New manufacturing jobs help Midwest Rust Belt gleam again

SOUTHFIELD, Mich. — From Northern Michigan's iron mines to Pennsylvania's natural-gas fields, the industrial heartland of America is humming with jobs again as a region once left for dead recovers faster than the rest of the United States.

The turnaround may shape this year's race for the White House as President Obama seeks to reverse Republican gains in the Midwest.

The economies of Michigan, Indiana, Ohio and Pennsylvania — all states Obama won in 2008 — have improved faster than that of the rest of the country since the recession's depth in April 2009, according to the Philadelphia Federal Reserve. Michigan is expected to lead all 50 states during the next six months, the Fed data show.

"We're going back to a region we abandoned a long time ago to get energy again from rocks that were already drilled a thousand times," said Clay Williams, chief financial officer for Houston-based National Oilwell Varco, which started in Oil City, Pa., in 1862.

Economic recovery in Rust Belt states may bolster re-election chances for Obama, who pushed the government-backed bailout of Michigan-based General Motors and Chrysler.

From Detroit and Pittsburgh to Peoria, Ill., and the town of Mellen in Wisconsin's Penokee Hills, employers plan to add jobs and facilities. Automakers are ramping up production as demand returns, energy companies are exploiting oil and natural-gas sources, commodity prices are supporting a return to long-closed iron and copper mines, and agriculture companies are finding new export markets.

Improvement in unemployment, which dropped 19 percent in Ohio and 29 percent in Michigan from April 2009 through the end of last year, is a key driver for the Midwest recovery, said Jason Novak, senior economic analyst for the Philadelphia Fed.

Automakers are increasing production after U.S. light-vehicle sales rose at least 10 percent for two straight years for the first time since 1984. This month, GM announced it had regained the title as the top-selling global automaker, which it lost to Toyota as it slid into bankruptcy.

The Obama campaign is banking on the auto industry's comeback to damp the appeal of Republican presidential candidate Mitt Romney in Michigan, where his father was a popular governor, as well as to reverse Ohio's swing to Republicans in the 2010 midterm elections.

Ohio added 72,400 jobs last year. That included 18,300 manufacturing positions after losing 419,400 such jobs from 1999 to 2009, federal data show.

Vallourec is completing a rolling mill in Youngstown next to its V&M Star facility to produce seamless tubes for hydraulic fracturing, or fracking. The plant is to employ 350 people.

U.S. Steel invested $100 million in its Lorain Tubular Operations to serve oil and natural-gas customers, creating about 150 temporary construction jobs and 100 full-time positions, spokeswoman Courtney Boone said.

Ohio's unemployment was 8.1 percent in December, down from 9.5 percent a year earlier and the lowest since December 2008, according to the Ohio Bureau of Labor Market Information.

A study commissioned by Ohio's oil and gas industry projects that by 2015 drilling could help fuel $12 billion in spending while creating and supporting more than 200,000 Ohio-based jobs.

"People in the eastern part of this state — who have been living, in many ways, in poverty with the shutdown of great industrial production in Ohio — they may have another chance," Republican Gov. John Kasich said in September.

The recovery isn't just about autos and shale; it's all sorts of related industries, said Huntington Bancshares CEO Steve Steinour.

The Columbus, Ohio-based bank, which recently opened its first branches in Detroit, is in the midst of a $2 billion lending binge in Michigan, where unemployment dropped to 9.3 percent in December from 11.1 percent a year earlier.

The state has created a team focused on exporting products to other countries, including a pilot program to identify 100 companies that can sell consumer goods to China, said Mike Finney, CEO of the Michigan Economic Development Corporation. Other industries also are improving.

"Mining is something that's picking up fairly aggressively here," said Finney, referring to iron-ore operations in Michigan's Upper Peninsula. Also, "the agriculture sector here is really doing well."

Agricultural Co-op Cherry Growers is adding production lines with about 94 jobs during the next three years in Grawn to manufacture applesauce snacks for Materne-Confilux. The Gogo SqueeZ treats produced in the northern Michigan factory are sold at Wal-Mart, Target and Whole Foods.

The new jobs, which rely heavily on automation, are a good fit for unemployed autoworkers, Cherry Growers President Brian Mitchell said.

Michigan gained 66,000 jobs in 2011, according to a Jan. 13 state report. It was the first gain in the state since 2000.

The Rust Belt rebound also means office space is nearly full in Pittsburgh as natural-gas exploration companies and others move in, Steinour said. Pittsburgh just received improved outlooks on its credit ratings from Moody's Investors Service and Standard & Poor's, going to stable from negative, after shoring up its pension funds.

Pennsylvania has seen increases in jobs and tax revenue with the development of the Marcellus Shale. Activity has risen to 1,751 wells drilled in 2011 from 195 in 2008, according to the state's Environmental Protection Department. Republican Gov. Tom Corbett has said he wants his state to be the "Texas of the natural-gas boom."

Other Midwestern states are seeing moribund industries revive. In Wisconsin, the state Assembly on Jan. 26 sent to the Senate a bill designed to streamline the state's mining-permit process that supporters say will clear the way for Gogebic Taconite to create about 700 iron-mining jobs near Lake Superior in the town of Mellen.

In Illinois, where unemployment fell to 9.8 percent last month after hitting 11.2 percent in January 2010, Peoria's Caterpillar is expanding to meet demand for shovels and trucks that miners use to dig coal, copper and ore.

Caterpillar, the world's largest maker of construction and mining equipment, announced plans in November to invest $300 million to expand a Decatur factory that builds trucks, and $340 million to manufacture tractors in East Peoria.

"We've always heard this Rust Belt thing about our region, even just a few years ago," said Steinour, speaking of the disparaging image of closed factories and declining industry. "But you don't hear it so much now, and we might not have to hear it much in the future."

By Jeff Green and Mark Niquette Bloomberg News

By Jeff Green and Mark Niquette
Bloomberg News