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Thursday, June 11, 2020

Tourist Micro-Manufacturing Can Improve Delta County's Manufacturing and DistributionSectors

Many local authorities try and improve their economies through a heavy focus on tourism and that strategy creates problems when market shifts such as COVID change the fundamental assumptions of the underlining economic mechanics. Tourism is still a great mechanism but should be utilized in a way that enhances other sectors in a way that creates stronger self-growth system that leads to economic resilience that can weather different unforeseen market challenges. Delta County Michigan has an opportunity to enhance tourism and manufacturing as complementary co-sectors by considering adding Tourist related micro-manufacturing to its sparse business downtown district in a way that creates spill overs to attract other sectors such as tourism, micro-manufacturing, manufacturing, resource extraction and distribution.

The sector approach to rejuvenating the economy has been supported in the literature and effectively  used in other places within the country. The Center for an Urban Future states that the sector approach can have a long term approach based on the benefits of moving beyond trying to use high incentives to retain companies to creating and enhancing multiple sectors at once (Bowles, 2002). In the case of Delta County we are pairing sectors that are most likely to succeed to create innovation and human capital spill over that leads to investment in other sectors. We can see how this might work in places where enhancing tourism, furthering its reach with tourist related micro-manufacturing can create benefits for attracting manufacturing and distribution into the area.

According to Tradeology  the official blog of the International Trade Organization, international tourism/traveling accounts for 32% of U.S. service exports and 11% of U.S. exports, goods and services (Lovis, 2019).They state that tourism encourages spill over investments because, "international visitors spend money while they are here, but they get to know our people, our places, and discover that the United States is a great place to do business and invest."

By looking at a general equilibrium model we are able to see how tourism and industry can work together. Tourism often revolves around local physical amenities. In Delta County area we may see these as forests (hiking, biking, hunting, etc...), waterfront (beaches, water skiing, boating, fishing, etc...), snow (cross country skiing, downhill skiing, etc...) or any other related outdoor activity. In their pure form these are not exportable and are non-tradable unless tourists are drawn to the area spend their hard earned money. They then become tradable in terms of memories, thrill, and investment potential.

Utilizing the framework of an economic geography (NEG) it is possible to better analyze the interdependence between tourism and manufacturing (Krugman, 1980, 1991). Most standard NEG models include agriculture that employs labor and manufacturing that utilizes labor and capital to produce value. Including tourism with a footloose capital model (Martin and Rogers, 1995) we can say that tourism produces goods and uses natural resources to manufacture those goods.

Principle: Micro manufacturing can create enhance tourism tradability in terms of an export product that further enhances manufacturing capacity in the area.

It was believed that when manufacturing rises it draws from the local labor pool away from tourism and visa versa. However, Micro tourism creates a type of bridge between SME manufacturing and tourism that can enhance both while creating an exportable product. Thus movement between the different sectors isn't necessary a detractor but could be a basis for raise human and intellectual capital in the area. One can act as a pool that helps further draw in qualified workers that raise international investment profile.

Delta County has experienced slow population decline over the past few decades. A primary reason is that there are few new local industries and the area has become misaligned to the global markets. Tourism, Micro-Tourism Manufacturing, Manufacturing, and Distribution can create jobs and draw people into the county from the U.P./Wisconsin and major cities. People in the region are often struggling to find high paying work. Escanaba/Gladstone could be that new area manufacturing powerhouse by implementing stronger economic development strategies.

When the influx of tourism income exceeds any short-falls in labor allocation we have the ability to create pro-industrialization (Zeng & Zhu, 2010). As tourism increases, and tourism manufacturing increase it will draw in labor and skills that can be used for other manufacturing endeavors. In such a situation Escanaba/Gladstone become net draws of investment, tourism, manufacturing and jobs. Micro-Tourism Manufacturing can further enhance tourism income while becoming a building block that draws manufacturing, resource allocation to feed that manufacturing and a distribution system that maximizes the county's geographic advantages.

Principle: Tourism and micro tourism manufacturing can create labor draws and spill over knowledge.

According to the study Industrial Agglomeration it is possible for small open economies to not only be net exporters of manufactured goods but also net exporters of tourism (Zeng & Zhu, 2010). They used the example of a North and South economy to conduct an equilibrium analysis that indicates while there is interplay between agriculture, manufacturing, and tourism it is possible to have tourism and manufacturing as net positives to an economy. 

Some of this is base in part on the cost of transporting goods, labor, and resources. Delta County and area has some cushion in labor that can help feed a growing tourism, resource extraction, manufacturing and distribution industries. Tourism micro manufacturing can feed and be training grounds for the other industries in the area. Skills can be further strengthened through Delta County Community College and the nature development of interactive clusters.

Principle: Tourism and tourist related micro-manufacturing with exportable products can enhance other sectors.

There has been discussion for some time locally on methods of enhancing tourism. This is where good local policies of selling downtown empty buildings to tourist related micro manufacturing to national needs for manufacturing and efficient exportation can make a boon situation for Delta County. The process of change starts with rethinking what our international brand is and putting in place the components needed to draw interest.

Almodovar-Gonzalez, M., Fernandez-Portillo, A. & Diaz-Casero, J. (2020). Entrepreneurial activity and economic growth. A multi-country analysis. European Research on Management and Business Economics, 26 (1). https://www.sciencedirect.com/science/article/pii/S2444883419301913

Aremu, M. A., & Adeyemi, S. L. (2011). Small and medium scale enterprises as a survival strategy for employment generation in Nigeria. Journal of sustainable development, 4(1), 200. Retrievedhttps://s3.amazonaws.com.......

Bowles,, J. (2002). A Case for sector-based economic development strategy. The Center for Urban Future. Retrieved June 8th, 2020.


Krugman, P. (1991) “Increasing Returns and Economic Geography”, Journal of Political Economy, Vol. 99, No. 3, pp. 483– 499.

Lovis, P. (May 6, 2019). Travel and Tourism Means Big Business for the United States, Including Manufacturers. Tradeology Blog. Retrieved June 7th, 2020 from https://blog.trade.gov/2019/05/06/travel-and-tourism-means-big-business-for-the-united-states-including-manufacturers/

Martin, P. and C. A. Rogers (1995) “Industrial Location and Public Infrastructure”, Journal of International Economics, Vol. 39, No. 3–4, pp. 335–351.


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