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How states can keep factories open

By Joseph Duffey / August 9, 1983

From remarks by the chancellor of the University of Massachusetts at Amherst delivered at the National Governors' Conference. The economy of Massachusetts has fared relatively well during the recent recession. I believe there are several reasons for this. We have an attractive New England climate. We have a tradition of good schools, strong public and private higher education with major research centers, and sturdy, hardworking citizens. We have substantially improved our attractiveness to industry and investment capital in recent years, applying greater restraint in public spending and taxation.

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A major reason for the strong performance of our state's economy is the presence of knowledge-intensive, high-tech industries which have a history in the commonwealth going back several decades in a fertile interplay of science and engineering, research and entrepreneurialism. This segment of our manufacturing and commerce has surely been a reason for the relative stability of the Massachusetts economy during a time of rising unemployment.

Over 100 years ago one of my predecessors at the University of Massachusetts traveled to Japan to establish an agricultural college on the island of Soporo. He wrote back to his colleagues in Amherst a description of the Japanese as the ''Yankees of the East.'' We have today come full cycle - for last summer, the New York Times described Massachusetts as ''The Japan of America.''

But those of us who travel the state see a different picture. High-tech is important. We will continue to nurture it. But it is just one segment of an economy that has always found its real strength in diversity. Even today after decades of decline in traditional industries and explosive growth in technology-based manufacturing, only 38 percent of all manufacturing jobs are found in industries classified as high-tech. Most of our manufacturing jobs still come from traditional sources such as shoes, apparel, machine tools, paper , and other basic goods.

We know today that if we want to maintain a strong economy we cannot accept federal policies that allow these mature industries to wither and disappear.

I can offer some observations about the positive and significant steps our state is already taking in response to these issues. And I can offer some personal observations from early inquiries into what it is possible for states to do.

The challenges these industries face today are tougher than ever. But they are not new. Nor are they insurmountable. These problems include declining productivity, migration or production to other sections of the nation and overseas, and increasing pressure from imports. Throughout the postwar era we have experienced in Massachusetts a major shakeout eliminating companies that could not compete. Thousands of jobs were lost as factories closed and companies relocated. This process caused pain and tragedy for many of our older workers, even if the impact was buffered by the growth of new industries.

Looking back on these developments, we can glean some important lessons for the companies that remain. The most important lesson is that while many companies failed, few if any industries vanished completely, and many companies continued to grow and prosper even while their competitors were in steep decline.

To us, this represents a sure sign of hope that with the right strategy and the right kind of support and assistance, we can maintain our traditional manufacturing base.