Two cities tell tales of struggle amid manufacturing losses

Printed from:

One city was once the wealthiest per capita in the world. The other was nearly the cotton manufacturing capital of the world. But today, New Bedford and Fall River are among the many mid-sized cities in Massachusetts struggling to adapt to the evolving global economy.

Both are adjusting at a “tremendously” slow pace, according to Ben Forman, research director at the Massachusetts Institute for a New Commonwealth, a Boston-based organization also known as MassINC.

“They are not progressing fast enough on those metrics we believe to make it a place that’s attractive enough to bring in new population,” said Jim Stergios, executive director of the Pioneer Institute, a policy research group in Boston.

An estimated one-fourth of all Massachusetts residents live in just over two dozen of the state’s mid-size cities, which are sometimes referred to as Gateway Cities because of their typically large immigrant populations. While much of the state has recovered from the past recession, many mid-size cities have been left behind. As the state jobless rate has eased down to 4.2 percent last year it remained higher –nearly double in some instances – in many mid-size cities, which range from a population of 35,000 to about 200,000.

New Bedford and Fall River, in particular, offer a glimpse into the problem. Just 14 miles apart, both are subject to similar regional economic dynamics. Both also draw on similar advantages, such as water access to the Atlantic Ocean as well as the proximity of metro markets like Boston and Providence.

The perception in Massachusetts is that New Bedford may be pulling ahead, Forman said. That is fueled largely by its ability to hold onto its historically robust commercial fishing industry.

New Bedford once had a thriving whaling industry too, serving as the opening setting for Herman Melville’s classic novel “Moby Dick,” but the last whaler left port in 1925. However, the city still enjoys world-class status for it fishing industry, with landings valued at over $350 million in 2013, making it top U.S. fishing port, according to the New Bedford Economic Development Council, a private organization.

One other area where New Bedford may be breaking out is in its creative economy: the city has expanded its arts and cultural scene, earning national recognition, according to Derek Santos, a local economic development leader. In 2011, The Atlantic magazine named it the seventh most artistic city in the country, based on U.S. Census data, and that same year the National Trust for Historic Preservation recognized it was one of America’s “Dozen Distinctive Destinations.”

Yet despite these distinctions, both cities suffer from similar economic weaknesses, Forman said.

Indeed, by many measures, both seem to be muddling along. One of the most important ways to gauge a city’s health is to look at its population, Stergios said. Both cities continue to hemorrhage people. Between 1970 and 2013, Fall River lost 8.5 percent of its residents, down to 88,697. New Bedford lost 6.6 percent and stands at 95,078, according to a recent Pioneer report.

In terms of jobless rates, it’s a virtual tie, with New Bedford at 7.8 percent and Fall River at 7.4 percent last year, according to Pioneer – both nearly double the statewide rate of 4.5 percent in February.

Pioneer has identified several fundamental characteristics that make a city a desirable place to live and work: good schools, safe neighborhoods, an affordable housing market, stability in local taxes, and a growing local economy where there are jobs available.

But New Bedford and Fall River aren’t making significant strides in those areas to reverse their population declines, Stergios said. For example, both cities have between 10 and 15 violent crimes for every 1,000 residents, well above the statewide average of 5 per 1,000. The high school dropout rate for both exceeded 5 percent – against 2 percent statewide – in the 2013-14 academic year, according to Pioneer data.

Behind such statistics is the story of a decades-long erosion in manufacturing in both cities –sparked initially by a move of industries such as textiles from North to South then overseas amid international trade agreements sealed in the 1980s and 1990s, according to Ken Fiola, executive vice president of the Fall River Office of Economic Development, a private group.

As jobs left, so did middle-income residents. The gap created was filled by a poorer population compromised of immigrants and low-skilled workers, further compounding the efforts of both cities to rebuild their economies, Fiola said.

As both cities have tried to cope, there were notable swings and misses. With the construction of a $113 million marine commerce terminal, New Bedford bid to become a center for wind-turbine manufacturing, betting on the success of the Cape Wind project slated for Nantucket Sound. But Cape Wind remains mired in litigation and, after losing supply contracts with two power companies, it withdrew from its terminal agreement.

(In its 2015 annual report, the city’s economic development council remained upbeat, asserting that capitalizing on the burgeoning wind industry had “never been predicated on the advancement of a single project, as this would sell short the long-term potential for the emerging offshore wind industry.”)

Over the last five years, Fall River has twice bet on landing a casino deal with no luck. New Bedford did the same once with similar results.

In 2011, Fall River officials announced plans for a 300-acre biotechnology industrial park – with a $23 million bio-manufacturing facility run by the University of Massachusetts-Dartmouth as its anchor tenant.

Two years later, the city was still awaiting its hoped for bio-tech boom of 8,000 new jobs. As one Boston Globe report put it: “So far, Innovation Way in Fall River is not exactly the Silicon Valley of the South Coast. The new road cuts through a thick forest where visitors are more likely to encounter wildlife than commercial activity.”

