At one time, Philadelphia was the world leader in manufacturing. Since World War II, that dominance has diminished to the point where today, manufacturing makes up only about five percent of the region’s economy. According to a Brookings
Institute study that ranks the 300 largest metropolitan areas by GDP per capita and job growth, the Philadelphia Metropolitan Area ranks 250th out of 300 and is one of 60 in a group that has been experiencing negative growth.
The city’s economy today is largely based on sectors such as education, health care and government, the so-called “eds, meds and feds” triumvirate. In recent years, these sectors have experienced flat or slow growth and face limited growth potential in the immediate future. Therefore, we must ask: Can revitalizing a fourth sector, manufacturing, grow the region’s economy? What would it take to stimulate the growth of manufacturing in Philadelphia?
The answer to the first question is obviously “yes.” Revitalizing the manufacturing sector would grow the economy. At five percent, this sector is still significant and offers the potential to become the economic engine that drives growth in other sectors. For example, growth in manufacturing would also grow jobs, add to real estate values, increase tax revenues to regional governments and yield many other benefits.
The answer to the second question is a bit more complex. To revitalize manufacturing requires focus, priority and commitment from a number of diverse groups. They will need to take a “long view” and weigh the potential benefits they can bring to their individual groups, to the region at large and to future generations. All groups will reap significant benefits from revitalizing manufacturing.
A key reason for making a manufacturing revitalization argument is that Philadelphia already has at hand many assets that can support the revitalization of manufacturing. These assets just need to be focused on achieving the goal of revitalization.
The Philadelphia region is located in the middle of the country’s Northeast market and is within a few hundred miles of about 50 million people, which accounts for nearly 20 percent of the U.S. population. Philadelphia is a port city with access to U.S. and world markets. The city has a highly developed rail and highway system for moving raw materials and finished goods. The close proximity of Marcellus Shale natural gas and other energy resources gives Philadelphia additional, unique features compared with other regions. The city also has a highly educated population and features the second highest number of institutions of higher education in the nation. Access to capital is also an advantage in that some of the largest financial institutions in the world are located within 100 miles of Philadelphia. In many respects, revitalization of manufacturing is the “low hanging fruit” among options available to put our region on a growth track.
With Philadelphia’s unique advantages, what needs to happen to grow manufacturing? Benchmarking those American cities that are most successful in growing their manufacturing sectors may not actually be that instructive, in that much of their growth comes from the auto industry growing in, or relocating to, those regions. Instead, we should look within our region at some of the successful or potentially successful manufacturers and/or categories that are currently performing well here. These include larger manufacturers, such as those involved in energy production, as well as some of the smaller manufacturing industries, such as craft brewing, medical device manufacturing and others. How can they become even more successful and also stimulate the growth of additional manufacturing in this area?
Ultimately, leadership must concern itself both with generating today’s results and leaving a lasting legacy of accomplishment. To achieve this, our diverse group of leaders will need to create a leadership culture, an environment in which leaders feel empowered and individually responsible for their activities, while working together for the success of a larger goal or vision.
Segments such as finance, unions, media, energy, government and others must decide to be committed to revitalizing growth in manufacturing as a top priority and then work within each of their areas to make it happen.
To accomplish this, leaders will need to redirect their outlook. Instead of competing to get a bigger share of the pie, leaders must work together to make the pie larger. These groups must create synergies that will enable the Philadelphia region to compete and win in the world.
City leaders must view revitalizing manufacturing as a legacy initiative. What kind of an economy and community will they grow for the future from their actions today? Our region has the power to own this opportunity and to nurture the growth of manufacturing to build a stronger economic base that will enhance the lives of our generations to come.
Stan Silverman is vice chairman of the board of Drexel University, a director of Ben Franklin Technology Partners of Southeastern Pennsylvania and former president and CEO of PQ Corporation.
Leo Levinson is CEO of GroupLevinson Public Relations, as well as a writer, speaker and marketing and brand strategist.
Published (and copyrighted) in Philly Biz, “Visions” Special Edition (September, 2015).
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