Tube City Almanac

August 10, 2010

A Nation of McKeesports


When you travel around the Northeast, you learn quickly that McKeesport is hardly some exceptional case. There are McKeesports all over the place --- small cities whose industrial bases have vanished, with nothing to replace them.

We just returned from a few days at the Lake Erie shore in northwestern Ohio. In Sandusky, best known as the home of the Cedar Point amusement park, manufacturers small and large once cranked out plastic panels, bearings, seats and other components for Detroit's "Big 3," as well as replacement aftermarket auto parts.

As you might expect, the recent bankruptcies of Chrysler and General Motors hit those plants hard. If that wasn't bad enough, they're also being squeezed out of the market by low-cost, low-wage Chinese plants. The remaining factories in Sandusky are hanging on by their fingernails, according to the Sandusky Register.

Even if they survive, those plants are relatively small, employing between 300 and 700 workers. I thought tourism would have filled the gap in Sandusky --- besides Cedar Point, there are biking and hiking trails along the waterfront, and lakeshore property invariably brings development, right?

. . .

Not really. On the roads leading to Cedar Point, there's a lot of retail business, but the Sandusky waterfront also has a lot of empty, decaying old buildings.

In short, Sandusky pretty much looks like McKeesport --- some really nice neighborhoods and some really, really rough ones, with a lot of vacant or underused commercial property. More than 15 percent of Sandusky residents are below the poverty line.

Sandusky is located in Erie County, whose biggest employers these days include Cedar Point, the Kalahari waterpark resort, and several non-profits and government agencies.

In nearby Port Clinton, where ferryboats take vacationers out to explore Lake Erie's islands at $18 per person (one way!), the business district has some wonderful stores and restaurants, but it also looks a little run-down and tired.

There are plenty of vacant storefronts there, too. People who aren't working don't buy many souvenirs and don't take many $18 ferry rides.

. . .

None of this is meant to beat up on Port Clinton (where we had a really wonderful time), Sandusky or any other city.

It is meant to question some of the negativity constantly leveled against McKeesport, Duquesne and other cities, much of it by former residents. The letters-to-the-editor in the Daily News and some of the comments on the otherwise-wonderful "McKeesport Memories" Facebook page can sometimes be as depressing as a month of rain and as bitter as a vinegar bath.

True, some of the problems in McKeesport and Duquesne (and Pittsburgh and Altoona) were undoubtedly failures of those cities' leadership. But it's hard to see what would have produced a different outcome, and Luke Ravenstahl isn't responsible for Sandusky's 15 percent poverty rate any more than Jim Brewster is for vacant stores in Port Clinton's business district.

When the jobs aren't there, people aren't there, the tax revenues aren't there, and stores aren't there, and all the finger-pointing and nasty Internet comments in the world won't change that.

. . .

This is all meant to make a fairly depressing, but obvious point --- the biggest thing hurting America's cities isn't the Community Reinvestment Act, or ACORN, or teachers' unions, or Nancy Pelosi and Barney Frank, or estate taxes, or gay marriage or gun control or whatever whipping-boy the far-right-wing is flogging today on Fox News and Jim Quinn's radio show.

The biggest thing hurting America's cities --- including McKeesport --- is a lack of good-paying jobs.

During the Reagan years, we were told that unionized workers were lazy and needed to become more productive. Well, in Seymour, Ind., which is about the same size as McKeesport, there's an ironing board factory. It's the last one in the United States.

According to a recent story in the Washington Post, the plant has squeezed wages as far down as they can go and has speeded up production to crank out an ironing board every five seconds. And it's not unionized. They still can't compete with Chinese manufacturers, who dump ironing boards onto the American market below cost.

. . .

The Reagan administration also told us that as the manufacturing sector declined, service-industry jobs would replace them. Maybe they replaced them, but they never supplanted them.

I've heard people complain about the pace of redevelopment at the old U.S. Steel National Works, which is administered by the non-profit, county-run Regional Industrial Development Corp. Why hasn't the site been redeveloped like the Waterfront shopping complex in Homestead?

That's a good question. I ask --- would it really make a difference? Before the U.S. Steel Homestead Works closed in 1986, workers averaged $14 an hour --- almost $32 per hour in 2010 dollars. Right now, workers at the Barnes & Noble in Homestead --- to name just one of the retail businesses in the Waterfront --- average $8 to $10 per hour.

It's hard to see the Waterfront as a replacement for industrial jobs.

. . .

In Sandusky, to take another example, the Kalahari waterpark is hiring, but according to its website it's looking for room attendants, receptionists, cocktail servers and concession-stand cooks. I suspect none of those jobs pay a third of what a seat assembler makes at the old Ford plant on Tiffin Avenue.

I also see that a guest room at Kalahari's hotel goes for about $300 per night. At that rate, I suspect few of Kalahari's employees could afford to stay there.

Yet still we get the Reagan mantra --- "cut taxes, cut government, cut spending, and jobs will follow." The jobs followed, all right --- they followed other jobs going overseas. And as Paul Krugman pointed out this week in the New York Times, cities across the United States have already cut taxes, cut government and cut spending to the bone.

. . .

But now they've cut most of the fat, and they're cutting the bones, too: Local governments all over the U.S. are turning out streetlights, shortening school years and actually unpaving streets to save money.

"And what about the economy's future?" asks Krugman, winner of the Nobel Prize in Economics in 2008. "Everything we know about economic growth says that a well-educated population and high-quality infrastructure are crucial. Emerging nations are making huge efforts to upgrade their roads, their ports and their schools. Yet in America we're going backward."

