virginia and eastern Tennessee, the Clinch Powell Sustainable Development Forum has crafted a three-pronged strategy for economic renewal that includes flexible manufacturing networks, as well as micro-enterprise and incubators, similar to the commercial kitchen being established by ACEnet. The Forum was launched at a gathering that included representatives from small businesses, universities, chambers of commerce, local mayors, state legislators and grassroots environmentalists.

Like southern Ohio, the area has been hard hit as natural resources have been depleted. “People are still geared up to think a corporation is going to come and give them a job, which is ironic to me because we have this stereotype of Americans being very independent,” says Eileen McIlvane, coordinator of the Coalition for jobs and the Environment (CJE), an active participant in the development effort. “Our long-range education program is designed to make people think how they might be employed in small businesses in their communities.”

Among the new businesses are horse-drawn logging operations that protect the forest from the damage typically caused by large-wheeled vehicles. The original horse-drawn logger, Jason Rutledge, of Copper Hill, Virginia, is training others in the system, and now 20 people are employed in this way. Because of the selective cutting done, each tree brings a high price to the logger. “Some of these people are unemployed loggers who were frustrated,” says Mcllvane. “They didn’t like to log the way they were asked to in the past, but that was the only job available.”

Another new forest product enterprise is a solar kiln, used to dry the wood after it is harvested. Local construction companies are also being surveyed to see if flooring and other materials might be supplied locally. Other economic ventures being explored include nature tourism, diversified, chemical-free agriculture and commercial recycling.

CJE and other groups are now raising money to produce a video and workbook to take to small communities. “To establish these sustainable development concepts, it has to be done by the local people,” says McIlvane. “I can’t imagine a multinational corporation doing it. People need to brainstorm, develop their own criteria, see what resources they have, what their local skills are, and see what they can do to produce jobs. It can be started as individuals or as a community, but the local level is where it has to be done.”

Community groups in Toledo, Ohio are also beginning to model their efforts after ACEnet’s. At the Urban Affairs Center, an outreach unit of the University of Toledo, the staff hopes to use flexible network manufacturing to boost the city’s urban core.

While the city has retained some of its industry, a significant number of plants have been boarded up and new ones built in the suburbs. Unemployment in the surrounding neighborhoods is high, and continued business migration is anticipated. To reverse this trend, the Urban Affairs Center hopes to rekindle a sense of the importance of urban neighborhoods as a place to do business by linking industry to community development corporations.

“Obviously job creation will be one measure of our success,” says Sue Wuest, flexible manufacturing network project manager for the Center. “We’re hoping this will happen and that the new jobs will go to folks in the neighborhoods.”

Using community development corporation (CDC) neighborhood volunteers, local firms will be surveyed this summer to find out how many employees each has, how many are locally hired, and what are the problems in training and gaps in skills that the applicants may have. One idea is to create a training network that would provide specialized training for specific firms or for groups of firms in the central city. To create the flexible manufacturing networks, the Center began meeting with a group of local manufacturers who had been identified as innovators.

Some of the new market ideas are inspired by the expected changes stemming from a shift from fossil-fuels. With its proximity to Detroit, automotive supplies have always been an important part of Toledo industry. One of the networks will explore ways to tap into the alternative-fuel and lightweight vehicle markets. “Rather than devoting all this energy trying to get around or delay environmental regulations, we’re trying to come up with solutions to the problems that drive the regulations in the first place,” says Wuest.

The other area of focus is medical equipment. One firm saves outmoded equipment from the landfill by reconditioning it. Alone, the firm is too small to take part in international markets. But by working with a network of other companies, the firms together will try to sell the equipment to places like China and Eastern Europe. By translating manuals, adapting the electrical systems and other refurbishing, out-of-date dialysis or xray machines may find markets in hospitals around the globe.

“What we’re doing is a big, ambitious project and it gets bigger every day, the more we learn. But there’s something missing from these communities,” says Wuest. “We have to find a way to reweave these neighborhoods to include all the important elements. Hopefully a strategy of flexible manufacturing networks can help to do that.”


Leave a Reply

Recent Comments