As oil prices continue to plummet, Ontario has the potential to reclaim its role as the driver of Canada's economic growth. Adam Radwanski travels to revitalized Rust Belt cities in the U.S., to see how they remade themselves and what we can learn
Ribs and beers are on the table. The firepit is crackling. And a TV is mounted to the back of a truck so we can watch the football game, tailgate style. Wearing a Browns jersey, Richey Piiparinen bounces around the starter home in the blue-collar neighbourhood that he, his fiancée and their baby daughter have recently moved into – making sure we all have enough to eat and drink, and bantering with a burly army veteran turned stand-up comedian he grew up with.
When he finally sits down, Cleveland’s leading urbanologist makes the passionate case for why Rust Belt cities like his – for all the economic pain they’ve suffered, people they’ve lost to more prosperous places, jokes made at their expense – are where the future is.
Snicker if you will. But as young Americans recoil from the 20th century’s suburban sprawl and are priced out of New York City and San Francisco and Washington, the Rust Belt offers an alternative within the bones of once-great cities. Past glories have bequeathed a legacy of well-respected universities, cultural entities, attractive neighbourhoods and gritty industrial spaces. Courtesy of past exoduses, the cost of living is often jaw-droppingly low. And for those who seek a sense of community, there is a chance to be leaders in (re)building. “There’s this psychogeographic pull, this humanness,” is how Mr. Piiparinen puts it. “We all have this longing to be part of something.”
There has been less longing, in recent years, to be part of our own country’s version of a rust belt – the one that comprises such Southwestern Ontario cities as Windsor, London and St. Catharines, and patches of Eastern Ontario. Young people have fled in droves as the region’s employment numbers have tanked, seeing the loss of more than a quarter of manufacturing jobs in the last decade.
The plight of the region has been a driving force behind a provincial deficit that remains at over $10-billion, as well as a net loss for Ontario in the migration of people within Canada, and an alarmingly aging population.
Even with Alberta driving the national economy, the country could ill afford Ontario’s struggles; it’s hardly healthy for the largest province’s per-capita GDP to be lower than the rest of Canada’s, and it helps explain why the federal government has remained in the red.
With oil’s current slide, Canada really can’t afford for it to remain a drag – and in fact there is some expectation that Ontario will instead reclaim its old role as the leader of Canada’s economic growth. Its premier, Kathleen Wynne, recently expressed optimism that plummeting oil prices and a sinking dollar will prove a boon to manufacturing. “I don’t wish for low oil prices and a low dollar for Alberta,” she said earlier this month. “But at the same time, we want our manufacturing sector to rebound. So if that [low oil price] helps, then that’s a good thing.”
While they could indeed help in the short term, it’s difficult to imagine those volatile factors leading to the lasting revival of traditional sectors competing with consistently low-cost jurisdictions such as Mexico, China and even the American South.
For sustainable renewal, Ontario’s old industrial towns will have to work harder at reinvention – and they should be looking to some of their counterparts in the U.S. A two-week road trip through Pennsylvania, Ohio and Michigan revealed in often surprising ways how our neighbours are much further along in reinventing their most hard-hit cities, and how much we have to learn.
“The wind is at the back of these cities in a way that it wasn’t before,” says Jennifer Vey, a fellow at the Brookings Institute who studies the revitalization of old industrial centres. And although many of them will remain smaller than in their industrial heyday, the numbers bear that sentiment out. When the Manhattan Institute ranked America’s 100 biggest U.S. metropolitan areas for their economic performance in the wake of the Great Recession, mid-size Northeastern and Midwestern cities accounted for nine of the top 20.
As Mr. Piiparinen and others are quick to stress, jobs will always be the cornerstone of any regeneration. But employers themselves can be drawn to a city by affordability and infrastructure, and like to set up shop where highly skilled people want to put down roots. The renaissance of former industrial powerhouses is fuelled by attracting and keeping well-educated, entrepreneurial citizens committed to community-building and capable of creating wealth and quality of life around them.
Of course, direct comparisons between the U.S. and Canadian experience is never exact: The places I visited tended to be larger than their Canadian counterparts; and although they may have such superior amenities as major-league sports teams and world-class museums, they also suffer from some entrenched disadvantages – notably an appalling history of race relations that has left a legacy of poverty, crime and troubled public schools.
