Phoenix Industries in Resilient Regions
Susan Christopherson
Department of City and Regional Planning
Cornell University
What Do We Mean by “Resilience”
The Narrow Definition: the ability of a regional economy to return to a previously
established equilibrium state (as measured by employment levels, rate of output
or population size) after a traumatic event, such as a hurricane or crisis in
financial markets.
The Longer View: connecting the concept of regional resilience to the ideas of
regional and industry restructuring popular in the 1980s. They ask how regions
affected by structural changes produced, for example, by trade liberalization,
avoid severe negative impacts, are less affected than other regions, or benefit
from the structural change.
Key Concepts: Lock-In and Path Dependency,
The accepted wisdom:
Regions that underperform relative to national averages are
characterized by inefficient political and institutions that prevent
adaptation to new market conditions.
A contrarian view:
Path dependency can cut two ways. Old industrial regions may
have assets that are the product of long-term (path dependent)
investments in workforce skills and research and development
capacity.
What Would a Region With Capacity for
Resilience (or Sustainability) Look Like?
It would be specialized:
The regional economy would have high location quotients in
several interrelated industries.
It would be internally diversified:
The regional economy would be occupationally diversified.
Assumption and a Question
Processes of trade liberalization and international out-sourcing
have decreased regional industrial specialization and internal
occupational diversity.
Is it possible to re-build regional industry specialization in
industries using internationally dispersed supply chains?
Phoenix Industries
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Phoenix industries have risen out of the ashes of the old industrial centers in the
U.S. and U.K. They have several features in common.
They are located in regions with a history of occupation-based expertise in the
processes, materials, and technologies in an industry. These tend to be old
sites, originally employing thousands and including R&D departments.
Universities in the region have specialized programs supporting basic research
related to industry technologies and engineering education around those
technologies
Supplier, design and engineering firms were spun off as the “anchor firm”
vertically disintegrated, creating value-added capacity in the region.
Average wages are higher than the regional average and higher than the
manufacturing average.
Phoenix Industries Focus on Process, Design,
and New Technologies
 Photonics (precision optics and Imaging)
Location: Rochester
Originating Firm: Kodak
Markets: Healthcare, Defense, Media production, Retailing
 Environmental Systems (Indoor air quality)
Location: Syracuse
Originating Firm: Carrier Heating and Air Conditioning
Markets: Environmental, Construction, Healthcare
 Electronic Packaging/ Flexible Electronics
Location: Binghamton
Originating Firm: IBM
Markets: Defense, Healthcare, Advanced Manufacturing
The Pittsburgh Steel Industry Case
“Although Pittsburgh lost most of its steel making capacity during the end of the
20th century, it did not lose its steel making expertise” (Treado, 2008).
 Between 1978 and 1988, over 70,000 jobs were lost in the Pittsburgh region in
primary metals (from 10% of all jobs to 2%).
 The Steel Technology Cluster, with 1800 firms in the Pittsburgh region, is now
the central source of steel-industry equipment, supplies, and services in the
United States. 12,000 people are employed. Production includes:
• Production equipment used by steel mills;
• Engineering services that assist mills in the selection, design, and
upgrading of that equipment;
• Parts and supplies needed to keep that equipment operational; and
• Raw material inputs to the production process (bundled w/ services).
Source: Treado, Carey et al. “Sustaining Pittsburgh’s Steel Technology Cluster”
What Problems Have Been Identified in
Building Phoenix Industries?
 The connection between the industry and the regional
development community has been weakened during the transition
process. An industry composed of SMEs is less visible to state
and regional policy makers.
 Economic development policy and politics favor national
champions.
 Poor transportation linkages hinder the ability of phoenix industry
firms to reach global customers and markets.
 Phoenix industry firms often compete with larger firms for skilled
labor.
How Can Phoenix Industry Firms Contribute to
a Regional Economic Development Strategy?
 They can provide leverage to attract multi-national branch plants
because they indicate regional skill base.
 They can contribute to the regional identity as a locale for
specialized expertise.
 They can provide entrepreneurial examples and opportunities.
 They can connect local expertise and supply chains directly to
global markets, creating a learning loop.
What is the Difference Between UK and US
Approaches to Phoenix Industries?
 U.S. has embedded regional science-based research and development resources linked
to local industries.
 UK has regional policies that can provide the “glue” to leverage the resource of phoenix
industries:
- skill development programs to broaden the regional identity as a skill center.
- connecting local firms to global markets through continual education about opportunities;
making connections among firms; and marketing the region as a center of industry
expertise.
 Fostering collective efforts to build the industry in the region.
Susan Christopherson
Department of City and Regional Planning
Cornell University
607-255-8772
smc23@cornell.edu
Discussion
• Dr David Hewitt
http://www.marinedesigncentre.com/
• Dr Stan Higgins
http://www.nepic.co.uk/
• Prof. Susan Christopherson
http://www.aap.cornell.edu/crp/