Shrinking cities: population decline in the world’s rust-belt areas

Shrinking cities: population decline in the world’s rust-belt areas

Pittsburgh’s unusual approach offers hope to other urban areas suffering from the effects of deindustrialisation

The city of Yichun in north-east China’s Heilongjiang region grew in just decades from a scrubby outpost near the Russian border to a boom town, thanks to its staple industry: logging. More recently Yichun has begun to struggle; its population fell by 111,000 between 2005 and 2015 according to UN data. Decades of unsustainable deforestation had taken its toll.

The city is now classified as one of China’s “resource-depleted” cities, and the lack of ground cover means that it suffers from devastating floods.

Yichun is not alone in its economic struggles. Last year China announced a five-year financial support package for its north-eastern rust belt to help the “resource-depleted” cities cope with bankruptcies and cover environmental clean-up costs.

Yichun’s economic rise mirrored the booms that previous generations of industrialising cities have enjoyed, stretching right back to the first cases of industrial revolution in places such as the cotton towns of north-west England.

Yet some emerging cities, such as Yichun, have begun to catch up with their counterparts in the developed world in another way, too: their economies have peaked and they are deindustrialising.

The world is urbanising rapidly — for the first time in human history more than half of the population now lives in urban areas and that figure is set to rise to two-thirds by 2050. As a result, most towns and cities are expanding.

For those whose shrinking populations buck the global trend, the most common reason is deindustrialisation.

Shrinking cities in developed economies are concentrated in a handful of areas across the globe, such as the American rust belt and the German industrial heartland. These places were some of the first to industrialise in the world, but have struggled in the past few decades to work out what comes next after manufacturing and industrial jobs have moved elsewhere.

The departure of industries can have sweeping effects across urban neighbourhoods, as demand for housing drops leading to a fall in property prices. Neighbourhoods with the lowest prices see the steepest decline in population but household incomes fall more sharply in areas with middle-tier property prices, according to research on a handful of major US rust-belt cities published by the Federal Reserve Bank of Cleveland in 2013. These patterns were “the reverse of a gentrification process”, it said.

Even in areas where property prices do not fall, the volume of sales can drop as the supply of new buyers dries up.

A case in point is Pittsburgh, America’s “steel city”. Its industrial might formed the basis of philanthropist Andrew Carnegie’s great wealth. In 1901 the sale of his steel empire made Carnegie the world’s richest man, yet just a few decades later Pittsburgh had slid into decline.

Recession, shutdowns, bankruptcies and lay-offs became the norm from the 1960s onwards as new technologies, offshoring and competition from foreign manufacturers ate into local jobs. Pittsburgh was suffering from the painful blight of deindustrialisation.

From a peak of 676,000 in 1950, the population of Pittsburgh’s city area — excluding its suburbs — fell almost 50 per cent over the following four decades. At its worst, the city was losing almost 10,000 people a year.

“We became the second-oldest place in America because so many young people were leaving,” says Tom Murphy, who was Pittsburgh’s mayor between 1994 and 2006.

Pittsburgh’s turnround gives hope to towns and cities around the world which are experiencing post-industrial decline. During his time in office, Murphy spearheaded an ambitious and controversial regeneration plan which saw the city buy up swaths of blighted inner-city industrial land, and use a mixture of demolition, public subsidies and development deals to regenerate it.

In the spirit of renowned urbanist Jane Jacobs’ maxim that “new ideas need old buildings”, the city transformed rows of vacant steel mills into funky workspaces to attract tech businesses, artists and other creatives.

To pay for it, Murphy laid off thousands of city employees. It is a move he defends, saying: “That’s the whole challenge we face — do we spend all our money on today or do we invest some of it for tomorrow? You have a fundamental choice to make — do you want to be loved or do you want to be effective? If you want to be loved, you’re probably not going to be bold.”

