Dislocation Intelligence in a Brutal Economy

By James Kobielus

It's painful to see the auto, newspaper, construction, financial services, and so many other formerly vibrant sectors of the world economy go down the proverbial tubes. One of the most nauseating realities is when millions of people lose their jobs, homes, and communities in a seeming blink.

I grew up in the perpetually recessionary Detroit area. I'm attuned to the regional dislocations that come from depending too much on an industry that has seen better days. Abandoned storefronts, dilapidated housing, vacant lots, tumbleweed-quiet city streets — all of it evidence of a growing ghost town, telltale signs of a marginal economy that depends on government programs, private charity, and low-wage service jobs. During my college years, I was a policy analyst with an urban coalition in downtown Detroit, and I could see that the slide was long-term and nigh irreversible.

Even in relatively well-off areas such as Washington DC, where I've spent close to a quarter-century, we’re not immune to serious economic dislocations. The National Capital Region, so reliant on federal spending, is likely to feel the brunt of whatever cuts Obama will almost certainly make to close this massive deficit. And even here you can’t escape dislocations in sectors that we all depend on, such as retailing, as evidenced by, for example, the ex-Circuit City big boxes that seem even bigger and boxier now that they’re totally empty.

In recent years, corporations have adopted location intelligence solutions to support their market-entry strategies, such as adding new stores and waging marketing campaigns. They also use these tools — essentially, geographic information systems coupled with predictive modeling — to optimize their footprint in existing markets. And to a lesser extent, they also use location intelligence to plan their exit strategy of closings and retrenchments. But when departures are hasty — such as any Chapter 11 proceeding — all we’re left with are vast tracts of vacant real estate, plus many formerly employed people who must find a way to survive amid ruins. Imagine how a General Motors or Chrysler bankruptcy will hit Detroit — it will be a liquidation to rival Hurricane Katrina in its devastation of a major city.

Dislocation intelligence is something that the leaders of the auto companies — and the Obama administration — should exercise when making the tough decisions to restructure this critical industry. People’s pain should be factored into decisions to close and relocate plants, so that, for example, whole cities — such as Flint, Toledo, and Janesville — can make a smooth exit from over-reliance on this one industry. As part of that effort, urban planners should consider the infrastructure that remains behind, so that, for example, whole regions of a city are not suddenly deprived of hospitals, grocery stores, and other basic amenities. Imagine you’re on welfare and have to somehow go ten miles to buy a loaf of bread.

Mapping tools are just tools, not salvation. Detroit long ago passed a point of no return. The US auto industry will never recover the manufacturing jobs that attracted people from all over the world to southern Michigan, northern Ohio, and other regions.

But we as a country should try to smooth over these economic dislocations so that they don’t completely wipe some places off the map.