Elmira, New York, Danville, Illinois wrestles with the American boom

It's not exactly a story of two cities.

More like a saga of two latecomers.

Nearly 10 years after the end of the Great Recession, only two metropolitan areas – the former manufacturing strongholds of Elmira (New York) and Danville (Illinois) – are mired in an economic downturn, according to Moody's Analytics recession analyzer . This is the smallest number of people in recession since the late 1990s, according to Moody data.

This is good news: it means that the US economy is so strong that it has lifted even the handful of the 400 struggling metropolitan areas. In 2018, the economy grew healthy 3% and generated an average of 223,000 jobs per month.

"The rising tide lifts all boats, even places that have experienced difficulties," says Adam Kamins, an economist at Moody.

The bad news: Despite the economic boom, Elmira and Danville remain outside the party that monitors them, stuck in a kind of economic purgatory.

"They keep going back," says Kamins. "When the next recession comes, these places will not be spared. The current recession will only deepen. "

"This is not the greatest distinction for which one is known," said Kamala Keeley, CEO of the Chemung County Chamber of Commerce in Elmira, about the mark of the recession. But it is also a distinction that does not define us as a community. "

Other metropolitan areas on the Moody's recession list have emerged from the slump in recent months, at least to some extent. The city of Michigan, Pennsylvania, is enjoying a mini-stimulus for steel manufacturers, due in part to the Trump administration's tariffs on steel imports. Erie, Pennsylvania, owns a General Electric plant. Cities like Shreveport, Louisiana, and Farmington, New Mexico, benefited from rising energy prices for most of last year.

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The struggles of Elmira and Danville illustrate the plight of the endangered factory cities in rural areas that are losing population and can not rely on other economic pillars to cushion the shock.

Not that the two metropolitan areas have been trapped in the abyss since the beginning of the Great Recession at the end of 2007. They have rather fallen into recession several times over the last decade. Recessions in Both Regions Moderated According to Moody's, employment statistics, industrial production and real estate prices should be finalized to determine recessions in metropolitan areas.

Yet both cities have struggled for decades, even though they have not been officially labeled a recession.

The wage bill offers the most revealing barometer. Over the past eight years, while the United States has created 20 million jobs, Elmira's employment has decreased from 3,000 to 36,200. Danville has dropped from 600 to 28,300, according to the data. from the Department of Labor. Elmira's production of goods and services, or subway gross proceeds, declined each year from 2012 to 2017 and Danville's economic output dropped in 2016 and 2017, according to Moody's. Figures for 2018 will only be available later this year.

Elmira was a booming city

Decades ago, Elmira was a vibrant hub in a network of canals and railroads that carried goods from west to east of New York. But these transport systems are no longer vital. And in 1972, Hurricane Agnes flooded the area, sweeping part of the bustling city center of Elmira. Municipal leaders made the fatal decision not to rebuild and officials in the region still see the moment as the beginning of the downward spiral of the region.

"They did not know how to handle it," says Keeley.

The long-term strengths – factory automation in the United States and offshoring of jobs in the manufacturing sector – have had an even greater impact in the state and country.

Nationally, the manufacturing sector has returned, adding 1.4 million jobs since 2010 to a global economy that has improved until recently and the rebound of the oil industry. But this recovery is concentrated in the automotive, transportation equipment, metals and machinery sectors, as well as in a corridor that extends from Michigan to Alabama, according to the Federal Reserve Bank of New York.

The state of New York has been largely left out.

The Elmira region was also affected by the closure of the Sikorsky Aircraft plant in 2012. In addition, natural gas prices have fallen sharply in recent years, which has hampered the slowdown in companies serving the United States. Marcellus Shale's neighboring basin, such as the Schlumberger drilling company.

Greater metropolitan areas of New York State have also suffered from industrial woes – such as Buffalo, Rochester and Syracuse – but all boast of the universities that create jobs and industrial startups, says economist Jaison Abel. at the New York Fed. Elmira has Elmira College, a small liberal arts school.

Manufacturing still accounts for 14% of Elmira's jobs, compared with 8.5% for the country. Hilliard, manufacturer of equipment for all-terrain vehicles; Hardinge, which manufactures factory equipment; and CAF USA, a wagon producer. But it lacks a dominant manufacturer that can attract other suppliers, customers and workers, and contribute to the creation of a vibrant ecosystem, such as Albany's Nanotechnology Cluster.

