Tuesday, December 07, 2004

What is St. Cloud's comparative advantage? 

In the middle of a difficult weekend, I had to finish the Quarterly Business Report for the third quarter. The St. Cloud Times report is here; we won't release the full report for a week until we get the production copy back from our graphics person. The reason for the jumbling was the announcement last week of layoffs at the Electrolux plant here in St. Cloud, which changed the lede on our report. We went back to the data and looked at something I'd to show you, and the best way would be a graph we drew for the report.

This is the share of manufacturing employment in total nonfarm employment measured for the St. Cloud, Minnesota and U.S. economies. It's somewhat known in the local area that St. Cloud is more dependent than most places on manufacturing. What we didn't realize was how recent this phenomenon was. While the rest of the state and national economies have been undergoing secular declines in manufacturing employment (nationally from 17.7 million in 1990 to 14.5 in 2003, while overall employment rose more than 20 million), St. Cloud has added manufacturing jobs at a rate exceeding that of non-manufacturing.

The overarching question is whether this represents some comparative advantage this area has, or whether we've somehow been lucky enough to avoid the sectoral shift happening at the macro level. If it's the latter, the Electrolux closing, like the Fingerhut closing 2.5 years ago, may signal our luck is running out.