Saturday, January 27th, 2007

Indiana’s Small Cities Suffering

The city of Muncie, Indiana lost 700 jobs last year, the latest in string of years featuring job losses. This is just one of the many stories that taken together show how it is Indiana’s small cities that are really hurting. Many of these were dependent on auto-related manufacturing and were “company town” type of places. Lacking the more diverse job base of larger areas, they’ve born the brunt of offshoring. This is tellingly illustrated by looking at the population figures in the various types of regions in Indiana since the 2000 Census.

Area 2005 Population 2000 Population Change % Change
Indianapolis 1,588,480 1,474,128 114,352 8%
Other Large Metro Suburban 878,899 857,087 21,812 3%
Medium Metro 1,192,849 1,152,032 41,547 4%
Small Urban 922,914 928,932 (5,478) (1%)
Rural 1,688,831 1,669,576 19,255 1%

Other Large Metro Suburban are the Indiana counties outside Chicago, Cincinnati, and Louisville.
Medium Metro is Fort Wayne, South Bend/Elkhart, and Evansville
See below for Small Metros and full county details

Indianapolis is clearly the growth leader in the state. Interestingly, the medium sized metros, which had previously done some of their own wandering in the wilderness, seem to be coming on strong, even outpacing the suburban counties of larger out of state based metro areas. It’s the small cities that are witnessing outright population declines. A look at the specific counties I categorized shows this.

County (City) 2005 Population 2000 Population Change % Change
Tippecancoe (Lafayette) 153,875 148,955 4,920 3%
Bartholomew (Columbus) 73,540 71,435 2,105 3%
Monroe (Bloomington) 121,047 120,563 844 1%
Howard (Kokomo) 84,977 84,964 13 0%
Wayne (Richmond) 69,162 71,070 (1,905) (3%)
Delaware (Muncie) 116,362 118,769 (2,407) (2%)
Grant (Marion) 70,577 73,407 (2,846) (4%)
Madison (Anderson) 130,412 133,358 (2,946) (2%)
Vigo (Terre Haute) 102,593 105,848 (3,256) (3%)

In descending absolute population change order.

I find this chart very illuminating. Tippecanoe County and Monroe County seem to be hanging in there. These are both home to Big Ten universities, Purdue and Indiana respectively. Bartholomew County is the headquarters of the large diesel engine company Cummins. For those that don’t have Big Ten schools or a Fortune 1000 headquarters, the tale is much bleaker. The bottom five counties were the five largest absolute population loss counties in the state and all have seen major plant closures recently. Most notably Marion lost a staggering 8,000 jobs when Thomson Consumer Electronics moved a TV picture tube plant to Mexico.

Howard County is an interesting case. It has been relatively unscathed as the auto parts plants there have remained in business at more or less full strength, leading to some of the highest average wages in Indiana. Even so, the population has only managed to stagnate, potentially indicating either that the rest of the town’s economy is weak, or that people are not finding it an attractive place to live for other reasons. Kokomo is within easy commuting distance of the northern Indianapolis suburbs, so perhaps some people are choosing to live there instead. Nevertheless, Kokomo is very vulnerable. News reports suggest Daimler Chrysler may be selling off its transmission plant to a company that would relocate the line to China.

In Muncie they are taking solace in the fact that the job losses appear to be bottoming out. In Anderson, the last auto-related plant just closed. Conceivably these towns may start recovering simply because there are no more jobs to lose. Aggressive leaders like Kevin Smith in Anderson are being new ideas and fresh energy to some towns.

I don’t think, however, that simply holding on and trying to ride out the plant closing wave is a good long term strategy. These towns need to do something to change things. There is probably a combination of things that can be done. The leadership to change has to originate locally, as it has in Anderson. But outside assistance from the state is clearly warranted. Major Moves road improvements will help. And I believe the state should also target its economic development efforts and incentive programs to these places. And the local population base needs to do its part. Having a reputation as an anti-company, organized labor stronghold hurts them. The local workers, who are often very skilled and experienced, need to find a way to change that dynamic to compete against towns in the South.

One idea for pursuing growth is to better integrate these cities into the relatively thriving Central Indiana economy. Now no one is going to mistake Indianapolis for Phoenix or Atlanta in terms of growth, but it is the top performer in Indiana. It also has a fairly good reputation as a place to do business. All of these small cities are conveniently located within an hour or less drive of Indianapolis. It seems to intuitively make sense that these cities would benefit from being more tightly associated with and linked to Indianapolis.