"We do not have that gorilla in the room," says Keeley.

Many young adults have fled, leaving a base of largely older residents. Since 2012, the region's population has dropped by 85%, according to figures from Moody's and the Census Bureau. Without a large customer base, sectors such as professional services and health care have not taken over from closed factories to generate employment growth, as they have done at the national level.

Manufacturers, on the other hand, have trouble finding skilled workers. The unemployment rate is 4%, which is the national rate, but this is largely because the region's labor force – which includes those who work and look for work – has steadily declined.

Adam Bunce, 35, grew up in the nearby town of Canisteo. He left Morristown, New Jersey to settle in Elmira eight years ago. He took classes at a community college and was planning to become a teacher. But he gave up after seeing his friends become bartenders because they could not find full-time jobs in their field despite their university degrees.

"They are people with a master's or bachelor's degree," he says.

Instead, he succeeded and then bought a restaurant, Turtle Leaf Café, moving the restaurant to the theme of healthy food downtown. Bunce says sales have been steady, although profits have risen slightly each year.

Armed with a $ 10 million public subsidy, the town, nestled near Finger Lakes in a wine-growing region, has begun to refresh its downtown core. There are fewer vacant and closed buildings than many years ago. And the city has recently reopened an arena that hosts a hockey team and motocross and wrestling events.

Elmira is on the cusp of receiving hundreds of millions of dollars worth of grants to the region that could create industrial parks and attract manufacturers, Keeley said. A $ 20 million osteopathic medicine school will open in Elmira this fall. Wayfair, the online
furniture retailer, recently opened a call center that should employ about 500 workers.

"I think we're at a critical point," says Keeley.

Danville fights as a border town

Like Elmira, the 77,000-inhabitant Danville area was a thriving factory center disrupted by globalization and technology. Manufacturers such as lift truck manufacturer Hyster, candy maker Chuckles and windbreaker jackets manufacturer have disappeared. Yet manufacturing still accounts for 17% of all jobs, led by companies such as Quaker Food, Danville Metal Stamping and ThyssenKrupp, manufacturer of crankshafts for vehicles.

The unemployment rate was 6.4% in December, among the highest in the country. Like Elmira, Danville has neither a university nor a big factory, like Caterpillar's in Decatur, Kamins said.

"If you (a company) are looking to hire people in a fast-growing region, you're likely to leap to a place like Danville," says economist Thomas Walstrum of the US Federal Reserve.

Like the rest of Illinois, Danville is burdened with high taxes. It's worse, though, as it straddles the border with Indiana, which has lower tax rates, according to the Illinois Policy Institute.

"It's much easier (for residents and businesses) to move and cross the border" in Indiana cities such as Terre Haute and Lafayette, accelerating the decline of Danville's population, says Orphe Divounguy, Chief Economist at the Institute of Policy.

Vicki Haugen, CEO of Vermilion Advantage, Danville's Chamber and Economic Development Division, challenges data showing stagnation in employment and economic growth. She cited her group's recent survey of 32 employers in the region, which found that 31% of jobs were created and 66% maintained.

Judd Peck, CEO of Danville Metal Stamping, a manufacturer of jet engine parts, added that about 35 employees had been hired over the past two years, pointing out that revenues had risen by about 20% in 2018. Peck's biggest problem: he can not find skilled workers for him. two local factories employing 480 people.

Since the closure of many mills in the area, he said, "There is less opportunity for … people to get that kind of experience." As a result, it takes about three months to get a job in Peck. vacant, as opposed to one or two months ago. . The company usually hires inexperienced workers and then trains them for six months. This somewhat limits revenue growth.

To avoid high taxes in Illinois, Peck said he planned to cross the border to Indiana. But, he adds, "Danville has been really good to us and we are happy to be part of this community."

Haugen says the region is diversifying by adding warehousing and distribution services.

But for cities like Elmira and Danville, in a cycle of loss of population and business, it can be very, very difficult to be overthrown (a turnaround), "says Kamins

Bunce, the owner of Elmira restaurant, rejects the morose speech. "I do not want my grandchildren to still hear about the flood (of 1972)," he says. "It's about finding a way to do something."

Contributor: Jeff Murray of the Elmira Star Gazette

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