So why is it that a younger generation is finding opportunity in these Rust Belt cities (or some of them, at least; nobody sees Flint, Mich., or Gary, Ind., as models) more than in places like London or Windsor, which have some decent bones themselves? As Ontario attempts to take back Canada’s economic reins, it would do well to learn from what’s worked, and know what it’s up against.
Tax rebates and budget cuts
“Are you a hockey fan?” I ask the mayor of Allentown, Pa., as he shows me around his baby: a gleaming new arena to host the Philadelphia Flyers’ farm team. A short and stocky transplanted Chicagoan with a thin mustache, gruff manner and reputation for elbows-out politics, Ed Pawlowski gives a wheezy laugh.
“I am now,” he answers.
Part of a $272-million sports, office and hotel complex, the arena is the centrepiece around which the eastern Pennsylvania city’s dilapidated downtown is being rapidly rebuilt – part of an astounding commitment by the state that speaks to the urgency with which governments have been pursuing urban renewal. For a 30-year period that began in 2009, Pennsylvania has designated a 52-hectare swath of Allentown’s core as a “neighbourhood improvement zone” or NIZ: Nearly all taxes collected from tenants there – in new or rehabilitated buildings – are being returned to developers for debt financing, which in turn allows them to offer cheaper rents.
Well beyond the arena complex, which was the impetus for the NIZ, the improvement zone has turned downtown into a construction zone as well – one where, Mr. Pawlowski hopes, “young professionals will want to stay and be engaged.” For reasons of affordability, Pennsylvania has rebuffed requests from other municipalities to institute the same program. But it is an example of the extent to which Rust Belt governments are using tax instruments and tools to drive dense urban development.
Most common among those is tax-increment financing, which has made TIF something close to a household acronym south of the border, even as it is just entering the lexicon to the north of it. In its simplest terms, TIF involves creating designated downtown zones, inside of which governments forfeit property-tax gains that would normally result from rising land values that follow new development; in most cases, the money is directed back into the zones’ infrastructure. To encourage developers to make use of land in cities’ cores, rather than building outward, many cities are also offering “brownfield” tax credits to offset the costs of cleaning up and converting shuttered factories.
The willingness to use tax incentives – and taxes themselves – has been only one part of a brash willingness to take financial risks in pursuing urban renewal. In few places has that been more evident than in Pittsburgh, often considered the gold standard of Rust Belt revitalization for the way it bounced back from the calamitous collapse of its steel industry in the 1980s.
When Tom Murphy was mayor in the 1990s, locals were asked to pay an additional percentage point on top of the state’s sales tax, with ensuing revenues leading to well over $1-billion in investment in the city’s core assets. Mr. Murphy also freed up more money for urban development by slashing police and other budgets. Even so, the city still plunged deeply into debt restoring its riverfronts, buying up abandoned land that the private sector wouldn’t, and rebuilding Pittsburgh’s historic Market Square. “Everyone thought he was crazy,” recalls Don Carter, a director at Carnegie Mellon University’s Remaking Cities Institute, who calls Mr. Murphy “visionary.”
Although Mr. Murphy still has his critics, in part because the debt he accrued helped force the cash-strapped city into a form of state oversight, Pittsburgh’s core is booming. Last year, The Economist ranked it as the most livable city in the continental U.S. And scarcely anybody there denies that its economic reinvention in advanced manufacturing, life-sciences and information technology – which have seen a host of start-up successes – has something to do with becoming a place young professionals want to be.
The likes of Google and Disney have even set up shop. “Even as a flat-broke city, we built really world-class stuff,” says Mr. Murphy, as we sit down for breakfast at a diner on Pittsburgh’s edgy North Shore. “People will say, ‘You can’t afford that.’ You can’t afford not to do it.”
Public cutting, private giving
Even before Mr. Murphy took the mayor’s office, Pittsburgh and other American cities experiencing a rebirth had a leg up because of a rich and enviable culture of philanthropy and corporate responsibility, the likes of which doesn’t exist in Canada.
Still, for Jim Rohr, it was painfully obvious when he came to Pittsburgh in the 1980s that the city was falling apart – and he had the paint chips in his hair to prove it. “I was in the Stanley Theater with my wife, at a concert, and the black paint on the ceiling rained on our heads,” recalls Mr. Rohr, who would go on to serve as chairman of PNC Bank, which he is credited for helping keep in the city. “It was a dump.”
Today, that old dump has been restored and is one of the busiest theatres in the United States. And where once the streets around it were lined with sex shops and rampant with crime, the Stanley is now surrounded by a bustling cultural district – part of a revitalization in which Mr. Rohr played an active role, learning in the process about his adoptive city’s civic culture.
