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How Small Businesses Could Turn the Midwest Around

Marc Tracy bizbox.slate.com

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April 3, 2009

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When the prospect of bailing out the Big Three was being debated late last year, we joined the discussion, because, as we noted, the livelihoods of thousands and thousands of small businesses, across the country and especially in the Midwest, depends on the continued solvency of General Motors, Ford, and Chrysler and the money they generate through taxes, through wages, through business transactions, and the like. Indeed, Fortune recently published a nice look at the way several Detroit-area businesses are coping with the stress that these companies' downscaling has caused.

The solvency of the Three, and in particular of GM and Chrysler, is still somewhat up in the air. In the meantime, a new meme has developed, which asks: might it not be that it is not the Three but rather the thousands of small, dynamic small businesses scattered throughout the Industrial Midwest that are actually that troubled region's last best hope for revitalization?

According to a recent post on the OPEN Forum (which is published by American Express OPEN, which is also BizBox's sponsor), Youngstown, Ohio has hatched a non-profit called the Youngstown Business Incubator, dedicated to attracting and supporting entrepreneurs who settle in the northeastern Ohio town, with aims of turning the area into a regional tech cluster. The catch is that Youngstown is known as "Steel City"--if you know about the domestic steel industry's trajectory over the past three decades, you'll know how bad that sounds. It is perhaps the ultimate symbol of Rust Belt decline, having even been given the Bruce Springsteen treatment in a song called, yes, "Youngstown" (which is far superior to Billy Joel's parallel track, "Allentown," where they're "closing all the factories down," if you ask us).

The other day, NPR did a story on the group, whose title says it all: Youngstown, Ohio: The Rust Belt's Silicon Valley? (Listen to it here.)

And John Tozzi over at The New Entrepreneur gives a nice bit of context for the group, linking to the superb cover story in this month's Atlantic on the future of America's economic geography. That article's author, sociologist Richard Florida (whose The Rise of the Creative Class BizBox heartily recommends), argued that the cities and regions that will thrive over the coming decade or two will be those that cultivate the most fertile ground for the development of innovative ideas rather than old, industrial products. It's a point Florida made eight years ago in the Washington Monthly, in which he held up his hometown of Pittsburgh as a model of transformation from industrial wasteland (the football team is called the Steelers for a reason) to thriving tech and especially life-sciences corridor.

Tozzi's point, which we would second, is that Youngstown appears to have taken this notion to heart, and is looking to transform itself from a center for the manufacture of just about the hardest, most physical substance there is to a hub for the manufacture of ideas that can zip around the world at the speed of light. Seeing whether towns like Youngstown succeed or fail in this endeavor will be one of the great American dramas of the coming years. And it speaks to the importance of small businesses and entrepreneurs that both will be at that drama's center.

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