The signs are that Pittsburgh’s strategy is paying off. In the past five years its population has stabilised, and in 2015 Metropolis magazine named it one of the 11 most liveable cities in the world.

Many other places are not changing swiftly enough to mitigate the dramatic political consequences that unchecked decline can fuel. The world woke up to the implications of deindustrialisation in last year’s US presidential election, when the rust-belt states’ surprise backing for insurgent Republican Donald Trump caused a political upset.

Trump successfully played on the economic anxiety of voters in areas of industrial decline who had felt overlooked by the Washington political class for too long.

A similar sense of dislocation in former industrial areas of the Midlands and northern England helped drive the Leave campaign’s victory in Britain’s EU referendum last year.

A controversial article about the city of Hull in the Economist in 2013 called on policymakers to admit they were battling against implacable forces and abandon these places, rather than continuing to pour in money in the form of benefits and regeneration projects.

However the occupants of these areas still have a vote, and recent political cataclysms show that many of them are willing to use it. That should be sufficient evidence, if it were needed, to support the argument that instead of abandonment, deindustrialising areas need help in finding their way to a positive economic future.

In the German rust belt, or Ruhrgebiet, diversification from heavy industry into associated high-skilled fields such as engineering since the 1980s has helped to reinvigorate one of Europe’s biggest industrial power bases.

Local authorities played an important part by changing their economic policy to encourage “sunrise” technologies, particularly environmental, according to a 2004 study by Dutch economic geographer Gert-Jan Hospers.

The region focused on developing new industries related to its existing, declining ones rather than pivoting to a completely different field, he found. The Ruhr’s local government also shifted focus from trying to attract inward investment towards growing local businesses and talent instead; and a decentralisation policy added to the “renewal from within” approach.

This reflects one piece of advice Tom Murphy has for other areas facing deindustrialisation: play to your strengths. “Towns and cities need to be brutal in thinking about what their competitive advantages are. Every city has its place but it can be a very brutal conversation about what that is, you can’t necessarily be what you want to be.”

It is a view that is shared by Gordon McGranahan, a research fellow at the Institute of Development Studies in the UK, who specialises in urbanisation. “Everybody wants to say ‘we’ll become a high-tech centre, we’ve got some nice old buildings’,” he says. “But cities are more and more being made to compete with each other and that is not necessarily a good thing.”

Instead of pursuing ambitious inward-investment strategies to attract businesses, he suggests that declining areas focus on appealing to the highly skilled and educated workers which companies want to attract. “Create cities people want to live in and if you do that the industry will come,” he says.

McGranahan’s argument echoes the work of urban theorist Richard Florida, whose concept of the creative class suggested that areas with a high proportion of creative, bohemian citizens were more economically developed. Cities should focus on attracting these people rather than funding major new developments, Florida argued.

This suggestion may work in places with favourable demographics where workers are plentiful; but countries with falling populations need other policy measures.

In Japan and South Korea populations are ageing and shrinking, and the effect is particularly pronounced in certain locations. Kitakyushu, which sits on the northern tip of Japan’s southern island Kyushu, has been one of the country’s biggest industrial areas since its first iron and steel mill opened in 1901. Yet it slipped into decline from the 1970s onwards and its population dropped by 72,000 in the decade to 2015.

The city is now focusing on new car works and semiconductor production, and high-tech industries including industrial robots and biotech. A major environmental clean-up effort has begun and the city is targeting disused land and vacant properties in a bid to reverse the fall in its residential densities.

These cities’ attempts to use urban regeneration to create an economic second act in the face of demographic decline hold lessons for other places that are experiencing a growth boom; in all likelihood, deindustrialisation could be their fate in future decades. That is because deindustrialisation is creeping up on the developing world faster than it did for cities that urbanised earlier on.

As today’s economic miracles deliver rapid urbanisation in Asia and Africa, city authorities should keep an eye on places such as Pittsburgh — it will help when it is their time to deindustrialise.

Kate Allen is an FT markets correspondent

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