Kevin McMahon, who heads the not-for-profit that manages the cultural district, says the city government was “preoccupied with triage” as Pittsburgh suffered 18-per-cent unemployment and lost roughly half its population after the steel mills closed. So business leaders, led by Jack Heinz of the food-processing family, stepped up to preserve and build upon core assets – from universities to riverfronts.
Other Rust Belt cities have, like Steeltown, been able to lean on foundations set up by the industrialist titans of their golden age. While Pittsburgh had the likes of Andrew Carnegie and Andrew Mellon, Cleveland can trace a good chunk of its recent development to the legacy of John D. Rockefeller. Of all the factors working for American cities relative to Canadian ones, this sort of philanthropy is perhaps the least imitable.
Perhaps more importable, though, is a willingness on the part of current American business leaders to continue investing in their communities. In Pittsburgh and other places, those leaders may still lobby for lower taxes, but they partially counterbalance their resistance to government spending with a willingness to spend heavily themselves.
In Grand Rapids, Mich., it was only later in the 20th century that a small number of business leaders and their families –almost exclusively Republicans – responded to their city becoming a ghost town by pouring hundreds of millions of dollars into it. First, that included funds for infrastructure and anchor institutions: a new arena, a convention centre and hospital expansions. More recently, it has meant funding ArtPrize, an enormous three-week arts festival that has helped turn the west Michigan town into a destination.
It is impossible to get through a conversation in Grand Rapids without hearing about philanthropy. “You don’t participate in this community if you don’t give time and treasure,” says John Kennedy, a staunch conservative who started an auto-parts company in the 1980s that is now worth over $250-million. “I’m not talking about giving back, because I don’t believe in that. I’m talking about investing in the future of the community.”
Tapping into the DIY vibe
Grand Rapids offers another important lesson for Canadian cities looking to reinvent themselves. Looking the part in an open-collared shirt, designer jeans and boat shoes, the golden boy of the city’s most powerful family helps point the way.
“When you look at the birth of the auto industry, it was a bunch of goofballs working on things that were seen as frivolous toys in cowsheds,” Rick DeVos tells me as we sit down to talk in his open-concept downtown office. “You had a bunch of lumber and mining guys tossing money at these goofballs. And eventually, out of this primordial soup emerged this unbelievable industry.”
It’s that “freewheeling entrepreneurial culture” that Mr. DeVos – the son of former Republican gubernatorial candidate Dick DeVos, and the grandson of Amway co-founder and Orlando Magic owner Richard DeVos – is trying to help recreate. Best known for using a bit of the family fortune to start ArtPrize, Mr. DeVos, who is in his early 30s, is now devoting most of his time to Start Garden – a $15-million venture-capital fund that offers an initial $5,000 to fledgling companies, and up to $500,000 if their venture takes off.
Every investment, Mr. DeVos says, is made “with the goal of building a west Michigan start-up ecosystem,” which is why there are monthly public events at which funding recipients can get updates on each other’s progress. Less than three years in, it’s difficult to measure Start Garden’s impact. But there are plenty of signs this city is reconnecting with its risk-taking roots.
Take Founders Brewing Company – where every young professional in town seems to congregate after work, and which helped kick-start a brewing boom that has the formerly sleepy town branding itself “Beer City USA.” Started in the late 1990s by a pair of college buddies who had hustle but little business savvy, Founders was on the verge of shuttering in 2001 because of mounting debt.
Then, a millionaire who grew up during the Great Depression came on board as a sort of angel investor. Other investment followed, and Founders is now poised to make 600,000 barrels of beer a year. Meanwhile, it became an anchor for a local industry that has exploded to include roughly 15 breweries.
Not all the start-ups and emerging businesses in Grand Rapids are as sexy. Some are tied to auto parts and office furniture, the traditional manufacturing around which Grand Rapids was built. Others are in communications technology or health sciences. Notwithstanding some growing financial-services companies, they tend to fit into the region’s proud history of making things.
As the Brookings Institute’s Vey notes, that tradition – and the accompanying institutional knowledge and infrastructure – can help Rust Belt cities take advantage of the current “maker’s movement,” in which a DIY culture makes the manufacturing market accessible to small enterprises. And so too, she suggests, can the fact that real estate and other key costs – and thus the stakes of investing – are lower than in bigger cities that didn’t go through the same economic struggles.
