RUST BELT

The term "Rust Belt" refers to an economic region in the northeast United States, roughly covering the states of Michigan, Wisconsin, Indiana, Illinois, Ohio, and Pennsylvania, a region known as the manufacturing heartland of the nation. Many of the factories and steel mills that produced the "American economic miracle" during and after World War II (1939–1945) were padlocking their gates by the 1970s. This was more than a downward phase in the business cycle. It was a structural crisis brought about by the aging of a generation of factories, the relative decline of the manufacturing sector, and increased global competition. The crisis brought unemployment to workers, and increased police and welfare costs to cities at the same time that it signaled a decline in tax revenues. When the factories shut down, the cities lost corporate and property tax revenues as workers followed jobs to the suburbs or to other parts of the country.

The term "Rust Belt" thus refers to a social crisis mostly affecting the cities. During the 1970s and 1980s, rust belt cities experienced deepening unemployment, out-migration of population, loss of electoral votes, and an overall decline in industry and the economy. Smaller industrial plants relocated to Mexico or to low-wage American Sun Belt states. Big steel companies dating from the nineteenth century, like Bethlehem Steel and U.S. Steel Co., became industrial dinosaurs in the mid-twentieth century, made obsolete by technological advances and competition from Japan and Germany (whose plants mostly dated from the post-World War II period).

One typical Rust Belt story is the Dodge Main plant in Hamtramck, Michigan, an older industrial suburb of Detroit. Built in 1910, Dodge Main for decades was the "flag ship" factory of Chrysler Motors Corporation. Because land was at a premium when the plant was built, it was six stories tall—a problem for assembly line production as the partially assembled units had to go from floor to floor. By the 1960s, as single story factories were being built in the suburbs or rural areas, the Dodge Main plant was obsolete. The plant was also the site of racial and union militancy, as African American workers formed the "Dodge Revolutionary Union Movement" (DRUM) to counter racial discrimination in the workplace and in the union.

By the early 1970s scores of factories that had once made up the Detroit skyline during the automotive boom were either razed or slated for destruction. The Chrysler Corporation in 1979 had to be bailed out of bankruptcy by the federal government and by concessions from its employees. The company revived, but Dodge Main went under the wrecker's ball in 1981.

By the mid-1980s, the Rust Belt began to recharge. Steel mills and factories retooled, making the transition from outdated, inefficient, and often unsafe facilities to innovative and progressive ones. This transformation was accompanied by downsizing and deregulation, which contributed to job insecurity for workers. Nevertheless, with these changes the name "Rust Belt" began to drop from common usage. By 1996, the double-digit unemployment rates of the 1970s had fallen to 4.4 percent. Some former Rust Belt states like Michigan began to experience lower average unemployment than the rest of the country. Part of this was due to low energy prices that favored energy-intensive manufacturing.

Several cities of the Rust Belt, such as Pittsburgh, Detroit, and Cleveland, have attempted to diversify their economies to escape the heavy dependence on manufacturing and have successfully made a transition to the "service and information economy." The region must still avoid complacency and guard against a shortage in skilled labor. The Federal Reserve Bank of Chicago reported in 1997 that improved access to education and skills was required for continued growth in the region. Educational reforms and an increase in the market base of their products are only part of the measures planned by the former rust belt states to maintain a competitive edge. The economic fortunes of the Midwest—as is clear from the experience in the automobile and steel industries—is tied to a competitive global market. The rusting experience of the 1970s provided the region with the opportunity to retool for world competition.

See also: Chrysler Motors Corporation, Sun Belt