Rural Technology and Transportation
Issue
Recently, I traveled to a remote region of western North Carolina. The only communication technology provided by the local motel was rabbit-ear TV! Cell, telephone (old school), Wi-Fi, cable and Internet (smart phone, computer, iPad) service were not available. But communication was not a problem since there were plenty of guns and ammunition around.
But seriously, I wonder if there is still a technology – communication or otherwise – gap as first reported by the United States Department of Agriculture (USDA) in 1997. That report, titled “Is There A Rural-Urban Technology Gap“, analyzes the technology gap between rural and urban areas.
Analysis
Without the benefit of a follow-up report, I speculate there remains a technology variance between rural and urban areas. However, the main culprit may not be the lack of desire to invest in technology itself but, instead, transportation costs associated with both the cost of manufacturing (cost of goods sold – import parts) and the cost to ship the finished product from the manufacturing facility. It is these transportation costs that determine the type of product that can be competitively produced in rural areas? Important to this conversation is that capital investment in the production process does not reduce these costs. Ultimately only plant location and/or plant capability (rail, water, truck) can lower them.
Early in my manufacturing career, we built a plant that was designed to ship 80 percent by truck and 20 percent by rail. After being in operation for a few years, the plant was shipping 80 percent by rail and 20 percent by truck. A significant plant upgrade along with a rail extension was necessary to make this possible, but it made an immediate profitability impact through the reduction of transportation costs of both raw material and finished goods. Ultimately this cost reduction lowered the cost per unit and made us more competitive in the market place. The cost advantage remains in place to this day.
Conclusion
Today advanced technologies can be found in most communities. What is not always available is a cost-competitive transportation model used to import manufacturing components and ship finished goods. Small rural communities may give a boost to their economic development efforts by eliminating this barrier for current and future businesses.
Note: As we left western North Carolina, on the side of a remote road was parked a classic Airstreamer with a sign that stated it had full Wi-Fi access – but there was no tow vehicle hooked up to pull it down the road!
Vehicle Manufacturing Employment
The Post and Courier article on vehicle manufacturing needs clarification. The impact data stated is incorrect. A typical impact multiplier for transportation manufacturing is approximately 1.7 jobs for each NEW job created in transportation, not the claimed 4.8. The claimed 4.8 is a crazy number (marketing hype) and not possible.
Furthermore, according to the Bureau of Labor Statistics, vehicle parts manufacturing employment (state of South Carolina) decreased by 1443 jobs from 2006 to 2008. Data for 2009 has not been released, but I expect another 300-500 jobs lost, bringing the total closer to 2000 jobs.
One item not reported in the article was the INCREASE in number of firms in this industry – from 10 firms in 2006 to 18 firms in 2008, a substantial increase. However, when we look at the bigger picture, transportation manufacturing employment as a whole has declined 15 percent.
It is important for the reader to know that I have offered a number of times, in writing, to assist the Post and Courier in their analysis of these data at no charge to them. So far they have ignored me, or anybody else for that matter. Until that time whereby they ask and receive technical assistance, I suspect most of these data will be reported incorrectly.