In Grand Rapids, there is a pattern of entrepreneurs getting support from established business leaders. Beyond Start Garden, for instance, there is Blue35. A partnership between the office-furniture giant Haworth and a construction company owned by the DeVos family, the eight-storey downtown office building aims to provide smaller companies with shared space and what’s billed as state-of-the art technology.
However much business leaders around the Rust Belt tend to argue that the best thing government can do is get out of the way, states have also encouraged risk in ways Canadian provinces have been more hesitant about. Among the best examples is Pennsylvania’s Ben Franklin Technology Partners. Launched in the 1980s, it has since provided many hundreds of millions of dollars in public funds to roughly 1,750 companies, largely in seed capital to start-ups. Purporting to have generated over 50,000 direct jobs and roughly 90,000 spin-offs, the program has been imitated around the United States.
The university connection
In some Rust Belt cities, though, it’s unlikely that either private or public investment would have been enough without another form of leadership, from institutions that – like their Canadian counterparts – long functioned as near-islands. A wave of postsecondary leaders recognized that if their schools became more integrated with their communities, and more ambitious, they could become vital assets in rebuilding economies.
Luis Proenza, who didn’t even know that Akron, Ohio, had a university until he was given the opportunity to be its president, is a prime example. Barely anyone in Akron knew who Mr. Proenza was, either, when he was hired away from Indiana’s Purdue University in 1999. By the time he retired last year, he was lauded as one of the most influential figures in rebuilding the former rubber capital of the United States, after the devastating shutdown of its tire factories in the 1970s and eighties.
When Mr. Proenza came on board, the University of Akron had already started to play a research role in helping the city partially replace rubber with the production of related polymers. But it was still struggling to get past its local reputation as “Hilltop High,” which reflected both the school’s isolation from the surrounding town and its perceived academic standing.
Mr. Proenza changed that in part by fundraising enough for the public university to be able to invest over $600-million to overhaul the dilapidated campus, add an engineering school, and create 14 hectares of new green space. Now, however, it’s not the physical upgrades about which he seems proudest – it’s helping to have fostered a more entrepreneurial culture.
A new foundation aimed at commercializing research, he says, was “the single most important” economic initiative to emerge under his watch. It started off with no assets other than access to the university’s intellectual property, and made the most of underappreciated resources left over from better times. Abandoned space became “incubator” space; companies donated or lent underutilized equipment; people who once worked in senior manufacturing jobs were invited to share expertise.
In a decade, Mr. Proenza now boasts, the foundation accumulated $16-million in net assets while launching 50 companies. It also started Akron Regional Change Angels, an agency that connects entrepreneurs with angel investors and mentors. Meanwhile, the university tried to gear its programs more toward areas likely to provide local employment.
Although Canadian universities have recently been making efforts to better address the needs of surrounding communities, it’s not unusual for such an entrepreneurial focus to meet the sort of ethical resistance that Mr. Proenza concedes he also ran into. “Still, some of my colleagues do not believe university ought to have anything to do with industry – that’s making a deal with the devil,” he says, sitting in the lakeside home in which he has semi-retired about 80 kilometres outside of Akron. “The very concept of universities as anchor institutions in an economy is really of recent vintage.”
Again, Pittsburgh was at the forefront of this kind of culture change. Carnegie Mellon University and the University of Pittsburgh never lacked respect, but through the steel era their connection to the city was limited. “Like [Canadian] universities, they’re there, they educate kids, they do research,” says Tom Murphy, the city’s former mayor. “But they weren’t an important player in the economy of the region.”
Yet, in the 1980s, those institutions started working with the business community and each other to lead Pittsburgh’s economic diversification. First, they identified a few high-tech sectors where research could be married with Pittsburgh’s industrial heritage, such as the robotics field – which has since become one of the city’s big success stories. Then they helped build infrastructure and the technology-transfer capacity to make it happen. Now, Mr. Murphy estimates, roughly half of Pittsburgh’s jobs are connected to the two universities.
While some schools lack the resources to be so ambitious about creating jobs, simply helping to arrest the outflow of talented young people is just as important. When I met him in Cleveland, Richey Piiparinen had just released a study, which had appeared on the front page of the local newspaper, showing that a growing (and now unusually large) portion of younger members of the city’s workforce hold advanced postsecondary degrees. It was an extremely encouraging sign for the future, he suggested; it was also an indication that people with other options were choosing to live in Cleveland.
