‘Change’ in manufacturing one year after crash

Written by Chip Ramsey | 24 September 2009

By Byron Hensley
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A year after the stock market crash sent the American and world economies into a downward spiral, and drove millions into unemployment, an economist at Middle Tennessee State University said the situation has largely stabilized.
But, warned Dr. Murat Arik, associate director of MTSU’s Business & Economic Research Center, rural communities in Tennessee need to focus on two major economic priorities: Education and diversification.
“One thing I notice is that in this whole process, there has been a changing of the landscape in manufacturing; certain things are not going to be the same as before. One thing this has done, many rural community leaders realize they need to address issues of education and workforce training; and second, they need to find a way to diversify their economies.”
Arik gave leaders in Coffee County credit for pursuing workforce education and economic diversity as priorities. “Coffee County is trying to move out of the rural county designation, and is making some progress,” he said.
Lack of diversity has hit many counties hard. During the past year’s crisis, one county, Perry, lost its two major manufacturers, resulting in a 15 percent unemployment rate there.
Many communities are hoping to replace old manufacturers by recruiting new, high-tech firms. But unless those communities can present a workforce that has training in the skills for the new economy, they are at a disadvantage, Arik said.
The U.S. stock market experienced a crash when several major banks and other financial institutions, after years of engaging in high-return, high-risk activities such trading in package of subprime housing loans and credit default swaps, which is essentially gambling on the success or failure of other companies. The collapse was further fueled by the collapse of a housing bubble, which was largely the result of sharp peaks in gas prices.
Arik expressed hope that the crisis has encouraged local leaders around the region to think proactively about “What to do next, what they should do to move forward. I deal with rural communities in Tennessee very much, and this has created a time when these communities should look to address workforce education and economic diversity.
“I’m very optimistic. Recovery is going to be slow and painful. But I think we’ve stopped the downward spiral. But moving upwards is going to take some time.”