While you were rubbing shoulders with the bipartisan global elite in Davos Switzerland last month, Bishop Rock was on the road hosting the first annual Heartland Davos – a road trip through the states that recently flipped from Obama to Trump. We met with local executives and economic development groups to take a measure of the people who know what it takes to grow the local economy and make America great again. With ports of call in Huntington (WV), Pittsburgh (PA), Frankfort (KY), Columbus (OH), Marysville (OH), Portage (IN) and Oshkosh (WI), here are the three lessons we learned:
#1 Red Hats: The Trump fanboy is easier to find on the Internet than out in the wild. Trump won the election, but it was hard to find Trump supporters from the coal hills of West Virginia to the factory towns of Indiana. Most people we met in offices, bars or Airbnb were confused as to who in their company or town had voted for Trump. The policies proposed on the campaign trail did not resonate strongly because the West Virginia coal miner seems well aware that coal is in structural decline due to market forces that prefer cheaper natural gas rather than over-regulation. The Ohio line-worker knows that no amount of bluster will make unionized production capacity competitive again. And across the region, sentiment was positive because unemployment rates are near lows and the economy is tight. We were stunned. We kept hearing the same arguments for why the Trump Presidency and economic policy make no sense in the heartland as we do every day at our local, artisanally-handcrafted coffee shop in Brooklyn. This is bullish for Trump. It lowers the bar for a Trump re-election as any positive impact that he can have for the swing states is not in the numbers of local consensus.
#2 Workforce: To our surprise, the most cited bottleneck for investment and job growth was workforce development. Tearing down the yolk of regulation is not on the map for making the Midwest great again. Helping businesses find workers that can pass a drug test and have relevant skills is the foremost barrier for economic development. For example, Oshkosh, WI has a population of 60,000 and a 3.3% unemployment rate. That’s a great story for Oshkosh, but it isn’t the kind of place that is set up to add a few hundred jobs quickly. Building an industrial scale project in towns with less than 100,000 people is just not possible.
Further compounding the challenge of workforce development are regional demographics. The workforce in the Midwest has aged and in the case of WV, OH, and WI, it is not growing. For a company looking to invest in a factory with a 30-year useful life, the numbers don’t pencil out demographically. This means that immigration is a critical lever for attracting greater investment in the productive capacity of the Midwest. Demographics are inevitable and they clash with Trump’s immigration policies.
We aren’t experts in workforce development or education, but we did come across programs that were looking to address the workforce issues. In Union County, OH for instance, where there is a large Honda plant, the town of Marysville has a STEM High School that is focused on manufacturing-related STEM. Other regions had their own incentive programs that have collaborated with community colleges and other educational institutions. What is clear to us is that if there is an influx of Trump-driven investment, it will occur in a few “hubs” that have existing infrastructure to stimulate workforce development. Columbus, Ohio stood out for us in this regard.
#3 Real Estate: There is very little A or A- industrial real estate in he places we visited. Most companies that are looking to invest in a project have a strong preference for new facilities that have higher ceilings, more bay doors, and are more energy efficient. If the administration is successful and manufacturing is built out in the US, there is going to be a big need for new industrial real estate development, particularly in the workforce development hubs.