Krugman points out that simply raising taxes on the wealthiest 2 percent of Americans would provide the revenue needed to put the lights back on, pave streets and reopen schools.

But "three decades of anti-government rhetoric," Krugman says, makes any such tax increase monstrously difficult to pass. He concludes that "America is now on the unlit, unpaved road to nowhere."

. . .

Increasing taxes on the wealthiest Americans would help maintain basic services, but higher taxes and more government spending are a stop-gap, not a cure. A sweeping reform of America's trade policies to protect jobs from unfair competition is needed.

Yet the same people peddling the "no taxes, no government line" for the past 30 years --- represented by the U.S. Chamber of Commerce, among others --- have also peddled a "free trade above all" philosophy that makes tariffs as unpalatable as taxes.

Take that Indiana ironing board factory, for instance. As the Post notes, Wal-Mart is screaming bloody murder to get the U.S. to lift tariffs on Chinese ironing boards. When that happens, the Seymour factory will probably close, too.

. . .

In that same Washington Post story, an economist from something called the "Peterson Institute" says the 200 ironing board workers can just find other jobs. Sure they can --- in the service industry, making half what they now make.

And The Peterson Institute turns out to have been founded by Peter G. Peterson, a former Nixon Administration official and Wall Street investment banker who's ranked among Forbes Magazine's 400 wealthiest Americans.

In other words, Peter G. Peterson pushed the anti-tax rhetoric so that he could benefit from it, and he also benefited from sending American jobs someplace else. Now he's using his wealth to fund a tax-exempt foundation whose purpose is to explain why it's a good idea to make the Peter G. Petersons of the world even richer!

I'm no socialist, but when you look at those kinds of connections, it's hard not to feel like the game is rigged against the working class.

. . .

As cities like McKeesport or Sandusky decline, those able to move away go to newer, shinier communities. But unless tax and tariff policies change, and unless we build back our manufacturing base and our middle class, more and more cities will look like McKeesport.

As Paul Krugman points out, it isn't just older cities any more --- newer suburban communities are feeling the same pressures.

Somebody tell me --- when all of the nation's communities finally look like McKeesport, to where will we move?

Feedback on “A Nation of McKeesports”

The U.S. is in flux right now; we have yet to figure out what comes after being the world leader in manufacturing and innovation. Selling houses to each other with money borrowed from China proved to be unsustainable, but there will be something; knowing what the next bubble IS is the tricky part.
Personally, the thing that saved me was education. “I don’t care what you’re up to, but stay in school, just keep taking classes,” my mother said.
Great advice, really. This country needs to spend more money, not less, on education and infrastructure.
If not, the U.S. will become a third world country,and we’ll be standing on the sidelines watching countries who provided their youth with a good education take the lead.
David Barey - August 11, 2010

It is easy to look at the retail end of the Waterfront and assume that’s all there is and that’s all one would get if a Waterfront had risen in the old National Tube Works site. No one doubts that retail is a major engine there, but there also is some industrial (Damascus-Bishop), some commercial (Eat ‘n Park’s headquarters, among others), a high-end housing development, warehouses and a hotel. The significance of the Waterfront against the lack of RIDC development is the fact that private investment, albeit aided by tax breaks, brought in things McKeesport only can dream about happening in the public-run Riverplace Industrial Center of McKeesport. So far, in fact, the only industrial successes in McKeesport and Duquesne RIDC sites are a McKeesport company that processes medical waste and American Textile in Duquesne. But what do I know?
Does it matter? - August 11, 2010

Whatever the pluses of the Waterfront, it still doesn’t add up to the kinds of decent-paying jobs that were generated by the mills and their related support industries.

And those tax incentives weren’t “free” – the County and/or the municipalities are taking a hit on property tax revenues for a good while. Frankly, I don’t see much in the way of improvements going on in old Homestead or Duquesne.

In the larger sense, the voo-doo supply-side economics (G.H.W. Bush’s term, no mine) that came out of the Reagan era have ham-strung our ability to compete.

And to some extent we are our own worst enemy. We want to earn big bucks but buy things for slave-wage prices. And so we do – our washers and dryers, our TV’s and electronics, a lot of our cars, all come from places that haven’t caught up to our wage structure. That’s why it is cheaper to make and ship ironing boards from China than make them here at home. Free trade is OK as a concept, but it can almost never work in practice as long as governments subsidize their economies for competitive advantage.

Things are probably not going to get much better until we figure out a way to make and sell things to ourselves and others at a decent return on investment.

Yes, the service sector is going to be increasingly important, but even that area is highly competitive. Just think how many of those help calls you make wind up in India or Pakistan or Indonesia. We need to figure out what other people want that they can’t reasonably provide for themselves and get busy doing it.
ebtnut - August 11, 2010

Jason, a great piece of journalism. Well done.
Adam - August 11, 2010

I think it’d be helpful to talk about the problem in terms of a lack of local export economy, rather than framing it all in terms of how much local jobs pay. McKeesport and its ilk used to make things for export, and they used to make things for local consumption, that they now import from far away; and the only new jobs being created are service jobs to support consumers, not production jobs to replace imports. Didn’t Chris Briem do something a while ago about the export economy of the region?
Andrea - August 12, 2010

Sandusky was once the home of Lyman Boats. We own one, built in 1956. Still not lake-worthy but we’re working on it.

We don’t build wooden boats anymore, which is a shame because a ride in our Lyman on the Mon was an experience I will never forget. Fiberglass is not a forgiving material, the wood boat took the wakes from the coal barges like a feather pillow. Soft and silent.

Where was ChrisCraft built?

There are so many skills and products lost these days. Bet you can’t get a wooden runabout from China.
Lane in McK - August 12, 2010

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