Back to the Future

Akron has revitalized its local economy with small companies operating in big markets.

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The revival in the Rustbelt isn't a comeback -- it's a transformation

We've heard a lot recently about the revival of the Rustbelt, and it's a dramatic story. Detroit back on its feet. Cleveland beginning to boom. Heavy-equipment makers such as Caterpillar thriving. Even U.S. Steel (oops, I mean USX) making money again. All of which has led me to a heretical thought: maybe the Old Economy isn't dead after all. Maybe the giant manufacturers whose obituaries we've been writing were only dozing. To find out, I went to Akron.

Akron: what better symbol of America's industrial transformation? The Rubber Capital's massive factories once churned out tires by the millions, anchoring a muscular blue-collar economy typical of yesterday's heartland. And when U.S. manufacturing entered its early-1980s tailspin, Akron was at the vortex. Between 1979 and 1983, say University of Akron economists James Shanahan and Richard Goe, the city lost 10,000 jobs in the tire and tube industry alone. All told, manufacturing employment dropped by 22,000, or nearly 25%.

Like the rest of the Rustbelt, Akron has been recovering -- to a point, says Shanahan, where it's on the verge of taking off. But anyone looking for the return of big-company America will be sorely disappointed. The economy that's powering the city's rebirth is utterly unlike what preceded it -- and quite a lot like what we'll see elsewhere in the country over the next few decades.

Point one: Akron's giants have relocated and restructured themselves past the point of no return. Goodyear Tire & Rubber opened an ultramodern tire plant -- in Lawton, Okla. B. F. Goodrich and GenCorp -- formerly General Tire & Rubber -- sold off their tire divisions completely. Firestone Tire & Rubber moved its headquarters to Chicago only to be bought out by the Japanese firm Bridgestone. Today just a few experimental and specialty tires are manufactured in Akron. Large companies such as Goodyear maintain a strong presence in the city, but they are no longer the driving force.

In their place are newer, smaller businesses. Jack Jeter walked me through Jeter Systems Corp.'s stylishly renovated offices; they are upstairs from what was once a Firestone shower-room building. Out back, where Firestone warehoused tens of thousands of tires, Jeter's 115 employees manufacture sophisticated filing equipment for a nationwide market. A few miles down the road, Dennis Oleksuk took me around the biggest, most decrepit complex of factory buildings I ever hope to see, all the while explaining how these old Goodrich facilities are becoming home to dozens of new businesses (see page 2, "Out of the Ashes"). "It's the small and midsize companies that are expanding," says Dale Gibbons of the Akron Regional Development Board. "The big ones are consolidating."

Point two: the small companies driving Akron's boomlet don't look or behave like the small companies of the past. Once, for instance, you had to attain a certain size before you thought about going global. No more. Beta Medical Products Inc., manufacturers of hydraulic trauma beds for hospital emergency rooms, is so young it's still housed in the Akron-Summit Industrial Incubator on Lincoln Street. But it is already selling in Europe through giant Siemens Medical Systems Inc., for which it has also contracted to develop a new and still-secret product. Beta is not, however, a captive supplier. It still sells most of its trauma beds on its own and has developed a new mobile medical-imaging table with the Cleveland Clinic Foundation, independent of Siemens.

Captive suppliers, in fact, are hard to find. "Ten years ago machine shops like mine lived or died with the [large] company they hooked up with," says S. Lee Combs of S. C. Manufacturing Inc. "Today I have 50 customers, and they come from all over." The typical customer, moreover, now wants ready-to-assemble parts, complete with quality-control documentation. To meet this demand, Akron's machine shops operate as a kind of high-capacity flexible network. Combs maintains various types of computerized machine tools. He subcontracts operations that require other specialized equipment, and his competitors return the favor.

Even fast-growing, diversifying companies are no longer emulating the old model of the large, integrated corporation. Not far from Combs, Akron Storage & Warehouse Co.'s ever-more-numerous employees run warehousing facilities, develop industrial real estate, unload and repackage plastic resins from hopper cars, and just recently began contract manufacturing of injection-molded housewares. The company is positioning itself, says marketing director Robert Flaherty, to serve the area's evolving polymer businesses. The goal: not just to thrive as a company, but to help build a thriving industry. The tire makers -- which muscled out competitors, dominated suppliers, and carved up the market like so many feudal lords -- could have used a little such farsightedness.

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