While some biotech companies have moved into the area, Fall River is also happy to welcome an distribution center into the park. And it has agreed to commit 12 acres in the 300-acre park to a medical marijuana cultivator, provided it wins a state license, according to the Herald News in the city.

“The problem with trying to chase one industry,” Stergios said, is that “government’s really not very good at that.”

But rather than swing for industry homeruns, economic development leaders in both cities say they are now doing the hard work of laying the foundations for long-term economic recovery.

“The city has made tremendous strides largely because the notion of the single silver bullet project that’s going to fix everything – that’s abandoned for a more comprehensive data-driven and economic-development strategy that’s largely on singles and doubles,” said Derek Santos, executive director of the New Bedford development council.

That singles-and-doubles strategy has resulted in more than $150 million worth of historic mill redevelopment in the past seven or eight years and has even let the city retain a small foothold in the textile industry itself, according to Santos. The manufacturer of Joseph Abboud men’s suits – acquired by Men’s Wearhouse in 2013 – continues to operate and has added several hundred jobs while other niche textile startups that make high-end gear have also opened production shops in the city, Santos noted.

Likewise, rather than hedge their bets on one industry, Fiola said Fall River is pursuing a strategy of diversification. He noted that as manufacturing jobs have ebbed, the city has built out its service sector. In 1985, there were 17,453 manufacturing jobs in the city, compared with 7,398 in services. By 2014, manufacturing had dwindled to 4,206 positions while service jobs ballooned to 31,017 – which he said is a sign of the city’s efforts to diversify its economy.

And Fiola touted Amazon as a potential turning point, noting that the new distribution center, which will open this fall, will bring up to 1,000 jobs to the area – double the number previously reported. He pointed to other bright spots of economic activity and diversity as well: a retail plaza development to be anchored by a Market Basket supermarket that will deliver another 1,000 jobs by spring 2017.

Rather than make big plays, Fiola said the Fall River development office has focused on helping to finance local development. Between 1978 and 2014, the nonprofit agency has loaned $77 million to 680 businesses, spurring $297 million in private investment, data Fiola provided shows.

Still, most of that has gone to stop the bleeding, rather than spur new growth. Out of 15,282 jobs supported by that lending, a third were new jobs while two thirds were existing jobs that the loans helped retain.

By comparison, the New Bedford council loaned $7.5 million between 2010 and 2015, leveraging $68.9 million in financing to create or retain 270 jobs.

Fiola said the issue in Fall River is much bigger than a lack of economic development. He noted that there are currently 1,024 job openings in the city that have gone unfilled – a fact that flies in the face of what a high unemployment rate might suggest. Much of the problem can be traced to a mismatch between available opportunities and the city’s less-educated, less-skilled workforce, Fiola said.

In addition, he said the state’s welfare system may provide a better deal to some workers who remain idle and collect benefits rather than accept a minimum-wage job.

“I’m bringing in 2,000 jobs. OK that’s a lot of jobs, right? Now call me in 18 months and see what impact that it has on the unemployment rate,” Fiola said. “You would think, logically speaking, with such a high unemployment rate and you introduce 2,000 jobs,” he said, suggesting that people would be clamoring for the opportunities. “Unless the people don’t have the skill set, educational attainment level or they’re comfortable in receiving public benefits.”

New Bedford faces a similar dilemma.

“There are lots of new jobs that have been created in New Bedford but New Bedford’s unemployment rate is still stubbornly at the same number,” Santos said. “We need to crack that nut. We need to get our unemployment rate as close to on par with the average of the commonwealth as possible.”

“That has much more to do with workforce readiness than it does with, you know, with job creation and investment,” Santos said.

A community-wide effort – from the school system to parents to those involved in workforce development – is needed to address the problem, he said.

“Everybody has a part to play in getting that squared away and that is a really, really difficult challenge, but that’s one where we are really excited about the trend lines over the past five years and want to see that work and that progress continue,” Santos said.

Ultimately, Fall River’s Fiola lays much of the blame for lack of progress at the feet of state leaders. He said that’s evident when a long-term pattern of economic distress emerges and leads some cities to fail.

“You would think at some point in time that the state would stand up and say, ‘Oh we need to put policies in place that can help reverse this trend,’” Fiola said.

“And I think that’s another factor. The lack of that policy,” he said, “has also contributed to the decline.”

Both MassINC and Pioneer are advocating a more focused state effort to help lift struggling mid-size cities out of their economic malais. In 2014, the state launched its Transformative Development Initiative for just that purpose. But policy leaders say much more is needed.

In late March, Pioneer issued a study calling for a $20 million infrastructure fund for mid-size cities and MassINC will soon propose its own set of reforms, according to Forman.

Still such initiatives may fall far short of what’s needed. As an example, Forman points to New York state, which recently began a $1.5 billion economic revitalization program, known as the Buffalo Billion, in the western upstate region.