Deindustrialization

In the 1970s, a new word, deindustrialization, was invented to refer to the rapid restructuring of national, regional, and urban economies. Technological advances in production processes, such as the use of robots for assembly, made it possible to produce goods with far fewer workers than in the past. In the 1970s and 1980s, although the volume of production increased, the number of manufacturing jobs fell in many places. Deindustrialization also occurred because factories left urban regions. The exodus of firms occurred more rapidly in the United States than elsewhere because companies reaped tax advantages for doing so. Firms began to move from older metropolitan areas to such places as the Caribbean, Latin America, and Asia, where wages were much lower and environmental regulations were lax. This process was somewhat slower in some countries because of regulations imposed by national governments. In Germany, for example, companies were required to give workers advance notice if they planned to leave, and they were required to meet other regulations as well.

Having absorbed one blow after another, and now facing this final disaster, workers in older urban regions wondered if they would weather the storm. The Pittsburgh, Pennsylvania, region experienced a 44 percent loss in manufacturing jobs from 1979 to 1988, three quarters of them related to steel. Unemployment levels reached as high as 20 percent. In Glasgow, Scotland, shipbuilding and metal manufacturing experienced dramatic decline in employment from the mid-1960s through the 1980s, resulting in unemployment levels as high as 22 percent. The miles of docklands that had once been teeming with shipyard workers stood empty. Hamburg, Germany, lost 46 percent of its manufacturing jobs from 1970 to 1987. This experience was duplicated in older port and industrial cities throughout the United States and Europe.

But there were glimmers of hope. The number of service jobs began to rise, though regions and cities differed in the speed with which this process unfolded. Over the past decades this historic development has utterly transformed national, regional, and urban economies. In seven northeastern and midwestern metropolitan areas in the United States, the percentage of jobs in manufacturing fell from 32 to 12 percent in the 40 years from 1960 to 2000. The largest gains came in services, which grew from 15 percent of local employment to [Page 211]36 percent over the same period. These changes closely paralleled the U.S. national profile.

In European countries, the human impact of deindustrialization was moderated somewhat by large public-sector employment and by housing and income support programs. Nevertheless, the dislocations stemming from high unemployment rates were extreme in older manufacturing and port cities throughout the advanced nations. In Europe, national governments and cities undertook aggressive programs to restructure local economies. Liverpool, for example, received massive amounts of aid from the U.K. government to renovate the abandoned Albert docks into a mixed development containing housing, a museum, shops, and bars and restaurants. By contrast, under the leadership of President Ronald Reagan, the U.S. federal government advised people to move to more prosperous regions. Urban leaders responded by launching efforts to regenerate their own economies, a process that continues to the present day.

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