Much of that choice has to do with the combined impact of Case Western Reserve University and the mammoth Cleveland Clinic, both of which have embraced roles as community-builders. Cleveland is among many cities that have pinned its economic hopes largely on “eds and meds,” and its booming University Circle area – which in recent years has sprouted new housing, hotel and retail developments alongside hospital expansions and upgrades to existing museums – suggests that the bet is paying off.
‘Americans crave realness’
Not all the factors in getting people to settle and do business in places they would once have fled are quite so tangible. Beyond academic initiatives, densification policies, philanthropy, and venture capital, the Rust Belt’s rebirth also involves something more emotional. A big part of this story still comes down to identity, and to restoring pride to places in which it was long ago lost.
On the corner of Euclid Avenue and East 4th Street, in the heart of an emerging entertainment district, Cleveland Clothing Co. is making a virtue of past misfortune. On the list of things that helped turn Cleveland into a punchline, the time its river caught fire ranks pretty high. So alongside hoodies celebrating heartbreaks inflicted by local sports teams, the store these days sells “Burning River Surf Club” T-shirts, with an image of a skeleton riding a fiery wave.
Forty-five minutes down the highway, Akron’s Rubber City Clothing is helping create local iconography, minus the self-mockery. “No negativity,” store manager Angela Roloff says emphatically as she points to apparel that celebrates Akron’s neighbourhoods, its history, and the return of basketball superstar and prodigal son LeBron James. But her goal is the same: to get people to stop apologizing for their hometowns and to celebrate them, instead.
As head of Positively Cleveland, the area’s convention and tourism bureau, David Gilbert says that a key factor in attracting visitors to his city is what locals say about it to family, friends and strangers online. He also knows, from a study his organization commissioned, that Cleveland long fared horribly on that front. Attracting tourists, Mr. Gilbert says, means “changing perception from the inside out, not just the outside in.”
Indications of emerging civic pride were everywhere during my visit. The city had just hosted the Gay Games, an international sports and culture festival; and locals were still boasting that participants who usually go to more glamorous locations had offered no end of positive reviews. For a city that has also landed the 2016 Republican National Convention, the Gay Games afforded a clear example of how major events can offer a citywide confidence boost.
There are also more granular efforts to change attitudes among the younger generation. Teaching Cleveland, started by a high-school teacher, works to get local history into classrooms. Another organization, iCleveland, offers “experiential civic education” to college students, through internships and interaction with community leaders. The non-profit that runs the University Circle area is making what its president calls an “intentional effort to get kids to understand their city before they leave their city,” in part through a program that funds summer work for high-school students at local institutions.
It helps that there are more things in which to take pride than there used to be. The river that caught fire has been cleaned up; old theatres have been restored; the seedy Flats neighbourhood has been replaced as the top nightlife hub by Ohio City, a trendy area that has developed largely around the enormously successful Great Lakes microbrewery.
At the same time, much of what’s starting to work for this part of the U.S. is its embrace of the character-building aspects of hardscrabble pasts – something Mr. Gilbert suggests could translate well to a city such as Windsor. It’s an attitude perhaps best embodied by the iconic blast furnaces in Bethlehem, Pa., which sits just down the road from Allentown. There was talk of knocking those furnaces down after Bethlehem Steel closed in the nineties. Instead, they became the backdrop for the town’s new arts centre and outdoor concert space; they’re lit up at night, and a walkway is being built along them.
In The Hard Way on Purpose, his book about Akron and his experience coming of age there in the eighties and nineties, author David Giffels describes having the run of an abandoned town. In the shuttered factories and vacant storefronts, others saw only failure; he and some of his friends saw a legacy to claim as their own.
“Americans crave realness,” Mr. Giffels told me, over grilled-cheese sandwiches and craft beers at a bustling downtown Akron diner, and difficult decades had given cities like his a frozen-in-time quality that satisfies that craving.
To Mr. Piiparinen, it’s all about capitalizing on an existing identity rather than trying to create a new one.
“You don’t want to fetishize grit,” he says, as we celebrate Rust Belt character with a bit of good old tailgating in his backyard. “But you’ve gotta invest in who you are.”
Adam Radwanski is a columnist and reporter for The Globe and Mail, and covered Ontario politics from 2009-14.
In May, 2014, Mr. Radwanski travelled through southwest Ontario to report on the industrial heartland's battle to reinvent the vital region. Click on the image to be taken to After the Gold Rush.