What’s more, Indianapolis could also benefit. Indy may be by far Indiana’s largest city, but it is a small city by big city standards. It is certainly a size category smaller even than places like St. Louis and Cleveland. As the city strives to achieve and maintain the population and economic heft to play in the game with other big cities, it would certainly be beneficial to be associated with a more expansive geographic area. Indianapolis is the 25th largest TV market in the nation for this very reason. So this has the position to be a win-win.

How to do it is the trick. With Indiana’s life sciences initiative and other programs, Indy is already becoming more linked with Bloomington and Lafayette as a sort of proto-research triangle. But those are the areas that need the least help. For others it is going to involve a lot of discussion, hard thinking, and trust building to start. Probably followed by a far more expansive regional view of economic development. Certain economic development organizations already cover a broader swath of territory. A more regional focus certainly would not be a substitute or replacement for local development efforts but could certainly help them.

A more expansive regional economic development approach isn’t the only thing that is needed. Broader cultural exchanges are good as well. I know some of this is already done, such as helping foreign nationals network with others from the same country to help build a desirable location for foreign investment. The Colts and Pacers can help build regional identity. The cultural institutions of Bloomington, the archicture of Columbus, etc. can be bigger regional draws. Area schools and universities could better collaborate. The state can build better highway connections linking these places. (In fact, many such projects are already on the books). In short, there are many, many ways to draw these small cities into a closer regional web.

A key challenge will of course be suspicion and lack of trust. Smaller cities are unlikely to want to be treated as satellites of Indianapolis. As the Indiana Commerce Corridor debate shows, Indianapolis can perceive that it is being treated as the golden goose from whom the state wants to redistribute prosperity. As I said, dialogue and trust building is likely to be first step here.

I think it is Indianapolis that is going to have to take the first concrete steps to make this happen. Perhaps Mayor Peterson could spend time helping to lure businesses to Muncie or other area cities whenever he can. When you are the big dog, everyone else is going to be afraid to make the first move. They want to see your intentions first. The example I like to give is the leadership shown by Mayor Goldsmith to build the 96th St. bridge over the White River. By virtue of Indiana’s laws, that road, despite running along the border, was Hamilton County’s responsibility. But the Mayor agreed to pay half on the bridge anyway. Then, when it was time to expand South County Line Rd., the mayor had the moral authority to ask Greenwood and Johnson County to help pay, even though it was Indy’s responsibility. If he hadn’t shown his willingness to move first on 96th St, they would have no doubt refused or at least believed they were being coerced. Similar leadership will need to be shown here.

The best upcoming test case is probably Anderson. Madison County is the next undeveloped frontier along the I-69 corridor, Indiana’s hottest suburban development zone. Fishers is already starting to build out to the border. If you get off I-69 at SR 13, you’ll see the subdivisions sprouting in cornfields in Madison County already. At one point, Madison County was even technically part of the Indianapolis MSA. With this proximity, the natural growth along the I-69 corridor, and the fact that there are no more plants to lose, Anderson and Madison County are in a prime position to take advantage of this trend. If the regional strategy doesn’t work in the case of Anderson, it probably won’t work elsewhere either. I would strongly suggest that Mayor Smith and the other leaders of Madison County attempt to figure out how to align themselves better with Indianapolis to capitalize on that region’s growth. Keep an eye on the population figures over the next decade to see how things turn out.

Notes:

I use the county definitions below. These do not align with MSA definitions. I altered the boundaries because a lot of principally rural counties are included in MSA’s strictly because of commuting flows. Brown County being part of the Indianapolis MSA is a good example.

Indianapolis: Marion, Boone, Hamilton, Hancock, Shelby, Johnson, Morgan, Hendricks

Other Suburban: Lake, Porter, LaPorte, Clark, Floyd, Harrison, Dearborn, Switzerland, Ohio

Medium Metro: St. Joseph, Elkhart, Allen, Vanderburgh, Warrick

Small Urban areas as above. All other counties classified as rural.

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Topics: Demographic Analysis, Economic Development, Regionalism
Cities: Indianapolis

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