Sisters from the same mother and different fathers? A geographic and economic analysis of two cities with equal premises but different development

1.  Introduction  2

2.  Situation Analysis  

2.1  Brief situation analysis of North-Rhine Westphalia and the Ruhr area  3

2.2  Development of Dortmund  4

2.3  Brief description of Buffalo s development  7

3  Comparison Germany vs USA and Dortmund with Buffalo  

3.1  The influence of governmental policy with focus on education  9

3.2  Is the re-development applicable to other regions  12

3.3  Outlook on changes in Dortmund  14

4.  Evaluation  16

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Introduction

This analysis focuses on the region Ruhrgebiet, especially Dortmund, in Germany. The coal and steel industry was Dortmund’s major income generator and the manufacturing industry served as important employer. Over the last 40 years, manufacturing lost its value and many people got unemployed. Dortmund, as flagship in the Ruhrgebiet, suffered from the structural change. It had to cope for many decades with the image of a dirty town without perspective. The main problem was that many of the unemployed people had worked for many decades in the manufacturing and mining firms. Their health conditions were often very bad and their educational level was low which led to the challenge to integrate these citizens into other jobs. Dortmund enforced re-education and invested huge amounts of mone y in universities and colleges. A well-educated young workforce was meant to add welfare to all citizens. The whole area followed this concept. Recently Dortmund was able to attract new firms from service and new-technology sectors. It became the role model for structural change, especially in micro technology, IT-services, and insurance services.

The major idea behind this paper is to analyse Dortmund’s development and the way out of the vicious circle. An area without perspective will loose its young workforce and therefore its future. Firms will invest in other cities and unemployment will increase. This paper will relate spatial similarities between the German Ruhrgebiet and the USA in general. I will also present a brief discussion about Buffalo and its economic development. The focus is on governmental influence, educational influence, and geographical influence on the situation both cities faced. Are the cities comparable? What did Dortmund better then Buffalo? Is there still hope, or is it better for college graduates to leave Buffalo.

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2. Situation analysis

2.1 Brief situation analysis of North Rhine -Westphalia and the Ruhr area

The challenge was to create an environment that both attracts investment and generates a sense of community in a destabilizing neighbourhood. The Ruhr Area has a population of nearly

5.8 million and is considered a megalopolis. It is the region with the highest density within

Europe and can be described as a polycentric agglomeration of 11 major cities and 42 smaller communities. Source 3 in the appendix reveals the agglomeration of manufacturing firms in the Ruhr area. The development is best described by the quote of Juergen Friedrichs: ”The history of the Ruhr area is, at the same time, the history of German industrialization, of its industrial heartland, of economic growth and decline, of the problems associated with economic dominance by few industries, and of working class” (Friedrichs, 1996). The major industries of mining, steel and iron developed during the period of ind ustrialization in the 19 th century . Although Dortmund exists since the middle ages, the Ruhr area gained its national importance in the last 180 years. During the industrial period cities acquired a common identity.

The historical development shows technological, and transportation improvements. The Dortmund-Ems Canal and the railroad system stimulated growth an labor migration in the 19 th century, but the rise of oil as primary energy resource, and decreasing import prices due to international relations finally lead to the depression in the Ruhr area. The last operating steel mill is located in Duisburg; all others have been closed , dismantled, or sold and transported to foreign nations like China. Nine traditional characteristics can be found typical f or the Ruhr area (McMullen, 1996):

- high-percentage of blue collar workers

- low percentage of residents with higher education

- low diversity of industries

- strong working class milieus

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- high wages (prevailing perception outside of the area)

- high unionization rates

- absence of bourgeois & culture

- high materialist values

- strong SPD affiliation (=social democratic party)

2.2 Development of Dortmund

Figure 1 focuses on the number of people in Dortmund employed in the three sectors, namely primary, secondary ant tertiary. Meanwhile the agricultural sector (Land-/Forstwirtschaft) has stayed stable, the share of employees in manufacturing (produzierendes Gewerbe) has decreased in the local economy from 48,2% in 1980 to 22.4% in 2002. Services (Dienstleistungen) grew from 51.4% to 77.1% in the same time period. Figure 1 below emphasises the Dortmund’s structural changes towards services and away from the predominantly strong manufacturing jobs. Figure 2 reveals local differences in service development. Dortmund’s shift towards services during the last decade is relatively high compared to other metropolitan area’s in Germany. The city is usually not considered as global player like the well-known cities Cologne (Köln), Hamburg, Berlin, Düsseldorf, Frankfurt, Munich or Stuttgart (home of Daimler Chrysler). These towns normally come into foreigner’s minds first, and not Dortmund or Essen, which are both located in the Ruhr area. Düsseldorf as North Rhine Westfalia’s capital provides services as administrative junction and provides important services to the state. Frankfurt is Germany’s most important financial city. It is also the home of the European Central Bank and has the biggest stock exchange in Germany. Düsseldorf is also the home of many large corporations’ headquarters and banks. It is also the centre for German and Japanese fashion enterprises in Europe. Dortmund’s weight in the German economy

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is shown in figure 1, which focuses on the GDP per capita. Dortmund is on the 10 th place. This is admirably high after the structural change and the weak economy in the recent years. Figure 1 Figure 2

Source: Stadt Dortmund, Fachbereich Statistik und Wahlen, Jahresbericht 2003: “Wirtschaft”. Source 2 in the appendix indicates that North Rhine -Westphalia is getting more interesting for start- ups. Especially internet and e-commerce businesses are growing stronger, with 24,1% start-ups in NRW, followed by Bavaria with 21,2%. The other 16 states share a smaller base of new start-ups. What is the downside of the structural change? Rapid deindustrialization began in the 1970s. Unemployment rose sharply after 1973 and lead to the highest unemployment throughout Germany in the1980s.

It seems as if Dortmund as location got more attractive for investors, but the change from a manufacturing city to new services has also lead recently to increasing unemployment. Figure 3 shows that the unemployment rate has increased from approximately 11% in 1992 to its peak in 1998 with 16%. Today, Dortmund has an unemployment rate close to 16% again.

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